Regulatory institutions and processes in telecommunications : An international study of alternatives

This article reviews national regulatory institutions and processes for telecommunications, and assesses some advantages and disadvantages of the alternatives. It is based on a report commissioned by the International Telecommunication Union (ITU) in connection with its Regulatory Colloquium programme. The report was prepared by an independent team, and represents their views, not an ITU view. It summarizes experience in numerous countries, and includes detailed case studies.     

The politics of relevance and the ITU

Ruben Näslund has done the telecommunications community a service by stimulating debate on the issues facing the ITU in the wake of the Nairobi Plenipotentiary Conference. The Nairobi Conference was important for both what was said and resolved and what was unsaid and unresolved. When sovereign nations meet for six weeks there is an interplay of emotions and perceptions which imperceptibly mould policy formulation well after the event. A Plenipotentiary Conference is a political event, however much the engineers, technicians and PTT administrators of the telecommunications community prefer or pretend that is not. The purpose of this article is to examine some of the outstanding ITU issues in light of certain basic facts which structure the interests of member countries.     

Improving development assistance for telecommunications

The stable development of telecommunications in the developing countries has been hindered by a variety of difficulties. Development assistance by the developed countries and a number of organizations has an important role in helping the developing countries overcome these difficulties and promote their telecommunications development. This paper examines different kinds of development assistance and suggests that the role of the ITU will be crucial to any improvement in coordination of assistance.     

Telecommunications for development: findings of the ITU-OECD project

This article presents the main findings of a major research project jointly sponsored by the International Telecommunication Union (ITU) and the Development Centre of the Organisation for Economic Cooperation and Development (OECD). The purpose of the project was to shed some light on the ways in which telecommunications contribute to economic and social development. The author also describes one approach to rural telecommunications explored by the project — the GLODOM concept.     

Toward international settlement reform: FCC benchmarks versus ITU rates

The global telecommunications service market is undergoing significant change as more countries privatize suppliers, liberalize national markets, and encourage entry. Despite these changes, international settlement rates remain significantly higher than the cost to terminate calls and many carriers reap substantial monopoly profits from the settlement payments they receive. Annual US settlement payments approximate $5 billion. Settlement rates are declining but the progress has been slow. High settlement rates, by raising the cost of international telephone service, result in high calling prices. To accelerate a reduction in settlement rates, the US Federal Communications Commission (FCC) adopted a set of maximum rates, called benchmark rates, which it expects US carriers to use in their settlements with other carriers and created a process designed to insure the implementation of these rates. The FCC benchmark rates vary primarily on the basis of a country's level of economic development. When the FCC took its action, the benchmark rates, which range from 15 to 23¢, were significantly below the rates in effect with most countries. The FCC action was widely criticized even though the rates exceed costs, vary according to countries’ levels of economic development, and will be phased in over five years to give countries time to adjust. The International Telecommunication Union (ITU) took an unprecedented step of proposing an alternative set of settlement rates for its members. The ITU rates differ significantly from the FCC rates, being much lower for economically advanced countries and significantly higher for less developed countries. The ITU rates vary according to a country's teledensity but the rationale for the ITU categories lacks support. In addition, other, arbitrary categories are part of the plan. Neither the FCC nor the ITU approach to reducing settlement rates address the problem of reforming the international settlement process and replacing it with an economically efficient, market oriented payment scheme. The first stage of the FCC policy went into effect in 1999. Complemented by changing market conditions, the policy has lead to lower US settlement rates, but most rates still exceed competitive market levels. Virtually all US minutes in the FCC's top two income categories comply with the prescribed benchmark rates. In fact, many countries in these two categories have rates with US carriers that are below benchmark levels. Several less developed countries have also negotiated rates with US carriers that conform to the FCC plan. As a result, US carriers benefit from the FCC policy as their average settlement costs decline. These cost reductions make possible lower calling prices but the market structure of US international communications service industry may inhibit the flow-through of these savings to US consumers. US consumer's prices were falling before the FCC acted on settlement rates. The FCC action seems to have increased the pressure to further reduce these rates. At the same time, however, service markets are being increasingly segmented and price discrimination is more widely practiced so only some US consumers benefit from lower settlement rates.     

Setting technical standards for improved communication flows

This article deals with telecommunications standardization in relation to world trade, needs of developing countries, and facilitating user access to worldwide communication. The author comments on the responsibility of ITU members to support standardization activities carried out in ITU forums.     

The changing nature of the ITU Plenipotentiary

The Plenipotentiary Conference is the supreme organ of the International Telecommunication Union (ITU). Since the Nairobi Plenipotentiary in 1982, there has been much debate about the role of the Plenipotentiary and even the future of the ITU in the continuing telecommunications revolution. This article explores the major attributes of the Plenipotentiary by comparing the Nairobi Conference with the five post-second world war Plenipotentiaries that preceded it. Criticisms are evaluated and suggestions for improvement are made.     

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.     

