INTERNET GOVERNANCE FORUM 2010
VILNIUS, LITHUANIA
16 SEPTEMBER 2010
1630
SESSION 77
DEVELOPMENT AND MOBILE BROADBAND
********
Note: The following is the output of the real-time captioning taken during Fifth Meeting of the IGF, in Vilnius. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid to understanding the proceedings at the session, but should not be treated as an authoritative record.
********
>> RIMAS KALVAITIS: Okay.
Good late afternoon, dear ladies and gentlemen. So sorry for some technical practicalities that we had to install right now. But I hope very much we will have plenty of time.
I'm Rimas Kalvaitis, Vice President of Ericsson in Lithuania. I have a very challenging task today, to be a moderator for the workshop development on mobile broadband. By challenging, I would say two reasons. First one, all of this is very challenging to run such an activity, we go the last one in the day programme, and especially before receptions if they are planned.
The second one, of course, the topic talks for itself, development, it's about society, mobile broadband and technology and we have to fit these things together.
But we have a powerful team around the table that will share the task with all of us. These people are well-known experts in their respective areas and I'm excited to introduce our guests for these two hours. This is Robert Pepper, Vice President for global technology policy at Cisco.
Also Mr. Mikael Back from Ericsson. Vice President of Product and portfolio management for business units.
Darius Maikstenas. Vice President for products and services, at Omnitel.
The last one, Eugenijus Laurinaitis, medical doctor, psychotherapist.
We have one more very important player with us today. So, Ms. Marilia Marciel. She will be the remote moderator and she will keep track of participants following over the Internet.
Broadband is becoming an natural part of our daily life and we are moving towards a world where people access their broadband applications and content and they can do that at home, at work, or on the move. The Internet broadband IP and mobility solutions can open the new ways of working and making business.
Telecom industries together with governments are shaping the evolution of broadband and the development of innovative, safe and more competitive society.
I think it sounds good, but let's check now all the statements for our discussion. And as my major part of today is keeping time, so let's agree that we will give 15 minutes to each speaker. After that, it will be followed by a few questions from the audience. And when we finish with those topics, then we will run a panel discussion with all participants for 20 minutes, followed by a Q and A session after that. Time is pressing, so we have to fit into this agenda.
So let's start from Mikael Back. His topic is Internet to billions with mobile broadband.
>> MIKAEL BACK: Thank you very much.
>> RIMAS KALVAITIS: We will ask our remote moderator to help us do this.
>> MIKAEL BACK: That's okay. Very good. Okay. Thank you very much for that introduction. It's an honour for me to be here and talk about the subject that is dear to me and I've been working for it for a long, long-time. When we introduced what we then called 3G, that became mobile broadband, a long, long time ago in, I think, Japan and Europe first, we did not foresee the explosion that was going to happen. And it's clearly so, it's much more than technology. It's really changing the lives for, I would say, billions of people and it's changing the rules for enterprises and governments in many, many different ways.
And I think we have to come back to some of the details around that.
So, should something happen when I quick? Maybe we have to run it manually. Yes.
We will skip this.
So, our view is, from looking at society in a larger view, that the world in 2020 will look different from today, and IT and telecoms will play a very important role in much more than it has been doing historically. So, first, it's a very personal thing. It's clear that the whole development is going towards something that is wished by the individual to have. It's a very personal service. The mobile phone, the smart phone has been the very much personal device for quite sometime and it's becoming increasingly so with, for example, payment services and so on on these devices.
And the whole shift with mobile broadband will totally change the conditions for enterprises operating in different sectors with different possibilities, and also some barriers for them. We will also in 2020 have around one billion consumers from other places, China, et cetera, and they will consume the services in what we call today the developed world. And China and India will emerge as super powers in this world that has historically been the case in many terms.
Sustainability is going to be very important for society, and I think I have a strong belief that telecoms in general, and mobile broadband specifically, will play a very important role in more or less helping us to live in a more sustainable way without sacrificing a lot of good things that we're used to.
Security and the vulnerability of the society is going to stay important or become even more important as we are logged on all the time with our personal information in the Cloud and so on.
I think we also have a vision that sometimes is called the 50 billion connections in 2020, and it means that everything that would benefit from a connection will have one. So today, your home and office and your car is full of electronic devices that is typically not connected, and you could easily see a case where they would benefit from being connected to something, you can call it machine to machine, or other things.
We see clearly a world where the operator controlled services will have to work together with a lot of what you would call over the top service. Services delivered from people, that is today, have been outside the telecom world, which is exemplified by companies like Apple and Google.
And the whole development will also clearly force a number of cooperations between different parts of the industry that has not really been working together today to really make use of the technology in a way that helps society going forward.
You can take the next one please. The one of the opportunity that we see is the telecom industry is one of the solutions to the carbon dioxide problem in the world. So, if we just continue with the smaller and smaller steps to get more fuel efficient cars, maybe we can get consumption down five or ten percent. But with the explosion of the number of cars in the emerging world, this will have limited affects on drastically reducing the emission that has to come down maybe more than 50 percent. So, instead, we are looking at replacements for part of that traveling, with more advanced versions of videoconferences, whatever you call it, and there I think telecoms will be able to help us achieve 50 percent carbon dioxide saving, without having to change a lot in the way we live and communicate and exchange ideas and so on.
So, we see right now three very important trends in the industry. One is that Internet is growing rapidly with mobile broadband. It's the fastest moving area in the whole Internet arena and it's very much driven by the smartphone development, where the Internet is no longer tied to your PC. Service is also very much generated from the Internet. And as I said before, the operated controlled world will have to live together with a lot of other services that is coming from traditionally the Internet world, but also brought to an environment where they are put together with things like mobility, location information, and so on, in smartphones, where new services become relevant that were not really relevant when you put them in the PC at home or the office.
And then we will see that the network is the key for the experience of the end user, when more and more divided become more and more like a browser, and then the service is performed more or less in a data centre or Cloud somewhere else.
Then the network will very much also determine how the services are perceived by the end user. So, we see that the explosion comes from a few things that are happening at the same time, which is really triggering the whole development. We see the device going from people accepting shared devices, like computers or TV screens, to personal devices. And this has been a trend for quite sometime. We see it not only for mobile, but the whole wireless connectivity is becoming a very efficient method to avoid putting in a lot of cables in buildings. So in certain cases it will become a very efficient way to reach a number of consumers that is residing in different places.
