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World Regulatory Trends and World Regulatory Trends and Challenges for Caspian and Challenges for Caspian and Black See RegionBlack See Region
Jaroslaw K. PonderJaroslaw K. PonderStrategy and Policy Unit
International Telecommunication Union
Advancing in Telecommunications Regulation- 1st Black Sea and Caspian Regulatory Conference –
25-27 May 2006, Istanbul, Turkey
Note: The views expressed in this presentation are those of the author and do not necessarily reflect the opinions of the ITU. Jaroslaw K. Ponder can be contacted at [email protected]
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AgendaAgenda
• Trends: The ICT sector• Trends: Regulatory environment• Necessary actions• ICTs: Caspian and Black See Region • Policy and Regulatory Challenges• Conclusions
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Trends: ICT SectorTrends: ICT Sector
• Progressing regulatory reform:Pro-competitive policy / Universal service/access…
• Expansion of mobile industry and the Internet
• High innovation dynamics• Falling prices of the ICTs:
Hardware / Software / Services • New requirements:
BandwidthGeneralized mobility Convergent solutionsOpen character
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Trends: Broadband AccessTrends: Broadband Access
Evolution in Pricing Strategy
133143
166
020
406080
100120140
160180
2004 2005 2006
Num
ber
of c
ount
ries
Data TimeBoth Flat-rate
75%68%
81%
Number of countries with broadband commercially available
81
113
133145
166
0
20
40
60
80
100
120
140
160
180
2002 2003 2004 2005 2006
T
Median price and speed, 2004-6
0
200
400
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800
1'000
1'200
1'400
1'600
1'800
2004 2005 2006
Spee
d (k
bps)
0
2
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Pric
e (U
SD p
er 1
00 k
bps)
Median speed
Median Price inUSD/100 kbps
Growth in max. broadband speeds
0
5
10
15
20
25
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Speed (kbps)
2003 2005 2006
2005
2003
2006
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Trends: Broadband AccessTrends: Broadband Access
Speed Price per US$ per Change Economy Company kbit/s month US$ 100 kbit/s 2005-06Japan Yahoo BB 51'200 14.2 0.07 -12.5%Korea (Rep.) Hanaro 51'200 40.59 0.08 --Netherlands Internet Access Ned. 20'480 27.97 0.14 -81.3%Taiwan, China Chunghwa 12'288 22.67 0.18 --Sweden Bredbandsbolaget 24'576 56.08 0.23 -6.5%Singapore StarHub 30'720 73.17 0.24 -85.0%Italy Libero 12'288 37.23 0.30 -73.8%Finland Elisa 24'576 85.64 0.36 -51.4%France Free 10'240 37.29 0.36 -90.1%United States Comcast 4'096 20.00 0.49 --Germany Freenet.de 6'016 30.95 0.52 --United Kingdom Pipex 8'128 50.89 0.63 -53.6%Hong Kong, China Netvigator 6'144 51.17 0.83 -0.1%Portugal Sapo 8'128 75.82 0.93 -0.8%Canada Bell 4'096 41.26 1.01 -3.93%Average 18'278 44.33 0.43 -45.5%Best practice (top 20%) 40'960 27.59 0.10 -46.9%
Broadband prices for the cheapest fifteen economies
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TeleCommunicationTeleCommunication Sector in Sector in TransitionTransition
• Meaning and character of communications
Voice, Video, Data, SoD• New sell and prices strategies coming
from IP-enabled flexibility on the operational level
NGS: N-play servicesFalling prices of communication services and accessTraditional services lose strategic meaningPersonalization and customization
• Regulation Less regulation / blurred boundariesMigration from vertical to horizontal approachTechnological neutrality becomes meaningful
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Trends: ICT SectorTrends: ICT Sector
• Migration to the IP-environment Fixed telecommunications
Incumbents: British Telecom, DT AG, KPN Newcomers: Dialog, Metropolitan Networks
Wireless communications Mobile telecommunications: from 2G to 4GWiFi, WiMax
Cable TVBroadcasting Service and content providers
• Strengthened process of convergenceTechnologyMarketServicesInstitutional
FMC?Regulatory Implications
Mul
ti-fa
cilit
y co
mpe
titio
n
Servicecompet.
