International
Telecommunication Union
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1 MARKET AND
REGULATORY TRENDS
A vibrant
ICT sector faces tough economic times
Fixed-line service holds
steady; Mobile service grows rapidly
High-speed, broadband access
trends upward
The shift to all-IP environments
Mobile broadband markets grow
in importance
Changes in regulatory
practices
Private ownership and
competition trends
2 EXPLORING OPTIONS FOR SHARING
Passive and active
infrastructure sharing
3 EXTENDING ACCESS TO FIBRE BACKBONES
Complementing efforts to improve local access
6 INTERNATIONAL GATEWAY LIBERALIZATION
The importance of IGW liberalization
8 INTERNATIONAL MOBILE ROAMING
Convergence: Sharing broadband
technologies
Regulatory issues with IPTV
and mobile TV
TRENDS IN TELECOMMUNICATION REFORM 2008
Six Degrees of Sharing
Summary
The Telecommunication Development Bureau (BDT) of the
International Telecommunication Union (ITU) is pleased to present the ninth
edition of Trends in Telecommunication Reform, an integral part of
ITU/BDT’s ongoing dialogue with the world’s ICT regulators. The theme of this
year’s edition of Trends – “Six Degrees of Sharing” – encapsulates new
market and regulatory strategies that optimize and maximize investment in
broadband networks and ICT equipment and services. Past editions of ITU’s Trends
in Telecommunication Reform have explored key regulatory issues such as
interconnection, universal access and licensing of domestic service provision.
These issues can be seen as making up a first wave of regulatory reform that
has been vital to growing the ICT sector in developing countries. This edition,
however, addresses a newer, second wave of regulatory reforms designed to
promote widespread, affordable broadband access.
In a way, many regulatory practices can be viewed as sharing. What
is new and innovative is their application to meet the needs of developing
countries. What is the same is that they use time-tested, pro-competition
tools, such as the regulation of essential or bottleneck facilities,
transparency, and the promotion of collocation and interconnection.
Sharing
options are also being closely examined among regulators in developed
countries. Regulators in those countries are now facing the difficult task of
encouraging efficient deployment of next-generation networks (NGNs) to meet
bandwidth-hungry consumers’ needs, while maintaining a pro-competitive
environment that fosters the emergence of new, innovative players.
This
year’s edition comprises eleven chapters under the global theme of
infrastructure sharing:
• Chapter One
provides an ICT market and regulatory overview for 2008, to set the stage for
the chapters to come;
• Chapter
Two defines sharing broadly, focusing on the many ways in which networks and
support infrastructure can be shared to promote affordable network access and
competition;
• Chapter
Three explores the mechanisms and policies for extending access to national
fibre backbones in developing countries;
• Chapter
Four discusses the sharing of mobile networks and support infrastructure, such
as towers, poles, ducts and rights of way;
• Chapter
Five moves beyond network sharing to explore new techniques and radio spectrum
sharing policies designed to meet the escalating demand for spectrum needed to
provide a growing range of wireless services;
• Chapter
Six delves into the issues driving the liberalization and sharing of
international gateway facilities, including undersea cables, cable landing
stations and satellite assets;
• Chapter
Seven turns to an exploration of functional separation as a regulatory means to
break up network bottlenecks and place retail service provision on a level
competitive footing;
• Chapter Eight takes a novel perspective
on sharing, exploring international roaming as the “sharing” of customers by
wireless operators in different countries;
• Chapter
Nine discusses sharing in a convergence context, as Internet Protocol
television (IPTV) and mobile television evolve into new media for content
distribution;
• Chapter
Ten looks at sharing from an end-user perspective, as policy-makers and
equipment manufacturers create opportunities for ICT access by multiple users,
either sequentially or simultaneous by – effectively creating “end-user
sharing”;
• Finally, Chapter
Eleven ties it all together in a conclusion and takes a look ahead.
The year 2008 saw growth in mobile networks and subscribers rise
to an all-time high, reaching an estimated 4 billion mobile subscribers
worldwide. A growing array of broadband wireless systems are now available,
opening the way for users in developing countries to access the Internet on
mobile phones and other handheld devices. At the same time, more developing
countries were deploying national fibre backbones and backhaul networks to
transport their growing data-rich traffic. In addition, several new
international submarine cable networks were set to connect developing countries
to the global network of Internet backbones – just as a group of high-tech
entrepreneurs were working to revive plans for a constellation of broadband
satellites for the developing world.
