At last! A new Canadian telecommunications act

Despite profound changes in regulatory jurisdiction over telecommunications, in industry structure and in the basis on which service is provided, there has until very recently been no change in governing legislation in Canada, which dated back to the turn of the century. This article seeks to explain why the legislature, even in a parliamentary system of government, lagged behind the courts, the regulators and the carriers in bringing about industry reorganization. It then examines a number of the more significant provisions of the new legislation, which was eventually passed in June 1993, and concludes with some general observations on the role of legislation in industry liberalization.     

A pan-European telecommunications regulator?

Creating a single telecommunications market in the European Union is well under way, particularly with the approach of full competition after 1 January 1998. However, the regulatory framework needs to reflect the demands of the single market and the needs of industry. The European Commission has been reviewing whether a single pan-European telecommunications regulator would offer a valuable focus in streamlining the existing regulatory structure. In so doing, they commissioned Denton Hall and NERA to evaluate the needs of industry and the legal and practical approaches to the creation of a single regulator.     

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.     

Leveraging the EU regulatory framework to improve a layered policy model for US telecommunications markets

What is the best way to overhaul the current telecommunications legislative framework in the United States? This is an ongoing debate among telecom policy analysts and many others affected by the legacy of regulatory compromises that govern US telecommunications (and related information and media) industry sectors. This paper compares a Layered Model for US telecommunications policy with the regulatory framework adopted by the European Union. Both approaches focus on service characteristics rather than underlying technological traits.¹ It becomes clear that the Layered Model could be adopted to move away from sector-specific regulation, and could successfully use conventional market analysis criteria.     

Information needs in US telephone industry regulation: A systems approach

After an initial discussion of current regulatory data problems in the common carrier telecommunications industry, the author proposes an alternative to the traditional regulatory process of the Federal Communications Commission. This proposal is essentially that the traditional control mechanism of rate-level regulation can be made more effective if, in addition, a comprehensive system of continuing industry surveillance is implemented.     

英国电信产业的放松管制和对主导运营商BT的再管制

自 1 980年起 ,英国电信产业先后实施了邮政、电信分离 ,建立独立的管制机构 ,对开放市场准入和私有化以后仍然居于主导地位的运营商———英国电信公司 (BT)实施包括价格上限管制在内的一系列管制 ,促进了英国电信产业向竞争性结构的转化。目前 ,我国电信产业同样面临着放松管制以及放松管制以后如何重组和再管制主导运营商的棘手难题。本文拟对英国电信产业 2 0余年的改革经验进行比较系统的回顾和评析 ,以期对我国电信产业的下一步改革有所启示。     

Regulation and innovation in the telecommunications industry

This paper aims to introduce issues that relate regulation and innovation in the telecommunications industry. We try to address the following question: which types of regulatory schemes are likely to promote innovation in a fast-growing telecommunications industry? Section 2 analyses ex ante control by sector-specific regulation and ex post control by competition policies. Section 3 deals with the importance of compatibility hence regulation of standards in the telecommunications industry. Section 4 discusses the major issues pertaining to the relation between innovation and pricing on the one hand, and innovation and unbundling on the other.     

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.     

The role of competition and regulation in stimulating innovation – Telecommunications

The telecommunications sector is innovative and its innovations strongly affect the growth of the rest of the economy. While regulatory policy has therefore shifted towards innovation as its major goal besides enabling competition, there appear to be tensions between regulation, competition and innovation. This paper identifies as the roots of these tensions the consumer protection objective enshrined in regulatory legislation and the regulatory neutrality issues arising from stranded assets, loss of labor rents, loss of services by captive customers, and the threat to regulators from looming deregulation, all of which are associated with innovations. This paper identifies some similar threats to innovation in unregulated sunk-cost industries with a monopolistic incumbent. A very simple model shows that a comparison of innovation incentives in such an unregulated industry with a regulated one leads to ambiguous results. However, the prospect of converting a regulated industry into an unregulated one after the innovation has occurred will unambiguously increase innovation incentives.     

On the determinants of non-market strategy: The separations mechanism and cost shifting in the telecommunications industry

This study examines the relationship between performance levels and the levels of cross-subsidy attained by local exchange carriers in the United States telecommunications industry. These cross-subsidies have been obtained by firms via their engagement in a separations mechanism, based on a cost allocation process, which telecommunications sector regulatory authorities use. Non-market strategies have assumed primacy in the activities of several sectors world-wide. Thus, understanding non-market strategic choices is important in the analysis of firms’ behavior and performance. Active engagement in the separations process is an important non-market strategy in the telecommunications industry, as a firm relatively successful in this activity can gain large cross-subsidies. The analysis establishes that less profitable firms obtain greater cross-subsidies. Once the profitability variable is decomposed into its two main components, which are productivity and price recovery, the impact of the profitability variable reduces. Firms which are relatively unproductive, as well as those unable to recover higher output prices, obtain relatively greater cross-subsidies. These results are inconsistent with the postulates of the strategic cost-allocation and behavior literatures but are consistent with x-inefficiency and rent-seeking perspectives of firms’ strategic actions.     

