Transcript Document
From Telecom Policies to e- Economy Professor William H. Melody Managing Director, LIRNE.NET [email protected], www.lirne.net Presentation to Seventh Conference on Technology Policy and Innovation: Connecting People, Ideas, and Resources across Communities Monterrey, Mexico, 10 -13 June 2003 Characteristics of 21st Century Economies • Driven by the services sectors • Founded on information/communication networks – next generation Internet • Dependent on effective reforms in the telecom sector – information infrastructure • Strengthening links among local, national, regional, internatonal networks and markets Stages of Telecom/Information Sector Reform • Telecom Liberalization (Participation, Univ. Access) • Expanding Network Capacity (Broadband) • Preparing the Network Foundation for New Services • Developing New Services - “killer applications!” • Applying Services Productively in Different Societies • Telecom Reform & Regulation – Key Driver for Implementing Policy Reforms for the e-economy Finance/ Banking Regional Development Travel & Tourism Manufacturing Health/Medical Government Services Content Broadcast Media Film Libraries Software etc Disaster Management Media & Cultural Sectors Education/Training Applications Electronic Services (Pay TV, VAS, Internet) Multimedia, etc. (Public, User group, Private) Telecommunication Facilities Network (Information Superhighway) Computing / Information Technology Interactivity (Instant & Delayed) Voice Data Sound Graphics Video Telecommunication Equipment Manufacturing INFORMATION INFRASTRUCTURE The telecom sector value chain Equipment Supply Competitive Markets Telecom Infrastructure Monopoly/duopoly/oligopoly Telecom Equipment Computer Hardware Software Consumer Electronics Service Development Competitive Markets Internet PTOs VAS Databases Network Management Significance of Network Unbundling • Industry Sectors - Equipment, Operator Networks, Services • Fixed and Mobile • Basic Network Layers • *Content *Communication Services *Network OSS & Management *Raw Facility Capacity The Dimensions of Convergence on the Information Infrastructure Convergence Sectors Computing Content Telecom Drivers of Convergence •Technology • Industry-Supply • Market-Demand • Policies/Regulation •Industry Specific •Convergent Applications • Finance • Commerce • Education • Health • Publishing • Manufacturing • etc. Criteria for Economic Growth Technologies Markets Applications Services Regulations Policies Regulation: Catalyst for, or Constraint upon Growth? Progress with Telecom Reform • Now 120+ Countries with Separate Telecom Regulatory Authorities • WTO Commitments to Liberalization • Industry Specific Focus of Reforms • Successes, Failures, Unanticipated Difficulties, Continuing Delays • Regulatory Reform is Proceeding at a Slower Pace than Technology Development or Market and Service Potential Progress with Telecom Reform • Regulation is the limiting factor constraining growth • It is not a simple matter of removing regulations or eliminating regulators. It is enhancing their competence and credibility. • Sound regulatory foundations are needed to attract investment, foster applications of new technologies and development of new services. • The speed of regulatory reforms must increase and they must be directed to providing a foundation for network-based e- Economies. Information Infrastructure: Investment 1990s • Mobile - licenses - operating; spectrum - network development • Privatising telecom incumbents - licenses – operating; IPO - network development obligations • Competitive network operators - fibre transmission - city / business LANs • Software, services and content (e.g., Internet) Information Infrastructure: Investment Deficiencies 21st C • Local - basic services access - broadband access • Universal access - fixed - broadband • Internet - local services and content • Applications - e-economy; e-society Policy, Regulation and Network Investment • • • • • Licensing - paying for the privilege Annual Fees and charges Restrictions on investment opportunities Price and/or profit regulation Policy & regulatory risk Assessing the Mixed Results of Market Liberalization • • • • Successes, failures and frustrations Learning and adjustment? Naivite and market failure? Government failure in establishing the policy/legislative frameworks? • Regulatory failure – bottleneck, rather than facilitator? • Inevitable market failure? Unresolved Network Market Issues • Public Resource Infrastructures for Telecom Networks - Rights of Way, Spectrum, Numbers, Names • Interconnection • Termination Number Monopolies • Access Limitations in the Face of Positive Externalities • Leverage Opportunities for Monopoly Nodes in the Network Elements of Policy and Regulatory Risk in Information Infrastructure Development • Credibility – regulatory independence from political intervention on substantive issues • Credibility – Regulatory independence from incumbent monopoly power • Transparent processes • Accountability for performance • Competence and skills • Commitment to implement policy objectives • Evident fairness Can Policy/Regulatory Structure Reduce Investment Risk? • • • • Morocco - licensing for mobile rollout Chile - making rural areas financially viable Denmark - minimizing barriers to participation Korea - multi-faceted programme promoting broadband rollout • Canada – innovative applications, wide participation, universal access • Botswana – world model for credible regulation Are Policy/Regulatory Structures Increasing Investment Risk? • Mexico – Telmex/SBC monopoly power • South Africa – Telkom/SBC monopoly power • US - tied up in administrative legal knots • Bangladesh - political nightmare • Ireland –”Celtic Tiger” of Europe in IT; slugs in Telecom Shifting Policy/Regulatory Priorities to Stimulate Investment • From supply of network facilities to stimulation of demand to justify investment • From physical capital to human capital - awareness, skill, capabilities - applications by individuals & organisations • Diverse sources of private and public investment - operators, service providers, - intermediaries (e.g., Telecentres), user applications Regulatory Relations