Then came September 2008, and with it the exploding global
financial and credit crisis. The dramatic events of autumn called into question
whether the necessary financing would remain available to ensure that the
positive trends in the ICT sector would continue. Indeed, financing network
growth may have just become a lot tougher. As could be expected, the bad
financial news in September and October sparked a handful of announcements that
planned network upgrades would be postponed.
Analysts’ predictions on the impact of the financial crisis on the
telecommunication sector ranged from the optimistic – predicting only a slight
impact through 2009 – to a decline of nearly 30 per cent in capital
expenditures in the year ahead. But even the most dour prognosticators noted
that everything depended on the severity of the financial crisis, which was
still unfolding in late 2008.
Fixed-line market penetration remains comparatively low in most
developing countries, at an average of 13 per cent by end of 2007 even though
the developing world accounted for 58 per cent of the world’s 1.3 billion fixed
phones lines in 2007. In fact, this segment of the market showed a decline in
developed countries and just a slight increase in some developing countries.
Overall, it is fair to say that fixed-line penetration worldwide stagnated in
2007.
Mobile penetration, however, continued to show high growth rates –
enough to reach an estimated 61 per cent of the world’s population (some 4
billion subscribers) by the end of 2008. Moreover, by the beginning of the
year, more than 70 per cent of the world’s mobile subscribers were in
developing countries. Five years earlier, in 2002, those subscribers had been
less than 50 per cent of the world total. Africa remains the region with the
highest growth rate (32 per cent between 2006 and 2007).
Figure 1.1:
Worldwide ICT growth
Growth
in fixed lines, mobile cellular subscribers, estimated Internet users and
subscribers to mobile broadband networks, in billions, 1995-2007
Source: ITU World Telecommunication/ICT Indicators Database.
ITU’s
Internet and broadband data suggest that more and more countries are going
high-speed. By the end of 2007, more than 50 per cent of all Internet
subscribers had a high-speed connection. Dial-up is being replaced by broadband
across developed and developing countries alike. In developing countries such
as Chile, Senegal, and Turkey, broadband subscribers represent over 90 per cent
of all Internet subscribers.
At the same
time, major differences in broadband penetration levels remain, and the number
of broadband subscribers per 100 inhabitants varies significantly between
regions. While fixed broadband penetration stood at less than 1 per cent in
Africa, it had reached much higher levels in Europe (16 per cent) and the
Americas region (10 per cent) by the end of 2007.
The difference in the uptake of
broadband is also reflected by the regional distribution of total broadband subscribers
(see Figure 1.2). Despite significant broadband uptake in developed countries,
a vast majority of developing countries still lag behind, especially those with
low-income economies.
Figure 1.2: The
broadband divide
Broadband
subscribers by region, 2007
Source: ITU World Telecommunication/ICT Indicators Database.
Figure 1.3:
Fixed and mobile broadband evolution in developed and developing countries
Mobile broadband
subscribers Fixed broadband subscribers per
100 population, 2007 per 100 population, 2007
Note: ITU’s
definition of “Mobile broadband” covers mobile cellular subscribers with access
to data communications at broadband speeds (minimum of 256 kbit/s). Source: ITU
World Telecommunication/ICT Indicators Database.
The shift to all-IP environments
Probably
the best example of the “all-IP” move is the rise of
Voice-over-Internet-Protocol (“VoIP”) services. In the last few years, VoIP
services have continued to grow strongly. Even if they were not as “disruptive”
to traditional telephony as had been predicted, VoIP offerings have proved to
be some of the most successful Internet applications. Over the past two years,
the market presence of VoIP has surged forward, although at a slower growth
rate than in 2005. More importantly, it is steadily replacing traditional
public switched telephone network (PSTN) lines in many developed and some
developing countries.
Both
in France and Japan, about one-third of all fixed lines were VoIP lines at the
end of 2007. According to some market analysts, the global number of VoIP
subscribers reached 80 million in 2008. It is worth noting that business users
constitute an increasing share of the total number of subscribers worldwide. Of
course, the regional distribution of those subscribers varies, depending on the
cost of traditional fixed-line communications as well as the regulatory
treatment of VoIP and of the international gateway for PSTN long-distance calls.
