The case for a more binding WTO agreement on regulatory principles in telecommunication markets

On February 5, 1998, the WTO agreement on basic telecommunications services entered into force. Although the WTO agreement is a step into the right direction its impact might be rather modest. This is because apart from the many exemptions, which are likely to undermine market access and national treatment commitments, the regulatory provisions laid down in the WTO agreement are neither specific nor comprehensive enough to ensure open market access. Because there is in most cases a lack of clear definition as to the terms and conditions of regulatory provisions, there is a great danger that governments might nullify the commitments by abusing the regulatory requirements.     

Mexico's international telecommunications policy: Origins,the WTO dispute,and future challenges

Mexico is by far Latin America's largest trader and the country with the most free trade agreements. Notwithstanding the success of its trade policy, the liberalization of its telecommunications sector was limited and generated a dispute at the WTO. This article offers an overview of Mexico's trade policy, with special emphasis on its policy regarding trade in telecommunications services and the 2002–2004 Mexico–United States dispute over telecommunications at the WTO. The dispute is the first one over trade in telecommunications services at the WTO and has generated interest among many developed and developing countries.     

Telecommunications in the land of the Thunder Dragon: recent developments in Bhutan

This paper charts the development of telecommunications in Bhutan. Since the introduction of telecommunications services in 1963 Bhutan has faced many challenges as it has sought to roll out a network that covers the whole population and country. A small population, a mountainous geography, a transitional economy and a unique approach to development—Gross National Happiness—present many challenges that need to be overcome if the telecommunications industry is to develop further. Added to this is the decision of Bhutan to join the outside world through membership of the ITU, APT and WTO that has added liberalisation and privatisation to the challenges faced by Bhutan. This paper identifies two broad policy options that Bhutan could adopt—network expansion nationally or investment concentration towards urban areas. The authors conclude that due to the limited resources available to Bhutan these policies are contradictory and will take the telecommunications industry in quite different directions if adopted.     

The future role of international telecommunications institutions

The telecommunications world is being swept by technological and national regulatory changes. The international telecommunication institutions — the ITU, INTELSAT and CEPT — were founded in times when technological trends were more stable and national regulation was more homogeneous. How will they cope with these new changes? In an era of growing heterogeneity, the ITU may need to look increasingly beynd itself to maintain its centrality. Meanwhile, INTELSAT faces challenges from new market entrants and a more flexible approach to new technological and commercial imperatives in satellite and cable services. The EEC is awakening to the need for institutional change within Europe and this is already having an impact on CEPT. It is concluded that to survive and to maintain relevance the existing international institutions will need to initiate changes or face a loss of authority to other institutions such as OECD and EEC.     

Consumer protection in the telecommunication sector: A comparative institutional analysis of five African countries

The telecommunications sector has proliferated in recent years, especially in developing countries. However, little attention has been paid to consumer protection issues. As more people get connected to telecommunication networks and competition becomes increasingly fierce, it becomes essential to revamp institutions that ensure consumer protection in the telecommunication markets. This paper analyses the current status of institutions that protect consumers in the telecommunications sector in five African countries from the perspective of three pillars of sound institutional design. The findings indicate that while all cases analysed herein have some form of institution that upholds consumer protection, in most cases, such protection is limited to mobile communications. Furthermore, in most cases, there are only general sanction provisions that are either too weak to bind service providers or that leave overly discretionary powers to regulatory agencies, which can lead to corrupt practices, hence weakening consumer protection. This paper describes current affairs with regard to consumer protection in the telecom industry, identifies its weaknesses, and proposes areas of improvement to attain a healthier telecommunications sector.     

The evolution of telecommunications policy-making: Comparative analysis of China and India

This paper is a comparative analysis of the telecommunications policy-making process in China and India. Adopting an institutionalist perspective and multi-streams framework, the paper analyzes the formal structures, rule-making procedures and interest groups involved in telecommunications policy-making in the two countries, in terms of their evolution over the last two decades. Though the two systems began this period with a somewhat similar ministerial-bureaucratic decision-making model, and faced similar problems of assimilating new interest groups and responding to international pressures, the paper finds that the decision systems in the two countries evolved in significantly different directions. China's telecommunications decision-making is significantly affected by the macro level political rearrangement and is more likely to be non-incremental. On the other hand, confronted by an increasingly litigious environment and a more fractious interest group culture, India represents a somewhat classical textbook case of incremental policy making. Nevertheless, numerous challenges remain in both countries, including institutional capacity and excessive regulatory deference to political authority.     

