Among Barriers to 4G in Africa, 3G Looms Large

It typically goes unsaid that a vibrant mobile Internet ecosystem allowing nearly anybody who wants to use the services to do so requires ecosystem alignment. In other words, every part of the value chain has to align to produce outcomes that allow virtually all citizens and residents to use mobile Internet.

And that emphasis on ecosystem alignment has to be foremost, if Africa is to experience widespread Long Term Evolution service, according to Ovum analyst Thecla Mbongue.

In early June 2015  there were 42 live LTE networks across Africa, spread across 21 countries, serving three million accounts, said Mbongue. That represents about one percent adoption.

The high cost of terminals and a fragmented, regional approach to spectrum allocation are the main factors impeding faster LTE growth, Mbongue notes.

So African stakeholders--ranging from governments, regulators, service providers, app providers and infrastructure and device suppliers--will be needed.

Device taxation and spectrum harmonization are two notable areas where work is required.

Import duties on handsets--which raise the cost for potential users, vary across the continent.

Exemption policies help, and are more frequent in East and Southern Africa, but most West and Central African countries are yet to follow suit, Mbongue said.

The government of Ghana recently announced a smartphone import tax reduction to 20 percent.

Until now, taxes could account for up to 35 percent of the cost of a smartphone.

Import duty for handsets are set at 20 percent in Senegal as well. In 2013, Nigeria moved to eliminate  import duties on devices by the end of 2014. Rates now are at about five percent.

Aligning regional spectrum allocations also would lead to handset economies of scale, and help reduce device prices.

The 1800MHz band is the most common because operators often re-farm spectrum initially allocated for GSM.

But slow adoption of 3G, which means service providers have not yet recovered their investments, also likely is a factor retarding investment by mobile operators.

In West Africa, where LTE is available in only four countries out of 15, there are seven networks, of which four are based in Nigeria.

Only one of those networks was activated by a traditional mobile network operator). The other six were started by ISPs. That suggests some of the sluggish LTE adoption on the part of mobile service providers is voluntary: they might be hoping to profit from their 3G investments before moving rapidly to 4G. .

That, in fact, is what Mbongue suggests. “3G is yet to be fully monetized,” she said.

So when will 4G become a higher priority? About 2019, Ovum’s surveys suggest. By 2019 LTE subscriptions should grow by two orders of magnitude to 318 million accounts.

“Operators must work with regulators to discuss and formulate a coordinated approach to tackling the barriers that prevent 4G uptake,” she argues. “Lower handset taxes, harmonized spectrum allocation, and a framework for network-sharing” can help.

Chicago Levies 9% Tax on Netflix, Spotify, Other Cloud Services

Chicago appears to be the first U.S. city to levy a new  "cloud tax" of nine percent that affects use of cloud-based services such as Netflix, Spotify and other video and music streaming services, or use of any cloud-based computing service as well.

The Amusement Tax ruling specifically taxes charges paid for:

• “watching electronically delivered television shows, movies, or videos”
• “listening to electronically delivered music”
• “participating in games, on-line or otherwise”

As a consequence, streaming a movie, listening to streaming music, or playing a game on a smartphone or tablet will now trigger a nine-percent tax on the subscription charge for those services if those activities are done at a location in Chicago.

Furthermore, the ruling addresses “bundled” transactions, by providing that “unless it is clearly proven that at least 50 percent of the price” is not for the amusement, the entire charge, except for any separately stated non-amusement charges, is subject to the Amusement Tax.

All other forms of content appear to be covered as well, including news, current events, sports, movies, music or other types of television programming.

In principle, new taxes also are incurred by consumers who pay for cloud-based real estate listings, car prices, stock prices, economic statistics, and “similar information or data that has been compiled, entered and stored on the provider’s computer.”

In addition, under the ruling, the Lease Transaction Tax will apply to the online sourcing of “word processing, calculations, data processing, tax preparation” and “other applications available to a customer through access to a provider’s computer and its software.”

In other words, the tax applies to SaaS (software as a service), PaaS (Platform as a Service) and streaming media services.

In the ruling, the Department expressly notes that these “examples are sometimes referred to as cloud computing, cloud services, hosted environment, software as a service, platform as a service, or infrastructure as a service.”

