Extensible standards and impact

on technology switching costsMark Pecen, Sr. VP, BlackBerry

Research and Advanced Technology

September 2013

on technology switching costs

• Why standardize?

• Impact of standardization on adoption of

cryptographic solutions

Agenda

• Technology switching costs – Why so

much legacy infrastructure still exists

• Extensible standards – Start from the

beginning

• Program framework

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Why Standardize?We can learn from our experience in ETSI wireless

� The first mobile radio systems were proprietary

(e.g. an Ericsson radio only talked to another

Ericsson radio and only in areas having

infrastructure)

� Single-source supplier has large monopoly

power

Equipment Interoperability

power

� Proprietary technology tends to create smaller

and more tightly segmented markets

Economies of Scale� Standard technology enables large scale adoption, which fuels the learning curve

Economies of scopeEconomies of scope� Re-use of platform for multiple products – no need for special country-specific

technologies

Large-scale adoption potential� For example, 3GPP wireless technologies (GSM/GPRS/EDGE/UMTS) have 87% of

global subscriber market share

A wireless example: 3GPP technologies

[Source: 4G Americas, 2012]

� Positive network externalities can be created• The more a certain technology is in use, the greater

further adoption potential

Standardization can create huge markets

further adoption potential

� Reasonable trade-offs possible• Give up certain proprietary advantages in exchange

for the creation of large global markets

A double-edged sword

� Future innovation can be severely constrained

• Innovation produces Ricardian economic rents• Innovation produces Ricardian economic rents

• You may lose some competency-based rents as the price you pay for creation

of large markets

� The large installed base of customers then becomes a constraint in itself

What does this mean for cryptography?

Impact of standardization on adoption of cryptographic solutions

� Cryptographic solutions are highly dependent on network externalities

(i.e. the ability for others to use the same solution)

� Must be a mechanism for key exchange, an authority to authenticate

identities, etc.

� A proprietary cryptographic solution may be appropriate in some cases,

but is likely to occupy a small and specialized market segment where

scaling isn’t a problem. Such proprietary techniques generally have scaling isn’t a problem. Such proprietary techniques generally have

difficulty in scaling in deployment size, across national borders, etc.

� Standardized cryptographic solutions anticipate market scale, scope and

deployment scenarios.

� Standards tend to be defined that are simple to implement and deploy – the

details of which are designed to mean the same thing to system designers in Beijing as they do to those in Paris.

Consider technology switching costs –Why so much legacy infrastructure still exists

What are Technology Switching Costs?

More Practical View…

Example: Electric Power Generation in the United States

� General Direct Current (DC) electric power distribution has

been outdated in the United States since 1903.

� Nevertheless, the last Consolidated Edison DC power

generation and distribution center in the state of New York

was turned off in 2007 – customers still using DC were

supplied with AC to DC rectifier units to ease switching costs.

� Over 5 billion GSM subscribers

� Estimated that there are more than 2.8 million

GSM base stations deployed worldwide

� 4th Generation Long-Term Evolution Advanced

Meanwhile in wireless…

� 4th Generation Long-Term Evolution Advanced

(LTE-A) is the latest, most spectrally efficient and

fastest cellular wireless technology available for

mass deployment today – but it’s hard to suddenly

disconnect millions of base stations, and to give up

the roaming revenue they provide, even if they

cost much more to operate than LTE base

stations.

� Fortunately, there are extensibility features in the

ETSI 3GPP standard that ease some of these

migration aspects

Extensible Standards –Start from the beginning

Extensible Standards

� Anticipate migration from one technology to future technology

� Ease or eliminate technology switching costs

� Relatively simple, if considered up-front

Extensible Crypto Standards

� Architecture, message structure to handle multiple

crypto standards

� Not difficult, if defined early in Which Which

Classical Processing #1

Classical Processing #2

Quantum Processing #1

Quantum Processing #2

� Not difficult, if defined early in standardization cycle

Common Message Stream

Classical or

Quantum?

Which Classical version?

Which Quantum version?

Simple to add extensibility up front…� Difficult to impossible to

implement after deployment…

Way forward?

I would urge my industry colleagues to consider the creation of an ETSI Technical

Report (TR) to be drafted over the next year Report (TR) to be drafted over the next year to consider, e.g. what might an extensible QKD architecture look like?