 Okay. So, ladies and gentlemen, good afternoon. So, I'm really honored to have this speech. Today, thanks Boca, thanks George for inviting me. Always a pleasure. So, the topic of today is very complex. So, OTT regulation and business that... No, I have a different mic. So, I need this one. Okay. Hello? Oh, yes, yes. So, today's topic is very complex. So, I asked myself what I can bring to this gentleman, to this ladies today. And I understood that you, part of you are an entrepreneur and coming in active in the digital world. And I am a management consultant. My clients normally are CXO, COs and telecom operators. And so, what I can bring to you today? I can bring my 15 years of experience in the sector. I've been, I'm an engineer. But eventually, I became the head of regulation and competition competence center in my company. Art of the little. Because I guess that my colleagues understood a solid base on network economics is the basis for regulation and competition. So, today, I'm about to speak about this. OTT regulation is not existent. There is rather a patchwork of legislation about in some countries for over the top player of software company. Probably in the coming years, even the acronym OTT will disappear. Because OTT was intended some years ago for the company like Facebook and WhatsApp and Google. Now, they are too big to be called just OTT. They are shaping the world. So, and today we'll be about this. To let you know how I see the big transformation going on in the digital sector, including software, device, electronics and telecoms. All right. We have an issue. The first chapter is the problem. And then we will discover what's going on in the big discussion. So, operator in particular, mobile network operator. Why mobile network operator? Because mobile network operator rely their business still 60% on voice business. And OTT, introducing VoIP or introducing messaging platform are destroying these businesses. So, this mobile network operator and OTT increasingly compete. And in markets where now they argue there is a lot of imbalances between operators and software. So, they compete across a number of market domains. And if you look at them, network operator normally are heavily regulated because they bought the license. So, they bought the rights. And while OTT, no. They just enter into an open market. But at the end of the day, they compete in the same market but on a completely different basis. They have a different tax system. They have different privacy rules. They have different labor basis. And these, some argue, can generate a differential source of competitive advantage. So, these areas of asymmetry are discussed. If or not these asymmetries turn into a differential competitive advantage, we will see in the coming. We don't know if the regulator will accept this because we don't know at which extent these imbalances are creating, really, a non-level playing field among the, or between the two sectors. Regulation, in any case, should be modernized. Then a personal comment. We are talking about a very innovation-driven sector. More regulation, or more regulation, but then in general, is not good to innovation. So, eventually, we want definitely a better regulation, not necessarily, and I would say we don't want more regulation. This would be the idea. So, I don't know how much you are familiar. Normally, I work at the CO level and I provide the big, high-level synthetic figure about what is going on. But definitely, I mean, you see, I mean, OTT are thriving. I mean, just an international market, for example. The red line here is the billion of minutes of an international telephony. Look how this goes. Why, if you take Skype, it's just growing. Increasingly. So now, probably Skype is half of international voice business. The only Skype. The biggest telecom operator in the world, working at... I don't know, is it working, still working? No, no. It's not working. Probably I need to... Hello? It's not working. Hello? Yeah. So Skype is the biggest telecom operator. It's Tata as like 40 billion minutes. International traffic. Skype has something like 160 billion minutes. In the messaging sector, you know that what's up is outspacing everybody else. So it's improving like hell. And only now, probably, this will be the last year of global growth of a total SMS. That's a big turning point. So probably this year or maybe next year, we will see the peak of SMS volumes, then decrease. It's not necessarily true. This is just a forecast, right? Because the SMS can be reinvented in many ways. Because WhatsApp, for example, is not a secure service. It's just for your chat. SMS may have a legal value because it comes from a trusted network. So you have to take this forecast as an indication. But in reality, the world can change a lot. The competitive trends are reflected on the value chain. And this is what's more interesting for banks, for CEOs, for chief financial officer. So the value is shifting. If you look at the value chain, overall value chain, the global value chain in the digital sector, you can name network operators, device manufacturer, Apple, so Samsung, equipment manufacturer, Nokia Siemens, Alcatel, Huawei, Ericsson, software company, IBM, for example, content provider, Time War, Disney, and internet. It's a Google, Facebook, Amazon, right? If you look at the real money, which is no revenue, which is free cash flow, normally free cash flow is the gross margin that you have, technical term is called EBITDA, minus investment. This is free cash flow. So what is in your pocket after you get your revenue and you made your investment every year? So in the