Internet Policy Day 3 - Workshop Session No. 5 The impact of telecomms regulation Prepared for CTO by Link Centre, Witwatersrand University, South Africa

Internet PolicyDay 3 - Workshop Session No. 5

The impact of telecomms regulation

Prepared for CTO by Link Centre, Witwatersrand University, South Africa

CTO / DFID Internet Policy workshop, Jamaica, 22-26 April 2002

Sessions Summary

Day 1– Session 1 History and technical background– Session 2 Market structure

Day 2– Session 3 Interconnection, IXPs and voice over IP– Session 4 Governance and domain names

Day 3– Session 5 The impact of telecommunications regulation– Session 6 Internet specific policy issues

Day 4– Session 7 Content on the Internet – Session 8 E-commerce issues

Day 5– Session 9 Internet tools for regulators– Session 10 Conclusion, review and evaluation


Topics of discussion Telecomms regulation

– Why regulate?– Policy, law and regulation– Best practices

Impact of telecomms regulation on the Internet Regulatory issues

– Universal access/service– Competition– Licensing– Interconnection and facilities leasing– Consumer protection– Price regulation


Why regulate at all?

Resource allocation– Frequency spectrum

Public utility– High costs to set-up infrastructure required

protection and some guarantee of a return on the investment

Social objectives– Ensuring that prices are reasonable for all

sectors of the population


Why regulate at all?

Efficiency– Monopolies are not efficient, no incentive to

improve service levels or lower costs– Lack of proper cost allocation and accounting

Globalisation– Rapid increase in global trade and the flow of

money– External pressures on countries– Multi-nationals playing an expand role

Aside: Who does the longest term planning?


Policy, law and regulation

Policy– Set by government– Sector specific needs– National objectives

Law– Usually a result of certain policies

Regulation– Application of the law to the sector– Defining the relationship between market and

regulator


Regulatory best practices

Transparency– Policies and procedures accessible to all and simple to use– Public hearings and the provision of reasons for decisions

Fairness– Impartial, equitable, lawful, unbiased and just– Fairness produces trust, credibility and legitimacy

Accountability– To government, courts, industry and consumers– Regulatory decisions should be accorded full recognition

Independence– Exercise of powers without interference or pressure– All stakeholders treated equally and with respect


Impact of regulation on the Internet

Charging models– Local calls flat rate or time based?

Access technologies– Restrictions on international connections impact price

and quality of service– Huge impact on local loop; restrictions in access

technologies impact the roll-out of content delivery capability

Restrictions on voice– Slow down the natural integration of voice/data

services– Erodes country’s competitive skills based


Universal Access / Service

Universal service means access to each household

Universal access means access within a reasonable distance

The goal of universal services is to bridge geographic disparities

Service must be affordable as well as available But the value of the service may actually be

higher! Changing definitions – from POTS to PANS

(Public Access Network Services)


Competition

Competition increases efficiency and improves choice

Ideal world: totally open market means no need for regulation

Real world: imperfect competition, resources allocated unfairly or inefficiently

How governments intervene– Behavioural: Modify the behaviour of company

Example: regulating prices.

– Structural: Directly affect the market structure Example: blocking a merger of two network operators


Competition

Advantages of incumbents– control essential facilities– economies of national networks– vertical integration– control over network standards and

development– cross subsidies

Accounting separation– to prevent unfair cross-subsidisation– to determine the real costs of interconnection


Licensing

Three main approaches– No licensing at all– General authorisations– Government/regulator issues a

licence

Snap survey: Should ISPs be licensed?


Interconnection and facilities leasing

Interconnection and facilities leasing– Enables communications – public interest, right

to communications, etc.– Enables competitive entry – fair competition

“Interconnection is key to the development of a competitive telecommunications arena…”.

Introduction to The European Interconnection Manual by Interconnect Communications

http://www.icc-uk.com/pubs71.html


Consumer protection

Quality of service regulation– Price vs. quality

Consumer complaints and dispute resolution

Standards setting Informed choice: educating the

consume– Publishing comparable QoS indicators


Summary

Why regulate? Initially to ensure service, now to ensure efficient services

Impact of telecoms regulation on the Internet

Universal service/access Competition Licensing Interconnection/facilities leasing Consumer protection

Documents

Internet Policy Day 3 - Workshop Session No. 5 The impact of telecomms regulation Prepared for CTO by Link Centre, Witwatersrand University, South Africa