Gender Gender Perspectives in Perspectives in Introduction to Introduction to

Competition PolicyCompetition PolicyGender Module #6Gender Module #6

ITU Workshops onITU Workshops onSustainability in TelecommunicationSustainability in TelecommunicationThrough Gender & Social EqualityThrough Gender & Social Equality

Presentation #1:Presentation #1:

Key Issues in Competition Key Issues in Competition PolicyPolicy

OutlineOutline What is competition policy?What is competition policy? Why is competition policy Why is competition policy

important?important? DefinitionsDefinitions

MonopolyMonopoly MergerMerger Market powerMarket power Market dominanceMarket dominance

Outline 2Outline 2 Objectives of competition policyObjectives of competition policy

Response to market failuresResponse to market failures Limits on abuses of market powerLimits on abuses of market power Improvements to economic efficiencyImprovements to economic efficiency Limits on participation of foreign Limits on participation of foreign

capital/companiescapital/companies Social objectives/social welfare?Social objectives/social welfare?

Link between competition and telecom Link between competition and telecom policypolicy How does digital convergence change this How does digital convergence change this

dynamic?dynamic?

What is Competition What is Competition Policy?Policy?

Regulatory intervention aimed at Regulatory intervention aimed at ensuring competition in telecom ensuring competition in telecom markets so as to induce markets so as to induce suppliers to become more suppliers to become more efficient as well as offer more efficient as well as offer more products and services at products and services at reduced pricesreduced prices

Importance of Importance of Competition PolicyCompetition Policy

It is a critical factor in the efficient It is a critical factor in the efficient functioning of the telecom sectorfunctioning of the telecom sector It is important to the competitiveness of It is important to the competitiveness of

the sector and of firmsthe sector and of firms Central to economic efficiency and Central to economic efficiency and

economic viability at the firm, sector economic viability at the firm, sector and national development levelsand national development levels It is key to sustaining economic growth and It is key to sustaining economic growth and

national developmentnational development

DefinitionsDefinitions

MonopolyMonopoly: The exclusive possession : The exclusive possession or control of the trade in a commodity or control of the trade in a commodity or serviceor service

Market powerMarket power: A telecom operator or : A telecom operator or other firm has market power when it is other firm has market power when it is able to establish/maintain prices or able to establish/maintain prices or other key terms and conditions of sales other key terms and conditions of sales in a market, without regard to the in a market, without regard to the market or the actions of competitors market or the actions of competitors

Definitions 2Definitions 2 Market dominanceMarket dominance: Extreme form of : Extreme form of

market powermarket power Definitions vary by country, but 2 factors Definitions vary by country, but 2 factors

are key in determining market are key in determining market dominance:dominance: There must usually be a relatively high There must usually be a relatively high

market share (usually no less than 35%, often market share (usually no less than 35%, often 50% or more)50% or more)

Second, there must normally be significant Second, there must normally be significant barriers to entry into the relevant markets barriers to entry into the relevant markets occupied by the dominant firm. occupied by the dominant firm.

MergerMerger: The combining of two or more : The combining of two or more commercial companies into one entity commercial companies into one entity

Competition Policy Competition Policy Objectives Objectives

Responding to market failureResponding to market failure Limiting market power abusesLimiting market power abuses Promoting economic efficiencyPromoting economic efficiency Limits on participation of foreign Limits on participation of foreign

capital/companies in domestic capital/companies in domestic marketsmarkets

Are there any social welfare Are there any social welfare objectives?objectives?

Competition & Telecom Competition & Telecom PoliciesPolicies

Some countries have a general Some countries have a general competition authority as well as a competition authority as well as a sector-specific telecom regulatorsector-specific telecom regulator

Where this is the case, it is Where this is the case, it is important that the two entities do important that the two entities do not subject an industry to not subject an industry to duplicative or inconsistent duplicative or inconsistent interventionintervention

Competition & Telecom Competition & Telecom Policies 2Policies 2

Sector-specific regulation often not Sector-specific regulation often not related to and is even inconsistent related to and is even inconsistent with competition policy objectiveswith competition policy objectives Competition policy usually focuses on Competition policy usually focuses on

stopping actors from interfering with stopping actors from interfering with the operation of competitive marketsthe operation of competitive markets

Traditional telecom regulation often Traditional telecom regulation often interfered in competitive markets to interfered in competitive markets to achieve social welfare goalsachieve social welfare goals

Role of Digital Role of Digital Convergence Convergence

Fundamental changes in world Fundamental changes in world politics and economics in the last politics and economics in the last several years have transformed/are several years have transformed/are transforming ‘smokestack’ media transforming ‘smokestack’ media and communication’s industries and communication’s industries and their traditional ways of and their traditional ways of functioning…functioning…

Role of Digital Role of Digital Convergence 2Convergence 2

Rapid Rapid innovationinnovation in and in and convergenceconvergence of ICTs to create the so-called ‘new of ICTs to create the so-called ‘new digital media’ are:digital media’ are:

eroding infrastructural, institutional, eroding infrastructural, institutional, policy, regulatory barriers between policy, regulatory barriers between previously separate communication’s previously separate communication’s industries, andindustries, and

forcing governments and private forcing governments and private industry to reassess old industry to reassess old assumptions/approaches about the assumptions/approaches about the nature and economics of the sector…nature and economics of the sector…

…‘…‘everything is everything is everything’everything’

Convergence is the merging of Convergence is the merging of different media types and different media types and communication’s technologiescommunication’s technologies Telecom, media (broadcast/radio/print) Telecom, media (broadcast/radio/print)

and IT (computers)and IT (computers) Convergence in one area is forcing Convergence in one area is forcing

convergence in others:convergence in others: Regulatory/policyRegulatory/policy Equipment manufacturingEquipment manufacturing Information deliveryInformation delivery Business modelsBusiness models

Convergence: Convergence: Regulatory/LegislativeRegulatory/Legislative

Historic torrent of mergers, Historic torrent of mergers, consolidations, buyouts, consolidations, buyouts, partnerships, and joint ventures are partnerships, and joint ventures are changing the nature of the global changing the nature of the global telecom and media sectortelecom and media sector How should telecom regulation and/or How should telecom regulation and/or

competition policy handle these issues?competition policy handle these issues? Impacts/implications for women, the Impacts/implications for women, the

poor, the under-represented?poor, the under-represented?

Implications?Implications? Media & telecom Media & telecom

ownership/consolidation…ownership/consolidation… … …and its effects on product and content and its effects on product and content

diversity, the economy, shareholder value diversity, the economy, shareholder value vs. consumer well-being, social welfare, etc.vs. consumer well-being, social welfare, etc.

ConflictsConflicts: Between and among global : Between and among global media & telecom giants and those media & telecom giants and those supporting big capital vs. government supporting big capital vs. government regulators, smaller industry players, regulators, smaller industry players, consumers and consumer protection consumers and consumer protection advocates; the global vs. the localadvocates; the global vs. the local