last six, five years, a telecom operator that gained the most of the value, so the peak, 34% of the cake, they decreased 3 percentage points. Devices increase, so Apple is happy. Equipment decrease, so Huawei, Alcatel is not happy. Software company increased a lot, 5%. Content to comment. Piracy is destroying content. First comment. Second is smaller than you could think. Content seems a very, very big thing, but global is the smallest. And then internet is getting... So we track this number every year. We have a tool we call the Value Tracker. But these give you, in one chart, where the money is going over the value chain. If there are these shifts, it must be disputes, it must be arguments. People are fighting. This is the why. Where we will go, we don't know. Well, some more numbers, because the numbers are always very good. So telecom operator earn $1,500, $1,600. This is the total pool of revenue of telecom operator. At the moment, over the top company are digital company, if you are entrepreneurs in digital company, earning 10% compare, so a tenth of it. So $150,000,000,000, $160,000,000, but it's increasing every year 15%. So the telecom operator get the money from data, a lot from voice, and a little from pay TV. This is how they get money. OTT takes a lot of money from e-commerce, Amazon, a lot from advertising, Google. Then we have media games, and then we have travel software, general software, human resources software, food related software. And there are many, many, many others, of course, but tiny, tiny sub-segment. Now, what's the pool? We have more or less 2,700 internet users in the world. 700 million are fixed, 2 billion are mobile. The internet company want to be closer and closer to this guy, the user. In the between, there are the telecom operators. They want to get closer, so search for proximity, and access network, telecom operator, don't want to be disintermediated, want to remain in their position, because I mean, being in the middle can creating an arbitration point of further demand. So a big debate about net neutrality is now going everywhere if you have heard of a net neutrality debate. And the story is that access network wanted to charge as they did in the past from end user, but they wanted to charge also from internet company. Now, this double-sided market created some tension. This was the very beginning, but in reality now the net neutrality has to do with the freedom of speech, it's a philosophical and religious story. It's now becoming so political the discussion requires a complete session to discuss about it. So we will not treat the net neutrality debate. We're not even interested because it's now becoming so political that it's not good for you, I believe. The hyper-giant, this term was started two, three years ago in the European community. So the hyper-giant named like Google, Amazon, Netflix are enjoying extra cash flows. They are now even investing in physical assets. They are building their submarine cables. They are building their data center. They are building, even Google is building their own fiber in Texas, I think, in Austin, in Austin. So they build also some morrow, I don't know how technical you are, Conte delivery network that are server and software platform for web acceleration. Because it's understood that the internet is, the topology of the internet is not enough. If you want to increase the experience, will improve the experience over the internet you need to bring the content closer to you. So the server that is serving me must be kilometers away from me to give me the experience of being fast. Otherwise, if I all the time try to access a server in Chicago or in Palo Alto the experience will be too poor. So this evidence is increasing the level of litigation between the two parties because they are entering in the typical domain of a telecom operator. Another area of discussion is this big guy's Skype, Viber, WhatsApp, Uber, taxes. Airbnb is a hospitality. And YouTube, in reality they enter in sector where specific licensing was available. They didn't ask for it. They didn't even pay for it. They didn't apply for any of this license. So they just enter into the market. So we have a telecom license, transportation license, tourism and media copyright. So they brutally enter into the market and that just created innovation. They even skip any privacy and data protection rules. In many countries there are rules that are available. Now there are two considerations here. If you go in a telecom operator say why do you don't launch this new service? The telecom operator will say because data protection and privacy law prevent me from doing this. And then you argue but Facebook is doing. Google is doing what you are not doing because they belong to a different jurisdiction. Who is chasing them? There is no capacity for extra national jurisdiction, regulation power. So the sentiment is that OTT are more free to do what they want against the rule. Taxation, I will bring some data here. It's not applied to this part of the world but if you go in Europe the taxation is a big issue. And then also local law or competition law. Facebook merged with WhatsApp. Nobody thought of raising a complaint or issue of antitrust law, for example. They just merged. And while if you merge to telecom operator there is a big discussion on national level if this is allowed or not. Internet players are said to enjoy a lot of tax shields. So there are a lot of simulations. So you just go over the internet and you find your way. But normally the problem is that ATOM, normally OTT is very much an American company. So ATOM they pay taxes. Google. When