Telecommunications reform and efficiency performance: Do good institutions matter?

Until recently, most studies investigating telecommunication reforms performance have failed to incorporate the importance of institutions into the empirical analysis. This study highlights the importance of institutional governance on telecommunications efficiency and provides empirical results for the impact of institutions on reform outcomes. It provides significant evidence that the institutional environment in which reform progress takes place is an important determinant for successful reform. This study uses the stochastic distance function approach to capture the role of institutions in explaining efficiency differences across 70 countries. The empirical analysis reveals that policy stability in the form of substantive checks and balances on executive power is the most important aspect for successful reform. Independently, legal integrity improves telecommunications efficiency through privatization, while greater freedom from corruption influences the effectiveness of a regulatory body.     

Financing and other issues in telecommunications development

Implementation of telecommunications infrastructure throughout developing countries is a prerequisite to national development. The fundamental question, argues Dr Parker, is how can developing countries pay for the capital investment in the necessary telecommunications equipment. The need is to encourage an institutional structure that can stimulate innovative, lower-cost appropriate rural telecommunications technologies without imposing excessive risks on the national telecommunications monopoly. With sucessful models to follow, it will be easier to achieve consensus between developing country borrowers, international lenders and telecommunications manufacturers.     

WTO principles and telecommunications in developing nations: challenges and consequences of accession

The accession to the World Trade Organisation (WTO) of developing nations brings into sharp relief the successes and shortcomings of the General Agreement on Trade in Services, which attempts to balance the concerns and interests of developed and developing nations alike. This paper reviews some of the key social and economic issues that arise in the field of telecommunications generally and specific issues facing developing countries arising from WTO accession and implementation of WTO principles. Lastly it considers the WTO decision in the US–Mexico dispute.     

Global political economy of technology standardization: A case of the Korean mobile telecommunications market

This paper examines empirical cases of standardization in the Korean mobile market as vehicles for approaching the broader political and institutional context of standardization in telecommunications. A consideration of Korean standardization in the mobile telecommunications market is particularly interesting because it reveals how the state's political interests influence standards decisions, which are primarily driven by market and technological changes in telecommunications. Judged from the social construction of technology perspective which sheds light not only on technology itself but also on political, social and economic interests that surround transformations in technology, this paper highlights power relations among the major actors that have made technology standards decisions in Korea regarding second (2G) and third-generation (3G) mobile telephony. The paper also attempts to show how the Korean government has dealt with the diverse interests of various market actors while pursuing its own policy agenda.     

The political economy of the Korean telecommunications reform

South Korea proclaimed a gradual economic liberalization ever since the early 1980s. Regardless of her vow to do so, however, most of liberalization efforts turned out to be a sheer rhetoric. In sharp contrast, genuine market liberalization and regulatory reforms are being introduced in the telecommunication sector, which is unprecedented in the Korean economic history. Why and how could Korea pursue such a full scale market liberalization and regulatory reforms in the telecommunications sector? Though it is argued that a regulatory convergence in economic management is found in everywhere in the world, the particular speed, scope, and/or processes of a country’s telecommunication reform cannot be understood correctly without examining the structures and institutions of the Korean political economy and of the telecommunications industry. This paper examines the causes and consequences of the Korean telecommunication reform by analyzing the relevant institutional changes both in domestic and international, which largely affect the interaction among those involved in the process of market liberalization and regulatory reforms.     

