Why regulate telecommunication

International Agencies

International Telecommunications Union (ITU)

African Telecommunications Union (ATU)

Caribbean Telecommunication Union (CTU)

Common Market for Eastern and Southern Africa

European Bank for Reconstruction and Development

(EBRD)

European Telecommunications Office (ETO)

The ITU was founded in Paris in 1865 as the International Telegraph Union. It changed its name to the International

Telecommunication Union in 1934, and became a specialized agency of the United Nations in 1947.

Domains of ITU technical, development, policy domain.

Three Sectors of ITU: Radio communication Sector (ITU-R) (Manages the radio-frequency spectrum and satellite

orbits), The Telecommunication Standardization Sector (ITU-T) (Produces standards and defines tariff principles for

international telecommunication services), The Telecommunication Development Sector (ITU-D) (Facilitates the

development of telecommunications/ICTs for members and partners (includes projects, policy, regulation and statistics))

5 regions of ITU are Asia-Pacific, Europe, Africa, America and Arab States. Each has frequency allotted.

Pakistan comes in asia pacific.

What domain is covered by standards in APT.

Bridging Standardization Gap, Green ICT, EMF Exposure, M2M, Future Network, NGN, Seamless Access

Communication, Multimedia Applications, Information Security, SNLP and Accessibility and Usability, Conformance

and Interoperability (C&I)

Groups of ITU-R

Spectrum management, Radiowave propagation, Satellite services, Terrestrial services, Broadcasting service, Science

services

Regulations issued by the PTA

The Telegraph Act 1885 / The Wireless Telegraphy Act, 1933

A joint DG of Posts, Telegraph & Telephone

Postal and Telegraph (Amendment) Act, 1962

Pakistan Telecommunication Corporation Act, 1991 (PTC)

Telecommunication Ordinance, 1994

Pakistan Telecom (Re-Organization) Ordinance, 1995

Pakistan Telecommunication (Re-organization) Act, 1996

Rules issued by Federal Government (MOIT), Regulations made by PTA, Policies issued by Federal

Government (MOIT), Cabinet division –For Administrative matters

FAB, PTCL, PTET, PTA, NTC

Amendments in 2006

Access Promotion Contribution Regulations, 2005

Accounting Separation Regulations, 2007

Protection from Spam, Unsolicited, Fraudulent and Obnoxious Communication Regulations,2009

To ensure and protect the interest of consumers

Establishment of a “Do Not Call” (DNCR) Register. Black, Gray list

Registration and management of tele-marketing by operators to

Control over unsolicited calls.

Complaint handling procedure

Class Licensing & Registration Regulations, 2007

Consumer Protection Regulations, 2009

Service provisioning, Interruption and disconnection

Procedure for disconnection of services by operators

Licensees to refrain from unfair commercial practices, misleading actions or omissions and concealment of

facts and avoid deception of average consumers.

Tariff and billing should be advertised as approved

Fixed line Tariff Regulations, 2004

Interconnection Disputes Resolutions Regulations, 2004

Number Allocation & Administration Regulations, 2011

Telecom and terminal equipment installer regulations, 2012

Mobile Number Portability Regulations, 2005

Why Regulation? Decision making, implementing regulatory policies, resolve disputes

The principles of good regulatory decision making are Transparency, Objectively, Professionalism, Efficiency,

Independence

Standards are made by ITU. Other bodies give suggestions and recommendations

Two primary classifications End to end standard (cover network systems and facilities necessary to achieve complete

linkage) Interface standards (enable end users to attach customer premises equipment to the network)

Standards should be Transparent and non-biased Efficient, Interoperability, Easy to use, Common interface that enable

different equipments to access networks.