they are abroad they pay less. This is true for Apple. This is true for Amazon. This is true for eBay. And this is true for Facebook. A situation of imbalance like that one creates not litigation between telecom operator and OTT. Create litigation between parts of the world. There must be a war between Europe and US over there. And this war is materializing now because, as you know, Google has been allegedly accused to have a monopolistic power over the search engine in the European community. This is just an attack. But for a battle that is much in a war which is much bigger. So what is happening from a European point of view a lot of money are migrating from European community to US because of this imbalances of the system. So this creates geopolitical struggles. Someone started to calculate the unfair advantage of OTT. They say that at the moment the Microsoft and Google of this world, American company enjoying almost 50% point against the typical telecom operator, telephonic or whatever. This is a typical European name. A more fair or a less imbalanced system would reduce the gap of just over 20% point. So just changing the taxation. So lots of people are commenting that this should be the level playing field. What is important for you? This is a big, big discussion for telecom operator. What is this for you? For you is probably the fact that there is a political tension, a regulatory tension, to bring some control over the software domain. This, it isn't me, but definitely is a good food for your talks with high level representative of telecom operation if you want to have a partnership with them an alliance if you want to make a deal. Because of course the telecom operator are in big urgency to find a solution because these imbalances are destroying the value base, the value pool of their business. All these issues go on the press every day. They are constantly noted in public press. Sometimes in a very controversial way, sometimes the people, the journalists are not really prepared to deal with these issues so there are a lot of mistakes in the analysis. Unfortunately now it's becoming political. So even net neutrality is a great currency for politicians that want to get votes. You achieve a point in which, or you reach a point in which there is no really rationality and there is no technical explanation of why. It's more because there is a short-term currency to get the short-term benefit out of this discussion. You can even have a fun in tracking the number of disputes that are between over the top and telecom operator. And definitely, I mean, we found the number. Almost we have 15 over there. The good news is that the green one was where self-sold, meaning that the both parties found without big lawyers a solution because the value at stake is too big. The innovation is too fast to litigate. The bad news is that the number is a little bit increasing. What is nice, what is nice that in general disputes are driven by the fact that telecom operator want to block an OTT. What is starting happening now, just one case, is that OTT want to block a telecom operator. Say, if you don't commit to my requirements I will not share with you my content. If you call the time Warner or Disney or YouTube you just don't share your content. The impact on telecom operator can be very, very serious. Okay, so looking at the future we need to, I mean, I understand that this is a little bit more a lecture today about competition but I think that this is a nice content for you. It's all about the nature of competition and what we need to agree today is that competition has dramatically changed over the last year especially in the telecom sector. An innovation-driven environment requires definitely a new regulation. Now, you should say, but why would I care about regulation? Again, you may care of these complex issues because you want to be informed or you want to participate in the discussion and definitely if you meet any CXO, CO, in telecom company you need to speak this language to get along together. So, first element of this change in nature of competition yesterday we had very few products now customer demand is very, very complex when a customer requires something it's a sophisticated demand yesterday was just bread now is an experience of having food if I can use the analogy of the food so we moved from mobile telephony to mobile computing mobile computing is a universe we will give you some evidence which is huge yesterday was about scalability and reliability of networks is my phone line working? Yes or not? Today is about which application shall I choose what is more performing? Yesterday customer demand and customer choice was just based on a number of few features related to the product and now there is a multiplicity of aspects so first of all now try to understand what the customer wants is a very difficult job second element, so first of all demand is difficult to track second element, intermodality intermodality means that if I am a player in the content arena I attack your domain which is telecom if you are telecom you are in the fix attack another segment that is mobile so players learn to bundle service all together I sell you mobile fix content and maybe even a ticket to Jamaica and a lesson for your children all together I tend to put at the beginning at the center of this bundle my core product it discount anything else so I kill your market to defend mine cross subsidies, cross subsidies in many industries are not permitted in the digital sector are brutally permitted cross subsidization so I use the extra margin from my product where I am a champion where I am