Nº 6 2015 > ITU Telecom World 2015
Regulatory changes to accelerate connectivity
Regulation was a key area of focus for ITU Telecom World 2015.
Whether discussing how to regulate for affordability and access for the 60 per cent of the world’s people who remain unconnected to high-speed Internet, or the pros and cons of regional regulatory zones, or how to regulate “over- the-top” (OTT) players like WhatsApp and Skype, the topic of regulation was covered from all angles with rich discussion from a variety of stakeholders.
Some panellists laid out the problems with existing regulatory systems, many of which are decades old. Others proposed new regulatory models. Many issued calls to action for innovative global regulatory approaches that can keep pace with industry change.
“If you want to connect 4 billion people, something big needs to be done,” says Pierre Guislain, Senior Director for Transport and ICT Global Practice at the World Bank. “We need different [regulatory] models depending on the countries we work with. The traditional telecom model we have in most developing countries will not get us there. If you want to double or triple broadband penetration, you have to gather all stakeholders. It requires help from the global community.”
Several parties called for ITU to play a greater role in bringing key stakeholder groups together.
“This is a wonderful opportunity for us to benchmark and set up [key performance indicators] for delivery [of service of ICTs for sustainable development],” said Pakistan’s Minister of State for Information Technology, Anusha Rahman Ahmad Khan. “Most of us are working in isolation. We should use these type of events to set KPIs and set up yearly check-ins.”
Much of the discussion, however, revolved around defining the problems that regulatory innovation would address.
Affordability and access
“Only 40 per cent of the world is connected to the Internet, with access to the digital economy,” says Bahjat El-Darwiche, a partner with PwC’s “Strategy&” consulting group. “Affordability is the big barrier.”
Indeed, affordability came up repeatedly as perhaps the biggest hindrance to connecting the world’s unconnected with the high-speed Internet access that fuels the modern digital economy.
In one discussion, Rob Middlehurst, Vice President for International Regulatory Affairs for the United Arab Emirates-based telecoms service provider Etisalat, wondered how it would be possible to align with the United Nations goal of providing broadband Internet at a cost of less than 5 per cent of monthly income for customers across least-developed countries, given that so many are only earning an average of USD 1.05 per day. “How do you provide that?” he asked the panel, pointing out that they’d presumably be paying less than USD 2 per month. “We need to balance public and industry requirements very carefully.”
“People don’t understand how pernicious the affordability problem is,” says H. Nwana, Executive Director of the Dynamic Spectrum Alliance (DSA). “Half of the 7.4 billion people on Earth are only prepared to spend less than USD 12 per year on communications services. You have to wake up every morning and think about how you regulate for affordability and access.”
Regarding access to ICTs, the biggest gap is in Africa, as mentioned by several participants. In one round table discussion, Aniko Szigetvari — head of the Telecom, Media and Technology group for the World Bank’s International Finance Corporation — pointed out that broadband penetration on the continent is at 6 per cent with less than 30 per cent living within 25 km to fibre. Also, only 4 per cent of users in Africa have access to 4G. More than 70 per cent of Africa is on 2G.
“Today the fact that most people surf by 2G is a real problem,” says Mr El-Darwiche. “2G occupies 60 per cent of spectrum in emerging markets. If you killed 2G, you could improve affordability and access to the digital economy.”
The rise of smartphones that require high-speed connections to properly utilize most of the functionality critical to a rapidly shifting digital economy was central to the discussion of new regulatory approaches.
Flexible regulation to fuel mobile-first growth
“We have to take into account how different the growth has been in Africa, especially driven by mobile first,” says Alison Gillwald, Executive Director of Research ICT Africa. “There’s enormous potential as we look forward to seeing what mobile can do. We’ve seen innovation, despite extreme constraints, especially in mobile banking, for example. But it’s important to realize that innovations have taken place where there’s a regulatory gap. They were unencumbered by regulatory constraints.”
“We have to ensure that the policies understand both sides of the equation [public and private],” says Mr Middlehurst. “Sustainability comes from economies of scale across borders. But the [regulatory] solutions are being found on a national level. Each of the national policies can become out of sync with the overall objectives. What are the overarching set of goals? And how are we driving towards that?”
This is where he and many others pointed out that ITU can do a lot to convene the dialogue and create the overall set of goals that Pakistani Minister Rahman also separately mentioned was needed.
A first step toward the type of harmonization needed could be regional regulatory zones, several participants said.
Regional regulatory zones?
“In Africa, the vast number of regulatory barriers makes it very difficult to operate,” said the World Bank’s Mr Guislan. “Can you make regulatory zones to create an integrated regional market where operators can operate across borders with a standard regulatory framework?” Many operators at Telecom World 2015 expressed the same point of view.
Derk Oldenburg, the Managing Director of Public Policy for the London-based Liberty Global telecom company spoke of the need in Europe to figure out “how to do a balancing act when you have some Member States who’ve [created] this competitive [regulatory] policy and others who haven’t?” In Europe, says Mr Oldenburg, “we could do with less regulation, but we have to be careful not to lose what is working well.”
“We need to seek common areas of interests where there’s a win-win,” says Guillermo Alarcon, the Global Director of Broadband for Alcatel-Lucent, adding that all stakeholders need to “find which countries are regulated fairly, but that requires agreement on framework.”
There was consensus that such a framework for assessing what regulatory system works best would need to take into account a long-term perspective and allow for flexibility and adaptability.
“European regulation is good from a short-term perspective, but not from the long-term perspective,” said Zoltan Papai, Chief Executive Officer of the Budapest-based group, Infrapont Economic Consulting. “But now the long-term perspective is more important than before.”
Regulating “Over–the-Top” (OTT) players
The rising trend of over-the-top (OTT) players was a major topic — and one of the most controversial. Many participants, especially telecom operators and government officials, mentioned the need to regulate them better. But several panellists urged caution here due to the rapid global adaption of services like WhatsApp.
“We have to be careful about regulating the OTT players. The regulatory approach has to be long-term,” says Mr Oldenburg.
“I think the genie is out of the bottle with the OTT. There’s no going back,” says Salam Yamout, the National ICT Strategy Coordinator for Lebanon. “We have to talk about how to protect the consumer of the service. I call for less regulation. We all complain about the OTT players. Regulators should work with the ISPs (Internet service providers) to make it possible. But our regulators are working against it.”
Unity of purpose within governments
A wide variety of stakeholders flagged the need to build unity of purpose within national governments. Several participants shared stories of government ministries’ failure to unite — or even communicate.
“One of the big challenges we have is that government ministries do not talk with each other,” says Pierre Guislan of the World Bank. “The ICT, finance, and education ministries need to come together and agree first.”
Many stakeholders emphasized tight coordination with the finance ministries as critical to success.
“The first thing that needs to be resolved is the role of the finance ministries,” says Ms Rahman of Pakistan. “Sometimes telecoms ministries aren’t even consulted when new telecoms taxes are coming down the pike.”