Benefits of standard setting Reduce equipment cost, vendor independence, fewer incompatible products, Network

transparency, reliable and efficient networking capabilities

Complexity in Standard Setting are number of manufacturers increasing SS Complex, Increase of competition,

Different market level, different manufacturing ofmobile & need to defray higher development costs

Current and developing Model are Big Data, Cloud Computing, OTT Model, M2M

The telecoms sector have Technological, Economic, Regulatory impact

Potential opportunities and benefits of broader ICT include Robust global telecommunications infrastructure, Social

and economic benefits, Healthcare, Education, Digital economy, Businesses, New job creation, Green economy

Cloud Computing: Cloud of application, platform and infrastructure maintained for public availability of data like

dropbox. Over the network sharing of hardware like printers. Online converter, online editor

Three types of users are thick end devices (works independently), thin users (work dependent on others) and mobile

Components of clouds: Client computer, Distributed servers and data center

Cloud as service: Like witribe, They have cloud and provide services. Their infrastructure is not used but their services

are. Like facebook

Cloud as infrastructure: use of infrastructure (hardware) through networks

Big data and smart analytics information gathering > process> analyse> Report generating (after analysing and

processing data). Store at one place > retrieving data for analysis is a challenging task. Properties follows 4 V’s such as

Velocity, Volume, Variety, veracity

Telecom, broadcast and IP based…… Can have all 3 on device. IP based services include whatsapp, skype.

Concerns are security prices and policy making.

M2M and Internet of Things Connection of devices through IP address. No Involvement of user as such, machines

communicates, future prediction, need of storing data on cloud. Advantages are adoptable, smart. Like feedback

controlled smart houses.

OTT Model (Over The Top) IP based Transmission of all type of data let it be multimedia (audio and video together)

without any operator. Same IP for all apps like Facebook, Twitter etc. Smart TV (IP Based)

The use of ICTs Climate Change

Prevention of environmental degradation and the reduction of GHG emissions.

Waste Management with Smart ICT Standard

Boosting energy efficiency through Smart grids and smart meters, smart buildings and urban planning as well as

smart mobility and electric vehicles

The reduction of E-waste and municipal waste.

ITU’s Focus Group on M2M: Smart governance, Smart mobility, Smart living, Smart environment

A smart sustainable city is an innovative city that uses information and communication technologies (ICTs) and

other means to improve quality of life, efficiency of urban operation and services, and competitiveness, while ensuring

that it meets the needs of present and future generations with respect to economic, social and environmental aspects

Holistic smart city has energy, business, transport, water, citizen, communication,

The Role of ICT in Reducing GHG Emissions and its Impact on Cities: Standardizing, Monitoring, Accounting,

Rethinking, Transforming

Virtual space for storage of data

Less RF Exposure/ Pollution

Less power Consumption and less space

Boosting Energy Efficiency through Smart Grids

Environmental protection and recycling of equipment/facilities

Using ICTs to enable countries to adapt to climate change

Reducing energy consumption and GHG emissions should be considered in the design and construction of data

centres, and that constant monitoring will be required to consistently manage and improve energy consumption

while the data centre is in operation.

Best practices are outlined for the use, management and planning of data centres, for cooling and power equipment,

for the optimum design of data centre buildings, and for the monitoring of data centres after construction.

For example, applying best practice to cooling could reduce the energy consumption of a typical data centre by

more than 50 per cent.

Convergence related to all technology merging and converging. Boundary between technologies merged.

Blurring of regulatory boundaries between different services and technologies.

Next generation Networks (4.5 > LTE), Bid data, all convergence are dealt by ITU-D Development sectors

In divergence all things were separate. All policies are now globally harmonized.

Circuit switching converged to packet switching which is an IP-based.

Fixed, Now fixed+mobile. Low speed, now High Speed. Single medium now multimedia. Distinct now bundled.

Challenges of Convergence are pricing, bundling and billing, interconnection, security, investment, emergency services,

competition policy, consultation.

Opportunities of convergence NGN: enable service providers to interconnect and cooperate, the provision of an

unlimited range of applications and services, accelerate the deployment of telecommunications networks and services,

jump several generations of technology, capital costs of deploying NGN technology are significantly lower than circuit

switched technologies, more rapid expansion of network capabilities, enable a range of multimedia services to be

provided easier with less cost, and so increase potential revenues.

