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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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� 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
� 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.
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
� 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?
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