Potential for competition and the role of PTTs

The author considers the potential benefits and problems of deregulation in the telecommunications sector. He discusses competition (a) in terminal equipment supply and (b) in network provision. Assessing both areas in the light of US experience, he draws up recommendations for liberalized policies in European countries.     

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).     

Telecommunications services in France: The regulated monopoly and the challenge of competition

Classical microeconomic modelling cannot alone explain the present trend of telecommunications deregulation. Based upon an examination of the French situation, the author argues that the current phenomenon should be viewed more as a game between three main players whose behaviour can be analysed using principles of industrial organization. The traditional telecommunications monopoly is bound to react defensively in response to increasingly powerful demand, stimulated by technical innovations, while at the same time the public policy maker searches for modern regulatory principles. Demand, as represented by large corporate customers, will probably trigger the next step in the game between the three players.     

Telecommunications in the Pacific region: Impact of a new regime

In many developed countries there has recently been serious erosion of the monopoly position of national telecommunications authorities. Such authorities have long found difficulty in adjusting to the furious pace of electronics technology. The private sector may find less difficulty and should benefit as both user and provider of new information services. However, there are likely to be costs involved, and those who have traditionally made least use of telecommunications seem destined to bear the bulk of these costs. In developed countries, this may be unfortunate: in developing countries, the consequences could be much more serious.     

Strategy in the telecommunications market: The effects of liberalization and competition

This article identifies some of the ways in which firms in the telecommunications industry have attempted to cope with deregulation, drawing upon the experience already evident since liberalization began a few years ago. The author argues that certain types of market conditions provide particular problems for firms, to which they must respond if they are to remain prosperous. A matrix describing four market types is offered as a facsimile of the competitive conditions now found in the telecommunications industry, and examples are given from the UK. Economic, technological and political factors affect the strategic behaviour which firms must follow, but in different ways and at different times.     

Internationalisation in the telecommunications services industry: Literature review and research agenda

A review of 356 publications addressing internationalisation aspects of the telecommunications services industry (TSI) shows a growing body of contributions, mainly covering research themes like settlement and regulation policy, strategic alliances and incumbents’ reactions to deregulation as well as opening of markets in-depth until recently. Wireline telephony TSI has been the dominant segment in most contributions, while the mobile or broadband Internet segments only featured in more recent work. Segment characteristics like non-uniform barriers to entry, different reasons for alliances and non-uniform levels of internationalisation differentiate these TSI segments pose a number of additional questions concerning telecom firms’ internationalisation strategy and success promising for future research.     

One country,two systems: contrasting approaches to telecommunications deregulation in Hong Kong China

Telecommunications deregulation strategies have been self-evidently different in Hong Kong and China due to differences existing in political and economic systems. This paper will provide an overview of contemporary trends in telecommunications deregulation in these two territories. Comparisons will be drawn between the two systems with regard to ownership, foreign direct investment, respective regulatory frameworks and the government’s perseverance in propelling deregulation. The study clearly indicates that the shared goal of deregulation can be reached at different rates by different routes (‘policy paths’) dependent on situational contingencies.     

Functional separation in Swedish broadband market: Next step of improving competition

Technological development together with liberalization policy has led to competition in the telecommunications market. Broadband has been recognized as a driving force in the social and economic development of nations, and many countries have introduced policies and/or regulatory frameworks to improve competition in broadband markets. An evolution can be seen from the 1980s until the present day through open access to local loop unbundling to several degrees of separation including functional separation. There are several countries implementing functional separation such as the UK, Italy, Sweden and, recently the EU. It has been suggested that functional separation can be an effective policy for increasing competition in broadband markets under certain circumstances. Sweden has implemented functional separation by amending the Swedish Telecommunications Act in 2008 to include mandatory functional separation as one of the powers of the PTS, the Swedish telecommunications regulator. Although TeliaSonera, the incumbent fixed line operator decided to voluntarily separate part of their business, the amendments to the law were debated with arguments similar to the debates in the EU following the new regulatory framework implemented in 2009. Against this background, this paper provides an overview of the development of functional separation in the EU and European countries such as Sweden and the UK. The paper also provides a theoretical and empirical analysis of the implementation of functional separation. The evolution of functional separation in Sweden is explained and ends with a discussion of the implementation of functional separation in the Swedish broadband market.     

Deregulation trends and policies in France

Although the debates challenging monopoly in telecommunications, and promoting deregulation as the alternative, have become the classic method of analysing the industry, deregulation trends in France cannot be approached so simply. This report focuses on some of the features of the French monopoly, and presents a hypothesis on the direction deregulation could take in France.     

On the role of telecommunications in development

Numerous studies document the relationship between telecommunications and economic development. The main types and relative merits of these are summarized. The paper argues that more of the same will do little to help promote accelerated telecommunications investment in developing countries as needed. Rather, the efforts should now mainly concentrate on conveying existing sector knowledge to governments and international agencies. The paper focuses on examples of simple, proven tools which can be used to supplement telecommunications project analysis for this purpose.     