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NGNsNGNs as a global issue as a global issue Technical aspects Technical aspects
ITUITU--T SG 13: Rec. Y.2001T SG 13: Rec. Y.2001A NGN is a packetpacket--based networkbased network able to provide telecommunication services and able to make use of multiple broadbandmultiple broadband, QoSQoS--enabledenabledtransport technologies and in which serviceservice--relatedrelated functionsfunctions are independentindependent from underlying transporttransport--related technologiesrelated technologies. It enables unfettered accessunfettered access for users to networks and to competing service providers and/or services of their choice. It supports generalized generalized mobilitymobility which will allow consistent and ubiquitous provision of services to users.
AsiaAmerica
Europe
ITUNGN
Africa
ChallengesChallengesMultimediaGeneralized mobility Convergence IntegrityMulti-layer orientationOpen character
FG NGN
SG: 11, 13, 19, 2, 12, 16, 17
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IPIP--enabled enabled NGNsNGNsA global issueA global issue
Regulatory considerations• Three background papers
Rulling new and emerging marektsInterconnection in an IP-enabled NGN EnvironmentUniversal Service in an IP-enabled NGN Environment
• Regulatory proceedingsNational, Regional, International level
http://http://www.itu.int/osg/spu/ngnwww.itu.int/osg/spu/ngn//
AsiaAmericas
Europe
ITUNGN
Africa
Study Group 1
• Tariff policies, tariff models and methods of determining the costs of services on national telecommunication networks, including next-generation networks
• Regulatory impact of next generation networks on interconnection
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NGNsNGNs as a national issue as a national issue MultiMulti--stakeholder approach stakeholder approach
• Broad framework on interconnections and general regulatory framework
United Kingdom: Interconnection and Developing India: Recommendations on Issues pertaining to NextGeneration NetworksUSA: Hearing on network neutrality
• Focused approachGermany: e.g. IP InterconnectionNetherlands: e.g. Emerging markets
• Advisory forums Australia: Industry Forum to Advise on Convergence IssuesJapan: Next Generation Network promotion forumUK: NGN Industry BodyIndia: Joint Consultative Committee &NGN Coordination Committee
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Needs for a new regulatory paradigm Needs for a new regulatory paradigm under regional and intl. discussionunder regional and intl. discussion
• ERG: 2006 Common PositionsPrinciples for IP interconnectionRegulatory principles for NGNs
• CEPTConsultations on interconnection model Many activities related to non-economic regulation
• CITEL and APEC-TEL Convergence, NGN, VoIP
• OECDStudies on IP related issues
• WTOFirst considerations on Agreement on Basic telecommunications
• ITUGlobal discussion / What rules on the IP-enabled NGNs? (March 2006) / Future of Voice (January 2007)
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New and Emerging marketsNew and Emerging markets
• SMP concept Fundamental regulatory questions confronted with long term goals of the economic and industrial policyDiscussion on implications of the regulatory holidays
• Relevant markets Wholesale – New access technologies do influence in particular broadband definitions Retail – all market may be redefined
• New balance between ex-ante regulations and ex post remedies
• Effectiveness of self correcting forces in a competitive marketplace
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Interconnection in IP environmentInterconnection in IP environment
• Distinctions in periods Transitional and mature
• Competition oriented regulation It is possible that in NGN environment the intervention in setting the interconnection agreements will be smaller
• New model?Conflict between technology independence, cost based regulation, and significant market power. For the migration phase zero or low rate model for call termination may be advantageous. In the long term new model (see ECC 2005) with full separation of services provision and connectivity.
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Open character and realityOpen character and reality
• Telco Model versus Internet Model • Similar to the internet
NGN offers horizontally integrated model with separated NGN services and NGN Transport layer
• Market structure Very different
• Who determines the openness Vertically integrated services and network operators together with regulatory obligations
• Meaning of the contnet providers still underestimated in the discussion
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Next Generation Universal ServiceNext Generation Universal Service
• Definition of the universal service and the scope of the services to be included
Inclusion of the broadband in Europe triggered very difficult debate
• Possible change of approach Migration to the universal access approach
• Unified prices and affordability• NGN is much more efficient
CAPEX and OPEX up to 40% lower More services on the network
• Universal service fundsPossible sources of financing
• Customer protection
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Customer interests protectionCustomer interests protection
• Universal service and access • Consumer emergency calls
(E112/E911)• Consumer protection and privacy (e.g.
SPAM, SPIM)• Quality of services• Authenticated caller or sender
identification• Disability assistance• Data protection and privacy issues
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Conclusions Conclusions
We all build the Information We all build the Information Society togetherSociety together!!
