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Namibia Polytechnic Namibia Polytechnic Postgrad Certificate in ICT Policy & RegulationPostgrad Certificate in ICT Policy & Regulation

December, 2012December, 2012

Global Trends in Global Trends in ICT Sector ReformICT Sector Reform

Charley Lewis, LINK CentreUniversity of the Witwatersrand, Johannesburg, South Africa

Session outcomesSession outcomes

Participants will be able to:able to:– articulate the drivers

and components of ICT sector reform nationally and internationally;

– describe key global trends governing ICT sector reform;reform;– understand the need for and the role of regulation in the ICT sector;– describe the need for integrated policy & regulatory approaches to converging technologies / sectors.

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Session roadmapSession roadmap

• Drivers of ICT sector reformF f ICT f• Features of ICT sector reform

• Global trends in ICT sector reform • Privatisation vs liberalisation • Deregulation & independent

regulation g• ICT sector reform in

Namibia• ICT sector reform issues

Putting ICT Sector Reform in Putting ICT Sector Reform in Global Perspective…Global Perspective…

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Why Reform the ICT Sector?Why Reform the ICT Sector?

Why reform the ICT sector?Why reform the ICT sector?• What were the key features of the ICT sector 20

years ago (ie circa 1992)? (telecomms, broadcasting, Internet, IS)

M k t t t ?– Market structure?– Institutional framework?– Technologies?– Sector performance?– Contribution to GDP?– Network rollout?– Pricing structure?– Universal service / access?– Benefits to consumers?

• What has changed since then?• Why reform the ICT sector?

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Why reform the ICT sector?Why reform the ICT sector?

• What is ICT sector reform?• What are the drivers of ICT sector reform?What are the drivers of ICT sector reform?• What does ICT sector reform promise?• What institutional arrangements are

required?• Why regulate ICT?• What makes for effective ICT sector

regulation?regulation? • What are the principles of good regulation?• What is regulatory independence?• How important is regulatory independence?

Why did we have stateWhy did we have state--ownedownedtelecomms monopolies?telecomms monopolies?

• Rationales for state-owned monopoliesp– Extension of postal services– Telecomms as a “natural monopoly”– High barriers to market entry – Benefits of economies of scale– Importance to security & defenceImportance to security & defence– Public / social service obligation of govt– Ability to address market failures

through cross-subsidies etc

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How did stateHow did state--owned owned telecomms monopolies perform?telecomms monopolies perform?

• Poor network development• Poor universal service / access record

(especially in developing countries)• Long waiting lists, poor quality of service• Lack of customer responsiveness• Inefficiently managed & operated• Shortage of capital• Shortage of capital• Shortage of skills and technology• Inability of telecomms to enable economic

development knowledge economy

Trends DrivingTrends DrivingICT Sector ReformICT Sector Reform

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What are some of the key What are some of the key drivers of ICT sector reform?drivers of ICT sector reform?

• Globalisation• Neo-liberalism / governance paradigm

shift• Technological change• Global institutional pressures• Economic pressures

(role of ICT in economy)• Stakeholder pressures

• Let’s examine some of these in more detail…

Impact of Globalisation on ICTsImpact of Globalisation on ICTs• What do you understand by “globalisation”?• What are some of its main features?• And how is it related to ICTs?

• ICT = a key enabler of globalisation as well as a major• ICT a key enabler of globalisation, as well as a major output

• ICT = a key driver of economic growth & social development• New communication forms - such as GSM, the Internet , 3G -

undermine economic monopoly arguments, reduce role of the state

• Greater access to information - fundamental to democratisation, informed citizen participation in decision-making

• Nation state undermined– power shifted upwards to global markets & multi-lateral forums– power shifted downwards to local authorities, communities

• Monopoly provision of telecomms becomes increasingly untenable

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ICT as a key Driver in the ICT as a key Driver in the Global Economy Global Economy

Trade in ICT goods, OECD 2009, USD Millions

Source: OECD 2012

OECD: ICT Sector GrowthOECD: ICT Sector Growth(1995 (1995 –– 2008)2008)

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ICT as a key Driver in the ICT as a key Driver in the Global Economy Global Economy

Contribution of ICT investment to GDP growth, OECD 2000-09.OECD 2000 09.