Affecting Sector Investment Supply Telecom/ICT Sector Services Demand/ Need Intermediaries Regulation Facilities End Users Public Resources Applications Policy NGI - High Speed Access • Role of the Market • Digital Divide • Role of Government *Promote Competition *Direct Regulation *Public Sector Applications *Public Investment - eg., Broadband • At What Level Should Gov’t Intervene? Moving to Convergence Regulation • • • • • • • Security, Privacy Intellectual Property Rights Digital Signatures & Contracts Micro payments and Funds Transfer Network Quality - eg., e-commerce standards Consumer Protection More Paths to Universal Access • Voice - prepaid mobile • Internet, e-economy, e-society - fixed & wireless network extensions - new operators – energy, transport - radio and TV distribution networks - retail service suppliers, ISPs, VANS - greater role for intermediaries Internet Governance For the next Generation Internet-based e-Economy • In 2002 ICANN president Stuart Lynn proposed that government representatives be appointed to Board positions. • ”ICANN, which was created to save the Internet from governments, is now turning to governments to save ICANN.” Michael Froomkin Internet Governance • Direct Internet-specific issues, eg., ICANN • ICT sector convergence and information infrastructure development issues, e.g., national telecom regulators-mach 2 • Trade- related issues in the e-economy, e.g., WTO, WIPO • Challenge: Making regulatory institutions credible at both national and international levels. Capacity – building: Actions • Build institutional networks for mutual development – local to international • Strategic management in a dynamic ICT environment • Experiment – the core of innovation • Stimulate demand for skills Capacity – building Requires Investment in Human Capital • Policies – to direct, enable & support • Institutions – to train & sustain • Programmes for the development & dissemination of skills • Programmes for the application & maintenance of skills Capacity – building for Information Societies • • • • • Policy analysis & regulation Strategic analysis & management Innovation, experimentation & flexibility Demand-led diffusion of core skills Network linkages Infrastructure For Digital Economies • Higher Capacity Facilities - Broadband? • Access to High Speed Networks? • Access to Minimal Level of Universal Services? • Access to Minimal Levels of Information? Characteristics of Information Networks • High fixed costs and economies of scale • Specialized monopolies and destructive competition • Extreme forms of price discrimination • Failure to serve segments of the polulation • Failures of coordination across networks • Positive network externalities – efficiency benefits go far beyond the limits of private markets The Foundation for Efficient Markets • Market theory – all parties are fully informed, and information is available at minimum cost • Is publicy requiring universal access to substantial levels of information necessary for markets in all sectors to function efficiently? • Will market failures in information markets cause failures in services and product markets? • If so, network access to information will be a new critical infrastructure for network economies Proactive Policy & Regulation • Create a favourable investment environment for physical & human capital • Minimize barriers to participation • Facilitate demand as well as supply • Apply skills and strategic management to achieve the spirit of the policy objectives • Can only be done if regulatory structure is transparent and credible World Dialogue on Regulation for Network Economies Mission: • to facilitate an international dialogue that generates and disseminates new knowledge • on frontier issues in regulation and governance • to support the development of network economies World Dialogue on Regulation for Network Economies Activities: • Research on the annual theme • Dialogue – www. Regulateonline.org e-Brief • Expert Forum • Report World Dialogue on Regulation for Network Economies (WDR) Dialogue Theme 2002: • The Next Step in Telecom Reform: • ICT Convergence Regulation or Multisector Utility Regulation ? World Dialogue on Regulation for Network Economies (WDR) Dialogue Theme 2003: Stimulating Investment in Network Development: Roles for Regulators World Dialoge Theme 2002 ICT Convergence • Digitalization of the network • Mobility • Next generation Internet • E-commerce • Media integration • Restructuring of industries World Dialogue Theme 2002 ICT Convergence Regulation • Access to communication channels and access to content • New issues of competition and monopoly • Privacy, security, IPR • Reducing digital divides? • Can content regulation be avoided? • The most effective role for national telecom regulators? World Dialogue on Regulation for Network Economies 2003: Research Partners • • • • Centre for Tele-Information, TU Denmark Economics of Infrastructures, TU Delft, NL LINK Centre, Wits University, S.A. Media@lse, London School of Economics World Dialogue on Regulation for Network Economies 2003: Institutional Partners • • • • • infoDev, World Bank ITU, BDT IDRC Canada LIRNE.NET Research Partner Universities World Dialogue Theme 2003 Stimulating Investment in Network Development: Roles for Regulators • Defining and Implementing Regulation to Facilitate Sector Investment in Network Development • The Challenge: Creating regulation that leads rather than lags technology and market developments, providing a catalyst for investment and growth in network e-economies? World Dialogue on Regulation for Network Economies • Participate in the Dialogue; review and comment on the research, www.regulateonline.org • For more information contact Merete Henriksen, WDR Coordinator, [email protected] Tel. + 45 4525 5178; Fax + 45 4596 3171 LIRNE.NET, www.lirne.net • A Strategic Collaboration for applied research, training, policy and regulation support, relating to information infrastructure and new network economy development • Center for Tele-Information (CTI), TU Denmark • Economics of Infrastructures, TU Delft, Netherlands • LINK Centre, Wits University, South Africa • Media@lse, London School of Economics, UK