Amid discussions about IT growth in 2014, analyst firm Strand Consult has issued a stark forecast: it expects 2014 to be an “annus horribilis” for telecom regulation.
In its annual mobile telecom review, Strand singled out Europe as the main problem area and contrasted it with what it described as stronger leadership in the United States. The firm warned that privacy, data protection and net neutrality are on a collision course and that the resulting overlap could produce significant regulatory confusion.
Strand predicts a regulatory mess, while noting one potential counterweight: the appointment of Tom Wheeler as FCC chair, who it says will push forward much-needed modernization of telecom regulation in the US.
But what evidence supports Strand’s gloomy assessment? The firm points to the uneasy position many operators and carriers now occupy. John Strand, CEO of Strand Consult, highlights an irony: while traditional telecom operators are increasingly regulated and scrutinized, other players in the communications value chain face fewer constraints.
“It begs the question of what and from whom are regulators protecting the public,” Strand says. “It’s not operators that are the problem.”
That tension surfaced in France last year, when ARCEP, the French telecom regulator, questioned Skype’s status for failing to register as an operator. Regulators argued Skype qualified because it enables internet users in France to call domestic and international fixed and mobile numbers from computers and smartphones.
Strand notes that if delivering voice, text and data is considered the domain of operators, then major internet services such as Facebook, Google, Skype and WhatsApp could all be regarded as operators in their own right — blurring long-established regulatory categories.
Roaming has been another flashpoint. For years EU digital commissioner Neelie Kroes campaigned for a single European telecom market and an end to high roaming fees. Strand, however, argues that the “roam like home” concept was effectively “dead on arrival,” claiming that its architects lacked a realistic understanding of the telecom market and relied on what Strand calls “armchair economics.”
Relations between Strand and some EU officials have been strained at times. With European Parliament elections approaching, Strand predicts politicians will favour rhetoric that sounds appealing to consumers rather than detailed policies that would provide regulatory stability.
Broadband will remain central to industry debates in 2014. Strand urges caution about appeals for additional government intervention, pointing out that private investment drives the sector: industry spending on broadband infrastructure and rollout exceeds $300 billion per year.
Looking back at 2013, many of Strand’s prior observations held up: the conflict between over-the-top (OTT) services and cable operators continued, value-added services (VAS) declined, and consumers generally benefited from competitive pressures — trends that appear set to continue into 2014.
Strand also expects major growth in Africa, calling the continent “the world’s final frontier for the internet.” With internet penetration still low, Strand argues there is substantial upside: broadband uptake will climb, and when it comes to connectivity in many African markets, the trajectory toward mobile broadband is effectively unavoidable.
Overall, Strand’s forecast emphasizes regulatory friction in Europe, the shifting boundaries between traditional operators and internet platforms, the political pressures that may favour populist-sounding but unstable policies, and the continuing importance of private investment and mobile broadband expansion — especially in emerging markets such as Africa.
What do you make of these predictions?