We see applications going from a fairly defined world, where you could control them to hundreds of new applications per day from different companies. A lot of applications have been residing in the laptop, in the smartphones now. It's a direct development towards the Cloud, where the applications are basically residing outside the equipment of the end-user.
We see power consumption becoming increasingly important in all kinds of movable devices that you carry with you. A lot of the Internet initially came from plugging things to the wall and it didn't matter if the power consumption of the PC was high or low. As you've seen with the smartphones, with the large screens and whatever, power consumption is really one of the important factors when you decide if you're happy or unhappy with a device and service.
And this is not only the device itself. We see that there are areas around how the device is connecting to the network that is affecting battery consumption. And then we see business models becoming much more advanced rather quickly. Going from a flat rate for a laptop and a phone, to differentiated tariffs, together with different offerings to really provide different devices to work together in the mobile Internet, without totally bringing down the cost structure of today's income for the operators.
Next one.
So, we see that it's a very clear trend that initially the fixed networks developed over a long time to develop high speed connectivity going up to fiber to the home, giving of course the highest bids. And then we introduced DSL and these kinds of services to make sure that we could also provide that over distance, where people didn't have the fibers. We have a lot of technologies typically developed for the fixed networks that followed this for a long time.
We also seen that typically in the -- this is the radio side and the packet switching side for the normal systems. We have had the same type of development, but in a much more rapid time. So, the uptake that more or less took 15 years on the fixed side has been happening the last, well, more or less five years on the mobile side. We see the same kind of development. The larger screen, the applications that drive the same kind of behavior. Video is introduced. You need more speed, latency improvements, capacity and so on. But the pace on the mobile side has been much, much quicker. And that is partly because you don't have to look for the killer application. You already have the applications that you're using on the fixed side and you're just enhancing them for mobile use.
So we are talking about three ways of the mobile broadband evolution. The first waive was making sure that we establish the concept by providing, you could call it best effort service at the flat rate.
Now, differentiation becomes important to cut the bigger part of the pie by providing high quality, guaranteed services, and at the same time you have to provide real low cost, subscription costs for things like, in the most extreme case, you have electrical meter readers, we can take very little cost but you consume not much capacity on the networks.
And the third way is connecting everything. The word is scale. We have to provide connection of multiple, maybe ten times more devices than before. And then the cost for provisions and these things becomes super important, not only for the networks.
So when it comes to differentiation and what is happening right now, we have a couple of interesting examples here on operators that is typically, at least in Finland, it provides tier bandwidth and quality of service to the users, typically charging premium for priority, which is in this case the base example, the charging premium for enterprise and they combine it with a fair use policy, where basically if you have people consuming too much content in the file sharing, you're allowed to cut them off. We have packaged the TV service with the quality of service quarantines. And another European operator that is not official, we don't have the name here, working with terminal based quality of service. And that means that you can determine which kind of terminal use you are using, and for that terminal type, brand, whatever, we guarantee quality of service.
And we have in India, we worked for quality of service on demand. That means that you can basically buy a certain subscription and when you need higher quality of service or higher speed, you can go in on the Internet and top off your subscription for two hours and get a better performance during that time.
So everything that will benefit from the connection will be connected. And the drivers are typically the needs for people based in society in terms of entertainment, productivity, and but also a lot from sustainability, also regulation, of course.
And, basically, this is becoming possible for a number of reasons. But typically nowadays we have networks covering the areas where people need and want to use the service at the same time as the cost for the cheap connections is becoming very much cheaper at a very high pace. So these are working together that is speeding up the development quite a lot.
So by this I would like to end my presentation. And I think we're going to talk about a bit of the same contact from a little bit different angle. But I've been part of this development since we introduced it, I would say, for a document in 2001. Today it's a different thing that we are discussing. This is really a transformational effect on society that will not stop for quite a long time.
Thank you very much.
>> RIMAS KALVAITIS: Thank you for fitting into the time limit. And time for a few questions.
Late -- the lady was the first one.
>> AUDIENCE: Thank you very much. My name is Linda from the Communications Commission of Kenya. My question is with regards to the providers that you noted, I was curious that the broadband services are provided, for example, on the basis of coverage, on the basis of congestion. I just wanted to clarify the issue with regards to network neutrality, which was another debate elsewhere, that you're on mobile networks. However, not -- in some cases optimized for data rather than for voice. How does mobile broadband take into consideration issues of open networks? Thank you.
>> MIKAEL BACK: If I understand correctly, there were some parts of the question related to the open access and also the way, when we have a network that is optimized for voice service versus data.
I think the neutrality thing is interesting. You had development in the US where Google is working together with Verisign to come to some conclusion on that case.
I think, from my point of view, if operators or other places, maybe you can block specific services or so on. But I think it's unrealistic not to allow them to up sell. So I think these kinds of things will most likely be possible in a world where you have regulations around net neutrality. Today it's mainly -- it's very much around the U.S. but it might come around in other places as well. But I think that kind of take is quite realistic on the case.
Then I think what is optimized and what is not optimized would carry all the time. But in reality, we see a lot of development from the simple services used in very nonoptimizeed network, you could say, that is using GPS or edge or coverage for speeds that is absolutely a connection that can be used for many other things where you have no other options. At the same time, there is a rapid development in almost all parts of the world around 3D technology as the main thing. One of the very good things that we created with the 3D and the standardization is the connection where all chips have the possibility to fall back to earlier services, like everything going for the LT, 3G, et cetera, so we create the scale economy and also the different fall back services, so it's very, very convenient for these services.
>> RIMAS KALVAITIS: Are you okay with the answer? Okay.
Thank you. So, short one, okay? Thank you.
>> AUDIENCE: I'm Gordon Campbell with Industry Canada. One of the issues that Canada faces, a rather developed country, but still there is a lot of open and remote rural space, which a lot of countries are also grappling with. And one of the things we are studying, and I'm not on the technical engineering side, but we have technicians, as do you, studying the issues. One of your charts seemed to imply that the theoretical limits for both wireless broadband and fixed broadband could be relatively similar subject to a certain time lag.
