1ETE 521: TelecommunicationBusiness and ManagementModule 2: Trends in telecommunicationreforms, the road to NGNFaculty: Dr. M. Rokonuzzamanzaman.email@example.comTrends in telecommunication reforms, 2007, ITU
2Introduction: The sector has already seen the year of“convergence”, followed by the year where“broadband” was on everyone’s lips, along with themore recent fascination with “Voice over InternetProtocol” (VoIP) and “fixed-mobile convergence”(FMC). Each of these recent buzz words represents part ofthe same evolutionary path in which individualservice-specific networks are developing intoadvanced IP-based networks capable of providing afull range of services and applications accessible froma wide range of devices that can function from anylocation.
3 Although the sector has faced many so-called“revolutions”, the consensus, with regard to NGN, isthat the move will be more of an evolution than arevolution. Many observers expect that NGN and the Internet willco-exist for some time – although most would agreethat the move to all IP-based networks is unstoppable. Even where NGN is deployed, it is also likely to includemany variants as market players leverage theirinvestments in today’s technology. In Europe, Japan, North America and the Republic ofKorea, many equate NGN with fibre (FTTx) deploymentscoupled with a move to more ubiquitous and robustwireless coverage.
4Market and Regulatory Trends: Buoyant ICT growth Developed countries, which have the majority ofthe world’s fixed and broadband lines, are morelikely to migrate to fixed rather than wirelessNGN access networks as they upgrade theirexisting fixed-line telephone and cable TVinfrastructure. Wireless access will still play a key role indeveloped economies where users seekseamless or ubiquitous coverage, and are likelyto use fixed lines while in a set location (homeor work) and mobile while on the go.
6 Figure 1.1 shows the buoyant growth in the ICTsector over the past decade, demonstrating thespectacular success of the mobile sector in particular. By the end of 2006, there were a total of nearly 4billion mobile and fixed-line subscribers and over 1billion Internet users. This includes 1.27 billion fixed-line subscribers and2.68 billion mobile subscribers (61 per cent of whichare located in developing countries) as well as some1.13 billion Internet users.
7 Broadband on the rise While access to ICT continues to grow, countries areincreasingly focusing on improving broadband use, inparticular. Broadband is necessary in order to achievethe Information Society. Broadband enabled services have the potential to createeconomic and empowerment opportunities and improvelives. Indeed, some of the applications that are having thegreatest impact on people and businesses are closelylinked to broadband uptake. This is also reflected by the fact that since 2005 therewere more fixed broadband subscribers than dialupInternet subscribers worldwide.
8 Today, however, broadband penetration is dominatedby the wealthy countries. Some 70 per cent, or nearlythree-quarters, of broadband subscribers worldwide in2006, were located in high-income countries whichaccounted for just 16 per cent of world population. Furthermore, two economies – India and Vietnam –accounted for more than 95 per cent of all broadbandsubscribers in low-income countries, while a singleeconomy – China – accounted for 94 per cent ofbroadband subscribers in the lower-middle incomegroup (Figure 1.2).
9 The good news is that a number of developingcountries are experiencing broadband growth. In Peru, for example, the number of broadbandsubscribers has grown by close to 80 per centannually between 2001 and 2006, from 22’779 in2001 to 484’899 at the end of 2006. In Europe, over half the Estonian population uses theInternet and the country has the highest penetrationof both Internet and broadband in Central andEastern Europe. But in Least Developed Countries (LDCs), there weremerely 46’000 broadband subscribers in the 22 out of50 LDCs with broadband service in 2006.
12 In the area of broadband infrastructure, developedmarkets are intent on bringing fibre closer to the enduser either as FTT Home (FTTH), where the fibrereaches the end-user’s premises, FTT Building (FTTB),where the fibre stops at the building; FTT Curb (FTTC)or FTT Kerb (FTTK), where fibre stops at a curb near abuilding or group of buildings; and FTT Node (FTTN)or FTT Cabinet (FTTCab), where fibre stops at acabinet with telecommunication equipment thatserves a nneighbourhood. Collectively, these variants are termed FTTx.
13 The Asia-Pacific region todayhas more FTTx services thanany other part of the world.Japan was the first country tointroduce a FTTH network in1999. In 2005, the number ofJapanese subscribers to FTTHservices increased 88 percent to surpass the 5 millionmark (Figure 1.3).
14 In developing countries, the meteoric riseof mobile services has been fuelled byimproved affordability, increased networkcoverage, and new service options. The same factors can promote wirelessbroadband Internet access in developingcountries, even in countries with poorlydeveloped fixed-line infrastructure, asmobile handsets that support both voiceand Internet applications become moreaffordable (Box 1.1).
17 Privatization and competition trends: Despite the general slow-down in the sale ofstate-owned incumbent operators, privatizationremains a priority for most countries that havenot yet fully or partially privatized theirincumbent operator. The objectives of privatization are to improveefficiency, productivity, and service quality, aswell as to raise capital, improve managementexpertise and further develop the network.
18 In addition, many countries have foundthat competition is often more fair whenthe state avoids being both a market player(as owner or part-owner of the incumbent)and a referee at the same time. Privatization sends the signal that policydecisions and regulations will be fair to allplayers. Between 1990 and 2006, some USD 83billion was raised through privatizations ofincumbent public telecommunicationoperators in developing countries.
20 During the same period, the opening of markets tocompetition has remained steady. Mobile and Internet services continue to be the mostcompetitive markets, while fixed-line services are alsobecoming increasingly competitive (see Figure 1.6). In the first part of 2007, the Gulf countries among the ArabStates were very active in opening both their mobile andfixed markets. For example, in April 2007 the Supreme Council ofInformation and Communication Technology (ictQATAR)launched a formal selection process for the award of amobile licence to a new entrant in the State of Qatar. The Telecommunication Regulatory Authority of Oman alsoannounced its intention to license a second nationaloperator.
