Nº 4 2012 > Trends in telecoms
Regulating in a broadband world
Trends in Telecommunication Reform 2012: Smart Regulation for a Broadband World highlights the power of national regulatory frameworks to accelerate broadband roll-out and bring on new digital goods and services.
Ensuring investment and innovation without stifling competition is the key challenge that today’s regulators in the information and communication technology (ICT) sector face. “In order for all citizens to benefit from the economic growth driven by broadband, huge and sustained investments in networks are needed. This report looks at how regulators could help, and what innovative regulatory measures might be able to achieve,” comments ITU Secretary-General Dr Hamadoun Touré.
The huge volume of data generated by fixed and mobile broadband applications means that most countries are now facing a critical ICT infrastructure deficit. Given the importance of broadband to each country’s ongoing development, this deficit is fast becoming a major public policy challenge, requiring new cross-sectoral broadband policy frameworks. Encouragingly, more than 130 governments have adopted or are planning to adopt a national policy, strategy or plan to promote broadband.
“I strongly believe that broadband should be regarded as part of a country’s critical infrastructure. Well-articulated broadband strategies and plans are now needed to ensure that all citizens get to benefit from new applications, services and business that the broadband world helps bring into being”, says Brahima Sanou, Director of ITU’s Telecommunication Development Bureau, which produces the Trends in Telecommunication Reform report as a key output of the annual Global Symposium for Regulators.
More regulators with broader mandates
Today there are 158 separate telecom/ICT regulators worldwide (see Figure 1). Over the past five years, a growing number of telecom/ICT regulators have seen their mandates expand to include information technology and broadcasting. Regulation of broadcasting content that touches upon the cultural identity of a country lies within the mandate of the telecom/ICT regulator in 18 per cent of countries. More recently, electronic content, cybersecurity, data protection, privacy and environmental matters have been added.
Over the past two years, the number of telecom/ICT regulators in charge of cybersecurity has doubled to reach almost 40 per cent of countries worldwide, mostly in Africa, Europe and Asia-Pacific. Regulation of Internet content has followed a similar trend, with telecom/ICT regulators responsible for this mandate in 16 per cent of countries worldwide, mainly in Africa, Arab States and Asia-Pacific, up from 8 per cent in 2009. In contrast, Internet content remains unregulated in 35 per cent of countries.
Environmental matters are relatively new ground for telecom/ICT regulators, but are rapidly gaining in importance. The proportion of telecom/ICT regulators tackling climate change grew to 13 per cent in 2011, up from 8 per cent in 2010. This trend is likely to continue, given the role of telecom/ICT regulators in promoting green standards to foster energy efficiency and mitigate greenhouse gas emissions, and in handling e‑waste. The world community of regulators attending the ITU 2011 Global Symposium for Regulators stressed the need to allocate “resources to strengthen the supervision of regulatory standards for e‑waste management”.
Changes in institutional design
Some governments have continued the move towards reform of their institutional and organizational structure by merging separate regulatory authorities from different areas of telecommunication and broadcasting into a single converged ICT authority. Others, mainly in Africa, the Americas and Europe, have established multi-sectoral agencies — either when sector reforms were initiated or when markets reached a certain level of maturity, as the following examples illustrate.
In Denmark, the Danish Business Agency was established in January 2012 to take over the functions of several previously separate agencies: the Commerce and Companies Agency, the Enterprise and Construction Authority, and the IT and Telecom Agency. The new agency is responsible for overseeing business development, registration and regulation, as well as telecommunication and Internet regulation, to create sound conditions for growth.
In the Netherlands, the government plans to create a converged regulator in 2013, the Authority for Consumers and Markets, by merging the existing Consumer Authority, the Independent Post and Telecommunications Authority, and the Competition Authority. The new authority will focus on consumer protection, competition oversight and industry-specific regulation.
In Spain, the government recently passed a law to merge eight pre-existing or planned public utility and market authorities, including the telecommunication regulator, into one regulatory authority, the National Markets and Competition Commission (Comisión Nacional de los Mercados y la Competencia). The new commission will take on responsibilities for energy, the telecommunications market, postal services, gaming, airports, broadcasting, railways and competition. This merger aims to foster the efficient use of public resources by avoiding duplication, reducing regulatory uncertainty between sectoral and market policies, and by improving oversight. Similar moves towards converged regulation are under way in the Asia-Pacific region.