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ConclusionsConclusions
• NGN will bring significant changes for the regulatory framework
• The changes will be implemented rather in a way of natural evolution then drastic revolution
• Competition is key to the NGN; on the other hand NGN fosters competition
new entrance opportunities for operating companies as well as newcomers / NGN creates new markets and reinforce position of some market players
• New balance between ex-ante regulations and ex post remedies
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ConclusionsConclusions
• Effectiveness of self correcting forces in a competitive marketplace
• The tempo of the NGN deployment depends on the effective regulation
• Regulatory proceeding determine incentives to invest for both new entrants and incumbents
• Regulatory policy should take into account the dynamic efficiencies dynamic efficiencies to be achieved in the ICT sector
•• BalanceBalance between facility based competition and service based competition should be preserved
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Implications for the regionImplications for the region
• NGNs may develop much faster develop much faster in countries with poor infrastructure
• Regulatory harmonization harmonization and propro--active active participation participation in the debate on the future regulatory paradigme is crucial
• It diminishes investment risk that is very high in transition economies anyway
Please do not wait and give your voice to this debate!
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Information and Communication Information and Communication Technologies in Caspian and Technologies in Caspian and
Black See RegionBlack See Region
We all build the Information We all build the Information Society togetherSociety together!!
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Measuring Measuring Opportunities Opportunities
1/3 1/3
1/3
DOIDOI
OpportunityOpportunity UtilizationUtilization
Infrastructure
Digital Opportunity Index
WISR 2006WISR 2006New New ITUITU’’ss SeriesSeries
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Digital Opportunity Digital Opportunity IndexIndex
DOIDOI
percentage of populationcovered by mobilecellular telephony
percentage of populationcovered by mobilecellular telephony
internet usersper 100 inhabitants
Proportion of householdswith fixed line telephone
mobile cellular tariffsas a percentage ofper capita income
mobile cellular tariffsas a percentage ofper capita income
internet access tariffsas a percentage ofper capita income
internet access tariffsas a percentage ofper capita income
ratio of broadbandinternet subscribers to
internet subscribers
ratio of broadbandmobile subscribers to
mobile internet subscribers
mobile cellular subscribersper 100 inhabitants
proportion of households withInternet access at home
mobile internet subscribersper 100 inhabitants
proportion of householdswith a computer
Oppor
tuni
ty
Oppor
tuni
ty Utilization
Utilization
Infrastructure
InfrastructureInfrastructure
Infrastructure
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Digital OpportunityDigital OpportunityIndexIndex
New New ITUITU’’ss Series Series
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Digital Opportunity Digital Opportunity IndexIndex
WISR 2006WISR 2006New New ITUITU’’ss SeriesSeries
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DOI: InDOI: In--depth analysisdepth analysis
Opportunity Infrastructure Use DOI RankBulgaria 0.96 0.34 0.22 0.51 46
Romania 0.93 0.26 0.20 0.46 53
Turkey 0.97 0.30 0.08 0.45 58
Russia 0.96 0.25 0.13 0.45 60
Iran 0.89 0.16 0.03 0.36 95
Georgia 0.92 0.12 0.13 0.39 84
Kazakhstan 0.94 0.17 0.02 0.38 89
Ukraine 0.91 0.17 0.02 0.37 93
Azerbaijan 0.90 0.15 0.02 0.36 99
Moldova 0.68 0.14 0.07 0.30 115
Turkmenistan 0.72 0.07 0.00 0.26 127
Kyrgyzstan 0.55 0.09 0.01 0.22 134
Armenia 0.70 0.15 0.02 0.29 120
Tajikistan 0.53 0.05 0.01 0.20 140
Czech Republic 0.98 0.42 0.13 0.51 43
Poland 0.98 0.39 0.19 0.52 39
Hungary 0.98 0.43 0.24 0.55 34
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DOI: UseDOI: Use
Internet per 100 inhab.
Fixed broadband to total Internet subs.