Today,
a number of mobile markets, both in developed and developing economies, are
saturated or close to saturation, whereas broadband penetration rates are still
relatively low in many countries. The combination of these two factors has
given a major push to the rise of mobile broadband offerings over the last
year. The number of mobile broadband subscribers reached 167 million at the end
of 2007, driven by 18 per cent growth since 2006. The market is being stoked by
robust competition among new and emerging technologies, such as the 2.5G and
3G, as well as the emerging “3.5 G” or 4G families of technologies: high-speed
packet access (HSPA), WiMAX, and long-term evolution (LTE).
The
first wave of sector reforms in developing countries, starting in the late
1990s, attempted to create more transparent and stable legal and regulatory
frameworks, with an emphasis on establishing national regulatory authorities
and opening certain market segments, such as mobile voice, to competition. The
goal was to attract investment and make progress toward universal access to
basic telecommunication services. Drastic changes in the sector have since
flowed from technological innovation, convergence of services, and growing
competition. These changes may now require a further regulatory shift to open
more market segments to competition and update licensing and spectrum
management practices in order to foster growth in broadband networks and
converged services. A rise in competition and new service providers will also
require an enhanced focus on dispute resolution.
As
of October 2008, 152 countries had created a national regulatory authority for
their ICT and telecommunication sectors. Africa now has the highest percentage
of countries with a separate sector regulator (93 per cent) followed by the
Americas (89 per cent) and Europe (80 per cent). The Arab States and
Asia-Pacific number 66 per cent and 62 per cent, respectively (see Figure 1.4).
Since 2007, two new ICT regulators had been created: the Regulatory Authority
for Posts and Telecommunications in Guinea and the Vanuatu Independent
Telecommunications Regulator. Two additional agencies were being established in
the Arab States and at least one more was planned in Africa.
By mid-2008, 125 ITU member countries had a privately-owned,
or partially privatized, national fixed-line incumbent (see Figure 1.5). The regions
with the highest percentage of private ownership are Europe78 per cent), the
Americas (74 per cent), and Asia-Pacific (53 per cent. Although a majority of
countries in Africa and in the Arab States still have state-owned incumbents
(53 per cent and 52 per cent, respectively, a number of countries in these
regions have embarked on the privatization pa
Algeria,
Guinea and Mali have announced plans to privatize their incumbent operators in
the coming year. Will these privatizations suffer from the current global
economic and financial crisis? While it is hard to predict the long-term impact
this crisis will have on the ICT sector, there is certainly the possibility
that it will affect the flow of capital into privatizations in developing
countries.
Figure
1.5: Ownership of the fixed-line incumbents, globally, and competition in
selected services, worldwide, 2007
Markets
steadily continue to open to competition. Mobile (2G as well as 3G and beyond)
and Internet services continue to be the most competitive markets, while
fixed-line services are increasingly becoming competitive, as well. Only 40
countries had authorized competition in the provision of basic
telecommunication services in 1997, but a decade later the number had risen to
about 110 countries.
Encouraging
effective competition has proved to be the best way to promote ICT sector
development and consumer accessibility. Liberalization of access to
international facilities is another trend taking place in developing countries,
especially in Africa. Countries that have liberalized international gateways
have seen prices fall and quality of service improve. Liberalization includes
licensing or authorization of multiple players for the provision of
international gateway services and opening up cable landing stations to
competition.
Looking at
ensuring competitive access to essential facilities, one of the recent
developments in policy-making is the concept of “equivalence of inputs”, which
holds that all market players should enjoy the same access to essential
facilities.7 Remedies such as accounting separation appear
inadequate, in some cases, to ensure non-discriminatory access to incumbents’
networks. The European Commission, for example, is searching for more effective
measures – including functional separation as a last-resort remedy. This is
discussed in greater detail in Chapter 7 of the 2008 edition of Trends.
The
single biggest reason to adopt sharing is to lower the cost of deploying broadband
networks to achieve widespread and affordable access to ICTs. Developing
countries can leverage the technological, market and regulatory developments
that have led to an unprecedented uptake in mobile voice services to promote
widespread and affordable access to wireless broadband services and IP-based
national fibre backbones, as well.
Promoting
widespread broadband access costs real money. Deploying mobile base stations or
fibre backbone networks to reach rural areas may be uneconomical if each
service provider must build its own network. Likewise, laying fibre to every
home, building or street cabinet – the goal of many developed countries – may
be unattainable if operators act alone. Companies can, however, share some
infrastructure but compete in providing services. With an effective legal and
regulatory framework and the right incentives, the critical factor in creating
new, affordable broadband access and backbone networks will be government
willpower.
