Introduction to telecom regulation
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This document provides an overview of regulation and telecommunications regulation. It defines regulation as administrative legislation that allocates rights and responsibilities. Regulations are used to regulate goods and services that are considered public necessities. Reasons for regulating include addressing market failures and facilitating competition. Telecommunications regulations have traditionally focused on monopolies but now also address competition. New technologies have implications for regulatory policies. The principal objective of telecom regulation is to make services available to all at reasonable terms. An effective regulatory framework requires an independent regulator with the proper structure, expertise, and independence from political and industry influence.
![What is Regulation?
• Regulations can be seen as implementation
artefacts of policy statements. They make up
policy statements
1. Levi-Faur, David, Regulation and Regulatory Governance, Jerusalem Papers in Regulation and Governance, No.1, 20101
Regulation is administrative legislation that constitutes or constrains
rights and allocates responsibilities. It can be distinguished from primary
legislation (by Parliament or elected legislative body) on the one hand
and judicial decisions on the other hand [1]
Centre for Communication Media and Information Technology](https://image.slidesharecdn.com/introductiontoregulation-130531094329-phpapp02/85/Introduction-to-telecom-regulation-3-320.jpg)
Introduction to telecom regulation
- 1. Introduction to Regulation Idongesit Williams, PhD Student CMI, Aalborg University idong@plan.aau.dk Centre for Communication Media and Information Technology
- 2. Outline • General overview What is regulation Why regulate What can be regulated • ICT regulations What must be regulated Why, what and how Driver of change from monopoly to competition Implication of technology change Principal objective of telecom regulation Types of telecom regulations • Regulatory Frameworks Regulator Types of regulators Regulatory organization structure Best practice for setting up a regulator Characteristics of a good regulator Government’s responsibility International frameworks Assessing a country’s regulatory framework Summary Centre for Communication Media and Information Technology
- 3. What is Regulation? • Regulations can be seen as implementation artefacts of policy statements. They make up policy statements 1. Levi-Faur, David, Regulation and Regulatory Governance, Jerusalem Papers in Regulation and Governance, No.1, 20101 Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation (by Parliament or elected legislative body) on the one hand and judicial decisions on the other hand [1] Centre for Communication Media and Information Technology
- 4. What is usually regulated A good of public / national interest A good, where the demand for a good or service is considered a common necessity for the public at large, and the supply conditions are such that the public may not be provided with reasonable service at reasonable prices, the government may regulate to ensure that the service is available to all telecoms water transport electricity ***The general need to regulate varies from country to country Centre for Communication Media and Information Technology
- 5. Why Regulate? Regulation mandated by a state attempts to: 1. Produce outcomes which might not otherwise occur, (eg. Facilitate competition) 2. Produce or prevent outcomes in different places to what might otherwise occur, ( constructive or destructive outcomes) 3. Produce or prevent outcomes in different timescales than would otherwise occur (market failures) Centre for Communication Media and Information Technology
- 6. What can be regulated? • controls on market entries • prices • wages • Development approvals • Pollution effects, employment for certain people in certain industries • Standards of production for certain goods • The military forces and services Centre for Communication Media and Information Technology
- 7. ICT/Telecoms Regulations Traditionally it was a regulation of monopolies, (mainly Post and Telecoms (P&Ts)) Now it regulation of both monopolies, duopolies and competitive markets Monopoly Competition Economies of scale Technical efficiency Low interconnection costs Public interest objectives Organisational efficiency Pressure on tariffs Innovativeness New service development Centre for Communication Media and Information Technology
- 8. What must be regulated? Monopoly Competition Tariffs Quality of service Universal service obligation Scarce resources Interconnection Transparency (Cross subsidisation) Centre for Communication Media and Information Technology
- 9. Why What How Monopoly Protect monopoly Technical Efficiency Social and Industrial policy Tariffs Quality of service Universal service obligation Direct: Ownership Informal guidance Competition Effective competition Coherent Infrastructure Scarce resources Interconnection Transparency (Cross subsidisation) Indirect: Legislation Market incentives Centre for Communication Media and Information Technology
- 10. Drivers of change in telecom policies from monopoly to competition Economic Politics Technology 1st stage 1990 -Liberalization policy broke up public monopolies into private monopolies -- Separation of Post from telecoms - Establishing a separate regulator 2nd stage -Privatization of monopolies - Opening up markets - New licensing framework 3rd stage - Exclusivity of incumbent ends - Full competition begins - Regulation of competition Fixed: PSTN (Using Analogue switches)--- ISDN (digitzation)---DSL---- ADSL---- future broadband Wireless- Radio transmission---GSM--- UMTS--- LTE– WiMAX---- future broadband . Globalization has led to New unbundled markets, new international policy framework that has produced new best practices Centre for Communication Media and Information Technology
- 11. Implications: new regulatory policies Market/ Policy Technology Services Application Monopoly Analogue technologies (circuit switching) Voice telephony Voice calls Monopoly, Duopolies Packet switching and Digitization (x.25, ISDN, analogue mobile) Voice + Data service SMS, Voice calls, Fax Competition; Liberalization Privatization Commercialization Deregulation Corperatization Digitization has led to Broadband, Internet protocol (GSM, UMTS, LTE, WiMAX, WiFi, DSL, ADSL, HSPA, etc) Voice + Data service + Multimedia services + lots more Voice, MMS, SMS, VOIP, IPTV, DVBH, Streaming etc Policy trend Centre for Communication Media and Information Technology
