Goodbye from Watching the Connectives: hello from The Digital Watcher

Rob Bratby

To all my readers, thank you and goodbye. This blog is now an ex-blog. Continue reading

Global IT tariffs eliminated? WTO wakes up?

Used under a creative commons licence granted by Alejandro Linares Garcia

Used under a creative commons licence granted by Alejandro Linares Garcia

“Mr. Praline: Look, matey, I know a dead parrot when I see one, and I’m looking at one right now.

Owner: No no he’s not dead, he’s, he’s restin’! Remarkable bird, the Norwegian Blue, idn’it, ay? Beautiful plumage!”

– Monty Python

Based on a press release from the World Trade Organisation, and tweets from its Director-General Roberto Azevedo it would appear that the WTO is about to defy persistent reports of its death and come back to life with its first agreement on tariff elimination in  eighteen years.

Covering a wide range of technology and IT products including new generation semi-conductors, GPS navigation equipment and medical equipment, including magnetic resonance imaging products and ultra-sonic scanning apparatus, the proposed agreement will lead to the elimination of import tariffs in a uniform and non-discriminatory manner – the [no WTO member is treated worse than the] ‘most-favoured nation’ principle. The WTO estimates that the value of trade covered by the prospective agreement amounts to USD 1 trillion.

In recent decades, the process required to reach agreement at the WTO has resulted in deadlock and an increased focus on regional trade negotiations such as TPP, in part because these are perceived as being easier to reach agreement by virtue of involving a smaller group of participants amongst whom a common goal can be agreed. Further, whilst students of David Ricardo still extol the virtues of free-trade, in recent years the WTO has come under both attack from populist anti-globalisation movements and domestic anti-trade liberalisation political pressure in many countries against trade liberalisation.

Against this backdrop, why does it now seem likely that the WTO will reach an agreement including the world’s largest trading blocs (US, China and EU) as well as much of SE Asia?The simple answer to this question is that everyone has something to gain. The reason for this is the global spread of technology – almost every country has technology exporters of some sort (bearing in mind that many manufacturing facilities for MNCs are in low wage economies) and/or see clear benefits in importing technology.

It is welcome to see that the global community still sees the benefit of global trade agreements – the next big question is whether this will lead to a wider reinvigoration of the WTO as means of advancing trade negotiations, as opposed to regional negotiations like the TPP?

 

 

 

 

 

Insight to China, India and Japan’s communications markets from Ofcom report

Ofcom this week published its most recent report comparing the UK’s communications (telecoms, TV, radio, web and post) market with 16 other countries, including China, India and Japan.  Whilst Ofcom’s press releases have focused on the comparatively good performance of the UK (which oddly enough seems to reflect well on the UK regulator – Ofcom), the report also contains some useful insight into the three of Asia’s biggest economies: China, India and Japan.

Some of the interesting snippets of information from the report include:

  • Mobile take up continued to exceed population size across all comparator countries with the exception of China. However, in China the number of mobile connections per 100 people more than doubled in the last five years, up from 40 to 83.
  • Smartphone ownership is now commonplace among comparator countries. Excluding Japan, which has a very high take up of advanced featurephones not readily available in other countries, the US was the only country to report a smartphone take-up level of less than 50% in our online survey. The majority of respondents in all other countries reported that they now use a smartphone.
  • Global TV revenues increased in 2012, by 4.1% year on year, to £252bn, driven by an increase in both subscription and net advertising revenues (up 4.4% and 4.6% respectively). Despite the challenging economic conditions, global TV revenues have increased by 4.4% on a compound annual basis over the four years since 2008. As in 2011, the BRIC countries – Brazil, Russia, India and China – experienced the largest year-on-year growth, with their joint revenues increasing by £4bn, or 12.4%, in 2012, to £37bn.
  •  Japan had the second highest spend, at £7.50 per head on mobile advertising.

The table below (reproduced from the Ofcom report) summarises key statistics by market:Ofcom summary table

The importance of understanding ‘face’ for doing business in Asia

Whilst the focus of this blog is the intersection of telecoms and technology with law and regulation, it does occasionally stray into ‘softer’ topics. With the first anniversary of our Singapore office coming up after the lunar new year, I was reflecting on what I had learnt in my time here.

Just after arrival I had blogged about the importance of face to face meetings, but with hindsight I was only scratching the surface of a much bigger issue in the high context cultures of SE Asia – that of ‘face’.

