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ICT 5: Driving demand - Accelerating adoption: Regulator’s role. Daniel Rosenne Chairman, Tadiran Telecom Communications Services, Israel October 7 th , 2009. Regulation plays key role: setting environment and conditions driving demand and accelerating adoption. - PowerPoint PPT Presentation
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ICT 5: Driving demand - Accelerating adoption:
Regulator’s role
Daniel RosenneChairman, Tadiran Telecom Communications Services, Israel
October 7th, 2009
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Regulation plays key role: setting environment and conditions driving demand and
accelerating adoption
Telecom regulation key role: free market forcesAllowing for innovation, supporting adoption, removing
obstacles
How to achieve this goal?Harness market power of dominant playersReduce entry barriers for new competitorsAssure level playing field
What are the critical issues? InterconnectionOpen accessNet neutrality
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Interconnection is Key: creating “Network of Networks”
Major regulatory challenge: Assuring non-discrimination and fairness Preventing abuse of market dominance Promoting competition Avoiding discrimination Assuring transparency
Professor Noam, 2001: “The regulation of interconnection is
therefore becoming the paramount tool of government into the reasonably foreseeable future, replacing the regulation of telecommunications retail pricing, the rate of return, or competitors’ entry.
It provides government with a tool for extensive micromanagement of markets”MIT Press, 2001
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Open Access is essential:Enabling value added service providers to utilize public networks
without discrimination
Essential for promoting competition: Small, agile, innovative and hungry for
business value added service providers are the main innovators of new ideas and services
Pat Longstaff, 2002: Policymakers double voice: “Policymakers in every country have generally
been unable to decide if they want the communications sector, and the industries and firms in it, to move towards concentration or toward diversity…
Although most governments embrace diversity to promote competition, they are nevertheless willing to allow concentration if that would enable companies to survive a competition they are in danger of losing”MIT Press, 2002
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Network NeutralityNet neutrality refers to a network open to carry every
form of information and support every kind of application
Net neutrality deals with a central concern, the power held by access providers - wireline, cable and wireless providers - to select, price or differentiate among Internet information streams passing through their networks
Enforcement of net neutrality is considered essential for achieving telecom competition and market development
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Israel as an example
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Israel - a “case in point”
Broadband - the merits of pro-competitive measures Structural separation enforced 2001 – assuring
open access and net neutrality Results: extremely high growth and adoption rate
Mobile - the pitfalls of “hands-off” regulation: Mobile service providers enjoy high degree of
freedom Results: extremely low mobile non-voice revenues
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Israel's Telecommunications
7.4 m pop, 1.7m households, US$ 27,200 GDP/capita
3.2 million main telephone lines(43% penetration) Bezeq: 2.6m subscribers HOT (cable): 0.5 m subscribers VoB: 0.1 subscribers
9.3 million wireless customers, on 4 networks(126% penetration) 35% with broadband capability
1.5 million households connected to multichannel subscriber television (88% of households): HOT (cable): 0.9m subscribers, Out of these: 0.4 subscribe to VOD services Yes (satellite): 0.6m subscribers
1.7 million broadband Internet connections Bezeq (ADSL): 1m HOT (cable modem): 0.76m
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Israeli Example: Broadband InternetEnforcing open access & net neutrality led to enormous growth
Since 2001, Bezeq and HOT adhere to “structural separation” rules, are allowed to provide access services only, to Internet service providers, assuring open access and net neutrality
Total
ADSL
CableModem
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Israeli Example: Mobile Wireless Non-Voice servicesCould it be that discriminatory practices delay adoption of new services?
Israel is well suited for growth in non-voice mobile wireless services: Relatively wealthy country (~$20K GDP/cap,~$27K) Technology literate High mobile penetration, extremely high usage
However, non voice revenues are rather low
Source: Bank of America Securities Merrill Lynch Global Wireless Matrix 2Q09
ARPU [US$]
Non voice revenues [%]
Wireless penetration [%]
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Conclusions
Competition is essential for high adoption rate for new services Only competition can reduces prices and create market
innovation and agility
Regulators have a critical role - free market forces: Cost based interconnect regime Open access Net neutrality
The Israeli experience demonstrates the effects of regulatory measures on the demand and adoption rate of new services
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The EndThanks for your attention
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