Source: OECD 2012

ICT as a key Driver in the ICT as a key Driver in the South African Economy South African Economy

South AfricaSource: Comninos et al, 2010

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ICT as a key Driver in the ICT as a key Driver in the Namibian Economy Namibian Economy

Source: Sherbourne & Stork, 2010

Global Telecomms InvestmentGlobal Telecomms Investment(1994 (1994 –– 2004)2004)

Source: ITU World Telecommunication / ICT Development Report, 2006

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ICT Sector GrowthICT Sector Growth(2000 (2000 –– 2010)2010)

Source: ITU, Trends in Telecomm Reform, 2011

The Jipp Curve:The Jipp Curve:ICT & economic developmentICT & economic development

Licensed under a Creative Commons Attribution NonCommercial NoDerivs 2.0 SA LicenceSource: Mansell et al, 1997

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The Jipp Curve 2:The Jipp Curve 2:Broadband & economic developmentBroadband & economic development

Source: World Bank, 2009

Economic Impacts of ICTs

Source: World Bank, 2009

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Africa:Africa:GDP per

capitaalignswith

teledensityte ede s ty

Which is theegg that

grows thechicken?

Role of ICT in DevelopmentRole of ICT in Development

Source: UNDP, World Development Report 2001

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Impact of Global Impact of Global InstitutionsInstitutions

• WTO (155 member states)– General Agreement on Trade in ServicesGeneral Agreement on Trade in Services

(1995)• Binding on all members, with exemptions

– Agreement on Basic Telecomms Services (1996)

• 108 WTO members have made commitments to facilitate trade in telecomms services

– Regulatory Reference Paper (1996)• 90 WTO members have made commitments

• World Bank• ITU

So: Why have policySo: Why have policy--makers makers implemented ICT sector reform?implemented ICT sector reform?

• Attract capital & investment, especially FDI• Promote modernisation, new technologies• Cater for new services (Mobile, Internet etc)• Roll out infrastructure, facilities & services• Improve management & skill• Market efficiency through competition• Innovative new services• Meet WTO commitments

Enable global t ade in telecomms• Enable global trade in telecomms• Raise revenue through privatisation• Regulation to facilitate market failure, minimise monopoly

abuses• Benefits to sector and economy

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Drivers of ICT sector reformDrivers of ICT sector reform• Supply-side drivers & demand-side-drivers• Globalisation the knowledge economy• Governance paradigm shift Neo-liberalism

Technological change including:• Technological change, including:– Digitisation and convergence – Network modernisation and rollout

• Global institutional pressures, including:– Increased role of supranational institutions– WTO commitments

• Economic pressures, including – Need to attract FDI into the ICT sector

Market liberalisation sector growth

101100111

– Market liberalisation sector growth– Privatisation of the incumbent revenue / FDI– Demand for new services - from POTS PANS

• Political pressures, including:– RSA - social & political transformation

Forces driving ICT sector reformForces driving ICT sector reform

Source: Beardsley et al, 2002

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Components of Components of ICT Sector ReformICT Sector Reform

ICT policy ICT policy in the knowledge economyin the knowledge economy

Source: Mansell et al, 1997

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Elements of ICT sector reformElements of ICT sector reform

• What was the impetus behind telecomms reform in pthe USA?

• What are the main features of ICT sector reform?

• What is the difference between liberalisation and privatisation?

• How do liberalisation and privatisation differ in their effect on market dynamics?

Components of ICT sector Components of ICT sector reformreform

• Separation of powers & functions– Policy formulation government – Telecomms regulation independent regulatorg p g– Telecomms services commercial operators

• Separation of posts & telecomms• Commercialisation of service providers• National telecomms / information society policies• Privatisation of the incumbent (SEP / IPO)• Creation of an independent sector regulator• Licensing new mobile operators & additional PSTS /

broadcasting providersbroadcasting providers • Liberalisation - telecomms competition• Rate rebalancing (local vs international call charges)• Interconnection requirements• Universal service & universal access interventions• Regulation deregulation re-regulation

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Separation of Functions:Separation of Functions:Policy, Regulation, OperationsPolicy, Regulation, Operations

Government( li d l t)

• Direct Influence• Indirect long-term

influence

(policy development)

