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Telecoms in a convergent world
Emerging issues

1. Telecoms in a convergent world
2. Big Data and its implications
3. M2M and the Internet of Things
4. Digital content and video streaming
5. Growing use of strategic alliances
6. Conclusions
Content
2
Dr Martyn Taylor
Partner
+61 45 777 4711 (mobile)
martyn.taylor@nortonrosefulbright.com

1. Telecoms in a convergent world
3

The historic view of convergence
• Digitisation of content combined with increasing use of standardised Internet-based
(data packet) delivery mechanisms.
• Vertically-integrated delivery mechanisms replaced by ‘hourglass model’.
• Increased computing power and more powerful consumer applications
• Result: convergence of telecoms, IT, radio/TV broadcasting, print media, etc
Device can accept all
forms of digital content
and deliver to consumer
Content
Consumer

Disruption of legacy business models

But digital disruption is now arising from a
confluence of enabling technologies…
Broadband
High-speed
Internet
access
ADVANCED
DEVICES AND
COMMUNICATIONS
Smartphones
Affordable
pocket
supercomputer
Digitalisation
Digital
encoding
algorithms
SOPHISTICATED
OPERATING
SOFTWARE
iOS / Android
Operating
system
software
E-commerce
Transactions
via digital
platforms
SIMPLE AND
USER-FRIENDLY
INTERFACE
Apps
User-friendly
application
software

Not just telecoms… ‘software is eating the world’

Telecoms is at the epicentre of disruption…
8
Telecoms
Software
Telecoms
Software
Software

…and innovation is clearly outpacing regulation
• Continued innovation and
convergence across TMT is driving
the launch of ever more complex and
convergent communications and
digital services.
• Modern communications services
often now include a combination of:
• In contrast, regulatory models in most
jurisdictions still apply regulation based
on traditional ‘silo’ models for each
regulated sector.
• Licences are required if particular
statutory criteria are met, such criteria
often based on a pre-convergence
view of the world.
• Local regulators frequently have
substantial discretion in the manner in
which their regimes are interpreted
and applied.
• The mismatch between innovative
TMT services and legacy regulation
raises challenges for advisors and
gives rise to real regulatory risk.
• web-based interfaces,
• cloud applications,
• foreign data storage,
• cross-border connectivity,
• voice over Internet Protocol,
• video imagery, and
• interconnectivity to legacy
telecommunications services and
digital media content.
Innovation – 21st century products Regulation – 20th century models
9

2. Big Data and its implications
10

What is ‘Big Data’ ?
11
‘Big Data’ is (i) the capture of information on a large scale; (ii)
the application of powerful analytical computing to that
information, then (iii) the use of that analysis to generate value

The vision for ‘Big Data’…
12
"Now we stand facing a new
industrial revolution: a digital one.
With cloud computing its new
engine, big data its new fuel.
Transporting the amazing
innovations of the internet, and the
internet of things. Running on
broadband rails: fast, reliable,
pervasive “
“Take all the information of
humanity from the dawn of
civilisation until 2003 - nowadays
that is produced in just two days.”
“That is the magic to find value
amid the mass of data. The right
infrastructure, the right networks,
the right computing capacity and,
last but not least, the right analysis
methods and algorithms help us
break through the mountains of
rock to find the gold within.”
Big Data is a catalyst for innovation,
as consumer needs can be better
identified and addressed

2185357213

14

Capture of information on a large scale…
15
Legal issues – data privacy

Storage of that information…
16
Legal issues – data breaches
• Ensuring the security of information
located in data centres is already a
key issue, raising legal responsibility
and risk allocation issues.
• UAE: DIFC Commissioner of Data
Protection appointed under DIFC
Data Protection Law.
• Consequences of a data breach can
extend well beyond legal liability to
include reputational damage, cost in
management time, loss of business.
• Moreover, the mobile phone itself
has become a means of identify
verification, particularly for banking.
• Phishing and SIM cloning has
become a means for fraudsters to
take control of mobile devices,
causing real issues for telcos.

Processing of that information….
17
Legal issues – data sovereignty
• The export of personal data from one
country to another country can
present unique challenges.
• In an environment of cloud computing,
the export of data to offshore data
processing centres is a reality of 21st
century commerce.
• Integrated telecoms products and
services may have a cloud computing
or data processing component
• Export of data can be affected by
employment laws, healthcare
legislation, banking laws, and laws
specifically passed to block the
transfer of information for certain
purposes.
• Location of information is also
relevant to the operation of statutory
notices in regulatory investigations.