ITU main focus “Smart Sustainable Cities” & “Smart water management”

Lecture 16, 17

Interconnection

“The set of legal rules, technical and operational arrangements between network operators that enable customers

connected to one network to communicate with customers of other network

Or

the physical and logical linking of public electronic communications networks used by the same or a different

undertaking in order to allow the users of one undertaking to communicate with the users of the same or another

undertaking or to access services provided by the parties involved or other parties who have access to the network

Why is Interconnection Needed?

No single operator can own or lease all the network required to switch calls to and from all possible locations

No operator has ever owned or leased all the network components for international calls

The requirement for any to any connectivity is paramount in the market

Legislation and policy has facilitated network competition

Any to any connectivity allow calls originating from a subscriber A to reach a subscriber B, whether on the same

network or on another network

Interconnection Services encompass:

Basic interconnection services

Call Origination

Examples include: Local services, Mobile services, National services, International services, Freephone

services and Internet access services

Call Termination

Examples include: Local services, Mobile services, National services, International services and Premium

rate services

Transit Services

Examples include: Calls from Operator A to Operator C through the network of Operator B

Use of network elements

Interconnect Capacity - transmission capacity between two networks

Other examples of network elements include:

Local loops Transmission facilities

Network access devices

Operational support systems e.g. billing,

ordering and fault repair

Switches - local, mobile and trunk

Signalling systems

Call related databases

Ancillary services

Operator assisted services

Directory assistance services

Emergency call services

Reverse charge call services (call charges

by reciever)

Freephone/ Toll Free services

SMS/MMS/GPRS/Roaming (not

voice/call services)

Enabling services

Equal access (call-by-call) (implies network transparency, seamless communication, equal right on every

carrier)

Equal access via pre-selection

Number portability (shifting from one network to other)

Rental of physical components/Infrastructure sharing also known as “infrastructure sharing”

Ducts and poles, towers

Building space e.g. for co-location

Interconnect capacity or links

UAN is a value added service that allows a subscriber with several terminating lines in any number of locations or zones

to be reached with a unique directory number.

Basic Elements of Interconnection Architecture

Call Handover

Point of Interconnection

Call Charging

Areas Equal Access (call-by-call)

Equal Access via Preselection

Number Portability

Call Handover

Far End Handover

Call communication is delivered as close as possible to the called-party’s (termination) destination/network

Near End Handover

Call communication is delivered as close as possible to the calling party (originating) destination/ network Often,

the originating party does not know the destination of the call and delivers to the terminating network at the closest

point Typically used for interconnection to mobile networks and calls to special services

Point of Interconnection: The switching points at which two networks interface and come together

POI may be virtual or physical

POI may take place at Local exchanges or switches, Trunk exchanges or switches, International Exchanges or

gateways, Networks can be connected - via full span or in-span circuits

Call Charging Areas

geographic distance originating and terminating charges

Equal Access

Call-by-Call (id code is changed) Preselection (code isn’t changed)

Number Portability

Customers are allowed to keep their telephone number when they change network operators or service providers

Why Interconnection Regulation is Necessary

competition Complex technical, legal & economic issue Providing services to new entrants

Generic Types of Interconnection Regulation

High: Mandatory – Regulatory prescribed Low: Commercial Negotiation, Regulatory Framework for

Negotiation

Structure of Interconnection Agreements

Recitals, Definitions and Interpretation, Scope of Agreement, Points of Interconnection and Interconnection

Services, Traffic Measurement, Routing and Access Services, Network and Facility Changes, Infrastructure Sharing

and Co-location, Billing and Settlement, Universal Service Obligations, Quality of Service/Performance and

Trouble Reports, Provision of Information, Ancillary Services, Dispute Resolution, Network Protection,

Intellectual Property Rights, Confidentiality, Liability and Indemnity, Review, Termination, Boilerplate Clauses,

Charges and Charging, Principles, Technical Manuals

Technical Manuals in interconnection agreement

Network information, Commission and de-commissioning and re-arrangement practices, Maintenance practices,

