Policy Brief on Internet of Things and Transport

The International Transport Forum at the OECD is an intergovernmental organisation with 53 member countries. It acts as a strategic think tank for transport policy and organises an annual summit of ministers. For this years summit on Seamless Transport I wrote a policy brief on the Internet of Things and Transport.

Building the "Internet of Things"
In the coming years the Internet will move from connecting people to connecting things. In a new report entitled “Machine to Machine (M2M) communication: Connecting billions of devices”, the OECD analyses the
impact of this phenomenon. The report

• finds new sources of growth
• identifies significant barriers to the functioning of the market
• proposes liberalisation to further open the mobile telecom market, to enable new entrants that may be transport, energy and healthcare companies, not telecom providers
• argues to support trade and travel for manufacturers and service providers in providing these services across borders,
• argues that removing barriers will result in billions in direct and indirect savings on mobile connectivity, and additional billions in new revenue from new services. 

In 2017, in OECD-countries an average family with two teenagers could have 25 things that are connected to the Internet: telephones, TV, tablets, printers, sports gear and health devices. But that is not all. Companies will dramatically change the way they design machines and devices, starting from the type of data they need to operate efficiently and effectively and then building the machine or device around it. Tens of billions of connected devices by 2025 is not farfetched. The combination of the data will allow smart transport, smart
cities, smart energy and smart health. for more see http://www.internationaltransportforum.org/jtrc/PolicyBriefs/PDFs/2012-04-04.pdf

Presentation at Telecom Reform Conference 2012

I presented at the Telecom Reform Conference in Copenhagen. Good conference. The 1969 reference in the disclaimer is to Bill Melody's presentation at the OECD on the Carterfone decision. Bill Melody was also one of the organizers of this conference. BTW 1969 is way before I was born. Nice little anecdote, in 1969 liberalisation wasn't even an acceptable topic to the US delegation to the OECD. We've come a long way since then.

(Just noticed that the nice graphs I had on Roaming and MTR's didn't get included in the Google Docs version. If you have a solution, please mail me. If you want to see them, look here (roaming) and here (MTR)

OECD report on "Developments in Mobile Termination"

As part of the OECD’s ongoing work to stimulate competition and innovation in mobile phone markets (see here for most recent news release on mobile roaming), this new working paper aims to contribute to the current debate among regulators in OECD countries who are reducing or considering the phasing out of the fees telecommunication network operators pay for delivering telephone calls to mobile wireless providers, known as mobile termination rates (MTRs).  This is because mobile operators have a monopoly over the termination of calls on their networks.

While it finds that rates have decreased across the OECD by 53% between 2006 and 2011, from USD 0.1406 in 2006 to USD 0.0650 per minute, there is still much divergence between countries. Rates are at zero in Canada and vary from the lowest (the United States (USD 0.0007/min), Israel  and Turkey (USD 0.0203/min) to the highest, including Estonia (USD 0.142/min) and Chile (USD 0.165/min).

The complexity and difference in the way that operators charge fees makes it difficult to draw a link between rates charged and prices paid by users for voice calls in different countries. But cutting rates to zero would strengthen competition in voice and other services, says the report. It could also speed up the introduction of innovative new VoIP services and encourage providers to offer a range of tariff models to meet the needs of their users, free from prices reflecting monopoly power on the networks of others.

Developments in Mobile Termination is available at http://dx.doi.org/10.1787/5k9f97dxnd9r-en.
All the data in an excel file is available here: http://www.oecd.org/dataoecd/25/44/49805921.xlsx

The author Rudolf van der Berg is also available to answer any questions at +(33) 1 45 24 93 67, (+33) 6 58 15 85 08, or rudolf.vanderberg@oecd.org

OECD publishes report on Internet of Things and M2M

(see also http://oecdinsights.org/2012/01/31/the-internet-of-things/)

Look around you for a second and count the number of electronic devices, machines and gadgets. All of them -- light bulbs, cars, TVs, digital cameras, refrigerators, stereos, cranes, beds – will be connected to the Internet over the next 15 years, if they aren’t already.