Regulatory governance in African telecommunications: Testing the resource curse hypothesis

This paper examines regulatory governance in the context of African telecommunications. Though there is already a substantial literature devoted to the regulatory practices in developing countries, it generally conceptualizes the quality of regulation as an exogenous policy variable that affects the performance of the telecommunications sector or treats it as a normative recommendation to improve performance.     

Moving beyond dichotomy: Comparing composite telecommunications regulatory governance indices

Despite an apparent consensus about the importance of the quality of telecommunications regulatory agencies, there is no agreement among researchers about how to measure it. While dichotomous coding of de jure independence has served as a proxy to measure whether an agency's regulatory governance is transparent, non-arbitrary, and free from political influence, we view measuring multiple components of regulatory governance including incorporating measures of regulatory independence into a composite index as providing a more nuanced understanding of facilitating or inhibiting factors. This paper compares composite telecommunications regulatory independence indices and regulatory governance indices available in the literature in order to construct more parsimonious indices. Using a methodology labeled “qualitative meta-synthesis” based on synthesizing previously published indices, we construct six different indices using combinations of 32 different variables, and different weights. Data from the OECD database are used to re-create the five original indices from the literature as well as our own six composites. Some of these indices (original and composites) were found to be negatively correlated with independent measures of regulatory governance such as the World Bank's Government Effectiveness Index and the Rule of Law Index; this may be attributable to the fact that countries, and especially those with poor overall governance standards, may need to put in place stronger telecommunications governance institutions in order to attract telecommunications investment to the country. The analysis suggests that a parsimonious index of as few as seven variables is capable of measuring the quality of telecommunications governance in a country, at the same time making the selection of variables and their weighting in the index more systematic than in previously available indices.     

Dissecting divestiture: A telecommunications book review article

This paper critically reviews the regulatory history of telecommunications as rendered in four recent books: Temin'sThe Fall of the Bell System, Henck and Strassburg'sA Slippery Slope, Wender'sThe Economics of Telecommunications, and the multicontributorDisconnecting Bell. Only Wender's regulatory cartel theory seriously competes with the Government's theory inU.S. v. AT&T as an explanation for AT&T's behavior under regulation. In response to inconsistencies between Wender's view and the historical record, an historically consistent alternative hypothesis of AT&T and regulator behavior is developed from clues apparent in the form of the AT&T divestiture.     

Politics,policy and fixed-line telecommunications provision: Insights from Australia

Over the past 40 years, telecommunications policy worldwide has been dominated by the privatisation of former government-owned firms, the pursuit of increasing competition as well as the delegation of day-to-day operations of industry decision-making and oversight from core governments to autonomous regulators sitting at arms-length from political decision-making. One of the most (apparently) dramatic reversals of this trend has occurred in Australia where the federal government has set up a state-owned company (NBN Co) to fully replace and upgrade the fixed-line infrastructure for voice and broadband communications for the entire country. Some argued that the NBN heralded a reversal of a “failed, neoliberal” deregulation and pro-competition policy agenda in Australia, and a return to “social democratic” values. The NBN has attracted interest as a possible model for other governments looking to fund broadband infrastructure.The NBN Co's network is nearing completion. It has proved disappointing in many ways, with costs escalations, missed deadlines and a downscaling of the original full-fibre footprint to a mixed technology model (MTM). It has also proved politically divisive, with some claiming the MTM changes represent the reassertion of a neoliberal political agenda. In this paper, we trace the evolution of the fixed-line telecommunications industry in Australia from the 1980s to the present along the dimensions of privatisation, deregulation and competition in voice, broadband and policy settings. We find that contrary to popular political rhetoric, the Australian industry reforms have been characterised by only a partial and inconsistent progression towards the international policy objectives. In particular, ongoing government ownership of the incumbent created perverse incentives for both regulatory and industry actors and ensured political involvement in import network investment and operations decisions which in other jurisdictions are delegated to private-sector owners and regulators at arms-length from political influence. We contend that the NBN was not a social democratic response to failed neoliberal policies, nor was the MTM a neoliberal reassertion. Rather, the politicisation of the NBN is a function of the inability to decentralise ownership and control of the industry away from the government. These issues will continue to dominate the Australian debate, as the statutory context requires the privatisation of the NBN within five years of its projected 2021 completion. Extreme caution is warranted for jurisdictions looking to the NBN model for guidance.     

Competition Policy under Laissez-Faireism: Market Power and its Treatment in Hong Kong

The paper describes the current competition policy framework in Hong Kong: how it came into existence, what business practices are prohibited, and how the enforcement system works. Recent cases in the telecommunications industry are used to illustrate the sectoral approach, a unique feature of Hong Kong's competition policy. We argue that a sectoral approach faces two fundamental drawbacks. First, due to having different ``rules of the game' for different sectors, the allocation of resources may be distorted in the long run. Second, since the relevant regulatory agencies perform dual roles both as competition policy enforcer and as traditional regulator of natural monopolies, the impartiality of their competition decisions may not be credibly conveyed to the public. We also address other specific problems associated with the sectoral approach, such as the exclusion of structural issues, narrow coverage of sectors, and the lack of public enforcement. We conclude that an overall competition law can better promote competition and economic efficiency in Hong Kong.     