a monopoly to subsidize something else this is very interesting and create disruption even people lose job ecosystem are the new form for generating value we will spend some time here to define what is an ecosystem so yesterday was a competition based on specific market now are ecosystem that combine different market today what is important is not to make money the very first objective is to have a customer control when I have a customer control, customer dominance I wait for you to die then I can price whatever just later I will show also this part the global scale if you play at the national level and you have to compete with the global player well it's a tough task and if you want to be defended against the global player you don't find an institution that can help you I mean you can ask Samina that is multinational but Samina today has not the legislation power to help you so even in Europe we have a big market which is a US which is a federal market by design so they enjoy at least 250 million people market with more or less one legislation now probably is not so true in Europe they are trying to do the same but in reality I have 28 countries but to give the power to Brussels is a very lengthy job in the rest of the world there are just specific small countries except the Cap 3 China, Russia and India that can give them their sides you can imagine this country like a sort of market by itself China de facto has its own internet which is a sort of internet so there is a problem regulation you don't have the power, the legislation power to manage these global players fourth point unfortunately the future is not so certain like it was in the past so future scenario given the pace of innovation of the digital sector are impossible to predict so unpredictability is the only thing that you know right now and this creates a lot of problem in regulation because regulation is based on something that must be must all true for at least 10 years right in Europe a regulation, a regulation window this is between 3 and 5 years you know in digital sector in 3, 5 years what can happen and this creates a lot of problem last point that you believe or not in network, in the networks, telecom networks there is a huge scope for innovation you may think that the broadband that you experience today is all you can have and the discussion is all about moving from 1 megabit to 10 megabit to 100 megabit to 500 megabit to 100, to 1 gig is not this the networks they are today managing the internet are really a prehistoric way, a prehistoric technology for providing you the service there is a huge work to be done in the future and what we have the possibility we have with the more advanced networks is huge so one point is that we don't want to kill the innovation process within the networks and this is a point that is difficult to understand and probably my friend in the telecom sector don't explain very well this point because all the discussion is about moving from 2G, 3G and 4G and tomorrow to 5G from copper to fiber but it's not like that, it's more complicated it's really much more complex than this speed, for example today are really much less relevant than in the past at 10, 20 megabit you can do a lot of things what you miss are completely different parameters probably you don't know is latency is the delay in the response of something is the click something which is the delay in which I receive the service is counted in millisecond 100 millisecond, 50 millisecond, 1 millisecond this is a huge impact I will discuss again more deeply this point later so let's associate some charts to the five points that I just introduced to you I found this from a vision mobile a number of charts are very nice but they make in a very simple way yesterday four apps messaging mail, internet, some voice camera, this was the world of the past now more than 1 billion apps service, telecoms, this was the past today mobile platforms which has nothing to do with telecoms this is old software, this is old wires old antennas differentiation, how to compete was the quality of the network in the past today is price competition for my friends in the telecom sector all they have is price competition what is the new competition? yesterday was my network is more reliable than yours so the voice call doesn't drop and my network is bigger than yours when you travel to Jamaica, I can cover you this was the old paradigm now it's just choice I can offer you more I'm more flexible in combining your products I can be as close as possible to your exact needs in just six years this transformation so it's called mobile computing now smart phone the word phone is really, really reductive this is very nice yesterday the telecom sector was about 3% worldwide of the spend of your pockets today the mobile computing cover the total variety of your spending you have an app for that this is the claim of apple you have an app for education, communication, housing, transport, food, recreation, restaurant, furnishing, clothing, alcoholic health you have an app for that so you can imagine the world of digital is how much is 33 times bigger than the telecom sector in theory to cover the 100% spending that you have and so there is a huge a broader scope for consumer need to address there is the certainty that internet is a must have to communicate I mean you cannot live without your Twitter or Facebook today, you miss something and consumer move from one platform to another in hours so every hour I switch between WhatsApp, Skype, Facebook, Twitter, LinkedIn every hour I check this and I move and consumer choose the platform and services of a variety