When arriving somewhere new, I try to ask those more experienced what is the most important thing they have learnt. Almost every conversation (and every conversation with those who were very successful) came back to the issue of ‘face’: building it, respecting it and, above all, making sure that your business partners do not lose face.

For individuals from low-context cultures such as Europe and the US, the whole concept can be baffling. Why on earth would you ‘waste valuable time’ on a short business trip to Asia, meeting, having dinner and talking about everything but the deal? Why don’t meetings start on time, and then briskly move through an agreed agenda in a smooth path to achieving the objective? If there is a problem, why not raise it clearly then argue out agreement through force of business logic? Surely the most efficient way to resolve things is to send an email with a numbered list of points for the other side to respond to?

The problem is that all of these things (that make sense in the context of a deal being negotiated in London, New York or Berlin) may not work as well in Asia. Success depends on building long term sincere relationships through building face for your Asian business partner and ensuring that you do not (even inadvertently) cause them to lose face. If your business partner loses face that may, sometimes entirely unexpectedly for the non-Asian party, jeopardise the deal for reasons which can appear inexplicable.

With thanks to @singarbitration, here are a few tips to make things run more smoothly:

  1. Business tends to be done based on long-standing personal relationships or the proper introductions and/or connections, so make sure you have the right introduction if you want to make contact with a new business partner.
  2. Many local businesses may be risk averse and cautious when it comes to doing business with a party for the first time, especially if there is no prior relationship and time hasn’t been spent building a relationship.
  3. The Confucian mindset still holds sway. Rank is always respected and age tends to correspond with seniority, both of which are revered. 
  4. Status and hierarchy are important in business culture where companies tend to have a top-down structure. Decisions are nearly always taken by the senior management and subordinates avoid questioning or criticising their superiors.
  5. Show respect to your business contact (especially if more senior than you in age or rank) by being polite, but avoid being too friendly.
  6. People are reluctant to do anything which may risk them losing face, e.g.  over-promising and subsequently under-delivering. One can “lose” face not just for himself, but also on behalf of the group that the person represents.
  7. Expats who have lived here for many years may think and act more like locals. Do not make the mistake of assuming that just because you’re dealing with an expat, he or she will be comfortable doing business on the same terms as, say, in Europe or the US.
  8. Many business people are soft-spoken and passive when it comes to verbal communication, preferring to listen more and to say less. This does not mean that they don’t have an opinion or an idea about something. You will just need to give them the space and opportunity to voice their views in a forum that they are comfortable with, e.g. informal one to one rather than large group meetings. Look out for non-verbal cues in particular.
  9. When in a discussion, do not interrupt. It is polite to take a slight pause before responding to a question because it indicates that you’ve given the question appropriate thought. Responding to a question too quickly can be translated as thoughtlessness and even rude behaviour.
  10. You will find that many business people do not like dealing with people who ‘talk big’ or act as though they know better. You are likely to make better progress if you tone down your sales pitch and show humility and respect.
  11. Communicate your message clearly, but avoid being too direct or blunt. That goes for comments or feedback as well.
  12. If you get a response like “I will try” or “I’ll see what I can do”, that is usually a polite way of saying ‘no’, or declining a request whilst at the same time allowing both parties to save face.
  13. Business negotiations happen at a slow pace and decisions are not made hastily. Local businesses and government take time to make decisions. Decisions are consensus driven which naturally takes time in larger organisations.
  14. As a foreign visitor, bear in mind that first visits do not usually result in business. You can mention a deal and see if the other side is interested, but don’t push too hard.
  15. Show that you are patient as this indicates that you are sincere about doing business, here for the long-term and not looking only for short-term gains.
  16. You generally need several face-to-face meetings with a contact before you can make any meaningful progress. Face-to-face contact is generally key to developing the necessary personal relationship and trust. It is not enough to just send regular emails, or phone them every now and then.
  17. Meetings typically start with handshakes and exchanging of business cards. You may wish to arrange the cards as you sit down in the general order of where people are sitting so that you remember the names of the people who you are speaking with.
  18. Use both hands when you exchange business cards. Do not give a tattered card. Study the business card as a show of courtesy and respect. It also gives a sense of where the person fits into the business hierarchy.
  19. When meeting a person for the first time, it is prudent to use the appropriate title and last name until told differently.
  20. Business meetings tend to start with informal chats. Talking about travel especially if you have been traveling in Asia recently is a good (and safe) ice breaker.

