General Regulation - ITU · Regulation is used to foster and sustain competition 2 Public Monopoly...
Transcript of General Regulation - ITU · Regulation is used to foster and sustain competition 2 Public Monopoly...
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General Regulation
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Regulation is used to foster and sustain competition
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Public Monopoly Limited regulation: Government supplied
telecoms services
Private Monopoly Increased regulation: Regulation of monopoly
supplier
Partial
Competition
Increased regulation: Regulation must foster and
sustain competition
Full Competition Decreased regulation: Competitive market,
relying on ex-post regulation
Competitiveness Need for regulation
Source: ICT Regulation Toolkit
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Why Regulate?
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To avoid market
failure
To foster effective
competition
To protect
consumer
interest
To increase
access to
services
Abuse of
market power
Under-
investment
Lack of
consumer
choice
Lack of
innovation
Too high
prices
LEADING TO…
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If dominant firms are unregulated they may demonstrate…
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Predatory
Pricing
Margin
Squeeze
Excessive
Pricing Customers pay high prices
Competitors go out of business
Competitors go out of business
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Two approaches – Ex-Ante and Ex-Post
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Ex-Ante Ex-Post
Before problems
arise
Fixes problems after
they occur
Regulation Competition Law
Sets out rules in
advance
“Rules” set by
precedence
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EU approach to regulation: Ex-Ante and Ex-Post
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Defining the market
Market reviewed
Remedies imposed
SMP or Dominance found
Ex ante approach
• The regulator carries out an assessment into all relevant markets to
determine whether dominance/significant market power exists
• Regulator then imposes remedies where it considers future potential
for market abuse
Ex post approach
• A complaint is made under competition law and/or an investigation
made by competition authorities into alleged past or current market
abuses
• Market then reviewed under competition law to assess whether the
defendant has market power and whether it has then abused it
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Reducing number of markets subject to ex-ante review in EU
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2003 2007 2014
11
wholesale 6 wholesale 5 wholesale
7 retail 1 retail No retail
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Regulation and Competition – EU and US
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• Competition Law: Jointly held (most EU countries and US)
• Ex-ante regulation: Only by sector regulators
DOJ FCC
Ex-Post Competition Law (National or European)
European Competition
Authority (DGComp)
Ex-Ante Regulation
National Competition
Authority (eg CMA)
National Sector
Regulator (eg Ofcom)
EU
US Ex-Post US Competition Law
Ex-Ante Regulation
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Interconnection
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The principle of access and interconnection: any-to-any
Access &
Interconnection
Incumbent
New entrant
Mobile
International
Incumbent
New entrant
Mobile
International
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Connecting networks: Interconnection and Access
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Access:
Using a part of another operator’s
network
Economic bottlenecks
Interconnection:
Two or more networks communicating
with each other
Physical: Access to local loop
Physical: Access to ducts
Virtual: Broadband access
Mobile to Mobile
Fixed to Fixed
Virtual: Access to wholesale calls Fixed to Mobile
Examples
Potential
concerns
Refuse access as access strengthens
competing firms.
Refuse to interconnect as this
strengthens competing firms. Offset by
benefits interconnecting firms obtain from
access to each other.
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Interconnection in 1980s – TDM networks
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Cabinet Local
Exchange
Central
Exchange
Local
Exchange
Cabinet
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Introduction of competition is complex – even with one
technology
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Cabinet Local
Exchange
Central
Exchange
Local
Exchange
Cabinet
Cabinet Exchange
Incumbent’s network New entrant’s network
?
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Time Division Multiplexing (TDM) networks
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Cabinet Local
Exchange
Central
Exchange
Local
Exchange
Cabinet
Incumbent’s non-IP (TDM) network New-entrant (TDM) network
?
Cabinet Local
Exchange
Central
Exchange
Local
Exchange
Cabinet
Solutions:
• Prices regulated
• Incumbents required to interconnect with other networks
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Interconnecting TDM and IP networks
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Cabinet Local
Exchange
Central
Exchange
Local
Exchange
Cabinet
Incumbent’s non-IP (TDM) network New-entrant (IP) network
?