Sharing
does not mean abandoning market liberalization or universal access practices.
On the contrary, further market liberalization is required, for example, in
international gateway markets, and to allow a new range of market players to
meet the pent-up demand for broadband services. Universal access practices also
can be refined and improved. All sharing practices – and infrastructure
sharing, in particular – are integral parts of a competitive regulatory
framework. Infrastructure-sharing regulations, whether mandatory or optional,
are usually included in a country’s interconnection framework, although they
are occasionally contained in operators’ licensing agreements.
Infrastructure
sharing takes two main forms: passive and active. Passive infrastructure
sharing allows operators to share the non-electrical, civil engineering
elements of telecommunication networks. This might include rights of way or
easements, ducts, pylons, masts, trenches, towers, poles, equipment rooms and
related power supplies, air conditioning, and security systems.
These facilities and systems all vary, of
course, depending on the kind of network. Mobile networks require tower sites,
while fibre backhaulbackbone networks require rights of way for deploying cables,
either on poles or in trenches. International gateway facilities, such as
submarine cable landing stations, can be opened for collocation and connection
services, allowing operators to directly compete with each other in the
international services market. Access to physical ducts, masts/poles (in the
case of power transmission lines), and rights of way are key potential passive
network elements for encouraging the rollout of national fibre infrastructure
through sharing. This has two aspects, one relating to cost and the other
affecting speed of action. National governments, municipalities state-owned
enterprises frequently charge considerable sums of money for rights of way that
allow operators to carry out physical trenching of ducts. Active
infrastructure sharing involves sharing the active electronic
network elements – the intelligence in the network – embodied in base stations
and other equipment for mobile networks and access node switches and management
systems for fibre networks. Sharing active infrastructure is a much more
contested issue, as it goes to the heart of the value-producing elements of a
business. Many countries have restricted active infrastructure sharing out of
concern that it could enable anti-competitive conduct, such as collusion on
prices or service offerings
These concerns remain
valid, but they have to be weighed against advances in technology and
applications that enable service providers to differentiate their offerings in
the market. In addition, for some remote and less accessible areas, the risks
of active infrastructure sharing have to be balanced against the alternative of
having no services at all.
Regulators may at least
allow active infrastructure sharing for a limited time, until demand for ICT services
grows to support multiple network operators. Regulators and policy-makers may
elect to adopt only one kind of infrastructure sharing, or they can implement
many options simultaneously. Some regulatory frameworks today may authorize
passive infrastructure sharing, for example, while prohibiting active
infrastructure sharing. Some regulators simply have not addressed the issue –
neither explicitly authorizing nor prohibiting infrastructure sharing.
A
critical aspect of promoting wider broadband use is ensuring that national
fibre infrastructure is affordable. While competition at the international
level has often driven down the price of bandwidth, national bandwidth prices
in developing countries are set by one or two providers and, as a result, often
remain high.
Increasingly,
the sharing of infrastructure by telecommunication operators, based on a model
of open access, is one option attracting greater policy attention. While
liberalized markets already have numerous models of infrastructure sharing,
such as collocation, national roaming and local loop unbundling, other forms of
sharing are also starting to emerge that involve sharing both the “passive” and
“active” elements of the network. However, effective enabling regulation and
policy are critical to facilitate such arrangements.
Infrastructure-sharing
regulation and policy must address two broad issues that are often viewed as
the stumbling blocks to speedy roll-out of national telecommunication
infrastructure:
.
• Opening up access to “bottleneck” or
“essential” facilities, where a single dominant infrastructure operator
provides or leases facilities.
.
• Promoting market investment in deploying
high-capacity infrastructure to unserved or underserved areas.
Box 3.1: What is open access?
Open access means the creation of competition in all layers of the network,
allowing a wide variety of physical networks and applications to interact in an
open architecture. Simply put, anyone can connect to anyone in a
technology-neutral framework that encourages innovative, low-cost delivery to
users. It encourages market entry from smaller, local companies and seeks to
prevent any single entity from becoming dominant. Open access requires
transparency to ensure fair trading within and between the layers, based on
clear, comparative information on market prices and services.
Source: InfoDev, 2005.
