The imminence of the Internet of things
THE WORLD of telecommunications is a dynamic and fascinating one uniquely positioned within the utilities universe to meaningfully drive economic growth and development. Changes in the sector over the past 30 years have revolutionised virtually every aspect of Jamaican life – from workplaces to homes; education to entertainment; how we worship to how we solve – and in some cases commit – crimes.
The overwhelming weight of evidence suggests that investment in and expansion of telecom services contribute significantly to economic growth. In light of Jamaica’s need to shed the burden of debt and the albatross of poverty that have strangled us in recent years, the telecom sector must be masterfully shepherded to unleash the most lucrative opportunities to increase our productivity and growth. No doubt, the regulators, policymakers, and industry experts participating in the Organisation of Caribbean Utility Regulators (OOCUR) conference, scheduled for October 26-28 in Montego Bay, will have to think intensely about how best to leverage the sector’s vast potential to power growth. To adequately do so, they must demonstrate a precise understanding of three critical items:
1. The recent historical landscape of telecom regulation and policy;
2. The inherent differences between telecom and other major utilities; and
3. New concepts requiring regulatory attention, including settled issues that are yet unimplemented.
Jamaica’s modern telecom era began in earnest in 1999 with the Government’s decision to liberalise the sector. The process, completed in 2004, effectively broke the stifling effect of a monopolistic industry, laid the foundation for true competition, and, resultantly, generated substantial benefits for virtually every aspect of society.
In 1999, per capita mobile subscription in Jamaica trailed the Latin America and Caribbean (LAC) average as well as the global average. In five brief years, however – in a manner similar to our champion sprinter, Usain Bolt, rumbling back from a poor exit from the blocks to roar past his competitors – per capita mobile subscriptions soared to two and a half times the global average and roughly twice the average in LAC. Jamaicans essentially relinquished fixed lines in favour of mobile communications – a phenomenon that has since become status quo across the globe.
Providing consumers with legitimate options is a key component of sustainable development and one we achieved by liberalising the telecom market. If any doubt exists about our capacity to lead the globe in something other than sprinting, shooting, and scamming, we should look no further than our leadership in mobile telecommunication penetration.
The Universal Service Fund (USF), established in 2005, represents another important development in the telecom industry. The USF – financed by a tax on inbound international calls – is aimed at accelerating the deployment of, and access to, the full range of broadband (voice, data, and video) services to Jamaicans. One of the principal projects initiated by the fund was the installation, five years ago, of a fibre-optic cable ring around the island. This project made it easier for telecom companies to provide fixed broadband services throughout the island.
Yet, unlike Jamaica’s pacesetting status in mobile phone penetration, our reality is completely reversed as it pertains to fixed broadband usage. Jamaica’s Internet penetration is a measly 43.4 per cent – lower than the 49.2 per cent global average and trailing almost every other Caribbean country. This is troubling as most of the infrastructural investments required to dramatically transform our standing have already been made. As much as they deserve credit for their apparent vision and foresight with respect to mobile Internet penetration, policymakers and regulators bear the bulk of the blame for shortcomings in broadband. They have displayed a lack of awareness of the critical differences between telecom and other utilities.
When compared to water and electricity, regulating telecom services is considerably more complex in five important respects. First, when a customer purchases water or electricity from a public utility, the customer (hopefully) receives water molecules or electrons in return. With the exception of cable TV, the telecom customer receives nothing tangible from the utility. Instead of receiving energy or matter, the telecom customer gains access to a network that may be used to communicate with and receive information from others.
Second, not unlike telecom companies, water and electric utilities employ networks to provide service to customers, however, these networks are essentially unidirectional – permitting water or electricity to flow from the utility to the customer but not yet, anyway (in the case of electricity), from the customer to the utility. Telecom naturally works differently. The telecom company simply provides a pathway along which the customer may send and receive voice messages, data, or media, whenever, wherever, however, or to whomever the customer chooses. In short, telecom service is multidirectional.
Third, when a customer receives water or electricity from the utility company, assuming quality is maintained, the customer does not care which specific water molecule or electron he or she receives. With respect to telecom services, however, communication cannot be arbitrary. When a message or other packet of information is transmitted through the telecom network, it must be location specific – Portia from Wood Hall doesn’t care to receive messages intended for Andrew from Spanish Town.
Fourth, over the past two to three decades, the telecom industry has converged tremendously as a result of technological innovations. Networks initially intended for a particular type of service have been repurposed to facilitate the delivery of other services. In general, telecom can be classified in three service classes: (1) voice service; (2) data service; and (3) multimedia service.