We study satellite, fiber and broadband as comparatives. I'm just interested in your own personal opinion, perhaps, here, in terms of a ten or fifteen year timeline in terms of what produces a consumer driven product. Maybe a useful high speed, be it a hundred gig or mega whatever you want to say, as compared to the other products.
>> MIKAEL BACK: Of course there are cases where, for the very most extreme data rates and requirements, you'll not be able to do over the air what you can do with a fiber directly connected to a device. That will always be unique as far as we can foresee. But for most of the services I think you can provide more or less the same performance in different ways. If you have the base station equipment relatively close. You can see where equipment is combined, where the base station connected by a fiber, handing close to the end-users, either can correct you to the last mile or the radio last mile for the people that are not living in the big houses but many apartments. So you can mix the services and they can be bundled by offer who wants to provide the service.
I've been close to a very interesting project that we did with Telstream Australia. They wanted to cover a much, much bigger part of the Australian continent that was possible through different means. Basically, they guaranteed the government a type of service. They got funding for some of the equipment in the rural areas, and so on. But then they had a requirement on us being the vendor to provide specific solutions. They could transmit on a base station up to 200 kilometers. That's a huge number. So I'm an up-beat guy when it comes to technology and what you can do with it. I think you can -- I see it's possible regulations around this and so on and so forth, so we don't have development going in the wrong direction.
We see some funds where government money goes into a certain product, and the product is not sustainable by itself, and in the end that's dangerous. Because now there is a strong flow of where the device industry is going. You have the follows of cheap sets that is bringing down the price to from 100 to 30. And soon you can afford to put that into a lot of equipment, maybe not as cheap as WiFi. I think it's a big change and I think technologically we will be able to solve many of the problems going forth.
>> RIMAS KALVAITIS: Second in our programme is Mr. Robert Pepper. The topic is wireless broadband and developments.
>> ROBERT PEPPER: The next slide, please.
Full screen at the top. Thank you. So, a little quiz. What is a zettabyte? And I -- because of time, I didn't ask the quiz question first and ask the hands to go up. A zettabyte is 10 to the 18th. We're starting to see traffic across networks approach the zettabyte level on a monthly basis across fixed and mobile networks. And I'll come back to why, by the way. I don't believe there is such a thing as a mobile network. But I'll use that phrase for the moment.
So, one of the things that we have been doing is we have a project called the visual networking index. And what we do is work with the operators, and have equipment in the network that looks at the types of traffic that are flowing across networks. We have been doing this for several years, and then make a five-year projection based upon that. So the latest data which I will show you that we have for wireless networks are 2009 pro data and project out to 2014.
What we're finding -- the mobile data traffic is growing at over 3 times faster than fixed data traffic. So for some examples by region in the world, we start with the -- sorry this slide. No. Next.
So, let's start with visual networking devices. So if I start with my mobile phone, and the data that I'm using off of my, you know, mobile phone -- not my smartphone, not my Galaxy or Android phone or iPhone, but just my regular mobile with data and some very, you know, basic access with 3G access to some data -- if I take that as the baseline, the smartphone is generating ten times as much data traffic as that. On a monthly basis, we're finding.
A video camera, like a flip camera, will generate 100 times that data. And a laptop or a slate or an iPad is generating over a thousand times that amount of data, per month. And so what does that translate into? Next please.
Globally, what we are seeing is a compounded annual growth rate of over 100 percent and that mobile data traffic will increase 39 times from 2009 to 2014. And, this is particularly important, if you look at the composition of that traffic, it is overwhelmingly video. And I'll talk a bit more about what we mean by "video" in a moment.
Only a small portion -- there is mobile Web and data. And there is a little bit of voice over IP. But, the concerns about voice over IP sort of cannibalizing the basic revenue is not necessarily the case, what we're finding. But video is going to be the big driver and that's important and I'll come back why.
What about regional examples? In North America, compounded annual growth rate of 117 percent, and by the way, we're up here at petabytes per month, which is approaching a zettabyte. So we're up at 10 to the 15th traffic per month across the network, the wireless broadband networks, within only four years in North America. Two-thirds video.
In western Europe, very similar. There we're actually seeing over a zettabyte growing at over a hundred percent per month. Very little VoIP in Europe. And that's growing as you see more applications embedded in devices.
What about countries that are emerging? So the region that we are in, and east of here, in Central and Eastern Europe, we are seeing the 114 percent compounded annual percent rate. It will grow 45 times from 2009 to 2014.
Next, AP, we are getting at it growing. Latin America is where we're seeing the largest growth, really, of 42 times from 2009, where it's almost nothing to 2014, and there over 75 percent we believe is going to be video.
So the implications of this are several, and they are very important, especially for the developing economies. Number one, we know that in addition to the three traditional essential infrastructures that were talked about in the development economics literature: Drinkable water, power, energy, electricity, and transportation as the precritical infrastructure, the fourth one is connectivity. It's not telephony. Going forward, it's connectivity and it's going to be broadband. And all of the applications that we heard about that can improve both economic and social well-being, especially in emerging economies, are going to depend upon broadband connectivity. The broadband is the necessary but not sufficient platform on which everything else is going to be built. And we look at those applications that that include the delivery of healthcare, education into remote areas, into villages, and towns.
Looking at the delivery of government services, the ability to have small business, agricultural business, crafts people in small and rural areas in emerging economies, being able to sell products, services, agricultural products, and markets in the bigger cities. And then become -- you know, become global partners and have global markets.
All of that is enabled by the necessary prerequisite which is the broadband connectivity. The primary way that we will have connectivity in low density and emerging economies is going to be wireless. Earlier, I used the phrase mobile broadband or mobile networks. You say I don't know what that means.
In fact, there is no such thing as a mobile network. The networks are not mobile, they're fixed. I may be mobile. My device is. The network is not.
And that's actually really important, because it has huge implications on the architecture, the investment that is needed especially in emerging economies.
If you think about the new 4G technologies, so GSM and even 3G, it's sliced and diced, and it's channelized to optimize voice. If we want wireless broadband, we need broadbands, whether it's TDD or FDD. If I want a real broadband LTE network, I really, I would love to have, you know, 15 MegaHertz each direction. That would give me broadband, right, or even more. Right?