Broadband services and the infrastructure on which they depend
have become recognized as an essential input to business, education, health
care and participation in the information economy. A developed broadband
infrastructure is a pre-requisite for increased investment in any
community.
In economic terms, access to a national broadband fibre network is
as important a priority as building an effective national transportation
network. Given the central role that ICTs play in the information economy, many
argue that broadband access is a “public good” similar to roads and railways.
Without broadband access, developing countries run the risk of enlarging the
“digital divide” and becoming second- or third-class nations within the global
order. Having competitively priced national broadband access has become an
important criterion of global competitiveness.
Government has
a key role to play in facilitating the most effective use of infrastructure
assets, identifying parts of the country where there are gaps, and getting
coverage extended to them. Moreover, governments, together with regulators, can
establish effective regulatory frameworks and regimes that promote effective
use and sharing of networks. Designing a regulatory framework may depend on
whether the national backbone provider competes with other service providers
for end users (and therefore has every incentive to block competitors) or
whether the backbone provider does not serve end users (and therefore has every
incentive to sell as much capacity as possible to those who do). In the former
case, the regulatory response could be to treat the backbone network as an
essential facility, including regulating prices for access as well as
establishing uniform collocation and connection terms for all market players
seeking access to the backbone. In the latter, it may be sufficient to revise
licensing frameworks to authorize one or more new entrants to enter the
backbone market and to work with local government officials to secure rights of
way to lay the fibre backbone network. Local governments could be encouraged to
provide rights of way, for example, in exchange for connecting schools and
hospitals to the high-speed backbone network.
Rolling
out mobile networks involves intensive investment and sunk costs, potentially
leading to high mobile-service prices. Mobile infrastructure sharing is one
alternative for lowering the cost of network deployment, especially in rural,
less populated or economically marginalized areas. Mobile infrastructure
sharing may also stimulate the migration to new technologies and the deployment
of mobile broadband networks, which are increasingly seen as the best way to
make broadband Internet access available to the majority of the world’s
population. Mobile sharing may also enhance competition among operators and
service providers.
For mobile
sharing, the passive elements are defined as the physical network components
that do not necessarily have to be owned or managed by each operator. Instead,
these components can be shared among several operators. The provider of the
infrastructure can either be one of the operators or a separate entity set up
to build and operate it, such as a tower company. The passive infrastructure in
a mobile network is composed mainly of:
.
• Electrical or fibre optic cables;
.
• Masts and pylons;
.
• Physical space on the ground, towers,
roof tops and other premises; and
.
• Shelter and support cabinets, electrical
power supply, air conditioning, alarm systems and other equipment.
A collection of passive network equipment in one structure for
mobile telecommunications is generally called a “site.” Therefore, when one or
more operators agree to put their equipment on (or in) the same site, it is
called “site sharing” or “collocation.”
In
addition to sharing passive infrastructure, operators may also share active
elements of their wireless networks. The “active elements” of a wireless network
are those that can be managed by operators, such as antennas, antenna systems,
transmission systems and channel elements. Operators may share those elements
and keep using different parts of the spectrum assigned to them. Although
active infrastructure sharing is more complex, it is technically possible.
Equipment manufacturers can supply packages that have expressly been designed
for active mobile sharing.
It is clear that network-sharing agreements may
benefit operators and the general public. They help operators avoid costs for
building or upgrading redundant network sites and allow them to gain additional
revenue streams from leasing access. Operators also can achieve considerable
savings in rent, maintenance and transmission costs. They may also achieve
economies of scale by combining operating and maintenance activities.
Network sharing may further help operators to
attain better coverage, since they may choose to use only those sites that provide
deeper and better coverage, decommissioning sites with poor coverage
possibilities. Network-sharing agreements may also bring substantial
environmental benefits, by reducing the number of sites and improving the
landscape.
There are obstacles to be overcome, of course,
when dealing with network-sharing agreements. From an economic and practical
point of view, network sharing is a complex process that requires substantial
managerial resources. Therefore, regulators should analyse the potential benefits
to be generated by network sharing on a case-by-case basis, taking into account
the specific characteristics of each market involved.
Spectrum
sharing encompasses several techniques – some administrative, some technical
and some market-based. Spectrum can be shared in several dimensions: time,
space and geography. Limiting transmission power is also a way to permit
sharing among low-power devices operating in the spectrum “commons” – as with dynamic
spectrum access, which takes advantage of power and interference reduction
techniques. Sharing can also be accomplished through licensing and/or
commercial arrangements involving spectrum leasing and trading.
