Sunday 26 October 2014

Brexit And Telephones (2)

Following on from our previous post on Telecoms, we intend to address more fully the complexities of European and international political and regulatory networks of telecommunications which present significant challenges when considering Brexit. We begin here though as background with the impact of the rise of the mobile phone before we move in further pieces which look at national, EU and international regulation in detail.

As would be expected due to its inherent nature regarding communication, telecoms is a truly globalised industry which is reflected by the fact that many of its well known companies are multi-national businesses. For example the biggest and most valuable telecoms giant is US-based AT&T which provides mobile and fixed-line telephone service and broadband cable whose overall revenues grew to more than $127 billion in 2012. UK based Vodafone is the world’s second largest mobile phone operator on revenue and subscribers, behind only China Mobile.

Yet the rapid advancements in the last 30 years in technology have not only been reflected in the diversity of services provided by telecoms companies but also that the market is now populated extensively by what are traditionally non-telecoms specific enterprises.

We can appreciate the rapid advancements most acutely when we consider that in the time it took fixed lines, since the invention of the phone some 140 years ago, to progress from analogue, to digital circuit switching and then to packet switching technology courtesy of VoIP, it has only taken mobile phones around 30 years to achieve the same progression path.

When the traditional telephone was first challenged properly by the mobile phone in the early 1980’s operating on a cellular network– it was essentially by a two way radio which operated on two different analogue frequencies in order to receive and transmit conversations at the same time. It was an advancement on Push-to-Talk technology.

The rapid rise of early mobile phone efforts and vigorous competition though meant incompatibility of technology between carriers and also capacity problems. Other problems were that some services in the UK services such as Rabbit, Phonepoint and Mercury Callpoint could only make outgoing calls near a designated base station.

Even in the United States by the mid 1990s, there existed competing and incompatible second-generation digital wireless — channel access technologies such as CDMA (code division multiple access), TDMA (Time division multiple access) and iDEN, ensuring that phones would not work from one system to another.

The situation in Europe in the early 1980s was initially even worse. The first European mobile cellular systems were introduced in Scandinavian countries in 1981 and 1982. Following on shortly were the likes of Spain, Austria, the UK, Netherlands, Germany, Italy, and France. These systems were all analogue, now known in hindsight with the technological advancements as first generation (1G), however the problem was that there were eight of them which were all different and incompatible. Thus mobile communication was generally restricted to one country only.

This led to the intervention by the Telecommunications Commission of the European Conference of Postal and Telecommunication Administrations (CEPT), a voluntary association of European countries where policy makers and regulators from 48 countries across Europe collaborate to harmonise telecommunication, radio spectrum, and postal regulations. The CEPT established a study group called the Groupe Speciale Mobile (GSM) to develop the specifications for a European-wide second-generation digital cellular system in the 900 MHz band.

The requirements were that it was to be fully digital, incorporating the best technology of the time. There would be no backward compatibility with existing systems and they desired that their new wireless standard would be similar to landline requirements for ISDN, hoping to make a wireless counterpart to it.

Here conflicts emerged between the national self interest of countries, of mobile phone companies and the need for standardisation.

The GSM group wanted to select the most appropriate technology by assessing a number of demonstration systems by interested parties. Eight systems were submitted which were between broadly TDMA technology and those incorporating CDMA technology. TDMA and CDMA were split along Scandinavian countries (Nokia, Ericsson and Elab) and the Germany/France axis respectively - whose systems were heavily subsidised by the French and German governments. The split reflected differing demographic characteristics between the countries.

TDMA with its fewer time slots thus its relatively moderate traffic capacity was less cost intensive and meaning it was easier and quicker to rollout across rural communities. Conversely the systems of Franco/German origin were generally designed with high traffic capacities in mind. This was a cost effective solution in more urban and dense areas with high traffic-density requirements but is more expensive for rural areas where many time slots are not needed.

Yet at least if not more as important as technology were; political issues, property rights issues and vested interests. Obviously the stakes were enormous for suppliers and states. One of the two shortlisted by SEL/Alcatel was considered to be “too proprietary” and held the patents on its CDMA-based proposal. There was reluctance by some countries to approve the other shortlisted option (TDMA) submitted by Ericsson due to it being based in a country that at the time was not a member of EEC. Other disputes included the use of encryption in GSM (A5/1), with eventual agreement that it should be optional – countries such as France do not allow it to be activated.