of aspects that's why I said at the very beginning multi-faceted customer demand so it's so complex of course the telecom operator is in big trouble in this so if you are entrepreneurial in the digital sector they need you they need you address this world because the majority of their organization is about 2 wires and 10 maybe walls of data center right so they need you that's why I thought that this I understand this is a regulatory topic it's very complex, very technical very telecom oriented but it's the basis of the knowledge that you should have for interacting at the maximum level with the CEO of a telecom company and the other assumptions they need you desperately intermodality just to give a chart to the concept of intermodality a cross-industry competition this is nice yesterday the Guardian, a newspaper was fighting against the Sun another newspaper Vodafone was fighting against O2 today Sun is fighting with angry birds because the need is not buying a newspaper but it's killing 10 minutes of your time between when commuting from home to the office so the need is completely different we have a reschedule yesterday was to buy a phone line of phone services today Vodafone is competing with WhatsApp to keep in touch with the front so the reformulation of the need, the basic need is all that is driving the change so yesterday was defined by product feature people like me, an engineer today is defined by product benefit what is that for? so the perspective has completely changed so customer oriented a famous word customer driven in reality you should unfortunately you cannot make a survey in the past, in the marketing strategy of the past there was something called the focus group the company wanted to ask you what is your next innovation simply the market doesn't know what is the innovation you cannot ask your customer what do you want more you can invent something then ask you like this or not but you cannot ask in innovation you cannot ask your customer if what you are doing is what they need they just after experience your service they can say this is interesting so that's why it's so difficult so what is happening now and we discovered this that markets as were defined by regulation yesterday are completely artificial constructs of the legislator today Amazon compete in all the layers of the digital value chain and Facebook do the same Vodafone do the same Micro do the same everybody is competing with everybody so let's read some points e-commerce players are actually active in advertising sorry you were selling goods and you are active in advertising why? advertising company are active in electronics electronics player provide internet services so everybody would want to kill everybody else online retail advertising gadget and internet service they are all different market but clash against each other so all these guys all compete in all markets okay try to design a regulation for this so the regulation as was written in the past was this is the market of a pasta this is the market of a pizza okay and we have a pasta we have a barilla competing with someone else and in pizza we have I don't remember the big name now it's a completely different so those artificial constructs were created to make sense of the business world yesterday intended to compare similar products and companies but today is not possible so imagine I mean when normally I'm asked to help to design the modern regulation but it's very difficult what is really driving the competition our ecosystem yesterday in mobile telephony we had a network the antenna and all the ecosystem around right it was the network was having so the telecom penetrating relationship with the supplier Nokia for the Samsung and Sony Ericsson for the mobile phones then you have the supplier of technology and then then you have the users and then you have some content ring tones okay and then the institution now is like something like that is an incredible an incredible networks of relationship that's why in most of the strategies of telecom operator partner management is a key essential ingredient to thrive in the future yesterday was just a sector now is a competition between industries but we want to learn more about this ecosystem because it's nice ecosystem are tremendously effective and Apple and Google are famous for this right so Apple invented around the Apple Store and iOS platform an ecosystem that bring together mobile application developers with accessories manufacturer with the of course all the device up store and content platform and content owners so this mechanism if you count is generate the 150 billion dollar Google does much less compared to Apple but therefore completely different reason you want to dominate you want to be sure that you are loyal to Google you want to be the the way they create business is not with the classical tool of let's make a business case let's see if the business case turn positive now they introduce a number of products that create just drive your loyalty in the market to defend the core engine of their revenues which is advertising so they give away a lot of value to the customer just to secure the relationship with you now is at this level of the game is not yet your level but I hope so in the next future so this the main strategy said each of these guy try to excel in a specific point of the value chain see the red dots and then to a large even with no profit objectives Facebook start with the ads Google with the ads we have the networks we have the devices we have the software license we have the e-commerce but then everybody expanded in any other direction there are some