Now, if you think about it, with the promise of LTE, we're talking about 25, 50, in some places 100 megabits. Think about how many different users operate on a wireless network at 50 megabits per second that operate off a base station that is connected to the back wall with an E1. Two megabits? No way. If I'm going to actually have multi-megabit wireless access, it's going to be connected to a base station which will need to have fiber. And that means that we have networks that have the complementarity of big blocks of spectrum and fiber back. It's not one or the other, it's both. And that's something that we need to think about in terms of the investments, the architecture, and what is needed globally and especially in the emerging economies.
By the way, this is -- so there is another very important trend. And that trend is to get the communications off of the wireless network as fast as possible. That's why femto is one of the growing trends. It's in buildings like this one. 90, 99 percent of all wireless data communications actually are indoors. It's not when you're outdoors. It's in places like this. It can either be WiFi, which is great indoors. It can be femto working off the wireless. It can be licensed or not licensed, and then get it into a fixed network, into my DSL or modem or the fire connection in the office, in the home, in the school, in the government building. So that's another important trend.
Finally, video. When we talk about video, people think about traditional television, movies, sports. That's only a very small part of video. We believe that the fastest growing part of video -- and that's going to be important. By the way, we're 2010, download video has replaced peer-to-peer. There was a lot of discussion about peer-to-peer. Peer-to-peer has been passed by the download video and another kind, two-way video. The IPhone 4 that was just released, I don't know if you have one -- you do. So you have a camera on both sides. And when you're in a WiFi network, you can send high video across the network to the person. The wireless networks that are licensed today, 3G can't support it. But they will.
Why is that important? When we talk about emerging economies, we're talking about one of the biggest barriers to the adoption of the Internet and broadband is there is not a sufficient content in local language.
There is not sufficient local content.
What has given the 4 and a half to 5 billion phone customers? The content is local, people to people. When you can do video people to people it overcomes the language barrier, the local content barrier, and it overcomes the literacy issues. Because people then can use broadband without having to be literal.
And you can develop and use all kinds of applications. So, wireless broadband converging with video applications that are going to be largely people to people are going to be hugely important in the developing countries and economy to bring the benefits of broadband to everybody.
And we need the networks and the architecture, the investments, and the innovation that will enable to us do that. And it's going to require major investments, which is good for Ericsson in order to be able to meet that demand that we see coming.
Thank you very much.
>> RIMAS KALVAITIS: I'm sure we will have a lot of questions, but we will take just two. Questions, please?
>> ROBERT PEPPER: Okay.
>> RIMAS KALVAITIS: Just fair usage.
>> AUDIENCE: Thank you again. Hello again.
>> AUDIENCE: My question is with regards, you skipped Africa, and that has the highest growth rate, according to the ITU, in terms of penetration. So I would be interested in the statistics for Africa on growth of video. Yes. Video data.
>> ROBERT PEPPER: The question was do we see this also in Africa?
>> AUDIENCE: I was interested in the statistics.
>> ROBERT PEPPER: I don't have the statistics. I'll get you the Africa statistics.
>> AUDIENCE: Yes.
>> ROBERT PEPPER: Okay.
>> RIMAS KALVAITIS: So one more. Please.
>> AUDIENCE: Hi my name is from Marion. I'm from South Africa. I see that you left Africa off of your slides. We have a problem with the telecommunication system in South Africa. 11 percent of our citizens have Internet access. The rest of them rely on mobile phones. And we have a great problem with our education system which failed for two generations now. And what is happening is that private enterprise is getting in and using things like interactive smart boards and linking school, advantaged schools with disadvantaged schools in the rural areas. They are trying to get wireless networks into this as well.
But I'm wondering, what is the use of satellites? I know it's terribly expensive and you have the latency thing. But would satellite be the alternate to the fiber?
>> ROBERT PEPPER: It's a targeted technology. The satellite is growing in capacity. Think about the capacity off of the satellite link. So having it as a point, as frankly it will be an interim technology, it will be difficult to keep up, but it's going to be a long interim, number one. If you're using a large portion of the satellite capacity to reach particular points such as schools, as opposed to a general population, actually, there are effective examples of that. And I think it's a really important complement to the, you know, the other networks. By the way, some of the latency issues are now being resolved with some of the most recent satellite technologies.
So I don't dismiss satellite, I believe it will be a very important niche, because there will be for a long time some other places that you'll not otherwise be able to reach.
>> RIMAS KALVAITIS: We have two questions. Sorry, I have to keep time. Thank you, Robert. We will be able to ask more questions.
So after listening to the technology representative, let's move to service providers.
>> DARIUS MAIKSTENAS: I was asked to talk about challenges, a bright future. Let's be open and let's try to dig a little bit deeper, at least, as it looks like from service provider perspectives, during these days. Next please.
Not in this session, but in another session, I heard a lot about how valuable mobile broadband and broadband is and there is a kind of real understanding. But the huge valley for the society, for governments, for customers, are consumers, businesses, is in the air and people can gain a lot and right now it seems that it's already happening.
Next please. And, if you look historically, the talk about IP and broadband, there was always there. But significant changes happened in 2006, 2007, when the first bottleneck for the explosion of mobile broadband kind of disappeared. Because before it was like okay, there is no need for the broadband. And people do not know why they need the broadband, why they need IP. There are no local operations and so on and so on. And together came something called smartphones. This question, I could say, is already done. And there is kind of a waste of time to say, but still this competent exists. Thousands and thousands of applications happening every day and people need them and people find new ways now to use it.
The next bottleneck, okay, is we have applications, but people need smartphones. So 2006 to 2009 Apple showed the way and everybody followed. Right now, we have wonderful smartphones with high Resolution. The next bottleneck is they are low cost and affordable smartphones. Here you see the clear path and trend that you'll have like 30 Euros, 20 Euros path to have a touch screen. So this is just a dream of the service provider.
Of course, coverage. This is the next bottleneck. So we should buy new base stations, go to the lower frequencies to cover the territory and so on. When we cover, when everybody has a smartphone, then of course we need capacity. You should build the fiber to each base station and then you should upgrade to FPE and then 4.5 and then 5 and so on.
