Adam Smith goes mobile : managing services beyond 3G with the digital marketplace

The next generation of mobile communications systems is expected to offer new business opportunities to existing and new market players. A market-based middleware framework has been recently proposed whereby service providers, independent of network operators, are able to tender online service contracts to network operators in a dynamic and competitive manner. This facilitates a seamless service provision over disparate networks in a consumer-centric manner. Service providers select network bearers according to the network operators' ability to meet the QoS target, which in turn is influenced, among other things, by user's price and quality requirements. The benefits of this proposal are the complementarity of numerous network resources, the decoupling of services and networks in a self-organising distributed environment, and increased competition to consumers’ advantag

International roaming in the EU : current overview, challenges, opportunities and solutions

As technology evolves and globalization continues, the need for reasonably priced roaming services has never been higher. In 2007, the European Commission (EC) introduced a first set of regulatory decisions to cap the maximal roaming fee end users have to pay for voice services. In the years after, additional price caps have been introduced for SMS and data, initially only for end users, in a later stage also for the wholesale tariff. The final step, Roaming Like at Home (RLAH), will start to take effect in June 2017; from then on end users will pay the same price (for voice, SMS and data) when roaming like in their domestic country. The effect of RLAH on the business case of each mobile operator is hard to predict, as the different national markets are extremely heterogeneous and operators face large discrepancies in terms of roaming usage and network costs due to different travelling patterns and various other reasons that cannot be harmonized (geography, economics, working force, usage history, etc.). Furthermore, competition in the telecom market will no longer be a purely national matter, as the decision to abolish roaming tariffs will fully open up cross-border competition. This paper aims at providing insights in the effect of RLAH for both the end user as well as the mobile operators. Following a literature survey approach, including an overview of the roaming regulation process from 2007 up to now, the paper discusses possible effects the RLAH initiative might trigger, going from lower wholesale prices for mobile operators to higher retail prices for end Users. Additionally, as the European Commission strives for a digital single market, this paper presents a number of technical solutions (carrier portability, software-based SIMs, cross-border IMSI, Roaming like a Local, Wi-Fi offloading) that may pose a - partial or full - alternative for roaming and explains how these may impact cross-border competition both positively and negatively. The solutions are assessed against two axes: (1) generating the best possible outcome for the end customers (in all countries) and (2) ensuring the best level playing field for (virtual) mobile operators in Europe, which will of course involve trade-offs on different levels

Do we (still) need to regulate fixed network retail markets?

In the beginning of fixed network liberalisation in Europe in the late 1990s, the main concern of regulators was to lower calls prices. This was done by introducing wholesale regulation and promoting service based competition. Some years later, the concern of some regulators turned from too high calls prices to too low calls prices which might ‘squeeze’ entrants out of the market. We look at a simple model in which this development is explained by increasing competitive pressure from an ‘outside opportunity’, e.g. mobile telephony. We conclude that a margin squeeze is not necessarily used by the incumbent as a device to drive competitors out of the market and increase market power but can also result from increased inter-model competition. If this is the case, we argue that regulators should consider alternatives to cost oriented access prices such as retail minus or complete deregulation.access regulation, vertical integration, foreclosure, price squeeze, telecommunications, fixed networks

Margin Squeeze in Fixed-Network Telephony Markets – competitive or anticompetitive?

This paper looks at the effects of different forms of wholesale and retail regulation on retail competition in fixed network telephony markets. We explicitly model two asymmetries between the incumbent operator and the entrant: (i) While the incumbent has zero marginal costs, the entrant has the wholesale access charge as (positive) marginal costs; (ii) While the incumbent is setting a two-part tariff at the retail level (fixed fee and calls price), the entrant can only set a linear price for calls. Competition from other infrastructures such as mobile telephony or cable is modelled as an ‘outside opportunity’ for consumers. We find that a horizontally differentiated entrant with market power may be subject to a margin squeeze due to double marginalization but will never be completely foreclosed. Entrants without market power might be subject to a margin squeeze if the wholesale access price is set at average costs and competitive pressure from other infrastructures increases. We argue that a wholesale price regulation at average costs is not optimal in such a situation and discuss retail minus and deregulation as potential alternatives.access regulation, foreclosure, margin squeeze, telecommunications, fixed networks

Revenue requirements for mobile operators with ultra-high mobile broadband data traffic growth.

