Who is paying for next generation of Internet and Internet services?

Transcription

1 Who is paying for next generation of Internet and Internet services? 4. Sept Thomas Jelle Norwegian University of Science and Technology

2 Increased need for - capacity - coverage - reliability Norwegian University of Science and Technology 2

3 Capasity Increased number of services 2011: Globally, IP traffic will grow 4x from 2011 to : Global mobile data traffic will increase nearly 11-fold between 2013 and Norwegian University of Science and Technology 3

4 Norwegian University of Science and Technology 4

5 Coverage Source: Limit Values for Downlink Mobile Telephony in Denmark Aalborg University Norwegian University of Science and Technology 5

6 Reliability- More critical services Norwegian University of Science and Technology 6

7 Increased coverage, capacity and reliability 1) Traffic growth due to services 2) Apps increase signaling traffic 3) We build larger, more complex and radio shielded buildings 4) Poorer antennas on smart phones 5) More critical services Norwegian University of Science and Technology 7

8 Who do you think should pay? Norwegian University of Science and Technology

9 Principle of network neutrality Internet user have a right to an internet connection that gives access to Receive and send content at their own desire Use services and application at their own desire To connect any equipment and use applications which doesn t harm the network, after own desire Internet users have the right to a internet connection free of discrimination of applications, application types, services type of services, type of content and whom is the sender or receiver Examples of breach of principle of network neutrality: NextGenTel s attempt to limit the bandwidth of users of NRK s Web-TV in the summer of 2006 Deutche Telekom blocking of Skype in the spring of 2009 Norwegian University of Science and Technology 9

10 History Norwegian University of Science and Technology 10

11 Telecom today Infrastrukturtilbyder Internett leverandør Tjeneste- og innholds leverandører Terminal Tjenesten Reklame Generere trafikk for andre Freemium Norwegian University of Science and Technology 11

12 Telecom industry's concern How to avoid commodity? How should they be able to differentiate their services? How should they be able to differentiate their services and still comply with the Principal of network neutrality? How to finance the accelerating demand for capacity in different networks? Norwegian University of Science and Technology 12

13 Who do you think should pay? Norwegian University of Science and Technology

14 Media Industry Norwegian University of Science and Technology 14

15 Convergence of channels Internet Norwegian University of Science and Technology 15

16 Norwegian University of Science and Technology 16

17 Who is paying for the increasing demand in coverage and capacity? Why shouldn t the media industry pay? They are the one that require the capacity and coverage to deliver their services Previously they had cost for distribution of TV, radio and paper, why should someone else pay the cost for distributing their content? Norwegian University of Science and Technology 17

18 Who do you think should pay? Norwegian University of Science and Technology

19 Media industry Before Controlling all parts of the value chain (paper, radio og TV) Monopoly on both content/information and adds Now No control of the value chain Everything becomes digital the entry barriers will be minimized Several challengers of content and information International media aggregators User generated content: YouTube Challengers on advertising Google, Facebook, Groupon Norwegian University of Science and Technology 19

20 Norwegian University of Science and Technology 20

21 Media industry's concern Trends «Everything» on Internet is «free» How can the media industry get paid for digital journalistic content? Users want to contribute, how should the challenge with user generated content be meet? More efficient advertising channels are appearing which doesn t require local presence Global competition on content and advertising Technology, volume and scaling advantages is crucial Norwegian University of Science and Technology 21

22 Turnover in Norway millioner NOK 700 millioner NOK Same turnover, the difference is that Adresseavisen spent 250 years building this revenues, Google spent 5 Norwegian University of Science and Technology 22

23 Scenario: Media industry is paying Media industry in Norway is paying to telecom operators to build sufficient capacity and coverage Not allowed to discriminate content (The principal of network neutrality) The terms for competition is changed Norwegian media players gets a huge competitive disadvantage towards the global players that won t Local content becomes even more expensive Traffic volume and advertising money goes to the global players Local media players can t afford to pay to telecom operators and no one can afford to build network infrastructure Norway is eventually set back to the digital stone age Norwegian University of Science and Technology 23

24 Scenario: Telecom industry is paying As of today fiber infrastructure is paid through bundling of services like e.g. Altibox If all services can be delivered through Internet, including TV, bundling of services is no longer necessary and telecom players have only one service to sell a «bit pipe» Consequences: Lower margins, higher risks for building of new infrastructure less incentives for building infrastructure, reduced «rollout speed» Norwegian University of Science and Technology 24

25 Scenario: Aggregator and distributor is paying Media industry claims that Google and other aggregators steal their content and that Google must pay for this Norwegian University of Science and Technology 25

26 Norwegian University of Science and Technology 26

27 Who do you think should pay? Norwegian University of Science and Technology

28 So what kind of investments are we talking about? Norwegian University of Science and Technology

29 Norwegian University of Science and Technology 29

30 Google s revenues in 2012: 12,7 Billion USD Google s global revenues is not enough to cover the yearly investments for 1 US Telecom operator Norwegian University of Science and Technology 30

31 Money in - money out Free distribution - low investments needed Huge potential for profit Commodity Huge Investments needed Norwegian University of Science and Technology 31

32 Money in - money out Free distribution - low investments needed Huge potential for profit Commodity Huge Investments needed Norwegian University of Science and Technology 32

33 Todays business model of internet is changing how the world works Norwegian University of Science and Technology 33

34 Norwegian University of Science and Technology 34

35 Norwegian University of Science and Technology 35

36 Is today s solution sustainable? Who do you think should pay? What happens to the ecosystem if we change who is paying? Norwegian University of Science and Technology

37 Who is paying for next generation of Internet? We need incentives both build coverage and capasity and to develop local journalistic content The Principle of network neutrality: freedom to choose and competition on content How fare should the principle go? Today there is a volume limit on mobile broadband The Principle of network neutrality could be bypassed with price models? The entry barriers in the media industry is dramatically reduced The entry barriers in the telecom industry is increasing Norwegian University of Science and Technology 37

38 Who is paying for next generation of Internet Conclusion? The largest threat is the global players with technology and scale advantages A question of influence of the user Need for cooperation and innovation to develop sustainable business models Norwegian University of Science and Technology 38

39 A tool that can help you do the analytics Norwegian University of Science and Technology 39

40 Osterwalder Business Model Canvas Norwegian University of Science and Technology 40

41 Homework 1) How does the Osterwalder business model look like for a) A mobile operator, e.g. Telenor b) Media house e.g. Adresseavisen c) Google 2) Does CDN (Content Distribution Network) players have a role in the debate of The Principle of Network Neutrality? 3) «Innovation in zero's» - Jonas Kjellberg Norwegian University of Science and Technology 41

42 Presentasjon av tema Hvordan gjør vi det? Norwegian University of Science and Technology 42