As the demand
for spectrum increases and available frequency bands become more congested,
especially in densely populated urban centres, spectrum managers are exploring
diverse paths to sharing frequencies:
• Using administrative methods, including
in-band sharing;
• Creating new, secondary market
mechanisms, such as spectrum leasing and spectrum trading;
• Adopting unlicensed or spectrum “commons”
approaches; and
• Encouraging use of low-power radios or
advanced radio technologies, such as ultra-wideband or multi-modal radios.
Increasingly, spectrum managers will have to resort to new
techniques and technologies to allow spectrum sharing. In theory, all bands can
be shared, using combinations of administrative means (setting geographic
separation buffers and channelization plans) and technical solutions (SDR and
cognitive radio, as well as smart antennas). Power limits and more robust
receivers are also key factors.
Interference,
however, cannot be eliminated and so must be managed. Identifying interference
management models that support spectrum sharing under either administrative, market-based
or spectrum “commons” approaches will remain an ongoing requirement and
challenge for spectrum managers. Their goal is to develop an appropriate regime
that protects user rights and finds the right balance for flexibility and
innovation, along with service neutrality. Finding that balance and structuring
the appropriate response will continue to be debated. Spectrum managers and
regulators can successfully implement spectrum sharing by combining vision,
commitment and careful planning, altering their spectrum allocation and
assignment policies to permit greater flexibility and access to spectrum
resources.
Broadband Internet access has become commonplace and increasingly affordable
in many areas of the world, but that is not yet the reality for most residents
of developing countries. Broadband services are either unavailable, or they are
almost prohibitively expensive, constituting a barrier to meaningful entry into
the global information economy. Yet, without greater demand, the market for
broadband services in many developing countries will remain stunted, crippling
the broad-based social and economic growth that comes from joining the
information society.
Figure 6.1:
The terrestrial option: Submarine cable systems
Source: TeleGeography,
at: www.telegeography.com/products/map_cable/
High prices for broadband access are tied to a lack of access to international network capacity. One way that countries can cut through the capacity conundrum is through liberalization of international gateway (IGW) facilities. The international cable and satellite systems that link multiple countries reach choke points as they are “landed” within each destination. These choke points are the facilities that aggregate and distribute international traffic to and from each country. In some countries the IGW is controlled by a fixed-line incumbent that charges monopoly prices for all international traffic, including Internet traffic, making services too expensive for end users and stifling demand.
Liberalizing
access to these gateway facilities through infrastructure sharing can lower
infrastructure costs while multiplying the amount of international capacity
available to operators. The result can be a rapid ramp-up of international
traffic, coupled with lower prices for international communications. More
affordable services, in turn, can generate greater demand, resulting in more
consumers on the network.
Functional
separation is one of the most drastic and potent regulatory remedies in a
regulator’s arsenal. There are enormous implications, not just for the
incumbent but also for the regulatory agency in charge of its implementation
and enforcement. This chapter explores functional separation, its ramifications
and when, how – or indeed, whether – to implement it.
Functional
separation is a recent response by regulators and governments to the serious
problem of anti-competitive, discriminatory behaviour by incumbents. It has
arisen from a concern that existing rules and remedies are inadequate to deal
with the problem. In particular, the focus of concern is often the incumbent’s
ownership of bottleneck network infrastructure and its abuse of that control to
harm competitors’ ability to provide broadband services.
Functional
separation is sometimes
also known as operational separation. The term applies to the fixed-line
business of incumbent operators, and it entails:9
.
• Establishing a new business division,
which is kept separate from the incumbent’s other business operations;
.
• Capitalizing and empowering this new,
separate business division to provide wholesale access to the incumbent’s
non-replicable (or bottleneck) assets, which competitors need in order to compete
with the incumbent in downstream retail markets; and
.
• Requiring the separate wholesale division
to supply network access (and support services) to competitors, along with the
incumbent’s own, remaining retail divisions, on a non-discriminatory basis.
Often, the incumbent sets up not just a network operations
division, but also a wholesale services division, which then can purchase
access to the bottleneck assets and resell them to retail operators. The bottom
line is that wholesale access and services are made available to the
competitors and the incumbent’s retail operations on an equal basis.