Mobile broadband data access over cellular networks has been established as a major new service in just a few years. The mobile broadband penetration has risen from almost zero to between 10 and 15 per cent in Western European leading markets from 2007 to the end of 2009. More than 75% of network traffic was broadband data in 2009, and the data volumes are growing rapidly. But the revenue generation is the reverse as the average for operators in Europe in 2009 was around 77 per cent of service revenues from voice, 10 per cent from SMS and 13 per cent from other data. Voice and broadband data service are built on two quite different business models. Voice pricing is volume based. Revenue depends linearly on the number of voice minutes. Broadband data service on the other hand is mainly flat fee based even if different levels are being introduced as well as tiers. Revenue is decoupled from traffic and therefore also from operating costs and investment requirements. This is what we define as a revenue gap. Earnings as well as internal financing will suffer from increasing traffic per user unless the flat fee can be raised or changed to volume based, other revenue can be obtained and/or operating costs and investments can be reduced accordingly. Observable trends and common forecasts indicate strong growth of mobile broadband traffic as well as declining revenue from mobile voice in the next five year period. This outlook suggests a prospective revenue gap with weak top-line growth and expanding operating costs and investment requirements. This is not only a profitability and cash flow issue. It may also severely restrict the industry's revenue and profit growth potential if it is handled mainly by cost-cutting. In sections 2 - 4 we describe related work, our contribution, the specific research questions as well as the methodology and its problems. Section 5 is an overview of mobile operators' revenue, its sources and development till today. Section 6 presents trends, developments and published forecasts that may be relevant for the future. Section 7 contains our conclusions. --Mobile broadband,mobile operator revenues,revenue requirements,voice revenues,non-voice revenues

Wi-Fi Offload: Tragedy of the Commons or Land of Milk and Honey?

Fueled by its recent success in provisioning on-site wireless Internet access, Wi-Fi is currently perceived as the best positioned technology for pervasive mobile macro network offloading. However, the broad transitions of multiple collocated operators towards this new paradigm may result in fierce competition for the common unlicensed spectrum at hand. In this light, our paper game-theoretically dissects market convergence scenarios by assessing the competition between providers in terms of network performance, capacity constraints, cost reductions, and revenue prospects. We will closely compare the prospects and strategic positioning of fixed line operators offering Wi-Fi services with respect to competing mobile network operators utilizing unlicensed spectrum. Our results highlight important dependencies upon inter-operator collaboration models, and more importantly, upon the ratio between backhaul and Wi-Fi access bit-rates. Furthermore, our investigation of medium- to long-term convergence scenarios indicates that a rethinking of control measures targeting the large-scale monetization of unlicensed spectrum may be required, as otherwise the used free bands may become subject to tragedy-of-commons type of problems.Comment: Workshop on Spectrum Sharing Strategies for Wireless Broadband Services, IEEE PIMRC'13, to appear 201

Estimating network effects in mobile telephony in Germany

In this paper we analyze the demand for mobile telecommunication services in Germany in the period from January 1998 to June 2003. During this time, the subscriber base grew exponentially by about 700% while prices declined only moderately by about 41%. We believe that prices alone cannot account for such rapid diusion and network eects have inuenced the evolution of the industry. We put this view to the test by using publicly available data on subscriptions, price indices and churn rates. Using churn rates gave us approximate sales levels which enabled us to use standard methods to investigate the eect of network size on demands. Our estimates of a system of demand functions show that network eects played a signicant role in the diusion of mobile services in Germany