And some even think the new tax will apply to satellite TV services received by customers who live in Chicago. The new tax appears to apply to streamed content only, not downloaded content.

That presumably means consumers using web services providers such as Amazon Web Services will owe the nine percent tax on their usage.

It isn’t immediately clear how tax collection will take place. But Netflix apparently is preparing to act as tax collector on behalf of its customers, and already is said to be making arrangements to add the tax to the bills of its Chicago subscribers.

But customers of any number of other cloud services could find themselves taxed as well.

Chicago's new tax results from two recent rulings made by the city's Department of Finance. A new interpretation of amusements taxes now has been extended to cover "electronically delivered amusements."

The other ruling extends an existing computer lease tax. Each extension takes an existing tax law and extends it to levy an extra nine percent tax on certain types of online services.

The first ruling presumably covers streaming media services like Netflix and Spotify, while the second would cover remote database or computing platforms like Amazon Web Services or Lexis Nexis.

As a result of the two rulings, each effective July 1, 2015, the city of Chicago will attempt to tax the “cloud” more directly and comprehensibly than any other U.S. jurisdiction.

Chicago apparently will determine whether the customer is within the city of Chicago for purposes of the Amusement Tax and the Lease Transaction Tax rulings by looking at the service or credit card billing address.

Having a Chicago billing address and engaging in the activities covered by the two rulings will incur the tax, even if the actual place of use or access was outside of Chicago.

Whether the new rules are lawful or not is the issue. Lawsuits are anticipated.

Telmex to Face Mandatory Wholesale Obligations

Though the precise details are unclear at the moment, Mexico's telecoms regulator will open wholesale access to the "last mile" of Telmex telephone networks to competitors, Reuters reports.

Mexico’s telecom regulator, the Federal Telecommunications Institute (IFT), had made clear its desire for such wholesale access in 2014.

At that time, IFT asked specifically for leased line access, access and passive infrastructure sharing in fixed networks, access and passive infrastructure sharing in mobile networks and mobile virtual network operators (MVNO) support.

Both Telefonos de Mexico (Telmex) and mobile market leader Telcel (Radiomovil Dipsa), both subsidiaries of America Movil, would be affected.

LTE-U Small Cell Capital Investment $2 Billion in 2020

By the end of 2020, mobile operators will be investing nearly $2 billion on Long Term Evolution-Unlicensed small cells, Signals and Systems Research forecasts.

Assuming the forecast is directionally correct, the prediction might also suggest that concerns about fair access to Wi-Fi spectrum in the 5 GHz range have been resolved.

LTE-Unlicensed (LTE-U) technology uses unlicensed spectrum bands, bonded with LTE channels.

For example, Korean wireless carrier LG Uplus has demonstrated twice the speed of its commercial LTE-Advanced  service by combining 60 MHz of unlicensed 5.8 GHz spectrum with 20 MHz in the licensed LTE spectrum.

LTE-U shipments are expected to grow at an 80 percent compound annual growth rate between 2016 and 2020.

EC, European Parliament Agree on End to Mobile Roaming Fees

Though the rules still must be approved by nations within the European Union, the European Parliament has voted in favor of an end to mobile roaming fees across the EU in 2017. 

That move is likely to put pressure on mobile service provider revenues, even as it lowers retail costs for mobile customers.

The new rule also ban paid prioritization, but do seem to allow for zero rating, though officials say they will be watchful about that practice.

Prior to the agreement, European Union and European Parliament members had disagreed in some respects about the specific rules and the implementation dates.

Under the new agreement, roaming surcharges in the European Union will be abolished as of June 15, 2017.  The Parliament had wanted a 2016 effective date, while RU officials were willing to wait until 2018.

However, roaming providers will be able to apply “fair use” policies that limit the total amount of foaming usage.

Roaming fees will start to drop on April 30, 2016, when the current retail caps will be replaced by a maximum surcharge of €0.05 per minute for calls, €0.02 for SMSs and €0.05 per megabyte for data.

Under the EU-wide open internet rules, operators will have to treat all traffic equally when providing internet access services as well, though mobile operators may use reasonable traffic management measures.

Blocking or throttling of apps will be allowed only in a limited number of circumstances, for instance to counter a cyber-attacks and prevent traffic congestion.

