Modelos para o Crescimento Digital nas Comunicações e Media Fórum AICEP das Comunicações Lusófonas

Transcription

1 Modelos para o Crescimento Digital nas Comunicações e Media Fórum AICEP das Comunicações Lusófonas Helder Vasconcelos Luanda, May 2016

2 Plan of the Talk OTT Business Models 5G and the world of tomorrow What are the challenges for regulation? Spectrum management aspects Market Definition Level playing field? Security and privacy issues 2

3 1. OTT Business Models 3

4 The new digital ecosystem The new digital value chain: Layer 1: Equipments Layer 2: Networks ( Classical Telcos) Layer 3: Services (Apps & Contents) Dynamic market with new players popping up and old ones sliding down Complementarity between infrastructure products and content services Decreasing traditional sources of revenues for Telcos due to OTT substitution It is unclear to what extent can telcos monetise on new services (with the possible exception of IP-TV) What about incentives to innovate? 4

5 Portuguese consumers using OTT services Voice and SMS Services (%) IM VoIP 58% years Source: ANACOM based on Barómetro das Telecomunicações da Marktest 5

6 Multi-sided Platforms ISPs and OTTs as multi-sided platforms Indirect Network Side 1 Externalities Side 2 P 1 P 2 ISPs/OTTs 6

7 Multi-sided Platforms II ISPs cater to consumers and content providers OTTs link consumers and advertisers Other Examples: Media companies (e.g. newspaper, TV broadcaster) delivers content to users and eyballs to advertisers, charging users for participation (pay TV) or activity (video on demand, traditional newspapers) and advertisers for adds. Cable TV - a more complex case High value content providers (e.g. premium sports) can typically demand high payments from the cable operators Payment may flow from the end-user to content provider, through the cable operator. Providers of content that is valued less, may not be able to command high payments, or may need to pay the cable operator to have their content transmitted 7

8 Multi-sided Platforms III Multi-sided platforms may charge multiple prices on diferent markets Biased pricing structures A zero price does not mean there is no market Two players at the OTT or ISP layer may belong to the same relevant market even if one (or both) have zero prices on the side of the market they interact. Should below-cost pricing in two-sided markets worry antitrust agencies? Evans and Schmalensee (2007) : Price equals marginal cost (or average variable cost) on a particular side is not a relevant economic benchmark for two-sided platforms for evaluating either market power, predatory pricing, or excessive pricing under European Community law it is incorrect to conclude, as a matter of economics, that deviations between price and marginal cost on one side provide any indication of pricing to exploit market power or to drive out competition. 8

9 2. 5G 9

10 2.1 Some data 10

11 4G Coverage in Europe (2012) Portugal (89%) is leading 4G coverage with Sweden (93%) Source: Studies for the EC by Point Topic and HIS and Valdani, Vicari & Associati 11

12 Mobile Market Indicators: Portugal Source: EC Digital Agenda Scoreboard key indicators LTE coverage widely implemented in Portugal Around 90% population covered More than 3000 LTE base stations 12

13 Digital Agenda for Portugal (DAP) The Portuguese Government has adopted a comprehensive BB plan: Sets three general targets regarding BB development: Access to standard BB for all in 2013 Access to fast BB (30 Mbps or more) for all by 2020 Access to ultrafast BB (100 Mbps or more) for at least 50% of Portuguese households by 2020 The DAP also established specific targets: Promote the conditions to allow ultrafast mobile BB to cover, by 2015, 480 parishes that are not covered currently Roll out access to BB for at least 50% of the population in rural areas 13

14 2.2 Demand issues 14

15 Data Draining Apps 15

16 But how do the Portuguese and Europeans use the internet? Source: EC (DESI 2015) 16

17 2.3 5G and the world of tomorrow 17

18 Is leapfrogging from 3G to 5G expected? Some doubts Cannot consumers wait until 2020? Is 4G affordable? Isn t 4G coverage suficient? What are citizens missing by not moving to 4G? 18