In 2015, I heard this prediction, that 35 times 50 -- I heard in Barcelona 2000 times --
>> That was 20.
>> Please be closer to the microphone.
>> DARIUS MAIKSTENAS: So of course it's an explosion, and it's -- and we see an exponential explosion of the demand.
Next slide. And when -- let's look at the -- what all this development brings to operators.
We are building very exciting infrastructure, which is open. And the value is changing. And all the business models are going away. And it's just a question of time when all of the services will kind of -- will be -- will be not charged by the operators. And payments already are kind of gone.
Content and applications, look at the development of applications for the smartphones. Of course, people will buy directly from SMEs, big and small, and a lot of providers will build a lot of connections.
Voice over IP of course will economize voice. And it's just a question of time and how rapidly it will happen. And it also will correlate how rapidly operators will deploy mobile broadband with smartphones and all the possibilities.
So what is the remaining chain for the operator is IP traffic, actually, and the flat one. It has a tendency to decrease and we are looking okay, how to differentiate, how to make service quality differentiation and so on. But still no proof that it has kind of enough scale and the need in the market to sell additional quality to everybody and to charge the relevant money for it.
Next slide. Please.
Next slide, please.
>> RIMAS KALVAITIS: It's not moving.
>> DARIUS MAIKSTENAS: Because it's kind of the most important slide.
>> RIMAS KALVAITIS: Of course. So then I think -- we will try to manage.
>> DARIUS MAIKSTENAS: So, as we see right now, we are kind of in the beginning. And we clearly see okay, the user demand for units of data has exponential growth, and this is clear.
The blue one is cost of production. We can't, of course, we can't hope that we will have cost of production lower than the ability to pay in the first days, and we need to build a scale and the scale advantage will work. But we are not sure if -- if this curve is not just worst case scenario. And it seems at least today, but demand for data is growing more rapidly, comparing how rapidly is the decreasing cost of production. Which means that in the -- in the PC industry, we always had this law that okay, for every year, for a one thousand dollars price of a computer you have like two times faster processorS and two times more memory. But the price remains the same. Which means at cost and capacity is increasingly correspondently.
We still don't have the proof that that will decrease so dramatically compared to how we will increase the demand. And most important, it seems that we can hope that the ability to pay or willingness to pay from end-users will increase. So having such a combination there is no room for a sustainable business model. All users should pay more or it should be financed from somebody else. Or the cost should go down more rapidly.
The next slide. So maybe it's a bit of a controversial statement, but today's mobile broadband explosion is timed by mobile minutes and text SMSs. And the hope I would say that okay, these trends will change. But for tomorrow, nobody knows who will find this broadband explosion. What will be also the government's, especially in the centre, there were a lot of questions how to cover Africa and Australia, and so on. How the revenues will be shared between the network provider, terminal providers. Today we see enormous concentration on the network and equipment provider side. In the world we have now, I don't know, three or four major equipment providers only. And they are consolidating.
Well, we have 400 to 500 operators. It's gaining. So what will the role be of communities? So we have one challenge, how to survive this explosion. And because -- because from the day first it looks very, very promising. But everything should be very clearly calculated and affordable how our future will be.
And I'd like to rephrase this challenge, and this cost and need gap challenge is not the challenge of operators. I think this is a challenge for all stakeholders, including governments, including communities, and including others, and we should have a sustainable service, accessible and affordable for everybody. Operators, when they will reach that time when the voice revenues will be cannibalized, too many investments into the mobile broadband infrastructure, it will not pay off so rapidly comparing to the need of smartphones. They will of course optimize new revenue streams.
So sustainable ecosystems should be developed. Otherwise, we will see a deepening digital divide. Because this pleasure of two year multimedia video broadband infrastructure will be the pleasure only in the developed countries, and for the emerging countries it could be worst than what we have today. This is my personal feeling as of today. Thank you.
>> RIMAS KALVAITIS: Okay. Thank you. Two questions, please. Welcome.
>> AUDIENCE: I'm from Turkey. From the speakers, I understand that we need the influx investment and especially a fiber investment. And it's costly.
But on the other hand, there is a regulatory environment from the government and it pushes some revelations to purchase this -- for the incoming operators for this investment. There is a question about competition or regulation or investment efficiency. What do you think about this conflict?
>> DARIUS MAIKSTENAS: For sure, as I said, we see governments also as a part of the ecosystem. And we should play some role in the ecosystem. And then when we are addressing this fiber to the rural area issue and how to connect remote base stations, we have to look at what is happening in other countries.
For example, we have examples in Lithuania, but the governments are using structural funds to build up fiber core infrastructure, not commercial ones. And then we are leasing backbone infrastructure on a competitive base to them, to the service providers, to provide the connection. It could be that solution, we have to keep the competition and yet gain the coverage, especially across rural areas.
In regulation, I really believe that the clear path is to stimulate competition. And only competition can kind of make the efficiencies work.
And sometimes we see in terms of regulation, which is not focused on increased competition, but focused towards increasing of costs.
So, that kind of regulation, in my personal opinion, is very, very dangerous for the societies especially, because we really see the big challenge, how to color and how to make connections really work.
>> RIMAS KALVAITIS: Thank you. We have time for one more short question.
>> AUDIENCE: Thank you. My name is Juan Carlos Saline. I'm from Ecuador. And the numbers that you showed to us and the path and the trend that you describe is very impressive. As impressive were the numbers that we have been analyzing for the last several years. Some of them were even more than expected.
But my question is, from a development perspective, developing countries are doing great efforts in creating markets and infrastructure and services and the private sector did a great job bringing prices down of device technologies. Now, with convergence, we have laptops fighting for the same market as small iPhones, smartphones. The same thing with wireless technologies. And my concern is that, from a development perspective, governments, local industry and consumers are exposed to different options. But for a developing country, you know, to decide to provide to all of the schools, with a one laptop per child programme, for instance, or to decide to provide to the police forces with small phones as a panacea or the solution for more professional police are very, very, very delicate decisions.
So in this environment and ecosystem in which convergence is not clear which path it will go, what do you recommend for local systems that are being formed within this huge amount of competing technologies?