Agreements on services requiring a specific level of quality will be allowed, but operators will have to ensure the general quality of internet access services

The new rules do not allow paid prioritization, the practice whereby app providers pay ISPs for packet acceleration, in exchange of payment.

At the same time, end-users and providers of Internet access “will continue being able to agree on different access speeds and data volumes as they do today,” the EU says. That means mobile operators can lawfully sell different-sized buckets of usage, or even speed tiers.

Notably, the new rules do not forbid managed services, such as entertainment video or carrier voice services.

The EU says it will continue to monitor zero rating practices, so one presumes zero rating might still be lawful.

“Zero rating does not block competing content and can promote a wider variety of offers for price-sensitive users, give them interesting deals, and encourage them to use digital services,” the European Commission says. “Regulatory authorities will therefore have to monitor and ensure compliance with the rules.”

European Parliament Agrees on Roaming Rules and June 15, 2017 Implementation

Though the rules still must be approved by nations within the European Union, the European Parliament has voted in favor of an end to mobile roaming fees across the EU in 2017.

Prior to the agreement, European Union and European Parliament members had disagreed in some respects about the specific rules and the implementation dates.

Under the new agreement, roaming surcharges in the European Union will be abolished as of June 15, 2017.  The Parliament had wanted a 2016 effective date, while RU officials were willing to wait until 2018.

However, roaming providers will be able to apply “fair use” policies that limit the total amount of foaming usage.

Roaming fees will start to drop on April 30, 2016, when the current retail caps will be replaced by a maximum surcharge of €0.05 per minute for calls, €0.02 for SMSs and €0.05 per megabyte for data.

Under the EU-wide open internet rules, operators will have to treat all traffic equally when providing internet access services as well, though mobile operators may use reasonable traffic management measures.

Blocking or throttling of apps will be allowed only in a limited number of circumstances, for instance to counter a cyber-attacks and prevent traffic congestion.

Agreements on services requiring a specific level of quality will be allowed, but operators will have to ensure the general quality of internet access services.

India Moves Closer to Banning Zero Rating

The Indian Department of Telecommunications, one report suggests, will recommend that zero rating (sponsored apps) should not be lawful in India.

The agency apparently will adopt a policy banning zero rating under network neutrality rules that ban all paid prioritization or app throttling.

The committee report still must be accepted, but some observers believe it will be adopted as policy.

Up to this point, Bharti Airtel had raised questions with its proposed and then withdrawn “Airtel Zero” program that would have allowed application providers to underwrite usage of their apps.

Google has a similar zero rating initiative called Google Free Zone that has been offered in a handful of countries like Kenya, Sri Lanka, Thailand and the Philippines.

Separately, Telenor Pakistan has launched Internet.org in Pakistan, making available to Telenor Pakistan's customers free access to 17 basic online services including Accuweather, BBC, BabyCenter &MAMA, Malaria No More, UNICEF Facts for Life, Bing.com, ESPN Cricinfo, Mustakbil, ilmkidunya, Telenor News, Urdupoint Cooking, OLX, Facebook, Messenger, Wikipedia and Telenor WAP MobilePortal, using either the 2G or 3G platforms.

“Zero rated apps” such as provided by Internet.org  have proven effective ways of introducing non-Internet users to the benefits of using the Internet. Under the Internet.org program organized by Facebook, mobile customers can use apps without paying for a data plan.

But such policies are viewed as a violation of network neutrality principles by some.

So here we have an issue of “good things” in conflict. One is the notion that innovation is promoted when every app has an “equal chance” of being discovered and used (even if, in practice, that rarely is true, or possible).

The other good thing is the ability to provide people access to useful apps without those people having to pay. That is especially useful for encouraging non-users to sample the Internet, and useful for people who have not, in the past, purchased mobile Internet access plans.

And it appears one or the other of those good things will not be lawful, eventually.

Should such a framework remain in place for a long time, more new apps are going to move away from “Internet” delivery, though. Some apps work better when quality of service measures are available. And some apps might have life-threatening consequences if absolute low latency or bandwidth is unavailable.

Such apps will move away from the public Internet and into “walled gardens.” That might be useful, in some instances. Medical apps, driverless cars and other automated processes arguably would benefit from higher performance guarantees than can lawfully be provided using the consumer Internet.