19 Why does the world need 5G? (I) A comprehensive view of future consumer demand is essential! Number of devices will increase (with extended capabilities) Growing demand for mobile services in vehicles, trains and even aircrafrs Data traffic volume will be dominated by video and social media Many of the trends in the consumer segment will also apply to entreprises Mobility will be a key driver for increase productivity Cloud-based services will enable application portability across multiple devices, requiring fast and reliable networks This imposes challenges to entreprises that will have to be managed properly (e.g. security, privacy issues) 19

20 Why does the world need 5G? (II) Operators will support vertical industries Operators have already started to leverage partnerships with OTTs, to deliver package services OTT will deliver more and more applications that require higher QoS, lower latency and better authentication Machine-type communication (MTC) and the IoT Tens of billions of smart devices will use their embedded communication capabilities Massive number of devices (e.g. sensors, cameras) with a wide range of characteristics and demands 20

21 3. What are the Challenges for Regulation? 21

22 Spectrum management aspects Increasing scarcity of spectrum has created the need for: Refarming existing spectrum bands for 5G Incentivising more flexible use of spectrum Achieve right balance in spectrum management between promotion of technical efficiency (e.g. use or loose it ) and promotion of allocative efficiency (e.g. incentives in auctions) Advances in technology have the potential to create opportunities for users to access other spectrum resources on a shared basis in ways that do not impinge on rights of incumbent users White space devices Cognitive radio techniques Licensed Shared Access (LSA) 22

23 Market definition The interaction between fixed and mobile? To what extent are they substitutes, and to what extent are they complements? When defining markets, demand substitutability should be the key criterion for market definition If multiple technologies/services can be used for the same purpose, all providers of these different technologies/services are competing in the same market A SSNIP test for mobile voice services must take all relevant substitution possibilities into account: Consumers may switch to OTT services if they experience a price increase for traditional voice services They may also substitute parts of their calls by messages (SMS or substitute services by OTTs such as WhatsApp) 23

24 Market definition II How should markets that encompass voice and data over fixed and mobile connections be defined? Do bundles represent a new market? Bundles Penetration (3/4/5 P in the EU) 80% 70% 60% 50% 40% 30% 20% 28% 10% 0% LT EL CZ SK DE PL BG IT LV IE HR SE AT DK HU UK CY RO ES SI BE MT EE PT NL FR LU Source: ANACOM based on EC and PORDATA 24

25 Market definition III From isolated offers to bundles T (+21%) (+98%) (+29%) (+5%) Source: ANACOM Note: Values in 000 Acessos 25

26 Level playing field? Clarify legal status of OTTs: Providers of ECS? To what extent is it feasible and proportionate to impose a specific regulation being imposed on an existing, traditional communications service on a (perhaps imperfectly) substitutable given over-the-top service similar to an existing, traditional communications service? What will be the service proposal of telcos in the future (Basic connection services, bundled offers )? Are telcos venturing into the TV space? In a world in which OTTs and network operators want to enjoy complementarities, how should competition authorities deal with vertical contracts between them? Are there likely efficiency gains from vertical contracting? What about the anticompetitive risks? 26

27 Security and privacy issues Security and protection of users data (and privacy): 5G will support a wide-range of applications and environments, from human based to MTC Huge amount of sensitive data should be protected against: Unauthorised access/use, disruption, modification, inspection attack The advent of Big data Collection, storage and analysis of datasets that have large volumes Internet has made information about individual consumers more accessible but also more commercially valuable (e.g. for price discrimination purposes) Data is also a commodity (e.g. advertisers purchase datasets) Many consumers are concerned about privacy losses associated with extensive collection and use of consumer information online 27

28 Security and privacy issues II Combining datasets through a merger Combination allows merged entity to gain new insights about individual consumers Does this combination create undue market power in the market for consumer data? Gives control of consumer data to an entity with which the consumer did not choose to interact Privacy increasingly represents a non-price dimension of competition Privacy issues should play a role in antitrust analysis Consumer data is an increasingly importante commercial good for digital platforms 28

29 Obrigado! 29