Regulator

PolicyAdvisory Unit

Source: Melody 1997

Operator(s) MarketBoardof Directors

ICT sector reformICT sector reformin contextin context

• Contextualised within global institutions• Contextualised within global institutions, agreements– WTO, ITU, CRASA etc

• Conditioned by overall national policy directions - MICT

• Determined by national ICT policy thrust– Telecomms sector reform– Information society / knowledge economy

policies• Affected by substantive regulatory issues

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ICT Sector ReformICT Sector Reform(1990 – 2009)

Source: ITU, 2009

ICT Sector ReformICT Sector Reform(1990 – 2009)

Source: ITU, Trends in Telecomm Reform, 2011

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Features of Features of ICT sector reform: ICT sector reform:

PrivatisationPrivatisation

Why privatise your Why privatise your telecomms incumbent?telecomms incumbent?

• Decrease state involvement• Increase efficiency• Inject capital• Bring in skillsg• Raise funds for the fiscus• Promote social objectives (eg BEE)

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PrivatisationPrivatisation

• Different forms– Strategic equity partnership– Share issue privatisation (IPO)Share issue privatisation (IPO)– Retention of a ‘golden share’

• Is transfer of ownership sufficient? Or must there be independent control?

• Impact of privatisation on:– Firm performance?– Profitability?– Employment?p y– Productivity?– Prices?

• Government conflict of interest?– Both investor and policy-maker

Impact of PrivatisationImpact of Privatisation• Firm performance

– Equivocal results • Profitability

– IPO linked to abnormal profits– Enterprise reforms in response to threat of competition?– Impact of exclusivity period?– “private unregulated monopoly” – worst of all possible worlds

• Employment– Significant shedding of labour– Competitive pressure increases employment

• Productivity– Usually: lines per employee – Both network expansion and employment reduction

• Prices– Indeterminate - difficult to disaggregate /weight factors (eg

rate rebalancing)• Role of regulation

– Regulatory certainty (esp price regulation, rollout targets)

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Telecomms PrivatisationTelecomms Privatisation

Source: ITU Trends in Telecomms Reform, 2007 / 2011

Privatisation trends Privatisation trends (1991 (1991 –– 2001)2001)

Source: ITU, 2008

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Privatisation of Fixed Privatisation of Fixed OperatorsOperators

Source: ITU,Trends in TelecommsReform, 2007

Some recent privatisationsSome recent privatisations

Licensed under a Creative Commons Attribution NonCommercial NoDerivs 2.0 SA Licence


Algeria, Guinea, Mali planned for 2009

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Privatisation typologyPrivatisation typology


Source: Noumba, 2003

ICT Foreign Ownership RestrictionsICT Foreign Ownership Restrictions(2011)(2011)

Source: ITU Trends in Telecomm Reform, 2012

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Status of Privatisation in NamibiaStatus of Privatisation in Namibia

• Telecom Namibia (TN) -100% state-owned (Namibia Post & Telecomms Holdings

• MTC - partially privatised

66%

34%

Namibia Post & Telecomms Holdings Portugal Telecom

Features of Features of ICT sector reform: ICT sector reform:

LiberalisationLiberalisationLiberalisationLiberalisation(Competition)(Competition)

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Why liberalise ICT?Why liberalise ICT?

Stim late inno ation• Stimulate innovation• Increase range of services• Improve sector efficiency• Enable advanced services

D i• Decrease prices• Promote consumer choice

ICT Growth of CompetitionICT Growth of Competition



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ICT Liberalisation by regionICT Liberalisation by region(2010)(2010)


ICT Liberalisation:ICT Liberalisation:FFixed vs Mobile ixed vs Mobile (2005)(2005)


Source: ITU World Telecommunication Development Report, 2003

Source: ITU World Telecommunication / ICT Development Report, 2006

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ICT Liberalisation by serviceICT Liberalisation by service

Source: ITU Trends in Telecomms Reform, 2009

ICT Liberalisation by Region & ServiceICT Liberalisation by Region & Service(2011)(2011)


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Liberalisation requires Liberalisation requires interconnectioninterconnection