Competition and regulation in China's 3G/4G mobile communications industry—Institutions,governance, and telecom SOEs

When it comes to the analysis of the intrinsic mechanism of market behaviors and hence competition development and regulatory imperatives in the Chinese telecommunications industry, currently there is no consistent pattern offered in the literature. In China's emergent 3G/4G era, market behaviors can be affected by various institutional factors, along with various forms of informal forces, which may translate into different implications for competition regulation. Based on extensive archival research and interview, this current study aims to bridge the gap by following an interpretive approach. An input–output model was substantiated for pattern-matching in the Chinese context base on the postulation of a series of propositions and hence Industry-Gray-Box. Accordingly, two categories of market behaviors, that is, market-driven vs. institutions-driven, were arguably delineated as being underpinning the competition development. Policy implications and future reform imperatives were discussed. This study may advance knowledge in terms of: (1) the establishment of a relatively consistent pattern for mapping the landscape of China's communications industry; (2) the substantiation of the inner working mechanism of China's SOE system in the telecommunications sector; and (3) original first attempt in identifying different roles of telecom SOEs and the governing forces that affect them. The paper also offers extensive and cohesive insights on China's formal and informal institutional environment in general and for telecommunications in particular. Measurements developed in this study may serve as basis for future study.     

Telecommunications policy in Turkey: Dismantling barriers to growth

Modern telecommunications technology is now widely seen as a critical driver in economic development. However, the issues involved in the rapid deployment of this technology are complex and frequently highly controversial. While some issues are technical, the most difficult ones involve changing an institutional framework originally designed for different times and different technologies. The process of changing this framework necessarily involves disruptive change for existing infrastructure and service providers as well as substantial benefits for the economy at large. This paper, based on an extensive series of interviews in Turkey in 2005 as well as published sources, seeks to discuss these issues in light of Turkey's progress to date in taking advantage of advanced available telecommunications technology and the myriad productivity-enhancing services that are associated with it.An important element in developing a more competitive and dynamic sector has been Turkey's long-standing desire to become a member of the European Union (EU). This has encouraged changes in the telecommunications regulatory regime following the guidelines set out in Chapter 19 of the EU “acquis” for candidate members. Nonetheless, substantial further efforts are needed to complete and implement the desired regulatory framework, particularly as it affects the former government monopoly carrier, Turk Telekom and the cable companies. A further limiting factor in recent years has been an overall investment climate characterized by a high level of uncertainty for most investors, regardless of size or nationality.Policy recommendations to help accelerate the deployment of telecommunications technology include a clear reaffirmation of the government's priorities for the sector, a reduction in the level of regulatory uncertainty, strengthening the Board and Staff of the Telecommunications Authority, and reviewing policies to broaden the scope and decrease the cost of telecommunication licenses.     

Mobile phones,the Internet and the institutional environment

This paper empirically investigates the determinants of the Internet and cellular phone penetration levels in a cross-country setting. It offers a framework to explain differences in the use of information and communication technologies in terms of differences in the institutional environment and the resulting investment climate. Using three measures of the quality of the investment climate, Internet access is shown to depend strongly on the country's institutional setting because fixed-line Internet investment is characterized by a high risk of state expropriation, given its considerable asset specificity. Mobile phone networks, on the other hand, are built on less site-specific, re-deployable modules, which make this technology less dependent on institutional characteristics. It is speculated that the existence of telecommunications technology that is less sensitive to the parameters of the institutional environment and, in particular, to poor investment protection provides an opportunity for better understanding of the constraints and prospects for economic development.     

Regulation and efficiency in transition: The case of telecommunications in Italy

In regulating the telecommunications industry, the separation between network and retail functions, which is designed to countervail the market power of incumbent operators, is a relevant issue. Despite its importance, little empirical research has addressed the effects of such a separation. Accordingly, this paper provides insights into the consequences of the Italian communications regulatory authority's (AgCom) decision to impose this type of separation on the incumbent telecommunications operator, Telecom Italia. In particular, the studied separation is between the firm's network-related functions, and those used for provision of its communication services. The present research finds that the type of separation implemented by AgCom allows a provider to maintain the advantages of operational scale in its network structure without dampening competition in the existing market for communications services. The study also offers further empirical evidence on the advantages of a composite vs. translog function in analyzing the multiproduct cost structure of a telecommunications operator.     