>> DARIUS MAIKSTENAS: Maybe colleagues will add something. My personal opinion is look a bit to the trends. What kind of technology will have the biggest scale worldwide? Because scale matters how rapidly the costs will go down. Why do we see success over GSM worldwide and why do we have billions of subscribers? Because it achieved the level of operability and they scaled.
Of course, there are different competing technologies, styles, providing almost the same ability to provide data and services. But not all of them have the chance to grow the same scale as just ended.
So, on the operator side and the GSM community, we chose, for example, an LTE path. And we see that in this technology, we can expect the same rapid decrease of costs in the network equipment, in the end user equipment, as we have seen in 2G.
But, there is no one answer to this question. You always should look of course locally. What are the real tricks for us for the country? And what should be done locally? And my personal suggestion would be to try to escape proprietary solutions and try to look for the scale, if you would like to have real future proved advantage.
>> RIMAS KALVAITIS: Thank you for your answer. Sorry, you had two questions, so you will keep it for the Q and A session.
And as usually happens, so the very last one in the queue is a consumer. His topic is called mobile broadband from a psychological point of view.
>> EUGENIJUS LAURINAITIS: Thank you for the invitation. I feel a strange bird in this nest, because first of all I'm indeed from quite a different professional circle. The other thing is that I will be the only obedient panelist, because we have been instructed not to prepare PowerPoint presentations. And I didn't.
But I would like to talk about the impact of broadband and the psychology on the human beings and the impact on personalities. And there are quite controversial opinions about that. For example, there is an opinion that Internet educates the dumbest society in our history. And there is completely other opinions by -- just a second -- Don Tapscott who wrote it will create a new society with new values and new abilities and capabilities. They are the only teenage experts of really serious matters in our life, in all of human history. Because he wrote about his own childhood years and it was at 11 he was the expert in children's chain building. And this child is an expert on Internet connections from around the world. I have some doubts. I see as a medical person, I'm a psychotherapist and I know from a lot of my profession, I see that the Internet gives absolutely an unimaginable opportunity for medicine, telesurgery.
When a surgeon works in one country and the expert gives him advice in a real timeframe on the operation he is performing from a completely other continent, this was not imaginable several years, not decades, years ago. So that is evolution. That's an improvement of services for people.
But everything about some things with the Internet, and especially broadband, gives to us -- the first idea is that ease of access is the most important feature of that technology. And the ease of access gives the possibility to use your smartphone, so beautiful, iPhone 4, virtually everywhere. And what people do is they use it everybody. And when he is driving, sorry about the video streaming, not only talking but looking at his speaker, what he is doing? And this is proven that the driving abilities diminish because of talking, only talking by mobile at the same rate as having drinking. And I see this drinking in my city streets every morning. I'm scared. This is ease of access. Maybe we should have some limitations on this ease of access, because human nature is actually to succumb to all the temptations, which are so easy, which are so nice and it looks nice. My phone looks nice, indeed. I like it.
The second thing, our technology, especially the broadband, impacts on the human beings and is multitasking. It connects with what I have told just now, when one tries to perform several complicated tasks, and you can't oppose. The brain is the best chip still in the world. It has -- sorry. Just figures. The brain has 10 mil billion cells, and 10 billion cells, and every cell has one Axion which receives signals from our neurons and about 1000 dendrites, which sends the neurons to the others. So 10 billion squared by a thousand, I don't know the name of this number in English. Sorry.
But this is a terrible amount of synapses, connections in this brain every second. So it means I now count 21. And in this second, your brain actually used and analyzed 400 billion bits of information. 400 billion bits. But the problem is that from these 400 billion bits, only 20,000 bits are conscious. All the rest serves body needs, unconscious psychological needs, whatever.
And what broadband tries to do with our brain, it tries to do their impact on this conscious, very thin layer of our process incapacity, and therefore our brain fails. We can't be multitasking personalities.
So this means that maybe we have to think a little bit what kind of data, what kind of stimulus, broadband should or maybe should not carry to every person at every single second.
This is maybe a technological question, I don't know. But this can be.
The third thing which was actually the topic of Don Tapscott's article was that this broadband generation has another brain, which is wired and functions in the other way. And actually, for me, it's a little bit dubious of a statement, because the brain is the organ which develops all our life. Our synapses are changing all of our life. So to state that broadband has a final impact on the brain development, for me, it's very controversial. And I think that actually the amount of information and the importance of the information for the personality makes impact on the brain vital.
The brain is more vital when it works intensive. And we have a lot of historical examples. Robert Gilter created his best poems at the age of 78. So we are talking that the brain can be younger much longer than our body. But still if we talk about brain development, to hope that it will be the main task for broadband, I'm dubious about that.
Finally, I read about values, and I'm suspicious. My values and my colleagues at the panelist table and for me are different things. For industry, for providers, value, money. For me, value is a human virtue. A value creates our orientation in the world. And for some, maybe even in the hall, money is the biggest value. But I don't think that we have a single person sitting here for whom money is not the most important value. There are a lot of different other values.
And what is the idea that the Cloud has value in itself? And I think that this is some mistake in reasoning. Because the Cloud has only values weaved in that. It has no value in itself.
If we are talking about human value, you do the development of the broadband, the best developed industry in the world is pornography. The Internet gave such an impetus for that industry that they are flourishing now compared to 20 or 30 years ago.
And I think that one additional example for me is about mobbing. This is clearly an Internet phenomenon. And if mobbing will replace friendship, I don't want to live in that world.
So I think I talked a bit pessimistic, but I think you heard what I told at the beginning. And I think you will hear what I tried to summarize of my ideas. I think that applications of the Internet are only possibilities for humankind. And what humankind will do, will make of that possibilities, depends on us, on everybody who creates and provides and who uses it. And I think when technology develops, when providers develop their nets, they should think and maybe consult some strange birds from a computer or other part of society that could look like a black sheep.
I hope that everybody understand what I mean. But if not, I'm ready to answer or discuss. Thank you.
>> RIMAS KALVAITIS: Thank you. We got a cold shower a bit from our emotions. So question, two questions. Welcome.
>> AUDIENCE: Good day. Thank you very much for the interesting presentation.