Farmers will connect their livestock, machinery and fields through sensors. Medical practitioners and patients, fitness fanatics and those of us that require greater encouragement, will be monitored for everything from our heart rates to glucose levels to the special needs of pregnancy.

This is the potential of the “Internet of Things”: billions and billions of devices and their components connected to one another via the Internet. 50 billion devices by 2020, according to companies like Ericsson. The “Internet of Things” will radically alter our world through “smart” connectivity, save time and resources, and provide opportunities for innovation and economic growth.

The basic building block of the “Internet of Things” is machine-to-machine communication (M2M), devices equipped to communicate without the intervention of humans. The trends are already visible: Internet-connected TVs are now widespread; eBook readers must have a Wi-Fi or 3G connection; smart electricity meters have already become standard in many countries. More often than not, however, M2M is hiding in plain sight: information terminals in trains and buses, traffic lights and bicycle sharing systems, like the ones in Paris and London.

  

This new “Internet of Things” is the subject of a new OECD-report, “Machine-to-Machine Communication: Connecting Billionsof Devices”, and examines:

1.       New Technology: the drivers behind connecting devices to the Internet

2.       New Markets: user and business demands, and whether they are being effectively met

3.       New Policies: what governments can do  to promote this new source of growth

New Technology

-          The Internet of Things is enabled by ever cheaper communication modules, new innovations and applications of existing technology and the fact that the Internet has become available almost anywhere that people are.

-          M2M is very different from traditional telecommunication. It does not need a human to start or stop a communication. As a result it has the same economical life span as the product in which it is embedded (10 years for consumer electronics, 15 years for cars, 30 years for smart meters). It can process extremely low data volume or very high amounts.

-          Different networking technologies can be used to connect M2M devices, depending on the amount of mobility needed and dispersion over an area. 2G/3G/4G mobile wireless is, however, often an ideal technology for most applications.

-          SIM-cards could become the standard for authentication to use networks, as this removes or reduces the need for human interaction. Devices can be connected straight from the factory.

Table 1. Machine-to-machine applications and technologies, by dispersion and mobility

Geographically dispersed	Application: smart grid, meter, city remote monitoring Technology Required: PSTN, broadband, 2G/3G/4G, power line communication	Application: car automation, eHealth, logistics, portable consumer electronics Technology Required: 2G/3G/4G, satellite
Geographically concentrated	Application: smart home, factory automation, eHealth Technology Required: wireless personal area (WPA), networks, wired networks, indoor electrical wiring, Wi-Fi	Application: on-site logistics Technology Required: Wi-Fi, WPAN
	Geographically  fixed	Geographically mobile

New Markets

-          M2M creates a new player in the mobile market: the “million device” user. These new large scale M2M users will potentially manage hundreds of thousands of smart meters, cars, and consumer electronics, possibly in higher numbers than some countries have citizens.

-          Large scale M2M users may offer their services in 10s to 100s of countries, selling the same devices globally. Their customers may buy the devices abroad and travel with them. As a result, manufacturers need to offer international connectivity solutions. The telecommunication industry, however, is still largely organised and regulated on a per country basis. Large M2M users will thus place new demands on telecom companies, and regulation and business models will have to adapt.

-          Companies creating innovative M2M-based services are currently locked into 10-30 year mobile data contracts and high roaming fees; this dependency hinders the role out of new services and innovation.

New Policies

-           Governments hold the key to set large scale M2M users free, by giving them access to wholesale markets. They will need to change the rules so that large M2M users can have access to numbers and SIM-cards, just like telecom companies have now. This will open up the market, break lock-ins, make large M2M users responsible for their own innovation and create a competitive market for roaming for M2M services. This liberalisation of the market will be a major paradigm shift, but might by some estimates lead to billions in savings and new services.