evidence for example is believe that the app store revenue share so you know that Apple ask 30% of the revenue when you sell through the app store well apparently Apple is not making any profit out of it is just to maintain the mobile developers community out of it Android has been designed by Google to better deliver advertising not to make money Internet Explorer Skype are believe the strategy of Microsoft to defend the software base Amazon Kindle apparently is not making any money zero profit out of the hardware is just to sell more books WhatsApp was incredibly bought at 14 or 18 billion dollars just because he's believed that since we spend a lot of time on this messaging that can be in the future marketplace for selling whatever from advertising to e-commerce of mobile money in the future there is a big, big, big bet say there is where I mean they understood that you are spending more time over there more time and more eyeballs mean more advertising revenue and more opportunity Apple and Google showed us how innovation created deliver values so all the basis of the new competition is creating a network effect network effect means that the more the more people join the party the benefit that the people participating in the party goes exponentially and non-linear okay so this is the mathematical definition of network effect so the value of the network grows exponentially square two the the number of people participating to the network so these are these were all the platform this was a typical software platform this is a communication platform and this is an app ecosystem platform so you had the participants in the past were just answer maker and here were user they use both they create a double network effect because bring together more user call more the developers more developers call more user a virtual cycle as is being created so and in fact the winning factor is connecting user with developers this was yesterday the model were completely different was sharing cost the idea was to share cost so I am engineer you are engineer we build together the platform nobody fault of linking together with you user or the communication platform were too much focus on telecom sorry on user on developers so network effects with the objective that the winner takes it all is the strategy they implement so when you win with the network effect at least you get between 70 and 90% of market share in that specific context because is a close system by definition the grow in fact is exponential and here is the regulation problem the platform or engine of your competitor is a monopolistic rent is closed group so is not open is not portable cannot be shared and there where the regulator should investigate in the future so apparently if you are a developer of Google you try to you work actively in this software segment you can immediately tell me that the Google software ecosystem one of the closest in the world so you cannot change you cannot propose everything has been designed to favor Google objective not even the consumer objective and this from a regulatory point of view is complicated the problem is that new entrant so newcomers would need to achieve the impossible to reach the same level of Apple and Google today so is almost impossible to win that game because you have to bring together is manufacturer, user, telecom operator partner and content all in the same in a very very fast way so achieve the same outcome cheaper, faster and better it's difficult the whole side of network simultaneously in case you fail even as a newcomer you would oblige your customer to incur the switching cost from one platform to another so at the moment what I'm telling you is that from a regulatory point of view if the ecosystem concept as a definition is understood at the level of regulation these will probably be a topic for modern regulation so we will not have more the definition of a market the definition of a product we need to have a way to manage the concept of ecosystem so how this ecosystem generate is based on now something is called I found this very interesting asymmetric business model why is asymmetric? the way they call it asymmetric is because I have something which is for pay and I give away a lot for free so asymmetric in the sense that I defend a product where I want to get money and I give 90% of the customer value for free so just 10% so that's why telecom operator are so unhappy this company destroy the value of 10 sms to retain the value of 1 sms so destroy 90% to keep just 10% for them but this 10% at the global level so it's a big number for them in any case a telecom operator just working on a small market so cross industry business model force profit to migrate from one market to another so what's up from the telecom sector destroy value in the sms market and I get money in the advertising so there is a profit migration this powerful competitor with this mechanism are created in second because I give away such a clear value proposition for free that is very effective and this disrupt giant company so immediately big incumbent become all the dinos ours in second and once the dinos ours is dead I can of course rule again so the typical asymmetric competitor destroy wants to find the market where to destroy some value by supplying loss making products and in this bundle bring something that generate some revenue the asymmetric competitor benefit from increased demand in this bundle the product and what he does is that redistribute huge value to the end user and just a small part of the value keep for themselves so this is and if you see Google is incredible Google operate in