Proposal for ICT and internet ecosystem: setting new rules on trade order

Internet usage patterns have evolved from web/text based usage to a high concentration on video. This has led to a sudden spike in traffic and the number of heavy users.

Multimedia traffic becomes more dominant in both fixed and mobile, accounting for approximately 70% and 53% respectively. This pattern is expected to further escalate.

According to Cisco, video is expected to consume 91% of the global traffic by 2014.

The growth in mobile traffic is much faster than the increase in the number of subscriptions. In fixed service, the subscription increased approximately 25% for the past 6 years, from 6.28 million to 7.82 million, meanwhile the traffic increased by 550% from 380Gbps to 2,090Gbps.

In mobile, the subscription increase is minimal compared to the 2009 level – with an annual growth of 5% – however the traffic has increased by 153 fold, due to the introduction of flat rate.

Within the fixed service, 5% of all users account for 55% of all traffic while in mobile 5% consumes 50% of total traffic causing inconvenience for many other users.

Increase in Over-the-Top (OTT) service providers who utilize the network without sharing the burden of investment further deteriorates the profitability of carriers.

In line with these evolving trends, new rules on trade order are required for the healthy development of the whole ecosystem.

While most new services and devices use the fixed/mobile network, the value of the network itself is underestimated. The investment is solely for the carriers while benefit/profit is shared with traffic generators or service providers.

The service providers, who profit from using the fixed/mobile network and in the process generates huge traffic, should bear their fair share of the cost.

When the traffic generator/beneficiary pays principle is put in place, the tragedy of the commons can be prevented and ICT ecosystem can be further advanced.

Therefore, massive and high-frequency traffic needs to be managed in a reasonable and transparent manner to promote virtuous cycle within the ICT ecosystem.

When a particular service, such as P2P and Smart TV, is suspected to cause massive traffic on the network, it needs to be managed to relieve network congestion. Also, as high-frequency traffic including signaling can cause serious strain on the overall network performance, some form of intervention might be necessary.

A possible solution could be standardization of mobile traffic.

A standardized usage may prevent unnecessary social cost from incurring, as it can promote more efficient utilization of the limited resource of mobile networks. Considering the characteristics of network and contents usage, a certain level of traffic trade order needs to be established.

Managed services may also need to be encouraged.

Premium services of enhanced Quality-of-Service (QoS) can be made available for service requiring higher performance. A QoS-dependent pricing structure can facilitate introduction of differential services of varying network and traffic values.

Most importantly, all the interested parties should promote virtuous development in the ICT ecosystem by exploring a mutually beneficial model.

Proposed Win-Win Structure for ICT Industry

By: Hyosil, Kim

Hyosil, Kim is the Executive Vice President of Network Value Enhancement Task Force in KT corp. KT (Korea Telecom) is Korea’s number one telecommunication operator in fixed and mobile lines.

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4 comments

  1. Nice post and thanks for sharing your knowledge. I really appropriate your views.

  2. This article is so out of touch with reality that it would be funny if it wasn’t so that people believe this for real.

    Free tip: If your network costs so much to build and run that you can’t afford to operate, you either go smarter or out of business. Cries for protectionism belong north of the 38th parallel.

    1. For sustainable ICT ecosystem · · Reply

      Global trend of today is that Telcos suffer from the decoupling of revenue from CAPEX, and the decoupling between revenue-CAPEX gets worse.
      As you already read it in this proposal, the fact is that the growth of traffic in fixed and mobile is much faster than the increase in the number of subscription. And the main concern is that the revenue of Telos is getting aggravated.
      Nowadays it is getting harder to gain liquidity for investment on network (including upgrade cost for new technology and widening network coverage).
      If there isn’t any appropriate measure, the condition couldn’t help getting exacerbated.
      We believe that the proposal that we pondered could be one of solutions or smarter way to go through the challenges that we confront.

  3. Build better and cheaper networks or go bankrupt. The world has had enough of the concept of a large telco sitting in the middle taking everybodys money. People will route around your broken 19th century model and you will find yourself without a job. Or you will cry at the feet of the regulator for more protectionistic laws, forcing business to leave your country in search of a sane communications regulation.

    Being overtaken in a competetive market means that somebody else figured out how to do things better, not that it is your right to ask for a cheating ruleset.

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