Convergence, ICT Sector Development and New Information Economies: Challenges for Policy and Regulation Professor William H. Melody Managing Director,

Convergence, ICT Sector Development and New Information Economies:

Challenges for Policy and Regulation

Professor William H. MelodyManaging Director, LIRNE.NET

[email protected], www.lirne.net

Presentation to Workshop

Convergence of Media and ICT in Egypt: Challenges, Policies and Regulation

Cairo, 3 May 2006

Characteristics of 21st Century Economies

• Driven by the services sectors• Founded on information/communication

networks – next generation Internet• Dependent on effective reforms in the

telecom sector – information infrastructure• Strengthening links among local, national,

regional, internatonal networks and markets

Stages of Telecom/Information Sector Reform

• Telecom Liberalization (Participation, Univ. Access)

• Expanding Network Capacity (Broadband)

• Preparing the Network Foundation for New Services

• Developing New Services - “killer applications!”

• Applying Services Productively in Different Sectors

• Telecom Reform & Regulation – Key Driver for

Implementing Policy Reforms for the e-economy

INFORMATION INFRASTRUCTURE

Regional Development

Finance/ Banking

Disaster Management

Travel & Tourism ManufacturingMedia & Cultural Sectors

Health/Medical Government Services Education/Training

Applications

Electronic Services(Pay TV, VAS, Internet)

Multimedia, etc.(Public, User group, Private)

ContentBroadcast

MediaFilm

LibrariesSoftware

etc

Interactivity(Instant & Delayed)

VoiceData

SoundGraphics

VideoTelecommunication

Facilities Network(Information Superhighway)

Computing / Information Technology

Telecommunication Equipment Manufacturing

Equipment Supply

TelecomInfrastructure

ServiceDevelopment

Competitive Markets

Monopoly/duopoly/oligopoly Competitive Markets

Internet

VAS

Databases

NetworkManagement

TelecomEquipment

ComputerHardware

Software

ConsumerElectronics

PTOs

The telecom sector value chain

Significance of Network Unbundling for Convergence

• Industry Sectors - Equipment, Operator Networks, Services

• Fixed and Mobile

• Basic Network Layers

• *Content *Communication Services *Network Protocols, OSS & Management *Equipment & Facility Capability

Convergence Sectors Drivers of Convergence

•Technology

• Industry-Supply

• Market-Demand

• Policies/Regulation

•Industry Specific

•Convergent

Applications

• Finance

• Commerce

• Education

• Health

• Publishing

• Manufacturing

• etc.

Content

Telecom

Computing

The Dimensions of Convergence on the Information Infrastructure

Criteria for Economic Growth

Technologies

Policies

Markets

Applications Services

Regulations

Policy & Regulation: Catalyst for, or Constraint upon Growth?

Progress with Telecom Reform

• Now 130+ Countries with Separate Telecom Regulatory Authorities

• WTO Commitments to Liberalization• Industry Specific Focus of Reforms• Successes, Failures, Unanticipated

Difficulties, Continuing Delays• Policy and Regulatory Reform is

Proceeding at a Slower Pace than Technology Development or Market and Service Potential

Progress with Telecom Reform

• Regulation is often the limiting factor constraining growth

• It is not a simple matter of removing regulations or eliminating regulators. It is enhancing their competence and credibility.

• Sound regulatory foundations are needed to attract investment, foster applications of new technologies and development of new services.

• The speed of regulatory reforms needs to increase and be directed to providing a foundation for network-based e- Economies.