- 12. Types of Telecom regulation • Public ownership – A part of the public administration – Public owned corporation • Legislation – Licensing – Rights and obligations – Competition laws • Market incentives – Taxes and subsidies – Tradable permits • Self Regulation Centre for Communication Media and Information Technology
- 13. Regulatory Framework • Government: Decide on the regulatory framework, structure and implementation. Creates the regulator. • Regulator: Executes the regulation • Market players: Network operators, equipment manufacturers, content providers, content aggregators, equipment retailers/suppliers, etc • Public Centre for Communication Media and Information Technology
- 14. Implications of Technology Change • Unbundling of the PSTN to several horizontal and vertical disintegrations. • More players, Network providers, content providers, content aggregators, application providers, equipment manufacturers, equipment suppliers etc. • Movement for diverged service platforms to a converged service platforms. Centre for Communication Media and Information Technology
- 15. Principal objective of telecom regulation The service should be made available to everyone on reasonable terms, sometimes whether or not it is profitable to do so. The services should satisfy the full range of consumer demand and be supplied under conditions of optimal efficiency Social/Political interest: Availability of service and continuity. Economic interest: Prevention of monopolistic behaviour to avoid failure, Promotion of competition through incentive regulations , Use of scarce resources in an efficient way. Centre for Communication Media and Information Technology
- 16. Regulator • Management of scare resources (spectrum, numbering, right of way) • Responds to the challenges made possible by new technologies that will raise the need for a new regulation, eg privacy concerns IPR etc. • Manages the evolving markets made possible by convergence • Tackles how to deal with disruptive technologies and how to protect public interest when they discover that the market for the new technology can't take off because of the impediments in former regulations that prevent it. (eg voip and IPTV) • It is advisable for the regulator to inform the public on the limitations that comes with new technologies. This isn't very practical Centre for Communication Media and Information Technology
- 17. Types of Regulators • Single sector regulator (Oversee only one sector, eg only telecoms) • Converged sector regulator (Oversee several inter-relating sectors eg, Telecoms, broadcast, electronic payment) • Multi sector regulator (Oversee sectors with common economic and legal xteristics eg, telecoms, water, energy, transportation. Under one umbrella) • A competition authority (no regulator as such but apply competition and anti trust rules) Centre for Communication Media and Information Technology
- 18. Regulatory organization structure • The collegial body: A board or commission composed of multiple members. Here individuals are with different expertise, more independent, but development of regulation may be slower due to internal wrangling • The single regulator: Often led by a chairperson or president. single regulator has benefit of consistent approach to regulation and decision making. They can act quickly but can be influenced by external actors. he/she may not be able to match the expertise of the collegial body Centre for Communication Media and Information Technology
- 19. Best practice for setting up a regulator • Regulators must be independent to be seen as transparent and accountable. • Regulators should have the expertise to assess and make sound judgements on both technical and industry specific issues. • Regulators must take into account various view points and interests, including economic, social and political objectives. there should be checks and balances. • The institutional design, internal structure and administration must be sufficiently flexible to allow the regulator to respond to market realities. Centre for Communication Media and Information Technology
- 20. Characteristic of a good regulator • Accountability • Transparency • Predictability Some areas to regulate competition • Local services • Domestic long distance service • International long distance services • Mobile • Internet services • Leased lines Centre for Communication Media and Information Technology
- 21. Government’s responsibility Must grant the regulator structural, financial and functionality independence • Structural: Free from political and industry capture to ensure transparency and objectivity. • Financial: Funding should be free from private and political interests. The regulator should manage its funds and also have multiple ways of sourcing for funds • Functionality: The regulator should be independent in making and enforcing authority, dispute resolution powers, clear rule involving appointment , removal and mandate of regulatory authority, incentives to promote professional expertise of staff, adequate provisions to address ethical and conflict-of-interest-concerns. Centre for Communication Media and Information Technology
- 22. International frameworks • Countries make global and regional commitments to open the telecommunication market to foreign investment • They also make commitments to harmonize legislation with that of other countries in similar geographic or economic situations Eg EU framework, WTO, NEPAD etc The advantage of this could be the development of global or regional regulatory best practices. It can also grant the telecoms investor a level of certainty and predictability of the regulatory regime in the country he or she wants to be a part of. Centre for Communication Media and Information Technology
- 23. Assessing a country’s regulatory framework • Greater economic growth • Increased investment in the sector • Lower prices • Better quality of service • Higher penetration and a more rapid innovation in the sector Centre for Communication Media and Information Technology
- 24. Summary • Regulation is an important tool to ensure public interest in the telecoms market • Technology, Economics and politics are the driving force for new regulations and the initial movement from monopoly to competition markets • Tariffs, interconnectivity, scarce resources, transparency, Quality of service, Universal Access and Services are some of the areas regulated in telecommunications • Telecommunication is regulated to promote its social and economic benefits to citizens of a country • A regulator must be independent to function properly • Countries do sign up with international regulatory frameworks to enable them develop best practices Centre for Communication Media and Information Technology