So
far, implementation of function separation has been limited mainly to a small
number of developed countries, although it appears to be gaining currency in
several other countries.
International
mobile roaming services allow customers of one mobile network operator to use
mobile services when travelling abroad. These services are enabled by a direct
or indirect (either through a broker or aggregator) relationship between the
“home” and “visited” operators. In effect, international roaming is a form of
sharing. Operators can multiply the range of their service offerings around the
world by essentially borrowing access to operators’ networks in other
countries. They can then give their customers seamless service wherever they
travel – at a price, of course.
International
mobile roaming revenues now constitute a significant portion of mobile
operators’ revenues and profits. Telecommunication analysts estimate
that international mobile roaming generates approximately 5-10 per cent of
operators’ revenues globally (in some cases up to 15 per cent), and constitute
an even bigger slice of their profits. Because customers lack any viable
alternative to international mobile roaming services (especially those who must
make mobile international calls, such as business users), customers continue to
use these services even in the face of high tariffs. Therefore, the subject of
international mobile roaming charges is now of great interest to many
governmental organizations.
After
analysing international mobile roaming costs and actual prices charged,
regulators might choose one of the following strategies:
.
• No direct regulation
of any international mobile roaming tariffs;
.
• Regulating
wholesale international mobile roaming rates only;
.
• Regulating
retail international mobile roaming charges only;
.
• Regulating
both wholesale and retail international mobile roaming rates.
The
different strategies regulators can choose to address international mobile
roaming charges are analysed in Chapter 8 of this edition of Trends. It
also identifies the pros and cons of each of these strategies recognizing that
upcoming next-generation networks, and the move to mobile IP networks, could
change the status quo, making the roaming problem less relevant
For countries struggling with the appropriate means and incentives
to foster broadband development, the introduction of video services by fixed
telecommunication providers may prove to be a key facilitator for such
deployment. Traditional telecommunication operators are upgrading their
facilities to obtain more bandwidth capacity in order to offer video services
and acquire a new revenue stream. These new video offerings are positively
affecting the roll-out of new broadband networks. As a result, the provision of
IPTV services has the potential to not only increase competition in the video
marketplace, but also to advance the broadband access goals of many countries.
Mobile television (mobile TV) is also being introduced in a number
of countries. Unlike most video services offered by 3G mobile operators, mobile
TV allows a user to view live television channels, not just downloads. For
mobile providers looking for ways to maintain and increase growth, mobile TV is
a new avenue to increase their average revenue per user (ARPU) through added
content and services.
IPTV is defined as the provision of video services (for example,
live television channels, near video-on-demand (VoD) or pay-per-view) through
an IP platform. However, some define IPTV services to encompass all the
possible functionalities that can be provided over an IP platform. For example,
some equate IPTV services with multimedia services, a category that can include
television, video, audio, text, graphics, and data. This encompasses not only
one-way video broadcasting services but also ancillary interactive video and
data services, such as VoD, web browsing, advanced e-mail, and messaging
services.
Mobile TV is
the wireless transmission and reception of television content
– video and voice – to
platforms that are either moving or capable of moving. Mobile TV allows viewers
to enjoy personalized, interactive television with content specifically adapted
to the mobile medium. The features of mobility and personalized consumption
distinguish mobile TV from traditional television services. The experience of
viewing TV over mobile platforms differs in a variety of ways from traditional
television viewing, most notably in the size of the viewing screen.
There
are currently two main ways of delivering mobile TV. The first is via a two-way
cellular network, and the second is through a one-way, dedicated broadcast
network. Each approach has its own advantages and disadvantages.
The
introduction of IPTV and mobile TV services presents regulatory issues-linked
to convergence of the ICT and broadcasting sectors. IPTV and mobile TV provide
new platforms and devices to distribute digital television and multimedia
offerings. But regulators are often uncertain whether the new offerings should
be considered broadcasting, telecommunication, or information services – or
whether they should be exempt from regulation altogether.
Operators of
IPTV and mobile TV services, however, need a clear set of rules that will
create the adequate environment for investment and deployment of their networks
and services. Regulatory classifications will have a direct impact on issues
such as market entry, licensing, content regulation, ownership requirements,
geographic coverage (nationwide, regional or local licences), regulatory fees,
and other obligations.