23A growing community ofregulators: The establishment of a separate regulator is one ofthe most visible signs of sector reform. Separate regulatory agencies lay the groundwork fora favourable investment climate and the promotion ofmarket opportunities. Increasingly regulators seek to be ICT enablers andagents of change. This is usually best achieved where ICT regulatorshave a certain degree of autonomy from governmentand industry pressures.
24 The world now has 148 national ICT-sector regulators(Figure 1.7). Over 75 per cent of ITU Member Stateshave established a separate regulator, althoughdifferences remain between regions. Africa counts the highest percentage of countries witha separate sector regulator (91 per cent), followed bythe Americas (89 per cent), and Europe (80 per cent). The Arab States and Asia-Pacific number 62 and 58percent, respectively. Growth in the number ofregulators is set to continue with more than fivecountries having indicated their intention to establishan ICT regulatory body in the near future.
26SELECTED REGULATORYDEVELOPMENTS: International mobile roaming The issue of mobile roaming charges is on the agenda ofregulatory authorities and regional regulator associationsworldwide, in an attempt to find solutions for the highinternational roaming charges paid by consumers usingtheir mobile phones while travelling abroad. To date, most regional groups have taken a “soft-regulation” approach to international mobile roaming,focusing on publishing roaming rates. The European Commission, however, in a watershedmeasure, has decided to regulate roaming charges in the27-country European Union block. This move may embolden other regional groups to takefirmer action to cut mobile roaming charges.
27 Regulating local loop unbundling and infrastructure sharing Countries like the United States, with inter-modal broadbandcompetition between cable TV and ADSL broadband providers, mayplace less emphasis on local loop unbundling, and even viewunbundling as a barrier to innovation and the development ofinfrastructure. Countries with limited inter-modal competition, such as manyEuropean countries, have found it necessary to embrace local loopunbundling to encourage ADSL provision and are now planning toextend LLU to FTTx deployments. Regulators in Europe have vigorously enforced LLU regulation as ameans of boosting broadband deployment, and the number ofunbundled lines currently available in Europe has risen dramatically,by nearly 80 per cent from 2005 to 2006. Many developing countries, in initial stages of sector reform, havefocused primarily on increasing the number of voice users, and haveprincipally concentrated on raising the number of voice subscribers onmobile networks. They also had far fewer fixed local loops tounbundle.
28 In addition to LLU, other regulatory measures arebeing developed to ensure smooth competition andmarket access for new entrants such as mandatorypassive infrastructure sharing and in-site sharing. According to ITU World Telecommunication RegulatoryDatabase, a majority of countries who completed the2006 survey indicated that infrastructure sharing isrequired while nearly half indicated that in-sitesharing is mandatory. This is the case for example in Bulgaria, Colombia,Jordan, Madagascar, Mali, Morocco, Poland andTurkey.
29 Interconnection A clear and transparent interconnectionregulatory framework is key to asustained competitive environment. Providing public access to referenceinterconnection offers, agreements, andprices is one tool regulators can use topromote transparency, raise competitorawareness and ensure a level playingfield among competitors.
31 VoIP regulation Voice over Internet Protocol (VoIP) subscribers continue to grow,fuelled primarily by the demand for lower cost services as well asthe fact that VoIP is being integrated into a number of newservices offered on IP networks. Despite obvious benefits, VoIP also challenges traditionaltelecommunication business models, leading some countries totry to ban or limit VoIP. In many countries, incumbents have resisted offering VoIPservices to protect their lucrative long-distance and internationalcall revenues. In the process they have tried to convince regulators and policy-makers to ban or restrict other service providers from doing so. Today, however, the number of countries in which VoIP has beenlegalized is greater than the number of countries where it isbanned.
32 Indeed the state of VoIP regulation ischanging so quickly it is almost impossibleto keep pace. Until recently, for example,VoIP was banned in many African and ArabState countries. Today, a growing number of countries haveor are about to legalize VoIP, including,Algeria, Ghana, Kenya, Mauritius, Nigeria,Somalia, South Africa, Tanzania andUganda (Figure 1.9).
34WHAT IS NGN? There are numerous views of what constitutes NGN. Different operators that have begun the process ofNGN migration refer to their next-generationnetworks differently. For some, NGN simply meansmigration from a PSTN to an IP-based network. For others, it is a more specific reference to advancessuch as international call IP trunking and IP in thelocal loop. From a technology perspective, NGN is based on anew architecture that modifies both the core andaccess parts of a telecommunication network,changing the way it delivers services to end-users(Box 1.2).
38Creating an Enabling Environment for NGN: The transition to NGN has demonstratedthe importance of regulatory clarity whendealing with essential facilities controlled bythe incumbent. Without clarity, current and futureinvestment by competitive providers maybe disrupted, as their investment decisionsare highly dependent on the incumbent’sfuture plans.
39 In general, regulators are mindful of the risks associatedwith NGN deployment so as not to stifle innovation. They seek to balance this goal with that of fosteringrobust, competitive markets. Although it is not necessarily the role of the regulator toprotect investments made by competitive providersagainst market risks, it is still important to consider theirinterests in terms of ensuring the continued availability ofcurrent wholesale inputs to their products during thelifetime of the assets in which they have invested. Similarly, suitable migration paths for existinginfrastructure investments following the deployment ofnew technologies must be ensured.