Mobile broad-band to total mobile
Bulgaria 0.24 0.42 0.00
Romania 0.21 0.39 0.00
Turkey 0.09 0.14 0.00
Russia 0.12 0.27 0.00
Iran 0.07 0.02 0.00
Georgia 0.04 0.34 0.00
Kazakhstan 0.07 0.00 0.00
Ukraine 0.07 0.00 0.00
Azerbaijan 0.05 0.00 0.00
Moldova 0.09 0.13 0.00
Turkmenistan 0.00 0.00 0.00
Kyrgyzstan 0.03 0.00 0.00
Armenia 0.07 0.00 0.00
Tajikistan 0.01 0.02 0.00
Czech Rep. 0.29 0.08 0.00
Poland 0.22 0.36 0.00
Hungary 0.22 0.49 0.00
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Digital OpportunityDigital OpportunityUtilizationUtilization
WISR 2006WISR 2006New New ITUITU’’ss SeriesSeries
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DOI: OpportunitiesDOI: Opportunities
Mobile population coverage
Internetaffordability
Mobile affordability
Bulgaria 0.98 0.97 0.92
Romania 0.97 0.87 0.96
Turkey 0.96 0.96 0.98
Russia 0.95 0.96 0.98
Iran 0.70 0.99 0.98
Georgia 0.95 0.89 0.92
Kazakhstan 0.94 0.92 0.97
Ukraine 0.91 0.93 0.90
Azerbaijan 0.97 0.87 0.86
Moldova 0.92 0.58 0.54
Turkmenistan 0.50 0.68 0.98
Kyrgyzstan 0.40 0.57 0.68
Armenia 0.81 0.43 0.87
Tajikistan 0.30 0.47 0.83
Czech Republic 0.99 0.98 0.98
Poland 0.98 0.98 0.98
Hungary 0.99 0.98 0.98
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DOI: InfrastructureDOI: Infrastructure
% households with fixed line
Mobile per 100 inhab.
% households with Internet
Mobile Internet per 100 inhab.
% households with PC
Bulgaria 0.83 0.59 0.10 0.03 0.15
Romania 0.62 0.47 0.06 0.04 0.12
Turkey 0.82 0.51 0.07 0.01 0.11
Russia 0.60 0.51 0.05 0.00 0.11
Iran 0.65 0.06 0.04 0.00 0.07
Georgia 0.33 0.23 0.00 0.00 0.06
Kazakhstan 0.61 0.16 0.02 0.00 0.05
Ukraine 0.53 0.27 0.01 0.00 0.03
Azerbaijan 0.53 0.18 0.02 0.00 0.04
Moldova 0.53 0.14 0.01 0.01 0.03
Turkmenistan 0.35 0.00 0.01 0.00 0.01
Kyrgyzstan 0.33 0.06 0.01 0.00 0.04
Armenia 0.67 0.05 0.02 0.00 0.02
Tajikistan 0.20 0.02 0.00 0.00 0.01
Czech Rep. 0.62 1.00 0.19 0.01 0.30
Poland 0.75 0.60 0.26 0.01 0.36
Hungary 0.71 0.86 0.14 0.09 0.33
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Challenges for the Countries in Challenges for the Countries in Caspian and Black See RegionCaspian and Black See Region
We all build the Information We all build the Information Society togetherSociety together!!
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ChallengesChallenges
• Progress in regulatory reform• Pro-competitive policy approach • Enabling regulatory environment
Infrastructure development, modernization…Voice over Internet Protocol…
• Mobile telecommunications Dissemination of 2.5G / 2.75G / 3G Mobile Virtual Network Operators Licensing: Emerging technologies
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Thank you very much Thank you very much for your attention!for your attention!
Jaroslaw K. Ponder International Telecommunication UnionStrategy and Policy Unit E-mail: [email protected]://www.itu.int/spuTel: 00 41 22 730 60 65
We all build the Information We all build the Information Society together!Society together!
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Resources Resources
• Full version of this presentation and others focusing on regulation:www.itu.int/osg/spu/presentations/
• NGN regulatory and policy resources:http://www.itu.int/osg/spu/ngn/ngn-policy-regulatory-resources.html
• ITU activities on NGN:www.itu.int/spu/ngn
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International International Telecommunication Telecommunication
UnionUnion
We all build the Information We all build the Information Society togetherSociety together!!
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ITU ITU -- International International Telecommunication UnionTelecommunication Union
• The oldest specialized UN agency with more than 140 years of experience in communication sector
• Headquarters in Geneva plus regional offices
• ITU staff: more than 750 from more than 80 countries
• 189 member states, more than 640 sector members
• ITU Agenda for Change• Structure of the ITU
ITU-T – Telecom StandardizationITU-R – Radio-communications ITU-D – Development Bureau
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ITU ITU –– InternationalInternationalTelecommunication UnionTelecommunication Union
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ITUITU’’ss Strategy and Strategy and Policy Unit (SPU)Policy Unit (SPU)
• New Initiatives ProgrammeDigital Bridges (2005)Ubiquitous Network Societies (2005)Today’s Networks Tomorrow (2005)What Rules for IP-enabled NGNs? (2006)Digital Transformations in the Information Society (2006)Regulatory Environment for Future Mobile Multimedia Services (2006)
• Many other activities…
http://http://www.itu.int/spuwww.itu.int/spu