mobile TV personal software enterprise software personal computer travel energy and transportation and this list is not exhaustive for sure okay so he's creating a lot of a touch touch point when in reality are hooks to you okay to keep close to to the ecosystem so asymmetric business model this is interesting have a no market boundaries these competition elements I think are good also for your strategy by the way of course we studied this element today from a regulatory point of view but competitive games tactics, strategies in the market so in reality you can bundle your product whatever I was mentioning the pasta, the pizza, the travel you can link to the digital good whatever you want the good thing is that you find the market that is complementary to yours right so you have a core product and you see what is then you boost demand in this market that are complementary to to yours by giving that product for free and let's create a winning product fantastic winning product then you bundle and you create with this bundle you have a competitive advantage compare to the old dinosaurs that were working in that domain and then you push for migration of profit from these complementary markets to your core product now this is working very well in the digital world because the marginal cost of a digital good is very very small so if I have to generate a product for George or for one billion customer the additional cost of providing the service for one billion is marginal and that's why I can do it ok so in that case really the competitors squashed because I mean a big incumbent has now a telecom operator has between 100 million to 150 million clients any hyper giant or TT play with the one billion they are always one the order of one billion so in the in the I don't know how many of you studied economics I didn't but the volume effect in the old books was about scale efficiency was so economy of scale right or economy of scope if I remember well no this is not what is driving this company today they want to just just integrating and improving customer experiences completely different way to compete they don't want to improve their cost they want to create the ecosystem so the economical logic is completely different from what we studied at the university and this is the effect that we have if you make an analysis of a market share operator small chunk at the global level and then if you go up in the value chain you discover the microsoft for example as 90% market share of software market more than 50% of mobile operating system market apple has more than 70% of market of up store so it's clearly that the dominance monopoly rent all the concept of regulation where we have new monopolies up in the value chain what so we are moving from a local dimension a global dimension and now what is happening is that the net neutrality problem is moving to a search content neutrality because the problem of dominance is moving here here we have the new monopolistic guys so the problem is we have a few dominant marketplace we have no device software interoperability we are moving from an apple device moving your content from an apple device to a blackberry is not possible or to android is not possible we have a few web acceleration platform even I mean this is a very technical I wouldn't spend that much definitely in the search and content domain and that's why Europe is accusing Google of maneuvering instrumentally the search engine to it's favor to be honest this innovation in this sector was after many years these platform software platform that we know today apple android blackberry windows phone are coming out a number of attempts in the past they were just not successful so people tried and tried and tried ok so the lesson learned for us is just it's difficult to understand what will work and what won't work so uncertainty and unpredictability dominate the digital sector so these windows are out of the ashes of many many attempts done in the past ok so what is the last point very important is that in this environment and this is important from a regulatory point of view because we need the certainty to write a new law we need the certainty to write a new regulation but we don't have the tools because we don't have a predictable scenario in the future don't use anymore the business cases not working in this sector so the conventional planning methods work for infrastructure investment telecom sector but it won't work for the digital sector so my friend telecom operator trying to apply their investment logic to the digital sector will just fail traditional financial tools fail because there is a reason they don't value the cost of doing nothing when you have a business case and this is not very nice and not comparable to telecom you should compare with the fact that it is lower to your previous profit you should compare to the cost of doing nothing so that means that high level of uncertainty require a completely new approach it's called discovery driven you will try ok by attempts and the best company what they do they attempt and immediately they start with the assumption but they are ready to change the assumption every month there is a famous story of Instagram Instagram was intended as a messaging platform at a certain point they discovered that people like to share a photo immediately they change the objective of the platform from being just a messaging platform to a photo sharing platform but they change the assumption as they learn from the first feedback from the market this was impressive and now Instagram is believed to overtake Facebook even because it's more picture centric last