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Outlook for telco regulation

David Stone | June 28, 2013
What is happening in other forward thinking countries who are rolling out fibre networks is what will happen here over time and we will be well positioned compared with many other parts of the world.

Impact of OTT

In 2001, at the launch of the United Networks metro fibre networks, I met David Isenberg who was then regarded as something of a network heretic, having, while working at Bell Labs, written a paper forecasting that networks would rapidly become dumb pipes and all the smarts would migrate to the edge of the network.

It may have taken rather longer than Isenberg imagined but it certainly is happening. Increasingly voice and data traffic is no longer the preserve of the network owner but rather is the domain of the over the top content and service providers.

These large, foreign-domiciled providers such as Skype, Facebook, and Google are increasingly controlling what is carried over the networks and are essentially invisible to the network owners. In the mobile area it is similar with the device and app providers now owning the customer rather than the network provider. Increasingly the networks run the risk of becoming relegated to just being a collection of dumb pipes.

This is a fundamental change to the dynamics of our industry and one that could have catastrophic consequences if new business models are not rapidly adopted.

As it currently stands the OTT providers make no contribution to the cost of the network and as a result the capital available for future network investment is diminishing.

Further, since most are foreign domiciled, they are beyond the reach of domestic regulation. If you extrapolate this out to its (il)logical conclusion, you end up with a scenario where there is no effective regulation as our laws have no extra-territorial effect.

Somehow this seems unlikely and there will continue to be jobs for lawyers and regulatory economists for many years to come.

*This opinion piece is part of a series looking back at major issues covered by Computerworld, to mark the final print edition, published Monday July 1, 2013.

 

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