Interestingly, although the EEC privately supported narrowband TDMA solution, it wasn't in a position to act to facilitate a breakthrough, as 84/549/EEC: Council Recommendation of 12 November 1984 confirms the EU only had the power to recommend:
that the Governments of the Member States ensure that:
- the telecommunications administrations:
1. consult each other, preferably in the framework of CEPT, before they introduce any new service, notably between Member States, with a view to establishing common guidelines so that the necessary innovation takes place under conditions compatible with harmonization;
It was not until the Treaty of Maastricht (Article 129 D) that, for the first time, the EU was given a competence in the field of telecommunications. Instead it was diplomatic efforts by individual countries, notably by the UK, that lead to a breakthrough which came via the Bonn Declaration in 1987. This confirmed that a decision had been reached to use TDMA technology:
Europe must have a single standard supported throughout the CEPT- This should be based on the narrowband TDMA concept defined by CEPT at its Madeira meeting in Feb 1987.
The ministers also called for the agreement between network operators to be formalised by a Memorandum of Understanding (called the GSM MoU) which they did, not long after:
The signatories shall support the open (non proprietary) definition of at least the following interfaces in the form of CEPT recommendations:
Mobile/BaseStation (air interface) based on the narrowband TDMA concept defined by CEPT at its Madeira meeting in Feb 1987 enhanced in the areas of modulation and coding to provide the greatest flexibility in receiving equipment implementation as agreed by CEPT GSM at its Brussels meeting 9-12 June 1987

Base Station/MobiIe services Switching Centre

Mobile services Switching Centre,/Mobile services Switching Centre/Location Register
In 1987 the then EEC adopted, via Council Directive 87/372/EEC, frequency allocations proposed by the CEPT covering the 25 MHz bands of 890 - 915 MHz for uplink - mobile to base station, and 935–960 MHz for downlink - base station to mobile to apply to the Single Market.

(Interestingly the rights to the GSM trademark and logo were held by France Telecom)
The first GSM systems were up and running by 1991 with Vodafone launching the UK's first GSM commercial service in the same year. Having been deployed throughout Europe, GSM allowed smooth roaming from country to country.

GSM has since become the most popular worldwide technology regarding the standardisation of mobile phone calls:
More than 6 billion people worldwide use the Global System for Mobile Communications (GSM) family of technologies. GSM is the most widely used wireless technology in the world, available in more than 219 countries and territories worldwide, with a market share of more than 90 percent.
What made GSM so successful, was not that it was a far superior technology - indeed the first GSM handsets in 1992 were not much better than the old analogue ones - but instead that it established a complete telecommunications network in one package. Other worldwide standards bodies only produced a specification for the radio piece of the mobile network. Automatic roaming and handover of calls between base stations required dedicated exchanges for numbering and switching management and this is what GSM provided. It turned out to be a very successful illustration of European co-operation, ironically, with little involvement of the EEC/EU.

Born out of the 'GSM MoU' in 1987, and powered by the success of GSM, was the emergence of the GSM Association (GSMA) which represents the interests of mobile operators. Thus GSMA has "evolved to become one of the most powerful trade associations in the world, lobbying governments on everything from tax policy to pricing strategy":
Spanning more than 220 countries, the GSMA unites nearly 800 of the world’s mobile operators with 250 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in industry sectors such as financial services, healthcare, media, transport and utilities.
In 1988, created by CEPT the European Telecommunications Standards Institute (ETSI) was established. ETSI is an independent, not-for-profit, standardisation organisation in the telecommunications industry and, although not an EU organisation, it is officially recognised by the EU. Crucially ETSI allows direct participation in its technical committees from non-EU companies that have commercial interests in Europe which means it has a global outlook and influence - for example it was a founding member of the Global Standards Collaboration.

GSM thus was a big success, and probably due to this success 'Europe' began to become complacent - an unwise position to take as technology marches on relentlessly. While GSM second generation (2G) cellular systems were used principally for the purpose of transmitting voice calls - there was a growing use for the transmission of data. GSM acknowledged this with the flexibility of using Signalling System No. 7 which was essential to support new data services and SMS (text messages). Within a decade one billion text messages were being sent in a month. The development of third generation (3G) meant that term 'mobile broadband' reflected the growing demand for phones to emulate domestic PC broadband speeds.