Sharing ICT technologies is a common behaviour among people around
the planet. People share for a variety of reasons ranging from economic to pedagogical
concerns. When they do it intentionally, as part of the usual or normal
operation of a service or application, we call this end-user sharing. To
be sure, this kind of sharing is commonly a by-product of lower income levels,
weak infrastructures, scarcity, or want. But this does not hide the fact that
technologies are programmed for sharing.
Figure 10.1:
Many users for one computer
Source: M.L. Best.
End-user telephone sharing has been the most
common form of two-way communication sharing among end users – at least in the
form of public payphones. Until recently, public phone boxes were common in
low- and high-income contexts alike. But today, in many countries, mobile
phones have increasingly been replacing public payphones although public phone
facilities remain common in many low- and middle-income settings. End users in
most African countries are likely, in the foreseeable future, to continue
obtaining telephony access primarily through public access facilities – whether
they are booths managed by telecommunication operators or privately-managed
tele-shops.
Some analysts argue that sharing mobile phones can act “as an
infrastructure service; a financial sector service (virtual currency, electronic
accounts or banking); a market, weather and health information exchange
mechanism; and an investment sector service.” Basic text messaging is perhaps
the simplest and most common value-added phone service. Today, tens of billions
of SMS text messages are sent every month.
A promising area for mobile end-user sharing is financial and
banking services, often referred to as “m-commerce”. Basic mobile financial
serv-ices could include access to secure savings accounts, non-interest credit
opportunities, currency management, fund transfers and cash delivery.
M-commerce has the potential of removing the biggest obstacle for commercial
banks to serve low-income communities: the high transaction costs associated
with very modest-sized accounts. Mobile banking (and digital banking, more
broadly) has been shown to significantly lower transaction costs compared with
brick-and-mortar banking.
Figure 10.2: A multi-point system
with multiple mice for a single PC
Source: Microsoft
Research.
Many aspects of computer system design discourage end-user
sharing. Indeed, the term personal computer illustrates how hostile to
sharing these technologies may be. But some researchers are attempting to turn
the personal computer into something that can be more easily shared by
communities of users.
Moving
beyond the sharing of physical hardware, there is a world of computer-mediated,
Internet-enabled websites and applications. These are virtual “places” where end
users share content and build cybercommunities on popular, so-called social
network sites. End users have come to share personal narratives, World-Wide-Web
bookmarks and other online content, pictures, movies,
online encyclopedias,2and, really, anything and everything
about themselves. Additionally, many of these technologies are also available
on mobile platforms. But the worldwide reach of each of the major social
network players is hardly uniform.
Here again,
regulators have a critical role to play in the development of robust end-user
sharing experiences. The properties of sharing are explored in greater detail
in Chapter 10 of this edition of Trends, as well as the ways that ICTs
can encourage and enhance sharing, business models and applications that are
predicated on end-user sharing and the role of the regulator as it relates to
sharing.
The
forward-looking exploration of sharing mechanisms may serve the global ICT sector
well, especially in the face of the potential broad economic downturn. Sharing
offers numerous potential business strategies and regulatory approaches
designed precisely to make more economically efficient use of network assets.
At
its best, an approach based on the Six Degrees of Sharing will lower
market-entry barriers and reduce and share network build-out and maintenance
costs for investment in ICT networks and services. The idea is to move toward a
second wave of sector reform in developing countries. There is a growing
recognition among regulators – reflected in the discussions of sharing – that
the rise of viable competition, and the extension of universal access – will
depend on a savvy application of new rules and mechanisms based on the real-world
circumstances found in each market. This would be true in any economic scenario
– but it is even more crucial in the current economic environment.
Initially
developed as a set of strategies to extend broadband network access in
developing markets, Six Degrees of Sharing may now have even broader appeal if,
as it appears possible, the sources of capital for network investment suffer a
temporary drought. Indeed, it may become increasingly necessary for
policy-makers and regulators to adopt sharing strategies to make their markets
that much more amenable to the shrinking pool of investment dollars. The first
wave of sector reform has demonstrated that huge pent-up demand exists for
telecommunications and ICT services, and that consumers are willing to pay for
these services no matter how small their income. This demand continues to grow
for new ICT services made possible by technological and commercial innovation.
What has changed is that potential investors will no doubt have to work harder
to attract financing. Cutting costs, by adopting the sharing strategies
explored in the 2008 edition of Trends in Telecommunication Reform,
promises to help make limited financing resources go further to make the dream
of an “information society” a reality.
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