Impact of wireless telecommunications standards and regulation on the evolution of wireless technologies and services over Internet protocol

Beginning with the historical role and importance of multi-physical standards in wireless telecommunications for the future in the US, Japan and Europe, this paper provides a cohesive vision of how wireless communication, voice over Internet protocol (VoIP) is likely to develop. Also covered in this paper are its benefits, the technical and regulatory support required to realize this vision and an assessment of its potential impact on the structure of the telecommunications industry. Although the competitive structure of the Internet is relatively open, several factors, such as frequency allocation policy and radio interface standards, could block the efficient evolution of wireless services to an IP platform. The paper proposes two major technical requirements to enable effective competition in wireless VoIP and achieve greater technical productivity.     

Can the US transition to digital TV be fixed? Some lessons from two European Union cases

This paper compares the regulatory incentives created by government policies aimed at promoting the transition to digital TV in the US, France, and the UK. It argues that US policies have aggravated coordination problems and even created incentives for terrestrial broadcasters to retard the transition in order to receive compensations from wireless telecommunications providers for vacating frequencies before the statutory deadline. The institutional analysis framework is applied to explain the observed policy variations across countries as well as the factors retarding the transition in the American case. The conclusion suggests possible remedies to accelerate the transition to digital TV in the US based on the British experience.     

The rise of the Australian Telecommunications Industry Ombudsman

Australia is the first jurisdiction in the world to introduce a national private telecommunications industry ombudsman. Created in 1993, the Telecommunications Industry Ombudsman (TIO) has grown in jurisdiction and importance, becoming a regulatory cornerstone of the fully competitive post-1997 Australian telecommunications regime. This paper examines the role of the TIO as a mechanism for dispute resolution and as an industry regulator, suggesting that it provides an example of an innovatory regulatory process which transcends the divide between deregulation and proregulation. This raises the question as to the applicability of the ombudsman institution in terms of the regulation of telecommunications. Through highlighting the conciliatory nature of the ombudsman, the role of the TIO as a regulator is considered in its Australian context.     

Wireline deregulation: The Canadian experience

Changes in the state of telephony markets paved the way for significant regulatory and legislative reforms in the telecommunications sector in the 1990s. In Canada, the 1993 Telecommunications Act was enacted to promote the emergence of competitors in a market that had until then been dominated by regional monopolies. This paper examines the Canadian telecommunications regulatory framework and analyzes the regulatory privileges given to new entrants at the expense of former telecommunications monopolies. Such regulations, which were meant to induce competition, ended up hurting consumers and distorting the market process. This paper also shows how the Canadian government recently eliminated many of those regulations by seizing control of the policy agenda from the telecommunications regulator.     

Interconnection regulation in India: Lessons for developing countries

Interconnection is not only a major competition issue per se, it is also a critical element of the basic telecommunications agreement of the WTO. An important issue in interconnection regulation is interconnection charging especially in the context of a dominant incumbent. Most regulators in developing countries face challenges in setting interconnection prices in the absence of market information on the incumbent's or entrant's costs, competition or demand and models suited for developing countries that also adhere to the WTO guidelines. There are few papers that illustrate the challenges faced by regulators in such a context. This paper attempts to bridge the gap by highlighting the nature of interaction between the regulator, incumbent, judiciary and the political environment, the role of formal models in setting interconnection charges and the implications of rapid technological changes in a developing country context through a case study of India.The case study highlights the point that besides independence, it is important to vest enforcement powers in the regulatory agency for it to be credible. Incorporating the WTO interconnection guidelines within a developing country context has implications for network growth and poses challenges to the regulatory processes.Although Telecommunications Regulatory Authority of India (TRAI) started with a distortionary, inefficiently priced network providing low coverage and quality, it has meandered its way to a more reasonable network access pricing regime. The decreasing cost of technology and increasing incomes in India and political interventions in regulation have put pressure on TRAI to provide lower interconnection charges and faster telecom growth. Thus, it is pragmatic for regulators to start with a “quick and dirty” estimate, provided that they can signal the downward trend in interconnection pricing, rather than wait for the “correct” estimates.Adoption of future looking strategies (interconnection exchanges), use of a variety of formal models, and strengthening of regulatory capacity are all necessary steps in fostering a competitive environment. Interconnection regimes set up early in the reform process require a review. For successful competition, effective dispute resolution mechanisms and institutions are also important.