Information Infrastructure: Investment 1990s

• Mobile - licenses - operating; spectrum

- network development• Privatising telecom incumbents

- licenses – operating; IPO

- network development obligations• Competitive network operators

- fibre transmission

- city / business LANs

• Software, services and content (e.g., Internet)

Information Infrastructure: Investment Deficiencies 21st C

• Local - basic services access

- broadband access• Universal access - voice

- broadband• Internet - local services and content• Applications - e-economy; e-society

Policy, Regulation and Network Investment

• Licensing - paying for the privilege

• Annual Fees and charges

• Restrictions on investment opportunities

• Price and/or profit regulation

• Policy & regulatory risk

Unresolved Network Market Issues

• Public Resource Infrastructures for Telecom Networks - Rights of Way, Spectrum, Numbers, Names

• Interconnection• Termination Number Monopolies• Access Limitations in the Face of Positive

Externalities• Leverage Opportunities for Monopoly Nodes in the

Network• Achieving Faster Infrastructure Network Development

Elements of Policy and Regulatory Risk in Information Infrastructure

Development

• Credibility – regulatory independence from political intervention on substantive issues

• Credibility – Regulatory independence from incumbent monopoly power

• Transparent processes• Accountability for performance• Competence and skills• Commitment to implement policy objectives• Evident fairness

Shifting Policy/Regulatory Priorities to Stimulate Investment

• From supply of network facilities to stimulation of demand to justify investment

• From physical capital to human capital

- awareness, skill, capabilities

- applications by individuals & organisations• Diverse sources of private and public investment

- operators, service providers,

- intermediaries (e.g., Telecentres), user applications

Regulatory Relations Regulatory Relations Affecting Sector Affecting Sector

InvestmentInvestmentDemand/Need

Regulation

Policy

End Users

Services

Facilities

Supply Telecom/ICTSector

Intermediaries

Public Resources Applications

Demand/Need

Regulation

Policy

End Users

Services

Facilities

Supply Telecom/ICTSector

IntermediariesIntermediaries

Public Resources Applications

Next Generation Infrastructure (High Speed Access)

• Role of the Market• Digital Divide• Role of Government

*Promote Participation & Competition *Direct Regulation *Public Sector Applications *Public Investment - eg., Broadband

*Public/Private Partnerships• At What Level Should Gov’t Intervene?

Paths to Universal Access

• Voice - prepaid mobile• Internet, e-economy, e-society - fixed & wireless network extensions - new operators – energy, transport - radio and TV distribution networks - retail service suppliers, ISPs, VANS - greater role for intermediaries

Capacity – building for ICT Convergence Opportunities: Requires Investment in Human Capital

• Policy analysis & regulation

• Strategic analysis & management

• Innovation, experimentation & flexibility

• Demand-led diffusion of core skills

• Network linkages

Proactive Policy & Regulation for Implementing Convergence

Opportunities

• Create a favourable investment environment for physical & human capital

• Minimize barriers to participation• Facilitate demand as well as supply• Apply skills and strategic management to

achieve the spirit of the policy objectives• Can only be done if regulatory structure is

transparent and credible

World Dialogue on Regulation for Network Economies

Mission: • to facilitate an international dialogue that

generates and disseminates new knowledge• on frontier issues in regulation and

governance• to support the development of network

economies

World Dialogue on Regulation for Network Economies

Activities:

• Research on priority policy/regulation issues

• Dialogue – www.regulateonline.org

- e-brief

• Expert Forum Meetings

• Reports

World Dialogue on Regulation for Network Economies (WDR)

(available at www.regulateonline.org)

Reports• The Next Step in Telecom Reform:

ICT Convergence Regulation or Multi sector Utility Regulation ? (2003)

• Stimulating Investment in Network Development: Roles for Regulators (2005)

• Diversifying Participation in Network Development (forthcoming late 2006)

World Dialogue on Regulation for Network Economies:

Institutional Partners

• infoDev, World Bank • IDRC Canada• LIRNE.NET• Research Partner University Centres

around the world

World Dialogue on Regulation for Network Economies

• Participate in the Dialogue; review and comment on the research, www.regulateonline.org

LIRNE.NET, www.lirne.net • A Strategic Collaboration for applied research, training, policy

and regulation support, relating to information infrastructure and new network economy development

• Center for Tele-Information (CTI), TU Denmark• Economics of Infrastructures, TU Delft, Netherlands• LINK Centre, Wits University, South Africa• LIRNEasia, Colombo, Sri Lanka• LIRNEamericas, Montevideo, Uruguay• Media@lse, London School of Economics, UK