world regulatory trends and challenges for caspian and black see region world regulatory trends and...

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]

25 May 2006 [email protected] 2

AgendaAgenda

• Trends: The ICT sector• Trends: Regulatory environment• Necessary actions• ICTs: Caspian and Black See Region • Policy and Regulatory Challenges• Conclusions


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:

Bandwidth Generalized mobility Convergent solutions Open character


Trends: Broadband AccessTrends: Broadband Access

Evolution in Pricing Strategy

133143

166

0

20

40

60

80

100

120

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180

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

600

800

1'000

1'200

1'400

1'600

1'800

2004 2005 2006

Sp

ee

d (

kb

ps

)

0

2

4

6

8

10

12

14

16

Pri

ce

(U

SD

pe

r 1

00

kb

ps

)

Median speed

Median Price inUSD/100 kbps

Growth in max. broadband speeds

0

5

10

15

20

25

30

35

40

Speed (kbps)

2003 2005 2006

2005

2003

2006


Trends: Broadband AccessTrends: Broadband Access

Table 1: Broadband prices for the cheapest fifteen economies.

Speed Price per US$ per Change Economy Company kbit/s month US$ 100 kbit/s 2005-06

Japan 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


TeleCommunication Sector in TeleCommunication 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 services Falling prices of communication services and

access Traditional services lose strategic meaning Personalization and customization

• Regulation Less regulation / blurred boundaries Migration from vertical to horizontal approach Technological neutrality becomes meaningful


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 4G WiFi, WiMax

Cable TV Broadcasting Service and content providers

• Strengthened process of convergence Technology Market Services Institutional

FMC?Regulatory Implications

Mul

ti-fa

cilit

y co

mpe

titio

n

Servicecompet.


NGNs as a global issue NGNs as a global issue Technical aspects Technical aspects

ITU-T SG 13: Rec. Y.2001ITU-T SG 13: Rec. Y.2001A NGN is a packet-based networkpacket-based network able to provide telecommunication services and able to make use of multiple broadbandmultiple broadband, QoS-QoS-enabledenabled transport technologies and in which service-relatedservice-related functionsfunctions are independentindependent from underlying transport-related technologiestransport-related technologies. It enables unfettered accessunfettered access for users to networks and to competing service providers and/or services of their choice. It supports generalized mobilitygeneralized mobility which will allow consistent and ubiquitous provision of services to users.

ChallengesChallenges Multimedia Generalized mobility Convergence Integrity Multi-layer orientation Open character

FG NGN

SG: 11, 13, 19, 2, 12, 16, 17

AsiaAmerica

Europe

ITUNGN

Africa


IP-enabled NGNsIP-enabled NGNsA global issueA global issue

Regulatory considerations • Three background papers

Rulling new and emerging marekts Interconnection in an IP-enabled NGN

Environment Universal Service in an IP-enabled NGN

Environment

• Regulatory proceedings National, Regional, International level

http://www.itu.int/osg/spu/ngn/http://www.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


NGNs as a national issue NGNs as a national issue Multi-stakeholder approach Multi-stakeholder approach

• Broad framework on interconnections and general regulatory framework United Kingdom: Interconnection and Developing India: Recommendations on Issues pertaining to Next

Generation Networks USA: Hearing on network neutrality

• Focused approach Germany: e.g. IP Interconnection Netherlands: e.g. Emerging markets

• Advisory forums Australia: Industry Forum to Advise on

Convergence Issues Japan: Next Generation Network promotion forum UK: NGN Industry Body India: Joint Consultative Committee &

NGN Coordination Committee


Needs for a new regulatory paradigm Needs for a new regulatory paradigm under regional and intl. discussionunder regional and intl. discussion

• ERG: 2006 Common Positions Principles for IP interconnection Regulatory principles for NGNs

• CEPT Consultations on interconnection model Many activities related to non-economic regulation

• CITEL and APEC-TEL Convergence, NGN, VoIP

• OECD Studies on IP related issues

• WTO First considerations on Agreement on Basic

telecommunications • ITU

Global discussion / What rules on the IP-enabled NGNs? (March 2006) / Future of Voice (January 2007)


New and Emerging marketsNew and Emerging markets

• SMP concept Fundamental regulatory questions

confronted with long term goals of the economic and industrial policy

Discussion 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


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.


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


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 funds Possible sources of financing

• Customer protection


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


Conclusions Conclusions

We all build the Information We all build the Information Society togetherSociety together!!


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


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


Implications for the regionImplications for the region

• NGNs may develop much faster develop much faster in countries with poor infrastructure

• Regulatory harmonization harmonization and pro-active pro-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!


Information and Communication Information and Communication Technologies in Caspian and Technologies in Caspian and

Black See RegionBlack See Region



Measuring Measuring Opportunities Opportunities

1/3 1/3

1/3

DOIDOI

OpportunityOpportunity UtilizationUtilization

Infrastructure

Digital Opportunity Index

WISR 2006WISR 2006New ITU’s SeriesNew ITU’s Series


Digital Opportunity Digital Opportunity IndexIndex

DOIDOI

percentage of population covered by mobile cellular telephony

percentage of population covered by mobile cellular telephony

internet users per 100 inhabitants

Proportion of households with fixed line telephone

mobile cellular tariffs as a percentage of per capita income

mobile cellular tariffs as a percentage of per capita income

internet access tariffs as a percentage of per capita income

internet access tariffs as a percentage of per capita income

ratio of broadband internet subscribers to

internet subscribers

ratio of broadband mobile subscribers to

mobile internet subscribers

mobile cellular subscribers per 100 inhabitants

proportion of households with Internet access at home

mobile internet subscribers per 100 inhabitants

proportion of households with a computer

Opp

ortu

nity

Opp

ortu

nity

Utilization

Utilization

Infrastru

cture

Infrastru

ctureInfrastructure

Infrastructure


Digital OpportunityDigital OpportunityIndexIndex

New ITU’s Series New ITU’s Series


Digital Opportunity Digital Opportunity IndexIndex



DOI: In-depth analysisDOI: In-depth analysis

Opportunity Infrastructure Use DOI Rank

Bulgaria 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


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


Digital OpportunityDigital OpportunityUtilizationUtilization



DOI: OpportunitiesDOI: OpportunitiesMobile population

coverageInternet

affordabilityMobile

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


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


Challenges for the Countries in Challenges for the Countries in Caspian and Black See RegionCaspian and Black See Region



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


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] http://www.itu.int/spu Tel: 00 41 22 730 60 65

We all build the Information We all build the Information Society together!Society together!


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


International International Telecommunication Telecommunication

UnionUnion



ITU - International ITU - 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 Standardization ITU-R – Radio-communications ITU-D – Development Bureau


ITU – InternationalITU – InternationalTelecommunication UnionTelecommunication Union


ITU’s Strategy and ITU’s Strategy and Policy Unit (SPU)Policy Unit (SPU)

http://www.itu.int/spuhttp://www.itu.int/spu

• New Initiatives Programme Digital 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…

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