Cabinet
Cabinet
IP
network
Solutions:
• Regulation based on “old” technology
• Incumbents still required to interconnect with IP networks
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VOIP
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Traditionally, fixed and mobile networks were distinct
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Access Backhaul Core Backhaul Access
Access Backhaul Core Backhaul Access
• Fixed and mobile networks were distinct, but had to
interconnect to send calls from one network to another.
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VOIP – can be used in many parts of the value chain
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Internet calling (Skype to Skype)
Internet calling (Skype to other)
Internet VOIP
Non-Internet VOIP
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EU Regulation of VOIP - Requirements
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Area Requirement
Security Security and integrity of networks and services.
Emergency services Access to emergency services.
Caller Location
Information
Provide Caller Location Information (where it is ‘technically feasible’)
Access Availability and reliability of access (although the regulations recognise that this may
not apply to ‘network-independent undertakings’ which may not have control over the
networks their service is provided over.
Quality of service The revised directives set out a number of obligations for providers including the right
for users to have a detailed contract
Privacy providers are required to ensure privacy of data relating the services they provide.
• Requirement are for the providers of Electronic Communication Services (ECS)
• ECS providers are those that operate a network of some kind
• Would apply to a VOIP operator like VONAGE
• Wouldn’t apply to a VOIP operator like SKYPE
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Determining what a “telecoms” service is complex
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Example firm Phone/Computer Phone number Data connectivity
Eg Viber Smartphone Mobile 3G, 4G, Fixed
broadband
Eg Skype Smartphone/
Computer
Landline 3G, 4G, Fixed
broadband
Eg BT One-Phone Smartphone/
Converged fixed/mobile
phone
Mobile OR landline Various – includes
picocell technology
Eg VONAGE VOIP Phone Landline Fixed broadband
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Net Neutrality: What does it actually
mean?
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Net Neutrality: Concept defined in 2003 in United States
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Broadband service Internet content ISP
Net Neutrality = Having a “neutral network”
“an internet that does not favour one application (say, the world wide
web) over others (say e-mail)”
Sources: Network Neutrality, Broadband Discrimination - Wu, 2003, Net Neutrality: A progress report – Kramer, Wiewiorra,
Weinhardt, 2011
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Netflix: Same content – multiple delivery methods
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Broadband
Cable
Mobile
Netflix available on:
• TVs
• Cable TV (via cable)
• Smart TVs (eg via broadband)
• Dumb TVs (eg via Chromecast)
• Laptops (via broadband)
• Mobiles
• Via mobile
• Via Wifi (via broadband)
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Netflix: Same content – multiple delivery methods
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Broadband
Cable
Mobile
“Cable TV service”: Service coming via a cable TV supplier, via a cable TV box, onto a TV.
“Broadband service”: Service comes via a broadband supplier, via a router, onto a TV
What’s the difference to the consumer?
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Voice: Same service – multiple delivery methods
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Fixed Broadband
Mobile Broadband
Mobile Voice
Fixed Voice
Consumers can make voice calls via:
• Fixed voice (via a traditional fixed operator)
• Mobile or Fixed broadband (via eg Skype)
• Mobile voice (via mobile operator)
Distinction between these services increasingly blurred
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Internet v “Non-Internet”
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Internet service
Service Provider
Eg IPTV service
Eg VOIP Data and services
• Internet v non-internet: There has been an attempt to distinguish between
“internet” and non-internet services in the net neutrality debate. However, the
distinction is debatable:
• “Non-internet” services could include dedicated IPTV service or VOIP service
• An internet service might be watching TV over the internet (eg BBC iPlayer)
• One access “pipe” may be used to deliver many services: Cable firms (eg
Virgin) deliver both their TV service and broadband service over joined
infrastructure.
