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.
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