Experts Group Meeting for Europe on Increasing Role fo the Private Public Partnership in the ICT...

Experts Group Meeting for Europe on Increasing Role fo the Private Public Partnership in the ICT

Ecosystem/25 Years of Telecom/ICT Sector Reform in Europe

New Fields of Efficient Regulation and Perspectives on Digital PPP ITU, Geneva, Nov. 14-15, 2012

Montbrillard Building

Prof. Dr. Paul J.J. WelfensJean Monnet Professor for European Economic Integration;

chair for Macroeconomics; president of the European Institute for International Economic Relations at the

University of Wuppertal, Alfred Grosser Professorship 2007/08, Sciences Po, Paris, Research Fellow, IZA, Bonn,

Non-Resident Senior Fellow at AICGS/Johns Hopkins University, Washington DC

[email protected], www.eiiw.eu;

Welfens/EIIW, U. of Wuppertal 1

mailto:[email protected]

http://www.eiiw.eu/

Content

1. Introduction2. Measuring the True Economic Significance of ICT3. Unfinished Regulatory Business: Mobile

Telecommunications4. Regulatory Challenges: Still to Be Done5. Smart Grids, Renewable Energy and Green ICT:

Policy Options6. Other New Policy Issues

2Welfens/EIIW, U. of Wuppertal

1. Introduction What went well: deregulation of fixed-line tel. Still to be done in regulations:

Traditional vertical integration; unbundling – how much? Ver-tically (opaquely) integrated firms get financing via capital markets

Adequate regulation in mobile telecommunications; but bundling fixed/mob

Defining mobile global universal services - could include broadband

Smart grids: defining a neutral data platform Newly to be considered for PPP: Green ICT,

positive external effects; efficiency+, innovation+3Welfens/EIIW, U. of Wuppertal

2. Measuring the True Economic Signifcance of ICT

ICT investment share in nominal GDP declining after 2000 in US, Germany,....

Real ICT investment – based on ICT price index – relative to GDP increasing all the time; at constant prices ICT investment becomes increasingly important for output growth, jobs..

International telecommunications prices falling = higher international trade (Jungmittag/Welfens, 2008)


True ICT Investment-GDP Share (ICT Price Index 2000=100) versus Ratio of Nominal ICT to Nominal GDP

5

Falling ICT Price Index implies that ratio of nominal ICT to no-minal GDP is biased: underestimation of true ICT-investment GDP ratio;By implication: overall investment-GDP ratio is underestimated

Welfens/EIIW, U. of Wuppertal

3. Theory of Regulation and PPP

We need regulation as sector specific rules of competition if otherwise there is market failure through monopolistic bottleneck or similar problems (this includes silent cartel building)

Telecomms: Enforcing that monopolistic bottleneck (access to customer in fixed line segment) can be leased by competitors of incumbant means that the overall digital services market becomes more competitive


3. Theory of Regulation and PPP

Government has role for facilitating market transactions (e.g. rules for interoperability); regulations if necessary, phasing out in the long run. NO PPP in competition policy

Government(s) should avoid conflicts of interest – e.g. government as owner of firms; government as regulator

PPP will be biased if government is facing conflict of interest

Would be useful if government gives minimal subsidies to broadband investors in rural areas (see e.g. Sweden), BUT the debt crisis will make this increasingly difficult; PPP as a substitute in this situation

International Organizations: Helping poor countries/best practice; PPP = combination of I.O.s (e.g. ITU, WB, WTO, G20) and actors from private sector

Real, or virtual PPPs; 1 country, many countries involved?


4. Regulatory Challenges: Still to Be Done

Adequate incentives for broadband investm.

Adequate regulation in mobile telecommunications

Defining global mobile universal services

Standard setting (industry itself; PPP (GSM))

Smart grids: smart meters & intelligent network - defining a neutral data platform in an environment which brings competition, guarantees privacy, generates efficiency gain


PPP Models

Global Actors (WB, ITU, G20); MNCs & SMEs...

Regional Actors(e.g. EBRD, EU, OECD/Dev.

Center)

National Policy Makers

Industry Representativ

es

Firms, NGOs from Countries

Academia


Germany‘s annual national IT Summit is a good example of PPP awareness, innov, entrepr., networking, overcoming bottlenecks; private sector puts issues on political agenda =progress = growth ++

Regulation in Mobile Communications in Regional Integration Clubs

Country 1 Country 2, Country 3 (outsider);

Knieps: Carrier portability instead of international static roaming (silent

cartel)

Welfens: Require that all major operators must offer mobile flat rate for the integration area (EU,

Asean, Mercosur etc.)

