Future of Telecoms Regulation Big Picture

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Future of Telecoms RegulationBig Picture

• Dr. J. Huigen
• Director Broadband and Broadcasting
• 2 Nov 2006

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Agenda

• Telecom regulation around the globe
• State of affairs in electronic/digital sector
• Questions for future of regulation
• Hypotheses

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Global Telecom Competition Regulation

• USA fixed duopolies
• Hard deregulation
• Real Competition?
• Asia government intervention
• Japan ull, FTTH investment
• Korea government aid, forced competition
• EU focus on competition for incumbent telcos
• Driven by economic theory and empirical analysis
• Variation in results across countries

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Global Competition In Wireline Telecom
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Trends In Electronic/Digital Markets

• Decreasing Revenues Old Economy
• Fixed and wireless telephony
• Music industry and movie box office
• Mass media advertising
• Increasing competition
• Increasing revenues New Economy
• Online advertising, e-commerce
• Gaming
• Increasing consumer awareness
• Pricing, abuse
• Non-professional use blogs, vlogs, etc

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Consequences

• Traditional telecom and media revenues down,
  margins down
• Revenues new information and software services up
• Ergo Concentration
• Horizontal (e.g., NL ISP, CATV markets USA
  MySpace, YouTube, wireless Auction )
• Vertical (e.g., Soccer rights)
• With mixed results
• Mergers expensive, but increasing scale
• Entry barriers higher

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New Questions For Telecom Regulation Investment
Incentives

• New investment in infrastructure automatic?
• Competition push not consumer pull
• Cost reduction NGN varies per country/operator
• New investment non-legacy, cash abundant
• IP-dynamic still not understood P2P/IPv8
• Telco flat fee model not attractive for telco

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New Questions (contd) Future Competition

• What competitive landscape ?
• Infrastructures converging
• How many infra providers?
• Services Advertising vs Per unit tariff
• Value add services in an IP world P2P vs
  hierarchy networks
• Markets converging
• Information (Google, etc), Transaction (eBay,
  ecommerce), Entertainment services (gaming, etc)
• Communication services always included
• Where do revenues go? Telcos? MS? Google?
  Hollywood? Electronic Arts? Consumers?

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New Questions (contd) Legal issues

• Ex ante regulation
• Possible only if dominant position
• Even if dominant position very difficult to
  achieve
• Concentration regulation complex
• Harmonisation goals
• Ex post
• Art 82 limited use for, e.g., tariff regulation
• What are relevant markets
• Who will dominate?
• We do not yet understand IP-revolution

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Hypotheses

• Structural upheaval of communication markets
• Markets with CATV/copper competition experience
  this first
• Regulators in these markets face difficult puzzle
• What are relevant markets? Who will dominate?
• How to combine ex ante and ex post? How to
• combine harmonisation and competition?