 (For those interested in the theory behind this, you can read a lot more here: Beyond Culture, Riding the Waves of Culture and Understanding Intercultural Communication.)

ADB’s Asia growth forecast highlights importance of services sector

When I opened my (electronic) Financial Times this morning, the headline ‘China slowdown hits Asian growth hopes’ seemed rather gloomy. As an expat European, I was bracing myself for bad news to follow, so was rather cheered to read the actual growth forecast for the region of 6.1%. Whilst that is a downward revision from the 6.9% forecast earlier in the year, compared to the continuing weakness across European economies it is still a very healthy rate of growth.

The article spurred me to check the underlying source – the Asian Development Bank’s Outlook 2012 Update report published today. The report’s summary contains a handy infographic summarising the importance of the services sector as a driver of Asia’s future growth:

 

The detailed report highlights the importance of high valued added subsectors including information, communications and technology (ICT) services, financial services and professional services as being both a growth sectors themselves and also providing spillover benefits to increase growth in other sectors.

Continued growth in Asian technology, media and telecoms sectors in 2012 despite Eurozone troubles

With the launch party of Olswang Asia happening tonight, I have been musing on the economic outlook for Asia in 2012 and beyond. At a very micro-level I have been very pleasantly surprised by the (extraordinarily high) level of interest in our launch and it looks like the party tonight will be standing room only. I wondered if my personal experience was indicative of the wider economy so have been reviewing a number of commentaries on growth prospects for the region.

In particular,  I looked at reports from the Economist and Insight Bureau. Both commentators agreed that the outlook for Europe varied from bad to very bad, whilst the outlook for America was mildly positive.  Whilst China’s growth rate is expected to drop into single digits, caused by a slowdown in its export markets, the consensus view is that the Indian economy remains driven by domestic demand. Whilst India’s reliance on domestic demand has resulted in lower growth than China, it also means that India is less exposed to the Euro zone slowdown than China.

So aside from India and China, what are the prospects in ASEAN? Its is sometimes easy to forget that Indonesia has an economy five times the size of Greece (to pick a random comparator). Whilst it is still less than a third of the size of the German economy, it is expected to sustainably grow at around 5-6% a year for the forseeable future, whilst Germany will be lucky to not contract. Meanwhile, its ASEAN neighbours such as Malaysia, the Philippines, Thailand, Vietnam, as well as South Korea, continue to grow strongly.

So, the upshot of my limited research is that my personal experience seems to be in line with the market (much as I’d like to convince myself that we are bucking the trend). However, I think there are others factors at play that mean that the technology, media and telecoms markets across Asia are in fact growing more rapidly than the region generally.

First, the rise of average income levels resulting from GDP growth means that the middle class (for these purposes defined as those on an above subsistence wage) is doubling every few years. Members of that rapidly growing middle class all have mobile telephones, watch TV, own computers and go to the movies. 

Second, as consumers become more assertive and the market size increases they are increasingly wanting local content, services and applications. Markets with revenue growth and consumer demand are increasingly resulting in local suppliers competing, complementing or co-operating with the more established global players.

Mobile broadband at heart of Europe’s recently adopted Radio Spectrum Policy Programme as WRC 12 concludes in Geneva

The wheels of European legislation have slowly turned, and last week Europe adopted a five-year radio spectrum policy programme, at Parliament’s second reading under the co-decision procedure. Readers will recall that last summer two key issues remained outstanding between the Council of Ministers and Parliament – the date by which the 800 MHz band should be cleared and the minimum amount of spectrum to be made available for mobile broadband.

In the usual European fashion, Parliament prevailed on one issue (at least 1200 MHz to be available for mobile broadband by 2015) and the Council on the other (800 MHz band to be cleared by 2013). Somewhat unusually, this horse-trading has resulted in a very good outcome with spectrum being made available early and in sufficient quantity to place Europe in a strong position globally in the race to enable mobile broadband. Of course, implementation is in the hands of Member States, so it remains to be seen how this will play out in practice.

Meanwhile, over in Geneva, the four yearly world radio conference of the ITU finished on Friday. The provisional final acts are available here, and whilst I’ve not yet had time to review in detail, mobile broadband appeared to do well there as well with press reports that additional spectrum in the 700 MHz band may also be made available.