Traditionally, telecom companies employed fixed wire-lines to carry voice calls. Mobile networks were initially designed for transmitting voice calls, wirelessly. And cable networks were developed specifically to convey multimedia signals. Technological progress and advancements in computing have enabled all three services to be carried on any network.
Fifth, the telecom industry is arguably more vulnerable to the impact of disruptive technologies than any of the other major utilities. This is primarily attributable to the breath-taking pace at which computing and digital engineering are developing. Applications such as WhatsApp and Skype (sometimes called ‘over the top services’) allow for instant interactive communication using the telecom network without compensating the utility provider in a manner consistent with traditional voice transactions.
While the foregoing discussion is essential, the conference must provide some clear insights into the importance of the following issues and perhaps some signal of the relevant parties’ intent to address them.
Digital convergence – or perhaps more accurately, the convergence of digital industries – involves the integration of the value chains of hitherto independent industries in all or combinations of telecommunications, consumer electronics, broadcast and print media, software, and entertainment. The ‘converged’ entities launch real or virtual businesses that provide digital products and services, for example, using a connected smartphone to read e-mails on your TV. This phenomenon, which is already topical in Jamaica and the region, is expected to have even more significant consumer impact in the coming months and years by enabling interactions involving playing, communicating, collaborating, and sharing information in a variety of novel and diverse ways.
This emergent innovation is critical for nations, national policymakers, and regulators. It has significant implications for governance, policy, and regulation, which demands thought, planning, and appropriate interventions to establish viable policies and regulatory frameworks to facilitate its inevitable ‘intrusion’ in our societies and to encourage appropriate behaviours that will contribute to long-run incentives for both competition and the protection of citizens.
The inherent differences between telecommunications and other utilities, as well as the emergence of digital convergence and its importance, bring into sharper focus the need, and compelling motivations, for a similar regulatory convergence through the establishment of a single regulator to integrate the ICT-related functions in a unified regime instead of through multiple functional regulators. In Jamaica’s case, there seems to be considerable blurring of the boundaries and inevitable inefficiencies that result from the current duplicative arrangements of having these similar operations reside separately in the Office of Utilities Regulation, the Jamaica Broadcasting Commission, and the Spectrum Management Authority. Yet we continue the longstanding debate and seemingly unresolvable disagreement about an idea whose time, frankly, has come.
The vast majority of countries that have effected this integrated regulatory arrangement simply apply the now well-established notion of technological neutrality, which at its most basic, asserts that all technical infrastructures should be regulated in a similar manner. But despite several useful examples and results that exist worldwide, this change is seemingly being resisted on the Rock by both regulators and the regulated alike.
The Internet of Things (IoT) has been described as an arrangement whereby things – objects, animals, and people – equipped with unique identifier are endowed with the capability to transfer data over a network without requiring human-to-human or human-to-computer interaction. The early reactions to the concept have regenerated some of the incredulity that accompanied progressive announcements of other remarkable, but now commonplace, ICT concepts. The progression towards implementation, however, has gained tremendous momentum, and application is now imminent.
Smart cars, smart homes, even smart refrigerators are all becoming increasingly commonplace across the globe. We in the Caribbean must (perhaps for the first time at last) be proactive in anticipating (even from the explication of the concept) the regulatory implications for both the facilitation of these innovations and the protection of individuals who deploy them. There is already an enormous volume of available literature and models to guide our behaviours. We must leverage these to create a framework suitable to our own reality.
With number portability – the ability to securely and cost-effectively interconnect to route phone calls and transfer customer telephone numbers among communication service providers – finally implemented in Jamaica, we must address another key ICT-related decision thought to be settled and agreed and should have by now been ticked off as an accomplishment. Instead, inexplicable procrastination has stalled its full and final implementation.
The commissioning of the IXP in Jamaica has remained imminent for over two years since the physical facilities were implemented. IXP enables local networks to efficiently exchange information through direct interconnection from within the country rather than through transshipment arrangements with overseas providers, thereby significantly enhancing the quality and transmission speed of Internet operations and considerably reducing cost.
The failure of telecom service providers in Jamaica to commence peering – or sharing data among themselves – is essentially robbing Jamaicans of faster, more efficient service connections and slowing the pace of telecom innovation.
This failure to launch, as much as any action or inaction on the part of the telecommunication providers, underscores the importance of creating a progressive and proactive regulatory environment in the Caribbean. The sector is too important to the economic outlook of so many of our people to leave its stewardship to chance.