Fault handling procedures, Complaint handling, Network monitoring, Access to POI sites, Contact lists, Quality of

service standards, Principles for network configuration, Forecasting, ordering and provisioning procedures,

Notification of international roaming data, Routing and numbering principles, Routing of ancillary services,

Signaling and technical specifications for interconnection, Billing procedures, Transfer of charge band data

Dispute Resolution in interconnection agreements

Good faith negotiations, time schedule for the same, escalation through management levels, Referral to regulator,

arbitrator or court, Selection of, and procedures for arbitration

Market power is defined as the power to set and maintain prices or other key terms and conditions to the

market. is defined as the ability to independently raise prices above market levels for a non-transitory period without

losing sales

Monopoly can be a result of market failure

Why Government Intervention to implement Competition Policy?

To respond to market failures, To limit abuses of market power, To improve economic efficiency

Types of Intervention: Behavioral –The public authority attempts to modify the behavior of a firm(s) through

regulation, e.g price regulation Structural – Affects the market structure of the industry, e.g prevent a merger and

separation of operation

Advantages of Incumbent Operators

Own and Control of Essential Facilities: Control of Essential Facilities can give an incumbent numerous advantages

over new entrants: increasing prices of these facilities, discriminate in their provision

Economies of Establishment National Networks:

Vertical Economies: Many incumbents have vertical integrated facilities, e.g local access networks, national and

long distance networks

Control Over Network Standards: An incumbent network standards have become de facto to which all competitors

must adapt their networks

Cross-subsidies: Incumbent are often able to cross-subsidize some services from others

Customer inertia: This is a particularly true for lower-volume customers

Barriers to Entry

Government restrictions

Economies of scale

High fixed/capital costs

Intellectual property rights

Incumbent anti-competitive

behaviour

Factors determining whether a firm has a market power:

market shares; Barriers to market entry; Pricing behavior; profitability; and Vertical integration

Significant Market Power (SMP)

European Commission defined the SMP if the share is more than 25% of a particular telecommunications market

Market Dominance:

high market share, 50% or more significant barriers to entry

Essential Facilities Generally defined as that is supplied on a monopoly basis, required by competitors and cannot be

practically duplicated by competitors for technical or economic reasons

Remedies of Anti-competitive Conduct

Abuse of Dominance

Refusal to Supply Essential Facilities

Cross-Subsidizing

Vertical Price Squeezing

Predatory pricing

Misuse of Information

“Locking-in” customers

Tied Sales and Bundling

Other Abuses of Dominance

Restrictive Agreements

Examples of Firm Abusing the Dominant Position in Telecommunications:

Refusal or delay in providing essential facilities (EF) to competitors

Providing services or EF at excessive prices or on discriminatory terms

Predatory pricing and/or cross-subsidization of competitive services

Bundling of services

Powers to Remedy Abuse of Dominance

Power to issue enforceable orders against him, reduce the license, fine the dominant entry, order compensation,

restructure the dominant entity, facilitate and approve informal settlements

The WTOs Regulation Reference Paper requires signatory countries to maintain appropriate measures to prevent

“engaging in anticompetitive practices”

Cross-Subsidizing: Incumbent will abuse their dominant position by engaging in anti-competitive cross-subsidization,

by increasing or maintaining its prices above costs in that market, and use its excess revenues to subsidize lower prices

in other more competitive market

Effects of Cross-Subsidy between services can be significant barriers to competition and A new entrant may not be

able to handle and may drive out of business

Determination and remedies to cross subsidy

Accounting Separations

Can be used to determine the existence of cross-subsidizing

In order to determine the costs of providing each service.

This add transparency to the costing and pricing process of incumbent operator

Structural Separations

Tend to be used only where there is evidence of significant anti competitive conduct.

Structural separations generally refers to the separation of different lines of business into separate corporate entities

(e.g cellular business can be operated by a separate company)

Regulatory conditions normally determine the degree of separation required

Divestiture (Disposition or sale of an asset by a company)

Divestiture is generally viewed as an extreme remedy that is only appropriate in cases of over-whelming dominance

by very large operators (e.g AT & T)

Vertical Price Squeezing occur, if the incumbent provides services in two or more “vertical” markets.

