A Commentary

Like a point on the spiral of a corkscrew, trends in technology have a way to not only come full circle when viewed straight down its shaft but also to move forward and evolve with every turn.

Ancient Buddhist and Hindu scriptures not only say that the universe was formed from something like the big bang postulated by science and that it expands as it's doing so now, but also that at some point the universe will contract in upon itself into something like a massive black hole, while it crushes all matter including all life in its path, then explode again into a sea or plasma and begin the cycle all over again.

In his book, The Dialectics of Nature, Friedrich Engles writes of the river which one crosses in the morning on one's way to work being neither the same nor different when one crosses it again in the evening on the way home.

In these modern or post-modern times, the wisdom of the ancients can be seen in how modern computing has come full circle and mutated as well – from highly centralised mainframe computers which played hos to dumb terminals, through minicomputers to standalone personal computers with their own independent processing power sitting on desks in offices and homes.

Soon after began the process of recentralisation through the growth of networking to share increasingly centralised storage and other shared resources among these PCs and for them to communicate with each other from anywhere, and now the latest buzzword is “cloud computing” where all the processing power, applications,  and resources are highly centralised in one remote location someone out there in our interconnected world and accessed either through a web browser or a client applet running on a PC or some other thin client -- which are a bit smarter than those dumb terminals of yore.

And, regulation of the telecommunications industry worldwide has gone through a similar cycle over the past 30 years.

Prior to the 1980s, telecommunications network operators in each country were either a state-owned or a private monopoly but the 1980s saw the “liberalisation” or “de-regulation” of the telecommunications operators in Britain under Margaret Thatcher, the United States under Ronald Reagan, Malaysia under Tun Dr. Mahathir and many other countries, to break the national monopoly in telecommunications to enable competition between multiple competing service providers, supposedly to benefit consumers.

This writer regards the term “de-regulation” as inaccurate since that would be anarchy, when what's actually happened was a change in emphasis in the regulations to enable regulated competition rather than a regulated monopoly, or more accurately -- “re-regulation,” as the authors of a book published by Ericsson described it.

Anyway, semantics aside, this concept of liberalisation or de-regulation of telecommunications operators became an article of faith among most consultants, communications regulators, government policy makers, economists, the media and even the International Telecommunication Union -- the United Nations specialised agency for telecommunications.

For example, liberalisation in Malaysia let tier-one operators such as DiGi, Maxis and Time dotCom lay fixed line infrastructure and provide various fixed line voice and data services to offices and homes in competition with the incumbent Telekom Malaysia.

And back swings the pendulum

However the pendulum is beginning to swing back towards a monopoly in fixed networks, while competition will shift to be that between fixed and mobile operators and the regulations will have to change to address these changed competitive scenarios, according to Craig Skinner, a senior consultant with industry analyst firm, Ovum Consulting.

“The past de-regulation and liberalisation of fixed networks was to unbundle the local-loop (the last-kilometre copper wire pair into subscriber premises) to enable competition and new services but many countries are now reverting to a monopoly in fixed networks due to the high cost to deploy fibre quickly and extensively enough to serve most of the population,” said Skinner over coffee in Kuala Lumpur on 22 July.

“That task is too costly for multiple individual operators to do by themselves, since they may not invest enough to roll out fibre networks extensively enough nationwide, while governments want universal service for all.

“While many people cite Hong Kong as an example of high competition between multiple operators all of which provide excellent service, what they don't realise is that Hong Kong is small, with a high population density which allows many operators to deploy territory-wide networks and be profitable despite the competition,” he added.

Well, Malaysians often complain about our relatively slow broadband speeds compared to some neighbouring countries in the region, while according to Malaysia's regulator, the Malaysian Communications and Multimedia Commission, our 22.9% broadband penetration per household as of the first quarter 2009 is still far short of the goal of the government's MyICMS 886 development masterplan to have of 50% broadband penetration in 2010.

This also isn't good, especially for our multimedia content and services industry. For example, at the recent PIKOM Leadership Summit 2009 & PIKOM Software and Services Showcase 2009 on 20 and 21 July, a company which provided videoconferencing systems complained to Comm & Tech Asia over a cigarette that slow broadband uplink speeds under 384Kbps were insufficient for smooth images.

At the same time, a top executive with the Multimedia Development Corporation grumbled that while Malaysia has an excellent network of national highways, ports, airports and impressive buildings, the state of our broadband infrastructure is way behind.

Well, reliable high-speed broadband is essential to the domestic consumption of the multimedia content and applications by the many developers his agency has nurtured or is nurturing.

Well Malaysia did embrace the now discredited von Hayekist, Chicago school, neoliberal ideology in telecommunications, so it's paying for that now, just as is the U.S. financial services, manufacturing, professional services and other industries, as the chickens come home to roost.

New thinking dawns

Thankfully, a new philosophy towards fixed broadband infrastructure worldwide tends to regard it as a national network of highways and roads owned by the government or a unified public or private entity, while the competition is between taxi, bus, van, lorry and other vehicle operators who provide services on these roads.

For example, Singapore's Next Generation National Broadband Network (NGN BN) comprises three key industry layers – namely the NGN BN network company, NGN BN operating company and  the retail service providers (RSPs).

