The Bandwidth Dilemma: Challenges and Opportunities for the Telecommunications Industry

The telecommunications industry stands at the precipice of a key phase. With unprecedented challenges and opportunities likely to emerge in the near future,and thehas held their inaugural telecommunications round table on the 10 November 2011.

The telecommunications industry stands at the precipice of a key phase. With unprecedented challenges and opportunities likely to emerge in the near future, UK ISRAEL BUSINESS and the Commercial Office at the Embassy of Israel has held their inaugural telecommunications round table on the 10 November 2011. The occasion was first event organized collaboratively by UK ISRAEL BUSINESS and the Commercial Office at the Embassy of Israel, and UK ISRAEL BUSINESS was delighted that the Commercial Attaché was in attendance. Chaired by telecommunications expert, Mike Grabiner, and hosted by CMS Cameron McKenna, the event brought together influential figures from all spheres of the telecommunications including sector senior individuals from BT, Vodafone, Orange, T-Mobile, Telefónica O2 and Jersey Telecom.

After a sumptuous light breakfast, the round table began in earnest. A key theme was quickly established, the issue of bandwidth. Across the world, there is an immense demand for more bandwidth. To buttress this assertion, attention was drawn to a recent Cisco forecast which estimates that global mobile data traffic will increase 26 fold between 2010 and 2015. Much of this is attributed to the growing use of smartphones which generate 10-20 times more traffic than non-smart phones. Attendees were then informed that during the same period, the total capacity of the world's wireless networks will increase by about 10 times. The pivotal question thus arose as to how the UK would address these impending challenges, and the resultant demands on bandwidth.

As smartphones began to become a commonplace fixture on the market, operators made the crucial mistake of bundling free data into their pricing plans. As such, their pricing models were based on voice and text and simply did not account for the data. The current model for processing bandwidth and data traffic has therefore become an unsustainable burden, shouldered by the operators. They have in turn incurred extra costs as they have been forced to outsource additional supplies from fixed line operators such as BT. Consequently, it was thus concurred by all present that greater regulatory intervention is both indubitable and necessary.

Urgent changes need to be implemented by operators to provide a more equitable model with clear definitions on how bandwidth is paid for and managed. Indeed, few will disagree that the costs ultimately need to be passed back to the user. To this end, attendees at Thursday's round table touted the idea of specialist 'packages' for gaming and video streaming as a potential solution. Others suggested that operators have to be more mindful of using unsustainable practices, such as subsidized mobile handsets. In this way, it is essential that operators make definite strides towards cutting back on their out-dated cost base. In our opinion, it is unlikely that any company will stand alone in carrying out sweeping changes. In such a competitive market, the cost of losing their customer base is simply too great. It is therefore imperative that regulators step in and oversee the process. Crucially though, the present regulation philosophy is sorely in need of reform. The challenge in this regard will be for regulators to balance neutrality with encouraging further investment to keep the industry buoyant. Perhaps most importantly, the solutions derived from this process should be organic and not technocratic, as attendees agreed that commercial solutions had not proved viable in the past.

Though the challenges are well-defined and critical, there is significant scope for real opportunities for trade between Israel and Europe in the telecommunications industry.

Speaking at the event, Daniel Seal, Chief Executive of UK ISRAEL BUSINESS said, "The innovative strides in telecommunications technology in Israel are remarkable. The dynamism and progressive outlook of the industry means there is significant scope for investment opportunities. Moreover, this round table reflects how keenly attuned UK ISRAEL BUSINESS remains to the latest trends in technology in both the UK and Israel".

Daniel Saunders, Chief of Staff, Commercial Affairs at the Embassy of Israel in London expressed similar sentiments, "The telecommunications roundtable, bringing together industry leaders from across the UK and Israel was yet another opportunity to showcase technologies and forge partnerships between the UK and Israel. As innovation continues to flourish, everyone is looking to discover exactly why people are calling Israel the new Silicon Valley."

In such a fast-paced industry, and on the back of the success of Thursday's event, is hoped that similar round tables will be held several times periodically throughout year. This in turn will provide an ideal platform for more innovative Israeli companies to introduce themselves to the British and European markets. Indeed, as a leading innovator of telecommunications both 'upstream' and 'downstream', Israeli companies are well placed to adapt to the impending changes facing the sector. And no organization is better placed than UK ISRAEL BUSINESS to advise and facilitate companies taking part in these exciting new opportunities.

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