Generation of value….
18
Information secrecy
• Contract: contractual protections to
maintain confidentiality and prevent
misuse of information.
• Secrecy: IP can be practically protected
by maintaining secrecy
Databases
• Copyright: is a database a literary work
and therefore subject to copyright
protection ?
Software and algorithms
• Copyright: source codes and object
codes; sometimes algorithms
• Patents: software and algorithms
normally cannot be patented
Legal issues – protecting IP rights

3. M2M and the Internet of Things
19

The Internet of Things (IoT)
MVNOs and M2M – Mobile telecommunications in 201520
• Moore’s law is unleashing low cost, high processing power,
tiny chips that can be put into anything from a power outlet
to a water pipe.
• A ‘thing’ can therefore be controlled by an Internet-activated
micro-computer with its own IP address.
• Wireless networking technology is lowering the cost of
communications to the point where most ‘things’ can be
connected inexpensively.
• The rise of ‘big data’ makes the cost of storing large-scale
data trivial compared to even a few years ago.
• As a result, it is economic to integrate things with processors
and connect them to the Internet, to realise substantial
benefits, including via real-time data capture and control.
• Powerful applications have the ability to co-ordinate the
various ‘things’, leading to the industrialisation of the Internet.

The M2M business model
21
• Machine to machine (M2M) is the name given to a range of technologies that permit
information to be exchanged automatically between machines or devices, without
human intervention.
• M2M has existed for many years (eg SCADA). However, greater use of low-cost
broadband wireless and Internet applications is now driving innovation and rapid
M2M market growth.
• M2M covers a broad range of technologies and applications and has provides
significant further potential for business innovation:
• Greater ability to collect more accurate information.
• More timely (including real-time) information flows.
• Automated diagnosis and implementation of solutions.
• Greater ability to react to information, providing greater control.
• Overall, greater efficiency and quality in service delivery.

Elements of the M2M / IoT process
22
An M2M process involves a number of discrete stages:
• the collection of a data event by an autonomous hardware device, such as a sensor or meter;
• the transmission of that data through a wireline and/or wireless communications network;
• the receipt and analysis of that data by another autonomous device (sometimes as part of a set of
data from multiple autonomous sources) using a telemetry-based software application;
• the translation of that telemetry into meaningful information, including computer-generated
directions given to further machines or humans.

Customer expectations are driving industry innovation
23
Embedded SIM:
• In the M2M market, a SIM may not
easily be changed via physical
access to a device or may be used
in an environment that requires a
soldered connection, thus there is
a need for ‘over the air’
provisioning of the SIM.
• The GSMA’s Embedded SIM
Specification provides a single,
de-facto standard mechanism for
the remote provisioning and
management of machine to
machine (M2M) connections,
• Allows the “over the air”
provisioning of an initial operator
subscription, and the subsequent
change of subscription from one
operator to another.
Customer expectation Industry innovation
Malfunctions in devices
can be quickly
distinguished from
network malfunctions.
Replacement of
customer helpdesks with
on-line network status
reports and diagnostics.
Switching devices to
different networks
without swapping SIM
cards.
Embedded SIM cards
with remote activation.
Switching devices to
different networks during
a home network
downtime.
Domestic roaming where
the home network has
an outage.
Integrated M2M
connectivity platforms,
devices and software
solutions.
Joint ventures and
alliances between telcos
and other suppliers of
M2M solutions, including
M2M MVNOs.

M2M growth forecasts – a USD 1.2 trillion market
24
Source: Machina Research (2012)
• Currently around 2% of mobile connections, by 2022 this will increase to around 22%.
• Global M2M revenue forecast to increase from USD 200 billion to USD 1.2 trillion, of
which around 10% involves connectivity and associated services.
• M2M data traffic usage is expected to remain low, at around 1 - 2% of network traffic.

Existing and future applications of IoT
25
Automated
provisionin
g
Remote
monitoring
Middle East
‘smart cities’
initiative
security
systems and
monitoring
intelligent transport
networks
smart
metering for
utilities
smart medical
devices
traffic
management
inventory
management
Areas of future innovation may include…
• ‘just in time’ inventory monitoring
• law enforcement and surveillance
• tailored insurance premiums
• tailored products and marketing
• anticipatory healthcare and support
• asset geotracking and monitoring
• preventative maintenance
• intelligent and networked cars
• intelligent houses and appliances
• information-intensive micropayments

Potential huge range of applications for IoT
MVNOs and M2M – Mobile telecommunications in 201526

Legal and regulatory issues for IoT
27
• Common issue in 21st century telecoms are regulatory systems
based on 20th century technologies. Pace of technological
innovation has far exceeded pace of regulatory change.
• While many legal issues are common to other technologies, there
are some nuances and issues that are unique to the M2M
environment.
• Key issues:
• spectrum management;
• device certification;
• numbering,
• data security and privacy;
• contractual liability.
• Also market liberalisation issues such as regulatory restrictions on
roaming and restrictions on the use of MVNOs, as well as general
competition policy where mobile operators refuse to provide access.