The endless need for regulation in telecommunication: An explanation

Telecommunication services have existed as a legal monopoly nearly throughout its entire history. In 1998, telecom market liberalisation was achieved across the European Union (EU) through the introduction of competition among telephone services. Asymmetrical obligations were deemed necessary in order to compensate the market power of the former monopolist.As the evolution of asymmetrical regulation in Spain illustrates, obligations and the telecommunications operators subject to them increased with the regulatory framework established in 2002 in the EU. This new regulatory framework may continue to expand through the inclusion of functional separation as another possible asymmetrical obligation. In short, it seems that the regulatory pressure on the telecommunications industry is increasing, despite the lapse in time since the liberalisation of the industry.In this paper, a methodology developed by the Austrian School of Economics is applied in order to explain why the telecommunication market is subject to increasing regulation in Europe, rather than deregulation, after more than 10 years of liberalisation. In particular, Mises's theory of price control is used to explain the evolution of the regulation of local loop unbundling.     

Strategy and strategic choice: The case of telecommunications

This paper outlines a model of organizational strategy that takes into account both the task ambiguity and concentration of the environment. A competitive strategy, in the sense as used in classical economics, is most suitable with low task ambiguity and concentration. When task ambiguity increases a shift to an innovative strategy can be expected. When concentration is high consolidative and cooperative strategies with respectively low and high ambiguity can be expected. These latter two strategies, in particular, tend to impose institutional and regulatory constraints upon firms, an aspect that is seriously neglected in the conventional business policy and strategic management literature. This model is illustrated using the case of the British telecommunications industry which has recently been subject to considerable regulatory and technical change. Implications for management are that strategy should be matched to environmental conditions as defined by task ambiguity and concentration. However, these dimensions are not fixed but enacted by firms in a particular industry. Implications for government are that a more contingent approach to regulation and de-regulation needs to be considered.     

TP case study: fixed–mobile interconnection in India

The Telecommunications Regulatory Authority of India (TRAI) attempted, in late 1999, to introduce the calling party pays (CPP) regime for mobile cellular services, with a corresponding revenue-sharing arrangement between fixed and mobile operators. According to the revenue-sharing proposal, mobile operators in India were to be compensated for carrying traffic to and from the fixed networks. Under their original license conditions, fixed operators (usually one of the two state-owned incumbents) were not paying mobile operators for terminating calls on their networks. However, mobile operators had to compensate the state-owned incumbent for terminating traffic. This unfavourable environment for mobile operators has meant that mobile services have not been able to reach their full potential in India. There was great disappointment within the mobile industry when the TRAI's CPP order was overturned by the Supreme Court of India in early 2000, due to lack of jurisdiction. Since then, the enabling legislation has been amended. It is hoped that the new provisions of the TRAI Act will empower the regulator to establish a level playing field for mobile network operators. It is only through the creation of a suitable framework for interconnection that the TRAI will be able to ensure the success of telecommunications reform in India.     

Telecommunications reforms in China: towards an analytical framework

This paper reviews and analyzes changing telecommunications policies in China since the inception of the so-called “Open Policy”. It is argued that these changes should be understood as the results of a delicate balance between (1) government considerations (including the state's desire to provide universal coverage, control the telecommunications industry and, more recently, improve the efficiency of state-owned enterprises), (2) the call from foreigners (sometimes made through their governments) to open China's telecommunications industry and to seek profits, and (3) the overwhelming demand of the Chinese population and the business sector (including foreign firms operating in China) to have freer and more rapid movement of information. Over time, the interplay of these forces has led to the liberalization of China's telecommunications industry. These moves towards liberalization took place in four stages. During stages one (Pre-1994) and two (1994–1997), only half-hearted reforms were introduced to separate government administration from business enterprises and to foster very weak domestic competition. During stage three (1998–1999), there were reforms to the regulatory framework and measures towards liberalization. From 2000 onwards, a solid legal foundation was laid after nearly a decade of gradual reform. Moreover, there has been some remarkable organizational restructuring since June 2001.     

The transformation of the mobile telecommunications industry in Pakistan: A developing country perspective

This paper offers a rare insight into the reality of the mobile telecommunications market transformation in Pakistan. Our analytical framework treats the mobile telecommunications market as a complex socio-technical system. Specifically, we define the telecommunications market as being composed of technology standards and three sets of social actors that include government institutions, network and service providers, and users. In the case of Pakistan, these social actors together determine the adoption of standards and services, and thus shape the trajectory of the market change. Our case study provides evidence that a pro-competition policy is imperative for mobile telecommunications development in developing countries, and an independent regulator is critical in promoting technological innovation.