Forecasting telecommunications data with linear models

For telecommunication companies to successfully manage their business, companies rely on mapping future trends and usage patterns. However, the evolution of telecommunications technology and systems in the provision of services renders imperfections in telecommunications data and impinges on a company's’ ability to properly evaluate and plan their business. International Telecommunication Union (ITU) Recommendation E.507 provides a selection of econometric models for forecasting these trends. However, no specific guidance is given. This paper evaluates whether simple extrapolation techniques in Recommendation E.507 can generate accurate forecasts. Standard forecast error statistics—mean absolute percentage error (MAPE), median absolute percentage error and percentage better—show the ARIMA, Holt and Holt-D models provide better forecasts than a random walk and other linear extrapolation methods.     

Freedom of access to the radio spectrum for satellite communications

A conference will open on 8 August 1985 under ITU auspices to consider major procedural changes in the international regulation of the use of the radio spectrum by geostationary satellites. There has been strong pressure for the introduction of a priori orbit/ spectrum planning for, for example, the fixed-satellite service from countries which foresee that they may lose their option to set up domestic satellite networks under the present ptocedure. However, reform of the present procedures, rather than radical change, would give better assurance that the real needs of all countries will be met.     

Fueling investments - The effect of the Agreement on Basic Telecommunications

As international agreements come under fire from current politics, it becomes ever more important to investigate the effect of such agreements. The telecommunication sector is of special interest due to its growing importance in the digital age. International law came into play in 1998 when the Agreement on Basic Telecommunications (BTA) entered into force. It demanded far-reaching liberalization reforms and was signed and ratified by 66 countries. A difference-in-differences estimator is used to analyze if the treaty had an impact on investments in telecommunications. The analysis reveals that investments in telecommunications became significantly higher in signatory countries than in non-signatory countries after the treaty took effect.     

Communication technology transfer : Impact on economic development

International technology transfer is defined and described from the economics perspective, with emphasis on costs. Its role in economic development is discussed, including its impact on social values and the question of ‘appropriate’ technology for developing countries. Examples are provided for communications technology, particularly in the areas of telecommunications and satellite communications.     

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.     

Telecommunications in Central and Eastern Europe: Similarities,peculiarities and trends of change in the countries of transition

The paper overviews the current state and modernization strategies of telecommunications in Central and Eastern European countries comprising Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Romania and Bulgaria. In the mid-1990s telephone density is relatively low; advanced telecommunications services are scarcely established. However, the significance of telecommunications is recognized, and therefore intensive expansion and modernization plans have been formed and a change of the legislative environment is in process. The main intention of the paper is to summarize the general features and trends in Central and Eastern European telecommunications and to derive from the experiences a possible way to harmonize the responsibilities for basic telecommunication services and the expectations for business-oriented operation.     

Walloon & Flemish videotex trials

This article focuses on the problems surrounding ‘compunication’, ie the growing imbrication between electronic computers and telecommunications. (The corresponding French term is télématique). More precisely, the specific problems of videotex systems thrown up by different experiments in Belgium are examined. The CCITT of the ITU uses the term videotex as the generic name referring to all systems that make it possible to gain information through telecommunication networks (Hertzian waves, cable TV distribution networks or telephone lines). Requested information appears on a TV screen (at home, in a place of work or in a public place).     

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.     

Economic growth,telecommunications development and productivity growth of the telecommunications sector: Evidence around the world

This paper studies the relationships between economic growth, telecommunications development and productivity growth of the telecommunications sector in different countries and regions of the world. In particular, this study assesses the impact of mobile telecommunications on economic growth and telecommunications productivity. The results indicate that there is a bidirectional relationship between real gross domestic product (GDP) and telecommunications development (as measured by teledensity) for European and high-income countries. However, when the impact of mobile telecommunications development on economic growth is measured separately, the bi-directional relationship is no longer restricted to European and high-income countries. This study also finds that countries in the upper-middle income group have achieved a higher average total factor productivity (TFP) growth than other countries. Countries with competition and privatization in telecommunications have achieved a higher TFP growth than those without competition and privatization. The diffusion of mobile telecommunications services is found to be a significant factor that has improved the TFP growth of the telecommunications sector in Central and Eastern Europe (CEE).     

Trade patterns,industry structure and industrial policy in telecommunications

This article examines three major changes which have been occuring in the telecommunications market: liberalization, leading to increased competition in services and equipment, the internationalization of the equipment market, and a rapidly changing industrial structure. The interrelationship among the three trends is analyzed, and the authors hypothesize that it is the technological determinants which are driving the changing structure of the industry and its trade patterns and regulatory environment. The instruments of industrial policy are discussed, with examples from several countries. The European Community's policy in telecommunications is explained in some detail.     

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.     

Assessing the WTO agreements on China's telecommunications regulatory reform and industrial liberalization

By drawing on new institutional economics, this paper contends that the “rules-of-law” specified by the World Trade Organization (WTO), as an exogenous institution for the member states, will theoretically influence its members’ domestic telecommunications regulatory institutions, but that the actual effects will be different and will depend on the institutional endowments of host countries and their institutional stances. Empirically, this paper examines the impact of China's prospective membership status in the WTO on its telecommunications regulatory reform and industrial liberalization and explores the institutional barriers preventing China from fully implementing the WTO Agreements in this sector.