-          Privacy and security need to be designed into products from the start. M2M could allow a detailed view of people’s lives, and parliaments have already curbed or changed some projects as a consequence. For example, cars are increasingly using onboard M2M services (GM Onstar, Ford Sync, BMW ConnectedDrive) and the European Union is now mandating their own service (eCall) to be built into every car from 2014. Since EU legislation requires telephone companies to record a person’s location at the start of each mobile communication, and since turning a M2M car on will itself start a communication, these companies will be inadvertently tracking the start and end of any trip! The current challenge requires privacy by design, because as this example shows, even if the automobile company does not register the location, the telecommunication company by law will have to.

-          Governments have tried to make spectrum policy more flexible in recent years, allowing companies to change networking technologies when new technology becomes available. M2M may rigidify spectrum policy, however, because any time M2M uses a particular networking technology, it expects the spectrum to be there for the lifetime of the device, which is 10 to 30 years. The consumer-oriented wireless technology works on a timescale of a maximum 10 years.

-          Countries may run out of phone numbers in their current numbering plans as a result of M2M, because 2G and 3G equipped M2M devices require an E.164 telephone number to work. Only when 4G is used can M2M work with just an IP-address.

-          It is unclear which country should issue telephone numbers for any given device. Is it the country that device is used in, the country of the mobile operator, or the country of the large scale M2M user?

-          Combining data generated by M2M devices may offer great insights to improve society. Cars could notify local governments of icy roads or bottlenecks in infrastructures. This may not always be seen as positive, however, as shown by a case in The Netherlands where anonymous and aggregated data from GPS-systems was used by the police to identify prime locations for speed cameras, which led to a public outcry.

What is certain from the report is that governments will have to change regulations in the telecommunications market, will have to be vigilant to apply privacy and security regulation and stay innovative to make use of the many possibilities it offers. Doing so promises to transform the economy, promote growth in the telecommunications sector, and produce growth and efficiency savings in government and society.

Slides available: BEREC expert workshop on IP-Interconnection (Peering and Transit) in cooperation with OECD

On November 2nd, BEREC organized a workshop on IP-interconnection together with the OECD. All the slides are now available online.  And to save you from reading the whole post, here they are:

• Dennis Weller, Senior Advisor, Navigant Economics "IP Traffic Exchange;  Market Developments and Policy Challenges"
• Martin Levy, Director, Hurricane Electric "The Background of Internet Interconnection"
• Scott Marcus, Director, WIK-Consult, "IP interconnection, traffic trends, and wholesale and retail prices"
• Bill Krogfoss, Strategy Director, Chief Technology Office Alcatel-Lucent "Internet Economy and Content Peering"
  
• Falk von Bornstaedt, Head of Peering, Deutsche Telekom "IP Interconnection and differentiated QoS."
• Patrick Gilmore, Chief Architect, Akamai 
• Eric Ralph, Chief Economist of the Wireline Competition Bureau, FCC (Video message
  and teleconference); (no guarantee that the video works).
  

This was a direct result of the OECD High Level Meeting on the Internet Economy in June, where through conversations in the halls we noticed that there was a difference in the way regulators and Internet peering coordinators discussed interconnection. The workshop was a huge success, several people from the internet peering community flew in from Vienna for one day even though there was a RIPE-meeting going on too. 

A couple of points to take away from the meeting are:

• Peering agreements are for 95%+ handshake agreements, without any involvement of lawyers. They take 3 minutes to set up technically. 
• Both content providers and eyeball networks are working on getting content closer, faster and cheaper to the consumer. This benefits both parties. An interesting example were Google Global Caches which are now placed in networks around the world, but whose effect can most profoundly be seen in Africa where for instance the traffic over the Kenya Internet Exchange Point increased by several hundreds megabit/s peak after a cache was installed, saving the local internet community hundred thousands of dollars every month
•  The market for peering and transit is highly competitive and highly dynamic, with switching barriers being extremely low. A change in routing from one transit provider to another can literally be done in minutes. The effect of a peering agreement is almost immediate. 
• The people whose job it is to interconnect IP-networks speak of themselves as a community, even though some of them disagree quite considerably on how it should be done and who plays what role. 
• Peering and transit is done between all kinds of networks, even the European Commission has an AS-number and could set up it's own peerings.