My name is Valarte. I'm from Belarus. And just after the IGF I'm going to apply to the local 4G supplier. We know that people travel. And to feel more safe outside of their country, they need to stay -- to see with an internal connection. When I travel, arise the question of how do I get to the Internet? And my question is the challenge of mobile broadband Internet roaming, I mean, even though the price is so -- mobile roaming are increasingly high. When you leave your country, the price of voice and text roaming and even the question of data roaming, it's high. For one site, I can travel. And like the data transfer, this limitation of prices, they kill the development, I mean, that -- the transfer of people and information in the world. Thank you.
>> RIMAS KALVAITIS: Thank you for the question. Your question is really not for Eugenijus Laurinaitis. It's for a service provider representative. It probably would not be Darius.
Let's agree that we will answer this question during another session. But I prefer to get a question for our psychotherapist, please.
>> AUDIENCE: Good afternoon. I'm Kayleen Francis and I'm representing the OECS secretariat. I found the presentation to be quite interesting, and I wanted to ask you about the impact of the Internet on the creativity and alertness of the young. Because you will find that even the babies who are born now seem to have an affinity in terms of using the computer. And because they are socializing with so many others online, it has a lot of benefits. But based on what you're saying, you described to us the obstacles. So I just want to get your perspective in terms of the benefits that you see.
>> EUGENIJUS LAURINAITIS: Thank you for the question. I agree that the Internet increases the ability and access to much wider society to allow their abilities to create. But, I think that creativity in itself is, again, only their ability. And the person who is creative may create a movie, but may create a nuclear weapon. Everything is creativity. So what he or she will create depends on the values we transfer through the Internet.
I think that creativity is an absolutely necessary skill to survive this life of course. But I think it's not a value in itself. It always is filled with other values. But if we are talking about the other part of your question, of course I agree. I agree that the Internet gives a lot of possibilities for those who are disabled or incapacitated in many areas of our earth, and I hope it will help for them to get in touch with other cultures and people.
When we are talking about socializing, however, I see socializing as much more person to person contact.
And maybe you'll know that in Japan, people who have a problem with young boys who close themselves in a room, don't let their parents to get in contact with them, and they live solely in the virtual environment. And this problem is real widespread. The Japanese count is that it may be about 1 and a half million for these youngsters. They have a special name. Socializing Acquired Internet makes them completely socially debilitated in the real world.
So I think that as we talk to Lithuanians, all statistics have to end. Sometimes it's a very optimistic development of the technology.
>> Thank you. We have a very short period for questions. Yes?
>> AUDIENCE: I'll be very short. My name is Aubert. I'm from South Africa, a member of Parliament. I just heard the professor saying that he was talking about the benefits of technology. For other communities, it's a possibility, it has really increased the awareness. For example, in Africa, with the penetration of the mobile, the phones were not penetrating as the mobile is, because connectivity -- with wireless it's easier. 600,000 Africans now have mobiles. And when you compare it to land lines, Manhattan has more land lines than all of the continent. So can't you see that is an opportunity that ought to be encouraged? But I agree with you that we have to have balance as human beings.
I know that socialization is one. And for them, they have to say that there are these traditions that we should not give away. However, allow technology and access and opportunity that it gives.
>> Eugenijus Laurinaitis: Thank you, but I understand it was not a question, but a comment in a way.
And I would like to say that in our society, broadband gives some things very positive for effects, sometimes quite negative. For example, you should know that teenagers are very impulsive and sometimes they have different fantasies. But if they would have no ability to realise these fantasies, they would remain in their layer, in the rim of fantasy. But when they have an ability to put it in actions, they very often do that. And there are a lot of examples, and later on they have very big remorse about their actions, but it's done. And here I think that broadband erases the border, the boundary between thought, word, and action. But we should know that responsibility for thought, for word, and for action is quite different.
And I'm not talking about legal responsibility. I'm talking about personal responsibility. So we should think maybe a little bit how to make it clearer.
>> RIMAS KALVAITIS: Thank you very much, professor. So let's we remember from Mikael Back presentation that there will be 50 billion connections. We will transform the industry and technology for this is already in place.
Mr. Robert Pepper highlighted that wireless networks are becoming the primary way people in the markets will access broadband. Internet and video will become more important because it overcomes language and literacy barriers.
The main focus should be put on elimination of the digital divide.
And finally, as Eugenijus Laurinaitis indicated, the social contact value, he pointed out the specifics of the human brain when talking about the broadband Internet. Let's just remember the topic of development and mobile broadband. I'm just approaching -- well, when you have -- now, your ideas, what comes to your mind about this? What would you like to ask others or do you agree with what was said and will it happen as was predicted? If yes, what pitfalls?
We have one question for Darius already taken from the hall. I'm trying to put now everything just on the table. So, my suggestion is that each of the panelists now have two minutes for his short statement and rest the of the time the workshop is dedicated to you, for your questions, because we have left 13 minutes. Okay?
Who will start? Darius. You will start. Mobile roaming being expensive.
>> DARIUS MAIKSTENAS: I can't live without it. As we see, it's completely -- -- it's completely, how to say in a diplomatic way, unacceptable to have such price differences when you are roaming and when you are at home. And actually, the operators say they are experiencing big troubles, especially when the user comes home from vacation and they don't understand how much we are going to pay for the same experience which we have at home.
And the problem and the solution of the roaming is that we should agree, but there is a market for failure when you roam. Countries who enjoy a bigger amount of roaming visitors, this is a significant amount of revenue to the operators. And since it is a no price elasticity in the roaming, because the roamers are not customers of roaming co-operators, usually if you cut prices for the roaming you're just shrinking your revenues, but you're not increasing consumption, actually.
So, it seems that kind of a clever mix of regulation and further competition of different technologies, for example, and the company will sort it out. Because some multinational operators were implementing kind of multinational plans so that you can have a flat fee wherever you roam. Maybe some places in the European Union will have this. And also since we have competition from fixed networks, from WiFi, sooner or later it will force markets to go down.
>> RIMAS KALVAITIS: Thank you.
>> DARIUS MAIKSTENAS: But this is kind of my answer. But I also would like to have one professor on the --
>> RIMAS KALVAITIS: Later on. You've got two minutes. Now, Mikael, the floor is yours.
