Role of regulation and policy in promoting national broadband development
Role of Regulation and Policy in Promoting National
IIC – Telecommunications and Media Forum
Bahrain – May 2009
A Wonderful World
Widespread Broadband: Alternatives
• Limited landline coverage in many MENA countries
means spectrum based solutions (3G, WiMAX) must be
used to promote widespread broadband coverage. Both,
regulations and public policy have a great role to play
Broadband: Feasibility of Investment
• Global history of telecoms shows that mobile communications has been one
of the most successful new technologies of all time, compared to fixed
telecommunications, mobile constitutes no economic bottleneck and enjoys
easier entry. Quote rapid growth in mobile penetration in Jordan and
elsewhere. Mobile has brought communications to millions, perhaps billions
of people who would never have had a landline.
• The success of mobile has been built on totally independent and
infrastructure-based competing firms who do not need to rely on each other
to provide service (except for termination). Compare this with fixed lines
where the incumbent remains in a dominant position almost everywhere.
Government release spectrum and can then stay out of the picture and let
competition and market deliver consumer benefits. No different from any
Wireless Broadband: Socio-Economic long term gains
Vs short term treasury gains
What kind of broadband technologies for the future – fixed or wireless or both?
What kinds of business models offer the best chance of success?
• The same mobile success can be repeated with wireless broadband, but
this requires that governments follow a policy for spectrum release aiming at
promoting broadband, NOT maximising revenue for the treasury. Our recipe
is: spectrum should be released in sufficient quantities at a reasonable price
to allow multiple players to provide wireless broadband in a sustainable
way. Experience in other countries suggests that 3 – 4 competitors is the
optimum amount. Firms should then be able to compete with each other
free from regulator interference and free from any expectation that
regulators will expropriate future profits. Regulators should only step in
when there is real evidence of market failure.
regulatory principles to ensure effective regulation leading towards self-
• Only regulate where there is clear and objective evidence of a lack of competition in the market
where that lack of competition is itself distorting investment incentives and harming consumers;
• Regulation should be aimed at the deepest level of the network, where economic bottlenecks are
unlikely to be removed in the medium term.
• Where regulation is found to be necessary, the TRC should make a commitment that regulations
will be consistent over time so that firms have the confidence to invest. This does not however
preclude regulatory reviews to ensure they continue to be best suited to meet the original
objectives of a properly functioning market.
• Co-ordinate the regulatory cycle with the investment cycle. This means that the TRC should
acknowledge that some assets, for example networks, have longer life spans than others, for
example services. Remedies put in place to correct market distortions in long asset life markets
should themselves have a longer life.
• The TRC should avoid the use of regulatory tools which might artificially limit firms’ ability to earn
a reasonable return. A clear example is the use of the Weighted Average Cost of Capital (WACC)
which might limit the ability of a firm to earn profits, but not limit its potential losses.
Government role and National Strategy elements:
- Consistent and transparent ICT policy that is fully aligned with other
government Policies (Treasury, Tax, Investment, Audiovisual…etc.).
- Leadership in setting forth sustainable long-term goals for Economic & social
development as well as growth.
- Incentivise Investments (Tax exemption, up front entry fees, review schedule
of spectrum tariffs, review Government revenue share…etc.)
- Government Funding to respond to Market Failure due to lack of competition
(economic barriers) or to mitigate Economic downturn.
- Implementation of Technology Neutrality (although it’s been adopted since