 I think everyone looks back at a very successful event, that was seated to capacity. 

 

BEREC expert workshop on IP-Interconnection in cooperation with OECD 

November 2nd, Bloom Hotel Brussels, 9:00-17:30  

The goal of the workshop is to bring experts from the IP- interconnection community in contact with experts on interconnection from national regulatory authorities and to discuss future interconnection in an all-IP world.

The Internet’s way of using peering and transit as the basis for commercial negotiations differs considerably from the telephony’s world of Calling Party’s Network Pays. As a result even when talking the two worlds seem to be speaking about different things even when using the same words.

BEREC has been looking into these different approaches to interconnection in a series of papers since 2007 (ERG Report on IP-Interconnection 2007, ERG Common Statement on Regulatory Principles of IP Interconnection 2008, BEREC Common Statement on NGN future charging mechanisms, 2010). The OECD has studied Internet traffic exchange in a series of reports in 1998, 2002, 2005 and in a forthcoming paper in 2011. Furthermore, it has studied Internet traffic exchange in relation to the development of local content in cooperation with UNESCO and it has also organized a workshop on the topic in 2001 in cooperation with the German government. IP-interconnection markets are global markets crossing national borders and even continents. Therefore the OECD is singular in its analysis of trends in Internet interconnection taking a global perspective. Following the same objective of safeguarding competition, BEREC and the OECD take this workshop as a starting point hopefully to be continued in the future.

The format of the 4 session is intended to allow for an extensive discussion with the audience.

Programme
9:00-9:30 Registration and Coffee

9:30 – 10:00 Opening words by Monica Ariño, BEREC and Sam Paltridge, OECD

10:00-11:30 Session 1: The background of Internet interconnection
The goal of this session is to outline the basics of Internet interconnection.
Technical background: Peering (paid or free), transit, partial transit, variants (reciprocal transit
etc.), “Public” versus private, application needs for QoS.

• Dennis Weller, Senior Advisor, Navigant Economics "IP Traffic Exchange;  Market Developments and Policy Challenges"
• Martin Levy, Director, Hurricaine Electric "The Background of Internet Interconnection"

11:30-12:00 Coffee break

12:00-13:00 Session 2: IP interconnection, traffic trends, and implications for
wholesale and retail prices
The interconnection of internet networks has been described in terms of two-sided networks.
The network provider stands in the middle and can receive money from either the content
provider or the consumer. Is this description of the market accurate? What can the theory of
two-sided markets teach us? What contribution can content providers give to the deployment
of networks or alternatively what is the role of network providers in content?

• Scott Marcus, Director, WIK-Consult, "IP interconnection, traffic trends, and wholesale and retail prices"
• Bill Krogfoss, Strategy Director, Chief Technology Office Alcatel-Lucent "Internet Economy and Content Peering"

13:00-14:00 Lunch

14:00-15:30 Session 3: IP Interconnection and differentiated QoS

• Mike Blanche, Program Manager - Network, Peering and Content Distribution, Google,
• Falk von Bornstaedt, Head of Peering, Deutsche Telekom "IP Interconnection and differentiated QoS."
• Patrick Gilmore, Chief Architect, Akamai

15:30-16:00 Coffee Break

16:00-17:10 Session 4: The Future of Interconnection
The Internet hasn’t done away with telephony as a very important means of communication. The growth of mobile telephony has even been more dramatic than the growth of Internet. There have been calls in academic journals and on regulators directly to both impose the Internet’s way of interconnection on telephony and vice versa the telephony’s way interconnection on the Internet.

• Can we expect the market to evolve into one model or the other for all traffic?
• Could a hybrid model evolve?
• What role will new services on networks play? Will new demands be placed on
• interconnection?
• What characteristics of both models should survive?