Spectrum management for IoT
28
• Key implications for spectrum policy:
• greater flexibility in use of spectrum (technology neutral);
• spectrum usage locked in for longer periods (e.g., 2G devices).
• If an operator does not hold its own spectrum and wishes to sell
M2M services, it would be necessary to enter into an MVNO or
resale arrangement with an existing operator – see later slides.
• Many existing wireless standards are optimised for traditional
mobiles (high data rates with fewer devices), but would have
difficulty supporting M2M (low data rates with many devices.
• Some jurisdictions are considering allocating spectrum specifically
for M2M purposes (e.g., US – auction in 2014 for 3.5GHz band).
• Global industry standards are evolving, including in the context of
LTE, to carve out a niche for M2M decides (e.g., low cost devices
that use half duplex or single receivers on lower power levels).

Device certification for IoT
29
• Most jurisdictions require certification of radiofrequency devices with
certification requirements varying between regimes.
• There are typically three layers of regulation: (a) regulator approval;
(b) industry standards association approval; and (c) operator
approval. The latter is often the most difficult to obtain.

IoT Case Study - Embedded SIM cards in BMWs
30
• During 2012, Vodafone and BMW announced a five-year
deal to fit all BMWs with mobile SIM chips for telematics
services.
• The deal involves fitting SIM cards within the vehicles at
the assembly plant, so they are embedded in the vehicle
during manufacturing.
• The SIMs are built to last up to 10 years.
• The SIMs allows BMW to roll out a host of new services
on its ConnectedDrive platform including automatic
emergency call, remote locking and unlocking using the
smartphone app, 24/7 concierge service and TeleService
which provides direct communication to the auto-maker for
vehicle maintenance and diagnosis purpose.
• A range of similar deals have subsequently been
concluded with other car manufacturers.
• Question: Is BMW therefore a mobile reseller?

31

IoT disruptive potential – the ‘Smart Grid’
32

4. Digital content and video streaming
33

Increasing speeds driving different applications
500kbit/s to 1Mbit/s
VoIP
SMS
Basic e-mail
Simple web browsing
Low-quality video
1 to 5 Mbit/s
Complex web browsing
Email with attachments
Remote surveillance
IPTV SD (1-3 channels)
Simple telecommuting
Digital broadcast (1 ch)
Streaming music
5 to 10 Mbit/s
Complex telecommuting
Large file-sharing
IPTV SD (many channels)
Switched digital video
Video on demand SD
Broadcast video SD
Video streaming (2-3 ch)
Video download HD
Low-quality telepresence
Gaming
Basic medical file sharing
Basic remote diagnosis
Remote education
Building management
10 to 100Mbit/s
Telemedicine
Educational services
Broadcast video SD/HD
IPTV HD
Complex gaming
Complex telecommuting
Complex telepresence
Surveillance HD
Intelligent buildings
100Mbit/s to 1 Gbit/s
Telemedicine HD
Multiple educational
Broadcast video full HD
Full IPTV channel support
Video on demand HD
Gaming (immersion)
Full telecommuting
1 to 10 Gbit/s
Research applications
HD telepresence
Digital cinema streaming
Complex telemedicine
Scientific remote control
Virtual reality
Terabyte file sharing
Remote supercomputing
BASIC BROADBAND HIGH SPEED BROADBAND SUPERFAST BROADBAND
The UAE is a world leader in
broadband penetration, so can
also lead in new applications

Media sector is experiencing dramatic reform…
Historically, advertising supported the
delivery of subsidised content. Now, a
proliferation of business models…

36
Streaming of content over mobile devices….
Quote from Deloitte

37
… but premium content can be expensive
Legal issues – exclusivity
• The market for delivery of content to consumers is becoming crowded, conferring greater
market power to content creators. In turn, this is driving up the price of premium content.
• In such an environment, the firm with the deepest pockets can often use exclusivity to lock
up critical content. Telecoms operators have historically been active in the content market,
but are now being challenged by global Internet giants.
• Is regulatory intervention appropriate or desirable?