In Hong Kong, China, the Office of the Telecommunications Authority will be merged with the Broadcasting Division of the Television and Entertainment Licensing Authority, following the coming into effect of the Communications Authority Ordinance in April 2012.
In Viet Nam, the Viet Nam Telecommunications Authority, was established in 2011. This sector-specific regulator shares responsibility with the Ministry of Information and Communication for price regulation, licensing and universal access.
Whatever the institutional approach and the market conditions, telecom/ICT regulators need the appropriate powers and tools to fulfil their mandates efficiently and without undue political or market influence, based on the principles of accountability, transparency, stability and predictability.
Addressing the spectrum crunch
The increasingly crowded market for mobile broadband is resulting in booming demand for bandwidth, squeezed margins for operators and enhanced virtual experiences for consumers. The growth of broadband services over wireless networks is also putting enormous pressure on radio-frequency spectrum.
A growing number of regulators are introducing market-based mechanisms, such as in-band migration, spectrum sharing and spectrum trading, to distribute spectrum access (see Figure 2, left chart) in an effort to quickly and efficiently meet the demand for fresh spectrum bands for 3G and 4G services.
What can be done in the many countries where there is no longer any available spectrum that can easily be refarmed for IMT‑Advanced (4G) broadband services, such as LTE‑Advanced and WiMAX-Advanced? Regulators have to decide which other industries and legacy services — including government services — should be relocated or forced to share spectrum in order to make way for the extensive bandwidths that 4G requires.
Regulators may also have to stop granting licences for exclusive rights to certain spectrum bands. Some regulators have allocated spectrum bands for licence-exempt use, effectively allowing more freedom for market players to manage spectrum among themselves.
Incentive-based, market-driven approaches to making more spectrum available for mobile broadband services are today considered best practice, enabling inter-platform competition and spurring innovation.
As agreed at the World Radiocommunication Conference (WRC‑12) in February 2012, the 700 MHz band will be opened to mobile broadband services in 2015. This, together with the reallocation of some of the digital dividend spectrum, is likely to provide spectrum for Long-Term Evolution (LTE) networks. Experiences with 3G allocations, however, suggest that competitive mechanisms should be used with caution. High bids for spectrum bands impose a cost burden on the industry, which is ultimately passed on to consumers.
Nearly half of the countries worldwide use auctions as a primary way of allocating spectrum for the most popular mobile broadband services, 3G (40 per cent) and WiMAX (45 per cent), as shown in Figure 2, right chart. First-come, first-served mechanisms are used in one-third and beauty contests in one-fifth of all countries.
Spectrum allocation for early LTE services differs from these established patterns, with roughly one-fifth of countries having introduced technology-neutral licensing, and refarming playing a greater role.
No single formula for managing regulatory and policy issues
Trends in Telecommunication Reform 2012: Smart Regulation for a Broadband World offers guidance to policy-makers and regulators in creating a digital environment conducive to growth — both of the ICT sector and of the broader economy. In his foreword to the report, Mr Sanou invites regulators and policy-makers to work together for the benefit of the whole world, saying “As broadband delivers “smart” solutions for our modern lives, regulators and policy-makers must develop “smart” regulatory frameworks for a broadband world. We hope that the discussion contained in the Trends in Telecommunication Reform 2012 will assist regulators and policy-makers in this challenge. We invite you to continue the discussion about broadband strategies and plans with us so that we can work together to ensure that all citizens enjoy the benefits and opportunities that abound in a broadband world.”
There is no single formula for managing the regulatory and policy issues that exist in a broadband world. Each country has to chart its own course in response to local conditions and needs. But there is great value in exchanging ideas and experiences.
This article is adapted from Trends in Telecommunication Reform 2012: Smart Regulation for a Broadband World. The report was prepared by a team led by Nancy Sundberg, Youlia Lozanova and Makthar Fall of the Regulatory and Market Environment Division of ITU’s Telecommunication Development Bureau (BDT). The report can be bought from the ITU website at: www.itu.int/pub/D-REG-TTR.13-2012