Panel: 

Eric Ralph, Chief Economist of the Wireline Competition Bureau, FCC (Video message
and telco);
Andreas Sturm, De-Cix;
Mike Blanche, Falk v. Bornstaedt, Patrick Gilmore; Martin Levy

17:10-17:30 Wrap-up 

Cara Schwarz-Schilling, BEREC and Rudolf van der Berg, OECD

Will speak at FTTH Forum Budapest on Nov 9

I will speak at the FTTH Forum in Budapest tomorrow. Always interested in meeting up with people. Many people of the so called Fiber Ring will be there ie Benoit Felten, Costas Troulos and James Enck

New presentation on Machine to Machine communication

I recently gave a presentation on Machine to Machine Communication to the Dutch Telecommunication User Group, BTG. This was based on work I have done at Logica. The presentation represent my own thoughts and not those of my employer. I am still working on the topic and am interested in hearing anyones views on the topic.

M2 m implications for btg

View more presentations from Raindeer

Born: Tycho Rudolf Willem

The blog is on semi-hiatus, but I thought some of you would appreciate this news. On Wednesday June 8th our son Tycho Rudolf Willem was born in Almere, The Netherlands. He is the little brother of Grace :-) Mother and son are doing great. Pictures available on request :-) And yes, I was present, the two days before were spent in OECD working groups in Paris, discussing two papers I wrote with member countries.

I'll be speaking on WIK's conference on Bundling and Multi-Play

I'll be presenting at "Bundling and multi-play: Does it require a new regulatory paradigm?". This conference organized by the German WIK-Consult is held Monday and Tuesday in Brussels. I'll present OECD-work on Bundling, which was published last year. It's not my work, but the responsible colleagues were otherwise disposed or had changed to other jobs. The line up of speakers is quite interesting.

First blogpost for the OECD... on International Women's Day (of course)

Working for the OECD may mean this blog is on hiatus, but that doesn't mean I stop blogging completely. Fortunately the OECD has some blogs and I've been allowed to write on International Women's Day. It's not a topic I'm an expert in, but as always I can have an opinion and I've got some skills in writing it down, so for your pleasure:

May the best (wo)man win

MARCH 10, 2011

by Guest author

8 March is the centenary of International Women’s Day. This year, we mark the occasion with a series of blog posts about initiatives to strengthen gender equality worldwide. In this post, Rudolf van der Berg of the OECD’sScience, Technology and Industry Directoratediscusses sex discrimination in management.

As we celebrate the centenary of International Women’s Day, in OECD countries still only 5%-30% of senior management is female. This is often discussed in the context of right and wrong. But let’s look at it from the perspective of competences and economic performance.

The argument for there being so few women in management positions is that they just aren’t available and that the best person for the job needs to be promoted. However, with educational equality being the norm and girls and women actually performing better than boys and men in education, this argument seems to hold less than it did a hundred years ago on the first International Women’s Day.

The simple conclusion we have to draw from the numbers is that if competences and chances were distributed equally, we would see roughly 50% women on boards. Unfortunately we aren’t seeing this. We still see far less.

The sobering conclusion is that if our societies were more equal, 40% of the men in some form of management today wouldn’t be in that position. They are not competent enough, given the pool of talented women. However, since managers are continuing the practice of selecting men over women for any management position in the organization, this means they are dipping deeper into the pool of available men and pushing lesser qualified men up to positions they shouldn’t have been in.

The consequence of this is that the position of men in organizations is supported by a whole column of lesser qualified men, crowding out women and in their own self-interest keeping those women out.

That this has negative effects on the performance of companies is clear. In a series of studies byCatalyst, Fortune 500 companies with more women board directors are shown to have significantly better financial performance, including 53% higher returns on equity, 42% higher returns to sales, and 66% higher returns on invested capital.

If shareholder value or government effectiveness and efficiency is dependent upon having the right people in the right place, it is time CEOs and Ministers start looking around and down and wondering which of the men they see in management is the weakest link, and where in the company the more qualified woman has ended up.

Useful links

OECD work on corporate affairs

OECD work on gender

WikiGender

Wikiprogress