point on the networks what I want to give to you for today is please don't believe the networks today are the best so I'm really against the net neutrality law because I have no clue of what is needed in the network a network is done by four layer the access which is the antenna or the best central office close to your code a core part and then the application meaning for the network point of view each other part is subject to a big innovation that is not yet here so what you must believe and please send this message to your next meeting with the CEO of a telecom company there is a long way and long scope for innovation in the networks this will please the CEO they need you so the future will be about the giga connectivity this is what you know already speed but millisecond latency I told you already seamless connectivity meaning that you want to switch from one another access network with seamless without that you realize this quality control of demand please please give me a product that can connect me to Boca when I'm in Rome because I want to have a video call high quality I don't have this product right now okay I try Skype and 70% of the time this quality of Skype is not working we don't have a product for that and if I ask for a specific product I should go for an enterprise product I should pay $10,000 a month for an MPLS protected connection I wouldn't pay this much for this and then I would even more complex stuff for open architecture I don't have the time to say this so the last three slides thinking of a regulation modernization in the future requires to think of a completely new market scenario in which we have innovation and we want to tell the regulator that we have just learned that innovation requires a big number because the ecosystem that we we just described are based on a billion of users right so this is quite important the telecom sector because if you keep telecom operators small in the number of 20 30 million clients you don't have the user base to really to implement innovation you need scale for innovation so the thesis is don't be scared of creating massive infrastructure in few number of players so consolidation is probably a big trend for the future of telecoms ecosystem and partner platform the values generated through this this tool that I described so I need scale when I scale I need the partner network to bring the element for each partner and then the value is created uncertainty I'm sorry I don't have the crystal ball so I need the rules that allow me to scout different solution if you as soon as you introduce a rule you distort a natural process for innovation so uncertainty mean that from a regulation point of view you need flexibility technology progress and adoption must be taken for sure technology has a huge scope to improve and be sure the customer will like it will adopt in a very short time so this is the basis for modern regulation if you ask me a guess about how the regulatory environment will look like in the future will probably be in levels three levels about network regulation probably we will see the rise of a digital service regulation unfortunately as I will say in a moment this is a patchwork in the world and then we will have horizontal regulation a number of rules like privacy data protection are not about technology it's about people rights contractual powers there are a number of public interests are not specific to network regulation neither to digital it's just horizontal so probably what we will see is the creation of these two recipients and we will see a lot of laws moving from one recipient to the upper one this is my big big guess for the future of regulation that will imply a big thing for my friend or telecom operator it will less regulatory burden at the network level a more playing field so probably we will see more regulation for OTT but broader and you will not really distinguish if this is regulation because you are a digital player or this is regulation because it's just horizontal law privacy I mean it's horizontal law there are just some roadblocks this will take a long time because to implement changes the first problem is that we understood that often legislative power is needed legislative legislative changes takes ages gladge and ages so this will imply probably to be effective we need new laws but probably it will take time some part of the world have less of this so emerging countries normally miss this part this is more true in US on Europe so we will have less tools to balance all the party then another problem is many many parts of the world are introducing specific laws India, Russia Vietnam are introducing some obligation for cloud provider, machine to machine provider social network social networks specific laws and when you introduce this at the national level you don't have a platform that organization like Samina could facilitate so you end up with a lot of implementation and hindering the process of having because then you have to always manage the local level with the global scale it's impossible to think that there will be part of the world where you don't have facebook you have in reality today there are countries that just don't allow this and then taxation taxation in the sector of digital sector between telecom and RTT I said at the very beginning it's a geopolitical war between geographies it was a long journey a lot of information I couldn't stop but I just want to give you a flavor of the most complex issues that are discussed in amongst you the highest level of institution in the world I hope that you enjoy a little bit about this thank you and I hope any question of course