While GSM was ultimately a triumph of European co-operation without the intervention of the then EEC, it was inevitable that the EU would use telecommunications as another excuse for further political integration which it retrospectively added to the Maastricht Treaty. Not unsurprisingly since becoming an EU competence the progression of telecoms innovation and co-operation within Europe has not been much short of stagnation.

We can see this acutely with the emergence of LTE (Long-Term Evolution) commonly known as 4G. Whereas European countries took the initiative in the '80s with GSM now other non-EU countries are doing so with 4G. Rather ironically the GSMA writes in its assessment - Mobile Wireless Performance in the EU & the US:
There is broad agreement that the EU mobile wireless market is underperforming relative to other advanced economies, including the U.S. We find that the EU is lagging well behind the U.S. in deployment of next generation wireless infrastructures and the advanced services they make possible, and that EU consumers are worse off as a result.

EU regulatory policies have resulted in a fragmented market structure which prevents carriers from capturing beneficial economies of scale and scope and retards the growth of the mobile wireless ecosystem. We recommend reforming and harmonizing spectrum policies, permitting efficient levels of consolidation, and promoting innovation by fostering dynamic competition.
It then notes that:
Growth in investment in the U.S. is translating into faster data connection speeds: U.S. speeds are now 75 percent faster than the EU average, and the gap is expected to grow.

The U.S. is deploying ITE at a much faster pace than the EU; by YE 2013, 19 percent of U.S. connections will be on lTE networks compared to less than two percent in the EU.

LTE 4G data networks will have the potential to make different streams needed for mobile voice and data services obsolete. Traditional cellular networks require a separate stream to carry voice traffic and data network. With LTE, rather like VoIP on landlines, voice traffic can be carried by IP technology, known as Voice over LTE (VoLTE). The final convergence for mobile phones is following the path trod before it by traditional land lines where the technology of VoIP has begun to establish itself.

Thus with the potential abolition of circuit switching technology within mobile phones this process to just being a mini computer will be complete. What for some time was effectively a phone with just some relatively simple software during the ‘90s where phones could text and allow users to play simple games like snakes as epitomised by the utter domination of Nokia, has become instead, with the development of smartphones, a small computer with telephony attached almost as an optional extra.

This convergence regarding mobile phones means we see telecommunications becoming an important component of the broader IT industry as companies such as Google with Samsung and Microsoft with Nokia enter the telecoms market.

In many ways the complexity of telecoms and indeed international regulation is demonstrated most clearly by the smartphone – the complexities of modern international regulation laid bare by a device small enough to fit in a pocket.  A modern smartphone contains many technologies which are regulated in different ways, by way of an example modern phones tend to have the following features for example:
Bluetooth: Regulated by the United Nations Economic Commission for Europe (UNECE): "Before launching a Bluetooth classified product it must be ensured that the product is in compliance with the international RF, EMC, Safety and Health standards set by the regulatory authorities of the various regions."
WiFi: Products are certified by the WiFi Alliance, which is a global non-profit industry association stating "The members of our collaboration forum come from across the Wi-Fi ecosystem and share a vision of seamless connectivity. Since 2000, the Wi-Fi CERTIFIED™ seal of approval designates products with proven interoperability, industry-standard security protections, and the latest technology.
GPS: Civil signal designs are owned by the US as confirmed by this statement in 2013 "The governments of the United Kingdom and the United States of America today announced that they had reached a common understanding of intellectual property rights related to the Global Positioning System (GPS) and will work together to address broader global navigation satellite systems’ intellectual property issues.
Radio: FM radio is available on modern phones via plugging in a headset and receiving analogue signals, frequencies agreed under the International Telecommunication Union (ITU).
NFC/RFID: Near Field Communication - technology in smartphones which allows contactless electronic payments. It is based on the international ISO/IEC 18092 standard.
Camera: Photographs made with a camera phone can fall outside the jurisdiction of the EU: "A photographer who requested Wikimedia to remove one of his images used online without his permission has had his wishes dismissed, with the US organisation behind Wikipedia claiming that because a monkey pressed the shutter button it should own the copyright".
Ringtones: Companies who offer ringtone services to sell to the UK public pay royalties to PRS for performance rights.
Music: Related to the above the issue of copyright and competing international trademark rights became an issue as illustrated by the Beatles (Apple Corp) verses Apple computer case.
What this illustrates neatly is that the telecommunications field is so vast, and changing so rapidly, it is difficult to cover all aspects of it. But its globalised complexity requires global involvement.

In the next few blog pieces we will concentrate on national, European and international telecommunication regulation in turn.

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