Auctioning spectrum in every country

(otherwise bias in single market)

Creation of secondary market for licenes

To which extent one should allow bundling, including Free Zone provision by

Google (Philippines)

Regional digital markets = benefits


Defining Global Universal Digital Services (GUDS)

Define universal global service for global mobile service markets; e-mail+voice tel.+x Political decision at the national and

international level Interoperability at global level + effective

competition in all countries = basis for GUDS Reason for such definition: stimulate global

network effects = equivalent to positive external effects which normally would call for subsidies; if market process can organize internalization then ok without government intervention


5. Smart Grids and Green ICT

Smart grids is a regional and regulatory challenge and could involve PPP With global warming and rise of share of

renewables in electricity generation smart grids necessary;

ICT + electricity sector in a competitive environment with international standardization = efficient smart grids

Who should own the data generated by households/users: one may recommend concept of neutral data interface – houshold can give green light for use of data/sell data for third parties; firms can exploit data for innovation.


Smart Grids and Green ICT

Smart Grid is

one clear element of green

ICT

Saving in electricty

generation

Saving in transmissionnetwork inv.

Induced innovations (houshold

applicance, firms...)


International Smart Grid Initiatives

Case of regional international electricity net-work integration – e.g. Scandinavia, EU etc.; Requires international standardization,

otherwise markets will remain fragmented; standardization reforms e.g. to the minimum set of data to be collected

Government ownership of electricity plants can be problem – will government-owned plants from different countries cooperate?


Green ICT Will Help to Save C02 Emissions, Cut Costs/Price

Europe, USA, Japan

NICs LDCs


Smart Grid Dynamics: Which Investments, Which Ownership

Smart Grids, Smart Meters

Relevant Data; Demand Management Systems = Matching with Supply = Saving on Ressources (about 40% in grid inv.; 10% in power generation capacity)

Relevant Data/Data Management and Regulation; e.g. smart meters to be leased to competitors on the basis of efficient provision of metering


Green ICT: Global Warming = Global Challenge; PPP National & PPP International

Best-practice Global

Diffusion

Innovators (Green ICT)

Industry Initiative


PPP in Smart Grid Building Can Be Quite Important

Cooperation within „regional integration clubs“ and across clubs EU and Mercosur or EU and ASEAN, EU and

Gulf Cooperation Council etc. so that from the EU some outreach program could be realized

Government ownership in electricity sector could be useful in a separate grid company which gives open access to all electricity producers Welfens/EIIW, U. of Wuppertal 18

Social Networks Role of digital social networks

increasing Natural problems with competition as

there are powerful network effects Search engine markets are a particular

problem Cross-financing is to some extent

typical in the internet – this development is doubtful since prices as a means to express scarcity is not used adequately; so where are the price signals for investors and users?


6. Other Policy Challenges

20Quelle:OECD (2012), Internet Economy Outlook.


This is a very crucial field

crucial: e.g. ICT & labor markets; find a job online (CDN/Germany, FR, IT, GR...

Internet Security in a Global Perspective

Internet security is a national policy challenge to some

extent however, mainly is an international

policy challenge – can cooperation be organized; e.g. through ITU


Only 1% ICT Expenditures in Education in OECD vs. Share of Value-added is About 5%

22Quelle:OECD (2012), Internet Economy Outlook.


ICT and Human Capital Formation

ICT Expansion

• Requires more skilled workers

Human Capital Formation/Trainin

g

• ICT can be used to cut costs/raise efficiency

National & regional gov.;International cooperation

• Setting standards,

• Benchmarking• Mobile

Teaching/cost of mobile serv.


ICT and Finance

Poor prudential supervision in financial markets can cause problems – lack of funding for new innovative firms

Import problem in many countries


Venture Capital as a Challenge

25

Quelle:OECD (2012), Internet Economy Outlook.


Public Investment: Smart Grids Will Mainly Be Programme at National Level

Governments could push on an individual basis for more smart grids

Smart grids – particularly with share of renewables increasing - could be easier rolled out if government can organize some coordination among smart grid actors


ICT and Health

ICT and Health could bring considerable benefits

through cutting of costs PPP pilot projects possible and useful Caveat: differentiated approaches

needed – for the elderly ICT and health is a rather difficult field; training with the elderly necessary.


ICT Patents per 1 Mill. Inhabitants at the USPTO

28

Greece

Portugal

Italy

Spain


ICT, Education and Patents

Digital schools/universiti

es

Internet education approach (including

universities)

Patents in ICT: considerable divergence

across countries


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Experts Group Meeting for Europe on Increasing Role fo the Private Public Partnership in the ICT...

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