The network company – a consortium headed by Singtel -- is responsible for the design, construction and operation of the passive infrastructure layer, the operating company – a consortium headed by StarHub – will be responsible for the design, construction and operation of the active infrastructure to provide wholesale broadband connectivity to RSPs, the downstream service providers who will compete with each other.

The operating company will ensure open access to the network for the downstream service providers, while Singapore's regulator, the Infocomm Development Authority (IDA) will regulate its prices to ensure they are competitive.

Malaysia's High Speed Broadband (HSBB) project launched in September last year is a 10 year collaborative effort between the over 120 year old Telekom Malaysia (TM) and Malaysia’s Ministry of Information Communications and Culture to provide high-speed fixed broadband connectivity nationwide. Under its first phase, it aims to provide HSBB access to over 1.3 million premises by 2012.

However, most HSBB deployment will be within urban areas with high economic value and provide between 100Kb/s to 10Mb/s to homes and up to 1Gb/s into businesses, while the private wireless and wired broadband operators will provide Broadband to the General Population (BBGP) in sub-urban and rural areas wit speeds from 100Kb/s to 1Mb/s.  

While some within Malaysia’s telecommunications industry and other commentators see this partnership as the government providing an “unfair advantage” to one telephone company over the rest, the government sees it as the only practical way – the now discredited von Hayekist, Chicago school, neoliberal ideology aside  -- to roll out HSBB infrastructure quickly to benefit most Malaysians.

Malaysia does not have a common trenching policy whereby several operators can share common ducting, unlike in some other countries but given its over 120 year legacy, TM is the only telephone company with an extensive network of fixed line infrastructure and ducts in place nationwide, while its fixed line competitors will have to build them quickly and extensively enough at great cost, and according to an article this writer wrote many years back, the others simply don't have the deep pockets which TM has.

So that being the case, it’s simpler, cheaper and faster for Telekom to deploy HSBB by removing all the copper cabling over 20 years old from its ducts and replace it with fibre, while it upgrades its newer copper infrastructure.

TM will provide the last kilometre access homes and businesses to using fibre-to-the home (FTTH), Ethernet-to-the-home (ETTH) and Very High Speed Digital Subscriber Line (VDSL2) technologies. This will provide homes with broadband speeds between 10Mbps and 100Mbps, and up to 1Gbps to businesses.

The government will contribute RM2.4 billion (US$685 million) towards the project, while TM will provide RM8.9 billion (US$2.54 billion). The government’s part is mostly to make up for loss of revenue to roll out broadband infrastructure in commercially unprofitable areas such as new housing estates and new industrial zones.

To ensure there’s no unfair advantage for TM, HSBB will be an open network with open access and competitive pricing so other operators can provide their own services over it for a reasonable fee.

Most sensible

“The most sensible solution is for the government or its relevant agency or company to own the telecommunication ducts but most governments cannot afford to buy back existing ducts but they can install and their own ducts in new development areas,” said Skinner.

“However, the bigger problem is the price the owner charges the service provider for use of its infrastructure and their principles used to arrive at that price as this will always be a bone of contention between the two parties,” he added.

For example, the French government won't buy back existing infrastructure already owned by different operators but is looking at regulations which would allow all operators and service providers use of their infrastructure at set prices, he added.

The ducts can either be owned by the existing operator or by the government based on common standards and guidelines, though more important is that content and service providers and other third-parties get to use the network at the same prices as the operator's internal business units.   

Spectrum availability and price

“The main regulatory issue with mobile and wireless communications is access to spectrum, especially for Long Term Evolution (LTE) services,” said Skinner. “The question is how much regulators will charge for new spectrum and whether it will allow operators to re-use its existing GSM spectrum for LTE service.”

The 2.1 to 2.6GHz frequencies give more capacity to support more end users but they do not penetrate into buildings as well as 850MHz and 900Mhz signals and since the higher frequencies have lower range, they will require more base stations, especially to cover rural areas.

“In Australia, Telstra has 850MHz, 900MHz, 1800MHz and 2.1GHz spectrum which gives it a great deal of flexibility to use the best frequency for the area being covered,” said Skinner, who's from Australia.

For example, they could use the high frequencies in city areas to support the high density of users, while they would use 850MHz in rural areas, where population density is low and distances great.

Even in cities, 900MHz could be used to cover outdoor areas, while 2.1GHz could be used inside shopping malls and other public places where user density is high.

Also, as free-to-air analogue broadcasters who use the 700MHz band migrate to digital broadcasting, they'll free up spectrum in that band which will become available for mobile and other wireless operators, so regulators will have to cater to that.

A problem for WiMAX

A problem Skinner sees for WiMAX is that its operators will require a lot of money to roll out their network quickly enough, especially since the gigahertz frequencies it operates in have shorter range.

“While WiMAX is a good technology with a high spectrally efficiency, governments were slow to assign lower frequencies for it to operate in, so it missed the opportunity and will exist in a niche, while LTE is designed to work over multiple spectrum bands.” said Skinner.

“Basically, regulators must let operators design their network at the lowest possible cost,” Skinner concluded.