38
… and piracy of content remains a real issue

5. Growing use of strategic alliances
39

Example – Indosat Ooredoo in Indonesia
40
“Indosat Ooredoo and Indovision
Establish Strategic Partnership” (2016)
Delivery of content from Indonesia’s
largest pay TV operator over Indosat’s
4G LTE network
Also….
Twitter (mobile recharge); GoSwiff (electronic payment); Fortumo (direct carrier billing);
iFlix (OTT multiscreen TV); Ericsson (M2M platform); Arsenal (soccer content);
DoCoMo (embedded SIMs); Google (Google Play)
“Indosat, Lintasarta, IBM team
up for cloud service” (2015)
Partnership for the delivery of
joint cloud and telecoms
solutions to corporate sector.

JVs and alliances – both risks and rewards
41
• Outright acquisitions – especially if buyer has limited experience – can be risky
• Joint ventures can reduce financial, cultural and/or political risk and give investor
time to understand local market
• Local partners can benefit from international expertise of investor
Risk sharing for new markets
• Increasing number and complexity of such regimes is driving investors increasingly
to joint venture structures
• In some jurisdictions foreign investors can only hold a maximum of 49% interest
• Use of trust arrangements also employed
Antitrust and foreign ownership regimes
• Propensity for local partners to want to litigate in their domestic courts – can be slow
and bureaucratic
• Procedural inefficiencies and corruption can make litigating disputes challenging
• Law may be applied in unfamiliar way
• Different jurisdictions take different approaches to dispute resolution clauses
Disputes

Practical issues to consider… example of JVs
42
• JVCo retains a certain degree of autonomy – may not be fully integrated
• On-going commercial relationship with joint venture partner – legislation may view client as
benefitting from improper actions by its joint venture partner
• What is the rationale for entering into the joint venture?
• Rights/access to information is generally limited
Risks of joint ventures generally higher
• Detailed warranties on ABC/mutual undertakings by parties to comply with ABC laws etc.
• Right of access to certain information re adequate ABC policies/procedures -– in particular
involvement in audit committee
Protections to consider including in JV agreement
• Training for JVCo employees who are identified as subject to high ABC risk by virtue of
their role
• Ensure JVCo has appropriate ABC policies in place
• Appointment of own employees to key roles as a compliance tool? Rotation?
• Consider JVCo’s whistle-blower procedures/process
Other practical steps for consideration
ABC = Anti-Bribery and Corruption

Strategic alliances - healthcare and telecoms
43
• Huge opportunity provided by Internet of Things and M2M
• Growth in wearable devices, such as the Apple Watch
• Broadband wireless is now facilitating mobile health and remote access to healthcare

Strategic alliances - transport and telecoms
44
• Again, huge opportunity provided by Internet of Things and M2M
• Growth in embedding of computers and Internet into cars, such as Tesla
• Broadband wireless is now allowing networking of cars and autonomous cars

7. Conclusions
45

Key points from this presentation
46
1. Convergence in telecoms/media/IT has created integrated platforms that are now
driving software-driven disruption throughout the global economy. Telecoms is well
positioned to leverage this disruption.
2. Regulatory models are not keeping pace with innovation, creating risks but also a
new generation of issues associated with Big Data, M2M/IoT, and digital content.
3. In the context of Big Data, telcos face an increasing focus on data privacy, data
protection and security, data sovereignty and protecting IP rights.
4. In the context of M2M and IoT, telcos face interesting issues in applying historic
licensing models to new integrated products, including embedded SIMs in vehicles
and smart grids. Issues are also arising in spectrum management and device
certification.
5. As broadband penetration has increased, delivery of streamed digital content has
become popular, but has lead to a proliferation of business models and a spike in the
price of content. In turn, this has placed greater emphasis on content exclusivity
issues and digital piracy.
6. The overlaps between different sectors are creating much scope for strategic
partnerships, JVs and alliances. However, while opportunities exist, so do risks and
there are many practical issues to consider.

About Norton Rose Fulbright
47

• World’s third largest legal practice with more than 3,800 lawyers in 53 offices.
• We have a global focus on six core areas of expertise, including technology & innovation.
• Our reputation is to provide high quality and commercial advice, yet to be friendly and approachable.
48
Geographic breadth and friendly reputation

0
Contact us
Dr Martyn Taylor
Partner / Head of Telecoms (Asia-Pacific)
+61 2 9330 8056
+61 45 777 4711 (Mobile)
martyn.taylor@nortonrosefulbright.com
Profile: http://www.nortonrosefulbright.com/people/56359/drmartyntaylor
nortonrosefulbright.com
2185357249
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