Source: ITU World Telecommunication Development Report, 2003

Degrees of LiberalisationDegrees of LiberalisationMarket

StructureNo of Operators Market Behaviour

1 Monopoly One Uncompetitive - only provider in sector / market

2 Duopoly Two Uncompetitive -likelihood of collusion

3 Oligopoly Three - ??? Uncompetitive - risk 3 O gopo y ee U co pe e sof cartel formation & collusion

4 Competitive Multiple Competitive

Source: Abi Jagun

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Telecomms LiberalisationTelecomms LiberalisationNamibia (2010)Namibia (2010)

225 000 subscribers (est)

Telecom Namibia (TN) (fixed)

Mobile Telecommunications Ltd (MTC) (mobile)

Leo (mobile)

157 083 main lines

Source: Abi Jagun

1 535 000 subscribers

Features of Features of ICT sector reform:ICT sector reform:

Independent RegulationIndependent Regulation

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Towards multilateral Towards multilateral regulationregulation

D li f t diti l i t ti l• Decline of traditional international regulatory regime based on monopoly & protection

• Telecomms policy part of emerging supranational regulatory order emphasising market access

• Driven by link between telecomms and investment

– Source: Drahos & Joseph (1995) Telecommunications and Investment

Independent Sector RegulationIndependent Sector Regulation

• ICT = “business affected with a public interest” (Lord Hale, 1670 – maritime facilities eg wharves)The “p bli tilit p in iple”• The “public utility principle” – Munn vs Illinois, 1877 – grain elevator pricing

• Economic objectives of regulation– Substitute for market failures, promote “fair” competition

• Social objectives of regulation– Universal service & access, consumer protection

• Ensure impartiality equal treatment for all players• Ensure impartiality, equal treatment for all players• Independent from govt interference & industry

lobbying (not independent of govt policy)• Increase market confidence, sector stability

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(1990 – 2010)


New New RegulRegul--atorsators

Source: ITU,Trends in


TelecommsReform, 2007

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Source: ITU, 2007, 2011

What do we mean by ICT What do we mean by ICT sector regulation?sector regulation?

• Government intervention in the• Government intervention in the telecomms market – to address market failures

• Policy law regulation?– which is primary?

l ti hi ?– relationship? • Are laws the best mechanism for

giving effect to regulation?

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Regulation Regulation in ICT Sector reformin ICT Sector reform

• Different phases of ICT sector reform

• Differing roles for regulationg

• Differing scope of regulation

Source: Telecommunications Management Group, Inc

What does the regulator do?What does the regulator do?Mandate of the RegulatorMandate of the Regulator


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What does the regulator do?What does the regulator do?Mandate of the RegulatorMandate of the Regulator


Source: ITU, 2011

What does the regulator do?What does the regulator do?


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Independent regulation in Independent regulation in AfricaAfrica

Need to developRegulatory capacity



Independent Regulation in Independent Regulation in CRASACRASA

INCM Mozambique 1992

NCC CRAN Namibia 1992 / 2011

CAZ ZICTA Zambia 1994 / 2009

TCRA Tanzania 2003

BTA Botswana 1996

IBA / SATRA ICASA South Africa 1993/1997 / 2000

MACRA Malawi 1998

Inacom Angola 1999

LTA L th 2000LTA Lesotho 2000

POTRAZ Zimbabwe 2001

ICTA Mauritius 2002

ARPTC DRC 2002 / 3

No regulator Swaziland

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ICT Sector ReformICT Sector Reform

in Namibiain Namibia

ICT Sector Reform in Namibia (1)


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ICT Sector Reform:ICT Sector Reform:

Some issues…Some issues…

Telecom Reform: success or failure?Telecom Reform: success or failure?

• “Three basic ingredients for reform: privatisation, competition and pindependent regulation… The difference between fast and super-fast growth is quality and timing of reform.” World Telecom Development Report 2002

• Commitment to move swiftly:Chil A i– Chile vs Argentina

– Hong Kong vs Singapore– SA vs Morocco

• Competition - significant impact on international services with dramatically reduced calling charges

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Impact of ICT Sector Reform?Impact of ICT Sector Reform?

