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Additional info for OECD Communications Outlook 2011 (08 July 2011)
In the future, this model may well be expanded into so-called machine-to-machine (M2M) communications. Sponsored connectivity is one example of how value chains are changing, with a greater separation between wholesale and retail in the provision of fixed and wireless services. The entity that provides the infrastructure is no longer necessarily the same entity that performs functions such as customer acquisition, management and billing, and more generally, the user interface. Examples include Amazon’s e-book reader and Apple’s tablet computer.
There are several reasons for this: communication services are increasingly non-discretionary spending items, have long contract durations and are sold as bundled services (see Communications Outlook 2009). Communication providers tend to set contract durations at periods of 12 months or longer as a way to recover the costs of the equipment provided when a contract is signed. These longer term contracts also result in greater consumer “stickiness” because they discourage households from cancelling services in times of financial difficulty.
RECENT COMMUNICATION POLICY DEVELOPMENTS Ongoing growth in the use of mobile services and further fixed-mobile convergence involves new challenges for spectrum policy. The radio spectrum, a scarce resource, is an important competitive asset. Therefore, policy makers need to carefully balance the multiple factors which will greatly influence the outcomes, in terms of competition, consumer choice and investment. That being said, the switch-over from analogue to digital terrestrial television services will release significant spectrum resources that should help to ease the spectrum needs of the mobile communications industry.