Vertical markets are sometimes labeled “upstream” and “downstream” markets or “wholesale” and “retail” Vertical

Price squeezing can occur when an operator with market power controls certain services that are inputs for

competitors in downstream markets, and where those key inputs are used by the operator to compete in the same

downstream market

An operator can often squeeze the margins of competitors by raising wholesales prices paid by competitors, while

lowering retail prices on competitive services (e.g internet access) Dominant provider must provides evidence to

the regulator that its retail prices are no lower than the sum of: The price it is charging competitors for the whole

services and The actual incremental costs

Predatory Pricing is the practice of providing services at prices that are low enough to drive competitors out of the

market

Remedies of Predatory Pricing vary, predator may be penalized, competitors (victims) may be compensated or both.

Price regulation is an other type of remedies

Abuses of monopoly and dominance

to misuse the information in an anti-comparative way

(e.g induce the other customers to switch to him)

Operators may attempt to “Capture” particular subscribers through agreements and contracts

Dominant competitor locks in customers in advance of introduction of competition, that merit regulatory review

A tied sales is the sale of one product or service on condition that the buyer purchases another product or service

Bundling is the practice of assembling multiple products or services together in an integrated offer

Tying a product or service offered in a competitive market to an other product in a monopolistic market

The incumbent provides the upstream services to competitors on a bundled basis, while he requires parts of

those services only

Excessive Prices: It is not anti-competitive but an exploitation of consumers

Restriction of supply – A monopolist may refuse to invest in network infrastructure and supply new customer

Refusal to Deal – refusal by an incumbent operator to provide essential facilities

Unjust Discrimination – operator may discriminate unjustly or unfairly between customers or competitors

Abuse Involving Intellectual Property – Anticomparative abuses may occur, in exclusionary Intellectual Property

arrangements, and in attempts to monopolize adjacent market

Two categories of agreements may raise concerns of anticompetitive conduct. Horizontal agreements – are agreements

between competitors. Vertical agreements – are agreements between upstream and downstream participants

Agreements that have anti-competitive effects: price-fixing: they are designed to manipulate pricing (horizontal) bid-

rigging: is collusion among bidders in order to determine who will win (horizontal). Market allocation agreements: can

be implemented by horizontal or vertical agreements

Types of Mergers Horizontal mergers, which take place between firms that are actual or potential competitors

occupying similar positions in the chain of production Vertical mergers, which take place between firms at different

levels in the chain of production, Other mergers, such as those which take place between unrelated businesses

Merger Remedies Prohibition or Dissolution – Preventing the merger or dissolution of the merged entity Partial

Divestiture – Divest assets or operation sufficient to eliminate identified anti-competitive effects.

Regulation/Conditional Approval – Regulation or modification of the behavior of the merged firm in order to prevent

or reduce anticompetitive effects

A major Supplier is a supplier which has the ability to materially affect the terms of participation in the relevant market

for basic telecommunications services as a result of: Control over essential facilities and User of its position in the market

Question No 2:

The Role of ICT in Reducing GHG Emissions and its Impact on Cities: Standardizing, Monitoring, Accounting,

Rethinking, Transforming

Virtual space for storage of data

Less RF Exposure/ Pollution

Less power Consumption and less space

Boosting Energy Efficiency through Smart Grids

Environmental protection and recycling of equipment/facilities

Using ICTs to enable countries to adapt to climate change

Reducing energy consumption and GHG emissions should be considered in the design and construction of data

centres, and that constant monitoring will be required to consistently manage and improve energy consumption

while the data centre is in operation.

Best practices are outlined for the use, management and planning of data centres, for cooling and power equipment,

for the optimum design of data centre buildings, and for the monitoring of data centres after construction.

For example, applying best practice to cooling could reduce the energy consumption of a typical data centre by

more than 50 per cent.