Source: Hernández & Ballot-Lena, 2011

Uneven implementation of Uneven implementation of ICT sector reform in AfricaICT sector reform in Africa



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WDR 2005: WDR 2005: Stimulating Investment in Network Stimulating Investment in Network Development: Roles for RegulatorsDevelopment: Roles for Regulators• Lack of ICT investment in developing countries• Healthy network development healthy regulatoryHealthy network development healthy regulatory

environment• Regulation historically concerned with distributive issues• Regulators need to stimulate sector investment• Regulatory risk = investment risk

1. Regulatory independence (govt & incumbent)2. Clarity of policy & delegation to regulator3. Regulatory governance & processes4. Regulatory capacity to apply substantive standards4. Regulatory capacity to apply substantive standards 5. Promotion of service demand (vs protecting incumbent /

maximising revenue)• How does telecomms regulation influence network

investment?• What can regulators do to stimulate network

investment?

Convergence…Convergence…

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SectorSector--specific vs Convergence Regulationspecific vs Convergence Regulation

CONTENT: Information, Entertainment

Access toContent

EnhancingContent

APPLICATIONS: Value-adding

Transfer ofContent

Enhanced Communications

NETWORK SERVICES: Connection and RelatedConnection and Related

Transfer ofContent

INFRASTRUCTURE:Transport and Access

Source: Hu Hanrahan

etc etc etc…

ITUITUTrends in Telecomm ReformTrends in Telecomm Reform

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Enabling Tomorrow’s Digital WorldEnabling Tomorrow’s Digital World

• Overview of ICT market & regulatory trends • Impact of Broadband

th Eon the Economy• ICT Regulation in the

Digital Economy• ICT Dispute Resolution• Spectrum: Digital Dividend• Regulation and Cyber-crime• Climate Change, ICTs &Climate Change, ICTs &

Regulation• Postcards from the

Information Society

Smart Regulation for a Broadband WorldSmart Regulation for a Broadband World• Overview of ICT Market & Regulatory Trends• Setting National Broadband

Policies, Strategies & Plansg• Open Access Regulation in the

Digital Economy• Strategies for Financing

Universal Broadband Access• Broadband-Enabled Innovation• Confronting the Social Media

Regulatory ChallengeRegulatory Challenge• Intellectual Property Rights in

Today’s Digital Economy• The Regulatory Landscape for Mobile Banking• E-Waste & Recycling: Whose Responsibility

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Assessing ICT sector reformAssessing ICT sector reform• Considerable literature (eg Ros, 1999; Boylaud &

Nicoletti, 2000; Li & Xu, 2000; Noll, 2000; Wallsten, 2000; Gebrebab, 2002; Wallsten, 2002; , ; , ; , ;Fink et al, 2003)

• Some key questions:– Impact of ICT reform on sector

performance?– Interaction between components of ICT

sector reform?Which components produce biggest– Which components produce biggest impact?

– Does sequencing matter?• Research has implications for other regulators &

policy-makers implementing reform

Does sequence of ICT Does sequence of ICT reforms matter?reforms matter?


Source: Fink et al, 2003

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Compliance with Telecomms Reference PaperCompliance with Telecomms Reference PaperSignatory? Competitive

safeguardsInterconnection

Universal service

Public availability of licensing criteria

Independent regulators

Allocation & use of scarce resources

Angola No Largely Partially Partially No Partially Yesg g y y y yBotswana No Partially Largely Partially Partially Partially PartiallyDRC No No No Partially No Partially PartiallyLesotho No Yes Yes Yes Partially Yes LargelyMadagascar No Largely Partially Yes Partially Partially Largely

Mauritius No Partially Partially Yes Largely Partially PartiallyMalawi No Partially Partially Yes Largely Partially PartiallyMozambique No No Partially Yes No Partially PartiallyNamibia No Yes Largely Yes Yes Partially YesNamibia No Yes Largely Yes Yes Partially YesSeychelles No No

Swaziland No No No No No No NoTanzania No Partially Partially Partially Yes Yes YesSouth Africa Yes Yes Yes Yes Yes Partially Yes

Zambia No Partially Yes Yes Yes Partially PartiallyZimbabwe No No Partially Largely Partially Somewhat Partially

Policy & Regulation for BroadbandPolicy & Regulation for Broadband


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In summary...In summary...

• ICT Sector Reform• Key drivers of ICT Sector Reform• Impact of ICT Sector Reform• Key components of ICT Sector

Reform• Privatisation• Liberalisation• Regulation

• Substantive issues of regulation

Thank you… Thank you…

…questions????…questions????

http://link.wits.ac.za [email protected]