>> MIKAEL BACK: There was another comment around the cost for building more capacity and so on. And I think I have a little bit different view. And we have been working quite a bit with the subject of course through working with 3G and LT and other technologies. And I think we came up quite early in this with a figure that we called one Euro per gigabyte production costs. And they can come to lower figures if you are efficient. I think in many cases, the equipment we poor infrastructure suppliers sell is a smart part of the cost. I think it's important so that we can address costs like the site, maybe sharing physical sites, to users, sharing of the fiber backbone. Because when you do the fiber to the site, you get more or less unlimited capacity. You can share that with more operators. So there are a number of different tools that we can use to really make sure that you follow the cost curve or the cost curve can follow the income curve of the operators. I'm positive that we will be able to do that. Of course, there will be cases of extreme usage of capacity in the same spot. But I think it's possible that we can stand up to the challenge. That's my main point.
>> ROBERT PEPPER: I'll comment on some of the comments in my two minutes. First, I agree with our doctor friend, the human interaction parts of the broadband are extremely important. We cannot ignore that. It's not about technology, it's about how people use technology. And there is a broader set of issues.
But I'm reminded of the fact fact that as humans, we are analog censures. And we take in more information as humans in our senses than are on broadband. So this is an analog world of broadband. So there are larger questions, and I agree with you, there are human values, there are economic values.
>> RIMAS KALVAITIS: But the neuron is digital.
>> ROBERT PEPPER: We translate from analog to digital and digital to analog.
>> EUGENIJUS LAURINAITIS: So for that you need 10 billion cells.
>> ROBERT PEPPER: A trillion. A thousand billion is a trillion. The point about shared infrastructure is important. 80 to 85 percent of the cost of building networks is civil engineering. If you put in fiber, it's digging trenches or hanging fibers. That is civil engineering. That is not subject to Moores law of declining costs. Once you put in fiber, then you have incremental changes in your cost. Hugely powerful. Paying landlords, building tower, self engineers, real estate payments. If we can have sharing of the passive infrastructure, the tower, the backbone, the generators, the security cages to make sure it's safe and secure, if we share the cost of the passive infrastructure, but we still can have different operators, we can have the benefits of competition in the services but have the shared costs at the passive layer that get you the scales that can lower the fundamental cost of the entry and networks. It's important, because we will need to do that and share that.
As far as the mobile roaming, what is interesting, in the US there was a change that took place about 12 to 15 years ago. There used to be roaming charges with different companies in different parts of the country. The companies began to internalize those costs. So if I'm in my office in D.C, and I then go to my office in California and I make a call, it's still a local call, as though I'm in the local network. My calling area within the continent of the US, my entire local calling area is the continent. And that was made possible by two things. The companies, the firms, internalizing the networks and the network costs and the roaming internal to the network, and there being competition across networks.
So then the networks completed with each other in terms of having large baskets. And now with the data network, I stay on the network and it's internalized to a single price and there is competition that is bringing that down. And also we have the WiFi and the hot spots.
>> RIMAS KALVAITIS: Thank you, sorry for stopping you. Time is running out. Thanks for the explanation of the not linear dependence. I think it's an important statement and we should understand this.
One and a half minutes left for him.
>> EUGENIJUS LAURINAITIS: Maybe I'll refrain from talking and I'd like to talk to the audience, because we have so little time left for that purpose. So I will rather listen to questions or comments.
>> RIMAS KALVAITIS: Thank you. The psychologist is always a human being. It's always important. Please come with the questions. And I'm sorry for being so sharp on timing. Mikael has to be on a plane. We have to be at 7 in the airport. So your questions?
>> AUDIENCE: I'm from CNS networks. I'd like to ask the professor, you mentioned the things about the inter-- the good and bad things that the Internet brings. It's a nasty side effect of the Internet society.
Do you have an idea how to leverage that? What would be advice how we should, for the sake of development, we are still kind of leveraging the bad effects that the broadband brings.
>> EUGENIJUS LAURINAITIS: I should answer very briefly. I think that we always should keep in mind that the Internet, despite its development and advancements, is only an instrument. And what we will carry through this instrument to masses, to all people around the world, because we are interconnected now globally.
It depends on some policies or philosophy of both owners and users. And who are now the authority, the moral authority in our society, this is a question. And this is not a question for Internet providers or producers. It's a question for our societies.
So, who will answer? I don't know. But every politician, every government, and this is a form of governance, yes? So every body which will govern the Internet should keep in mind to keep it human, with all human values, which made us human and kept us human.
But this sounds a little bit like Laura Sams, but it has to start with simple statements. To make this working, it has to be divided into simple tasks. And somebody has to be creative about that. Some, I don't know, bigger or smaller community has to take responsibility for that. Because the Internet is not the phenomenon to stop. It is a phenomenon to develop. How we will keep it for our benefit, our, I mean humankind benefit, it's our task.
>> RIMAS KALVAITIS: Thank you for advice. And gentlemen, you had one more question? The last one.
>> AUDIENCE: Yes, thank you. Just one -- just on the penetration of mobiles in society, particularly in the developed nations, the broadband aspect of it obviously it's quite welcomed. However, you have a cost effect there on the issues of the gadgets themselves. And a smartphone, it can make you access the Internet, which is something that is so badly needed in those societies from the countries. So under the issue of cost, as already illustrated that, the demand is high, but then the customer is not willing to pay the price.
And then also the other gentleman who spoke up about sharing the cost. We should be sharing the costs. It's government. In the representation they only put question marks without giving answers. We can say let's go to the governments and say let's share the cost. Let's put in the infrastructure. You need engineers to put in fiber optic, you need engineers, those are costs.
I'll come back. Professor, is there a focus on the fears which are the danger? The professors and psychologists, can they look at adaptation, how the brain can still be utilized to the optimum by adapting to the new innovation, rather than sticking on the fears and dangers? Say yes, these are dangers and these are fears.
So if you could write and come up with an answer for that adaptation, so that we can still optimize our brains to whatever,
>> RIMAS KALVAITIS: Thank you very much. I think after this speech we don't need any rounding statements. So the time is finished. Thank you for your participation, for being active and for being so passionate. So thanks to all of you.
Thank you and have a nice time today in the evening and for the rest of this forum. Thank you.
(Applause)