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Net Neutrality: EU and US
perspectives
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Concerns over non-neutrality – EU and US perspectives differ
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Blocking Blocking access to legal content and
services
Throttling Slowing down access to the internet for
certain users.
Paid
prioritisation
Creating of so-called “fast lanes” for
some forms of internet traffic
Traffic
management Prioritising certain forms of traffic
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Concerns over non-neutrality – EU and US perspectives differ
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Blocking Blocking access to legal content and
services
Throttling Slowing down access to the internet for
certain users.
Paid
prioritisation
Creating of so-called “fast lanes” for
some forms of internet traffic
Typically
prohibited
Prohibited, with
limited
exceptions
Allowed, must not
affect “internet
services”
Traffic
management Prioritising certain forms of traffic
Allowed in some
circumstances
EU
Prohibited
Prohibited
Prohibited
“Reasonable
Network
Management”
US
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EU in more depth – Proposed EU Council rules
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Blocking Blocking access to legal
content and services
Throttling Slowing down access to the
internet for certain users.
Paid
prioritisation
Creating of so-called “fast
lanes” for some forms of
internet traffic
• May be required to block as a matter of public policy.
• Not allowed to block for business purposes
• Allowed if different quality of service requirements exist and
can be “objectively justified”
• Other throttling not permitted
• Allowed, but must not be a “replacement” for internet
services
• Shouldn’t affect “internet” services
Traffic
management
Prioritising certain forms of
traffic
• Allowed, should be transparent
• Rules should be made clear
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EU in more depth – Proposed EU Council rules
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Blocking
Throttling
Paid
prioritisation
Allowed for PUBLIC POLICY REASONS not for BUSINESS REASONS
Allowed if there are OBJECTIVE DIFFERENCES between quality
requirements
Allowed, but must not affect STANDARD INTERNET SERVICES
Traffic
management
Allowed, rules must be TRANSPARENT and COMMON RULES
needed
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EU Legislation – the path to Net Neutrality
32
April 2014
EU Parliament proposes
suggested measures for
the EU Council
Jan 2015
EU Council proposes
measures for all EU states
Mar 2015
EU Council proposes
measures for all EU states
• The March 2015 seems to allow EU Countries to enact the concept of Net Neutrality in a variety of ways
allowing:
• Paid priorisation: Although subject to the requirement that it doesn’t affect “standard internet”
• Traffic management: The exemptions from the general principle of no traffic management have been
expanded over time to allow operators to take account of potential network congestion.
• Blocking/Throttling: Operators wouldn’t be typically allowed to do this for business reasons, but
Governments could require it for public policy reasons.
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US Approach: Clear rules…almost
■No Blocking: broadband providers may not block access to legal
content, applications, services, or non-harmful devices.
■No Throttling: broadband providers may not impair or degrade lawful
Internet traffic on the basis of content, applications, services, or non-
harmful devices.
■No Paid Prioritization: broadband providers may not favor some lawful
Internet traffic over other lawful traffic in exchange for consideration
of any kind—in other words, no “fast lanes.” This rule also bans ISPs
from prioritizing content and services of their affiliates
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Bright Line Rules
Applies to all broadband
providers
■ Broadband services considered “telecommunications” services: The
approach reclassifies broadband services as “telecommunications”
instead of “information” services.
■ Applies broadly: Applies not just to “open Internet” services, but
other data services (eg VOIP from a cable service)
Some ambiguity remains
■ Unclear how this applies to bundled services: Cable operators sell
both TV and internet services together. Unclear whether the TV
services are also subject to these rules
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Mobile number portability
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MNP may be a more pressing issues for regulators
GSMA Intelligence, Majority of developing countries have no plans for MNP, November 2013
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Other regulatory topics
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Illegal international traffic by pass
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OECD (2014), “International Traffic Termination”, OECD
Digital Economy Papers, No. 238, OECD Publishing.
http://dx.doi.org/10.1787/5jz2m5mnlvkc-en
http://www.slideshare.net/firdausf1/sim-box-issue