Carlos Lopez Blanco of Telefonica discusses a re-evaluation of "convergence" which has promised much but delivered little. Broadband must be seen as the key provision in convergence whilst policymakers need to overcome real challenges including a consistent enforcement of net neutrality principles, a strengthening of consumer trust and control and an alignment of international policy in data privacy and processing.

1. MYTHS AND FACTS OF CONVERGENCE Mixing and Matching Media Platforms – Maneuvering for Advantage on the Communications Chess Board Carlos López Blanco Director, International Office, Telefónica S.A. Montreal October 26, 2009

2. Many years announcing the arrival of convergence…. … but not happened

3. Convergence of products and services would lead to a scenario in which firms of traditionally different business, compete Internet agents Users would see companies that previously did not compete, in the same playfield Telecom Media IT

4. Because of convergence, there have been multiple errors in the past The strategies to get access to content in the nineties, led some operators to difficult financial situations Vertical Integration to contents Telecom Media IT Internet agents

5. Convergence had been announced but something lacked Network development Internet paradigm Consumers skills Devices development free SUPPLY DEMAND Access to any content anywhere

6. Convergence had been announced but something lacked Network development: BROADBAND Network development Internet paradigm Consumers skills Devices development free SUPPLY DEMAND Access to any content anywhere

7. Broadband is the key factor for devices, products, services and their convergence Convergence of the three screens Smartphones E-Books Joggler Netbooks Internet-TV

10. Source: ITU Because market has strongly changed from the year 2000 Millions of fixed BB subscribers x25,7 Millions of mobile phone subscriptions x5,4 Millions of Internet users in the world x9,6 World internet penetration x3,9

11. Source: ITU Because market has strongly changed from the year 2000 Number of customers and true broadband, will allow the development of new services World internet penetration X3,9 Millions of Internet users in the world X9,6 Millions of fixed BB subscribers X 25,7 Millions of mobile phone subscriptions X 5,4

12. and market is going to change much more Demand of video services will trigger a virtuous circle New services will emerge because of video services and we should be sure this huge number of users show how will be this development 4,2 billion mobile users ....

13. Development of new services will take advantage of Broadband e-banking e-commerce e-government e-leisure e-education e-health Thanks to broadband, there will be an explosion on services for all areas

15. Operators should become a major platform for services Applications and Services from all players Convergence should help operators to enhance network capabilities with platforms for applications and services Platform for applications and services Contents Cloud computing

16. A new business model, a challenge Acting for ourselves Creating a new ecosystem Complex scenario of Networks & Services

17. We need to capitalize our strengths MOVILITY CONTENTS INTERNET CONVERGENCE NET Network management in convergence’s core , , , mobile customers Few sectors have such a big number of customers 1,642.8 M 504.9 M 298.5 M 630.3 M 391.5 M Source: Global Wireless Matrix 3Q09. Bank of America-Merryl Lynch 157.5 M Networks as key factor Direct contact to customers

19. Not everybody thinks in operators as key actors for the “cloud” … but they are not the invaders… they were always there

20. Not everybody thinks in operators as key actors for the “cloud” … they were always there

21. The technical infrastructure for convergence (broadband), does not solve other questions… ? Smart Regulation and for all 1 ? New business model for contents 2 ? Boosting Internet and privacy 3

22. Source: ITU We need clear rules Skype should be seen as a competitor, like any other operator Regulation should guarantee same rules for every player Source: Telefónica 1 New business model for contents 2 Boosting Internet and privacy 3 Skype million of users by region Source: eBay. March 2009 Million of accesses worldwide + Skype

23. Network neutrality proposes Internet freedom to access applications, services, contents, or by devices Rules that discriminate among competitors, harms innovation and investment New business model for contents 2 Boosting Internet and privacy 3 1 Nobody disagrees on these principles but … … to some links in the chain? why should be applied only… … to some sectors? ? ? ? ? ? ? ? New applications, services, contents, devices… require Investments Innovation ALSO IN NETWORKS Tel Vendors HandsetVendors Operators Consumer Electronics Internet Agents Media

25. Digitization allows that same services could be received by different platforms and technologies Eliminate regulatory asymmetries assures same rules for services and promote competition among alternative technologies New business model for contents 2 Boosting Internet and privacy 3 1 Telecom - audiovisual Telecom operators Separate regulation (if exists in audiovisual!) Technology Combined offer of services Different regulation Maintenance of asymmetries for same services facilitates the continuity of competitors that have no vocation of investment and discourage the innovation Regulatory Asymmetries

27. Free… 2 Boosting Internet and privacy 3 Boosting Internet and privacy 1 Generators of contents and media are looking for their new business models “ The traditional newspaper business model has to change. Accordingly we intend to charge for all our news websites” Conference call after News Corp released its full-year results. Rupert Murdoch. August, 2009 “ Google is developing a micropayment scheme to allow users to buy digital content through its Checkout online payment system” Information Week. September, 2009. Advertising New business model Subscriptions Micro-payments ... ? There is an urgent need that generators of contents find its sustainable new business model Source: PWC, 2009 * Origin of revenues of first 100 webs 2.0 in ranking of Alexa. Percentages of models are not mutually exclusive. www.multiplica.com. September 2009. News registry Billion USD digital book, music & video markets +179 % 7 % * 86 % * 26 % *

29. Real challenges must be overcome to develop potential of internet, ensuring comfort of consumers New business model for contents 2 3 New business model for contents 1 Strengthen consumers’ trust in handling their personal data 1 I share it for all on internet I don’t want companies to use it PARADOX OF CONSUMERS' INFORMATION HOW ESTABLISH SUSTAINABLE CONSUMERS’ TRUST Adoption codes of conduct + certification New entity as trustworthy intermediary ? or Accord customers more control over their personal data 2 ? MANY CONSUMERS FELT BLIND-SIDED BY HOW PERSONAL DATA IS USED Recommendations to friends without user's knowledge HOW AVOID INCIDENTS IN SHARING WITH OTHERS Explicit opt-in or opt-out choices on how their personal data is shared International policy alignment regarding data privacy & processing 3 ? HOW AVOID INCIDENTS FOR INTERNATIONAL COMPANIES Establishment of agreements DIFFERENCES BY COUNTRIES ? If a user moves to other country? blog Data privacy legislation

30. There is not a magical recipe for convergence CROSS-INDUSTRIES AGENDA INTERNET AND PRIVACY BUSINESS MODEL FOR CONTENTS SMART REGULATION INTERNET AGENTS CONTENTS - MEDIA IT TELECOM INTERNET AGENTS CONTENTS- MEDIA IT TELECOM Monetize intellectual property stimulating to create contents 1 Foster investment in intelligent infrastructures 2 Render personal data with privacy concerns 3 CONVERGENCE