What will the Trans-Pacific Partnership mean for the technology, media and telecoms industries?

Apologies to readers for the long hiatus between recent blog posts. With hindsight (and English understatement), I may have rather underestimated the time that would be taken up in relocating personally from London to Singapore to set up our office there. It is not without irony that I find the time to write this by being ‘snowed in’ in the European Alps.

It is traditional at this time of year to look back at the events of the year just gone and to look forward to the new new year. For the press in general, there seems to be a broad consensus that 2011 was the year when social media came of age playing a very large part in the changes described as the ‘Arab Spring’ whilst the sad demise of Steve Jobs means that the world has lost a innovator who I suspect that history will compare with Watt, Edison and Ford.

Looking ahead, whilst there are lots of topics that I could consider, the rest of this post will consider the implications of the Trans-Pacific Partnership (or TPP) on the technology, telecoms and media industries. The TPP currently includes America, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam whilst Canada, Japan and Mexico have expressed an interest in joining. At their latest summit in November 2011, the leaders of the current 9 TPP members published the following statement:

“We, the Leaders of Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, United States, and Vietnam, are pleased to announce today the broad outlines of a Trans-Pacific Partnership (TPP) agreement among our nine countries. We are delighted to have achieved this milestone in our common vision to establish a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges. We are confident that this agreement will be a model for ambition for other free trade agreements in the future, forging close linkages among our economies, enhancing our competitiveness, benefitting our consumers and supporting the creation and retention of jobs, higher living standards, and the reduction of poverty in our countries.

Building on this achievement and on the successful work done so far, we have committed here in Honolulu to dedicate the resources necessary to conclude this landmark agreement as rapidly as possible. At the same time, we recognize that there are sensitive issues that vary for each country yet to be negotiated, and have agreed that together, we must find appropriate ways to address those issues in the context of a comprehensive and balanced package, taking into account the diversity of our levels of development. Therefore, we have instructed our negotiating teams to meet in early December of this year to continue their work and furthermore to schedule additional negotiating rounds for 2012.

We are gratified by the progress that we are now able to announce toward our ultimate goal of forging a pathway that will lead to free trade across the Pacific. We share a strong interest in expanding our current partnership of nine geographically and developmentally diverse countries to others across the region. As we move toward conclusion of an agreement, we have directed our negotiating teams to continue talks with other trans-Pacific partners that have expressed interest in joining the TPP in order to facilitate their future participation.”

In its commentary, the Economist noted that the TPP plus the interested three constitute over 40% of the world’s GDP – more than the EU. However, there remain serious obstacles to Japan’s accession and the TPP discussions notably omit China, India, Indonesia and Brazil. It is also unclear whether regional trade arrangements complement or hinder the work of the WTO as countries prefer to deepen trade within the content of regional agreements in preference to opening markets more generally. Commentators have also commented unfavourably on the implicit export of a US-centric model of intellectual property law, and it appears that there is significant resistance to to TPP in a number of countries including US, Malaysia and Japan.

So, what might come out of the current negotiations? A background paper was published to the negotiations which summarised the agreement in more detail. Some of the sections that caught my eye were:

  • Investment. The investment text will provide substantive legal protections for investors and investments of each TPP country in the other TPP countries, including ongoing negotiations on provisions to ensure non-discrimination, a minimum standard of treatment, rules on expropriation, and prohibitions on specified performance requirements that distort trade and investment. The investment text will include provisions for expeditious, fair, and transparent investor-State dispute settlement subject to appropriate safeguards, with discussions continuing on scope and coverage. The investment text will protect the rights of the TPP countries to regulate in the public interest.
  • Technical Barriers to Trade (TBT). The TBT text will reinforce and build upon existing rights and obligations under the World Trade Organization Agreement on Technical Barriers, which will facilitate trade among the TPP countries and help our regulators protect health, safety, and the environment and achieve other legitimate policy objectives. The text will include commitments on compliance periods, conformity assessment procedures, international standards, institutional mechanisms, and transparency. The TPP countries also are discussing disciplines on conformity assessment procedures, regulatory cooperation, trade facilitation, transparency, and other issues, as well as proposals that have been tabled covering specific sectors.
  • Cross-Border Services. TPP countries have agreed on most of the core elements of the cross-border services text. This consensus provides the basis for securing fair, open, and transparent markets for services trade, including services supplied electronically and by small- and medium-sized enterprises, while preserving the right of governments to regulate in the public interest.
  • E-Commerce. The e-commerce text will enhance the viability of the digital economy by ensuring that impediments to both consumer and businesses embracing this medium of trade are addressed. Negotiators have made encouraging progress, including on provisions addressing customs duties in the digital environment, authentication of electronic transactions, and consumer protection. Additional proposals on information flows and treatment of digital products are under discussion.
  • Intellectual Property. TPP countries have agreed to reinforce and develop existing World Trade OrganizationAgreement on Trade-Related Aspects of Intellectual Property (TRIPS) rights and obligations to ensure an effective and balanced approach to intellectual property rights among the TPP countries. Proposals are under discussion on many forms of intellectual property, including trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge. TPP countries have agreed to reflect in the text a shared commitment to the Doha Declaration on TRIPS and Public Health.
  • Telecommunications. The telecommunications text will promote competitive access for telecommunications providers in TPP markets, which will benefit consumers and help businesses in TPP markets become more competitive. In addition to broad agreement on the need for reasonable network access for suppliers through interconnection and access to physical facilities, TPP countries are close to consensus on a broad range of provisions enhancing the transparency of the regulatory process, and ensuring rights of appeal of decisions. Additional proposals have been put forward on choice of technology and addressing the high cost of international mobile roaming.

Whilst the barriers to implementation of the TPP (noted above) and the details, particularly around the detail of the IP arrangements (e.g. copyright term and software patentability (or not)), mean that negotiating and implementing the TPP is by no means a foregone conclusion the increased ability for companies in the TMT sector to directly invest in markets that are increasingly liberalised to offer cross-border services whilst having adequate protection of their intellectual property will be positive for companies in those sectors.

Perspective, distance and why business still requires face to face meetings

Having recently relocated to Singapore to set up my firm’s first office in Asia, I have been rather quiet on the blogging front recently. This post serves as something of a reboot – the blog will continue with its theme of the intersection of business, law and regulation in the telecoms and technology sectors but in addition to continued coverage of the UK and Europe will have an increasingly Asian focus.

It has been an interesting time to be in the region with President Obama spending far more time at the APEC  and ASEAN summits that I can ever recall him spending at European meetings and with the US administration signalling a ‘pivot towards Asia’ in their policy focus. With the current turmoil continuing in Europe (and the Eurozone in particular), whilst the mood here is not wildly optimistic, I perceive that there is a quiet confidence that global growth over the medium term will be driven from the region, both from the powerhouses of China and India, and also from countries in the ASEAN group such as Indonesia, Malaysia and Thailand.  Whilst some of the immediate press headlines highlight the fall in growth rates in the region, with Hong Kong fearing recession, from the perspective of a newly arrived European what is most noticeable is the can-do positive business outlook, which contrasts sharply with attitudes in Europe.

It is now 16 years since Frances Cairncross’ original economist 1995 article and subsequent 1997 book,  ‘The Death of Distance’. Whilst it is certainly true that developments in technology and communications infrastructure have vastly changed the  communications, broadcasting and media industries and that (as I can attest) people are far more mobile, it has also been striking that despite easy access to video-conferencing and other communications tools that people (or at least those who give lawyers work!) are still hard-wired to do business with people that they have met, know and trust. Whilst I continue to work with clients in the Europe, it seems that there is no substitute for getting out and meeting people face to face if you want to do business with them. The good news is that once you have established a relationship, all the various communications methods make it much easier to keep that relationship alive and to stay in touch.

Microsoft to rescue Nokia?

“There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform”, and he needed to make a choice.” (allegedly) Stephen Elop, CEO Nokia. 

When an internal memo from the new CEO of Nokia was leaked earlier this week it was clear that he was not a man happy to steer Nokia on a ‘steady as she goes’ course.  Instead, he liken Nokia to a burning oil-rig with three major fires – Apple at the top-end, Android in the middle and low-cost  OEMs at the bottom.

This morning’s announcement of Nokia’s switch to Windows Phone as its principle smartphone platform is a dramatic shift in strategy for Nokia as it abandons the Symbian platform. Nokia has also restructured and reorganised its management team.

For Microsoft, whose mobile platform has quietly been winning plaudits, but has struggled to get volume distribution, this seems like a great opportunity, whereas for Nokia this represents a leap off the burning platform into icy waters. It remains to be seen what Nokia looks like when it surfaces.