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The M-Business Evolution

  • August 14, 2002
  • By Prentice Hall
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Regulatory Environment

In addition to the major global carriers, handset manufacturers and software companies creating the market for mobile business for the enterprise, the global regulatory environment is also helping to chart its course. Regulations such as the Telecommunications Act of 1996 and the Enhanced 911 (E911) mandate from the Federal Communications Commission (FCC) within the United States have helped to bring about major change in the telecommunications industry.

The FCC was established by the Communications Act of 1934 as an independent United States government agency directly responsible to Congress. The FCC is responsible for establishing policies to govern interstate and international communications by television, radio, wire, satellite, and cable.

Enhanced 911

In the United States, the Federal Communications Commission's E911 mandate made automatic location identification a requirement for the wireless carriers to implement within their networks. The following is an extract from the FCC Web site:

"In a series of orders since 1996, the Federal Communications Commission (FCC) has taken action to improve the quality and reliability of 911 emergency services for wireless phone users, by adopting rules to govern the availability of basic 911 services and the implementation of enhanced 911 (E911) for wireless services."

The basic 911 rules required wireless carriers to transmit all 911 calls to a Public Safety Answering Point (PSAP) without regard to validation procedures intended to identify and intercept calls from non-subscribers. Phase I of the enhanced 911 (E911) rules, required carriers to provide to the PSAP the telephone number of the originator of a 911 call and the location of the cell site or base station receiving a 911 call. Phase II of the E911 implementation required wireless carriers to provide Automatic Location Identification (ALI) beginning on October 1, 2001 in order to provide emergency services with greater accuracy for call origination. The ALI accuracy requirements were as follows:

  • For handset-based solutions: 50 meters for 67% of calls, 150 meters for 95 percent of calls
  • For network-based solutions: 100 meters for 67% of calls, 300 meters for 95 percent of calls

This Government mandate has helped add fuel to the location-based services industry as a subset of the M-Business market. According to Strategy Analytics, the market for location-based services will reach $6.5 billion in the United States and $9 billion in Europe by 2005. Some of the potential applications of located-based services include tracking services for locating and tracking people and assets, and location-based advertising. The business models and potential applications for location-based services will be explored in further detail later in the book.

Telecommunications Act of 1996

The Telecommunications Act of 1996 was the first major overhaul of telecommunications law in almost 62 years within the United States. The goal of the law was to let anyone enter any communications business—to let any communications business compete in any market against any other.

"To promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies."Telecommunications Act of 1996

The main thrust of the law was to force the Bell Operating Companies to open up their local loops to competitors in exchange for providing them the ability to enter the long distance market. The Telecom Act has done a lot to create a competitive environment in the telecommunications industry and has resulted in a large increase in financial investments in the telecom industry.

Spectrum
The allocation of spectrum, the various frequencies for radio transmission, is also subject to regulation. Radio spectrum is the part of the natural spectrum of electromagnetic radiation lying between the frequency limits of 9 kilohertz and 300 gigahertz.

The International Telecommunications Union (ITU) in Geneva is responsible for worldwide coordination of both wired and wireless telecommunications activities. Frequency planning is conducted by the ITU Radiocommunication sector (ITU-R), which has divided the world into three broad regions.

In the United States, responsibility for radio spectrum is divided between the FCC and the National Telecommunications and Information Administration (NTIA). The FCC administers spectrum for non-Federal government use and the NTIA, which is an operating unit of the Department of Commerce, administers spectrum for Federal government use.

3G Licensing

One of the biggest costs, in addition to physical infrastructure building, for the wireless carriers in moving toward 3G networks has been the bidding on spectrum auctions. According to Nokia, over 80 3G licenses were granted in 2000 and several hundred more will be granted over the next few years.

The U.K. government auction, which ended on 28 th April 2000 after seven weeks of bidding, raised nearly 22 billion pounds from five operators—TIW, One2One, Orange, Vodafone, and BT Cellnet. The German auction, which ended on 5 th September 2000 after fourteen days of bidding, raised $37 billion from six operators—T-Mobil, Mannesmann, E-Plus-Hutchison, Viag Interkom, MobilCom, and Group 3G. According to 3G Newsroom (http://www.3gnewsroom. com), the five most expensive auctions were Germany, Britain, USA, Italy, and South Korea with a total of over $100 billion spent within these five countries alone.

Other countries such as Norway and Finland have adopted a beauty content approach and have given away spectrum licenses for free or for reduced prices when compared to auction pricing. Due to the high fees paid out by the wireless carriers in buying these 3G licenses, companies such as BT and Vodafone have actually started to talk about teaming in order to share the costs of the 3G buildout in terms of network infrastructure such as mobile masts.

With this much money invested in 3G networks, it will be interesting to see how quickly the wireless carriers transform their business models, products and services, and target both consumers and the enterprise in order to attempt to recoup these massive expenditures.





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