The Pacific Islands. Policy options for telecommunications investment

The Independent Commission for World-Wide Telecommunications Development (Maitland Commission) reported that telecommunication networks, including public telephone systems, are an infrastructure which aids economic development throughout the world. The Commissions objective is to bring the majority of the world's population within easy access of a telephone and, in time, other communications services. Development in the Pacific Islands region is slowed by a lack of efficient communications. The islands are spread over 29 million square kilometers of ocean and extremely vulnerable to natural disasters. Pacific Island Nations (PINs) have problems of foreign exchange, skill shortages, and poor credit terms. Telecommunications infrastructure audits showed the overall regional teledensity of 3 telephones per 100 population. The individual countries vary form 8.3 in Fiji to 1.5 in Papua New Guinea and 25.2 in New Zealand. The population of the developing island countries is in mostly rural areas where there is a chronic shortage of telephones. The constraints on radio systems can be overcome with satellite technology. The new technologies are coming on the market faster than these countries can afford to handle them. By using satellite technology and sharing facilities PINs can greatly reduce the cost of telecommunications systems. Fiber optic cables will be used to carry large volumes of traffic over major routes while satellites can be used for a array of services for the smallest PIN nation to the largest route rim country. Work is being done to standardize the equipment specifications and to develop policies for the coordination of regional telecommunications training. To further facilitate communications development in this area, changes need to be made in international funding priorities for development, and recommendations by the Maitland Commission must be taken seriously.     

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.     

The US telecommunications industry in transition: Bypass,regulation and the public interest

Since the AT&T divestiture, the Federal Communications Commission has been attempting to introduce competition into the telecommunications industry in the USA. This article discusses the problems of the transition period, particularly the contradictions between the policy of widespread availability of affordable basic telephone service, and the short-run burdens on most subscribers as competition erodes the toll-to-local subsidy. The authors discuss welfare economics in the telecommunications industry, and propose an interim and self-terminating plan for gradual deregulation. The proposal includes an empirical test of economic or uneconomic local exchange bypass, and a social compensation option which meets the requirements of Pareto superiority.     

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.     

The impact of the regulatory framework on fixed-mobile interconnection settlements: the case of China and Hong Kong

Network interconnection is one of the most critical issues in the process of telecommunications deregulation. An improperly interconnected new network is not dissimilar to an isolated network, while network externality remains a concern for subscribers who are searching for demand-side economies of scope. Traditional studies mainly focus on formal mechanisms of setting an interconnection price, while this study indicates that an appropriate regulatory framework is also one of the most important factors in settling effective network interconnection arrangements.     

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.     

Conflicting national policies: The creation of the euro and the rebalancing of telecommunications prices

Government departments have diverse interests, and on certain occasions, the need to achieve a priority objective in one department may lead to the adoption of inefficient policies in other areas, with long-lasting consequences. In this paper, we analyze the rebalancing of the telecommunications tariffs that took place in the European Union before and after the liberalization of the market in 1998. We show that the objective of satisfying the Maastricht inflation condition to allow participation in the European Monetary Union from 1999 led some national governments to block the rebalancing of telecommunications tariffs. Specifically, we demonstrate that in the years immediately before the liberalization of the telecommunications market, those countries that faced greater difficulty achieving the inflation objectives of the Maastricht Treaty reduced, rather than increased, the prices of local telephone calls and line rental. Furthermore, these countries did not intensify efforts to rebalance their tariffs after the creation of the euro. Our paper also shows that in this period the countries that diverged most from the inflation condition invested less in their telecommunications infrastructure.     

‘Mainline’ telecommunications infrastructure, levels of development and economic growth: Evidence from a panel of developing countries

This paper assesses the growth impact of telecommunications infrastructure investment in developing countries by subjecting country-specific data on mainline tele-density and per capita growth to a Granger causality test within a panel cointegration framework. The results suggest that growth effects vary widely across country groupings reflecting different levels of development. Mainline tele-density and per capita growth strongly reinforce each other for countries that are relatively less developed. The reinforcement effect is even stronger for emerging countries that can be identified by their higher than average growth rates. In contrast, there is, at best, weak evidence of bi-directional causal links between the two variables for countries that are relatively more developed. These differences in the mainline tele-density and per capita growth relationships suggest that investment in telecommunications infrastructure, with its potential to generate high growth return, may serve as the critical tool for driving the growth and development process forward in the less developed countries.     

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.     

Deregulation in Australia,by design or default

This article traces the debate on the deregulation of telecommunications in Australia from initial private sector lobbying in 1977. Although the recommendations of the Davidson Report were seemingly sunk by the defeat of the Fraser government in 1983, the authors believe that the Labor government's commitment to monopoly public sector telecommunications may give way to deregulation by default under increasing fiscal restraint and private sector demands.