Caspian Telecoms 2012: Government Regulation & Market Development 19-20 April 2012 Istanbul

Setting the Regulatory scene A competitive market environment is key to promote investment, spur growth and extend connectivity Removing market entry barriers & open access policies may speed up market development and provide a win-win scenario for investors, service providers & consumers Additional reforms could ensure a level-playing field for all market players This phenomenal growth of ICTs have changed the way we work, learn and communicate. ICTs can have an enormous impact on everyday lives and economic activity, but the opportunities only materialize fully when the regulatory framework fosters investment and widespread diffusion of ICTs. Without these conditions, the full promise of ICTs remains unrealized. On this slide you have a snapshot of the latest regulatory trends. Over the last two decades, countries around the world initiated sector reforms ranging from introducing limited changes to extended restructuring. The first wave of sector reform resulted in the establishment of separate telecom/ICT regulators, which then lead the march towards privatization and liberalization (opening up) of the telecom markets. ITU have had its role to play in urging Administrations to engage in reforms. Part of our mandate is to help countries shape sensible reforms and bolster change in the regulatory landscape.

Number of telecom regulators

Evolution of Regulators

Competition in ICTs How about competition? Considerable efforts have been made to foster competition in telecommunication/ICT markets over the last decade. - Basic services are provided competitively in more than 70% of the countries, up from 38 % in 2000. Mobile services have always been provided on a more competitive basis. It’s not surprising, therefore, that the number of mobile subscribers skyrocketed to above 5.9 billion. Today more than 93 per cent of countries worldwide allow competition in the provision of Internet services, up from 86 per cent in 2000. The 3G market is highly competitive with 95 per cent of countries worldwide allow competition in the provision of those services. - International gateways were competitive in over three quarters of the countries worldwide meaning that if no undue restrictions are imposed on those offering access to international internet connectivity, this will result in increased affordability of broadband services. Source: ITU World Telecommunication Regulatory Database

The Criteria for investment decision in ICT sector Regulatory Risk The legal processes for regulation The independence of the regulator Presence of a balanced and fair competition The transparency of the regulatory process

Effective regulation & Investments The analysis of this study shows that effective regulation continues to have a strong and positive impact on the level of investment in telecommunications networks and services The higher the overall effectiveness of the regulator, the greater the investment

Is effective regulation the only policy alternative?

Mobile subscriptions rate

Internet users rate

Fixed broadband prices are decreasing but are the still the highest The good news is that our overall findings suggest that prices are falling globally, which reflects the policy efforts made in many countries. However, in developing regions, major price differences remain. Fixed broadband showed the highest decrease among the three services, but is still the most expensive, and least affordable ICT service in the developing world in 2010. Between 2008 and 2010, the price for high-speed Internet connections dropped by 50%, compared to a 22% drop in prices for mobile cellular services The steepest price drops were in developing countries, in particular Africa – but broadband is still too expensive. In 2010, the price of an average monthly fixed BB subscription represented 112 % of GNI p.c. in developing countries and 291% in Africa, compared to 1% in Europe. Sourcee: UIT.

Developing countries pay more ICT price basket, 2008 ICT price basket, 2010 Developed countries Developing countries One important factor that determines whether people actually use ICTs is the price people pay for ICT services. Here, our data show that people in developed countries have to pay relatively less for ICT services than people in developing countries. The data reflect prices for three main services, namely fixed telephone, mobile cellular and fixed broadband Internet. It is presented as a percentage of average monthly income per capita. It therefore is a measure of affordability of the services. The chart illustrates the huge difference between developed and developing countries. For example, the ICT Price Basket in 37 out of 46 (80%) developed economies corresponds to less than 2% of their monthly GNI per capita. In 7 developing countries, the ICT Price Basket is even above 50 % of monthly income. This makes services for telecommunication and Internet unaffordable for many poor people in developing countries. Note: About the IPB  ITU’s ICT Price Basket (IPB) is a composite affordability measure based on three sub-baskets – fixed telephone, mobile cellular and fixed broadband Internet services – and computed as a percentage of average Gross National Income (GNI) per capita. As a comprehensive benchmarking tool, the IPB monitors the relative price of ICT services and provides an indication of how affordable services are across countries, and over time.  Published annually, the latest IPB compares 2008 and 2010 tariffs at global and regional levels and highlights the difference in prices between developed and developing regions. Covering 165 economies, it is the only price basket to monitor the affordability of ICT services worldwide.  Data from ITU's 2010 IPB were released at the WSIS Forum 2011. The full details and results of the 2010 IPB will be released in September 2011, in the Measuring the Information Society Report 2011. Source: UIT.

Is effective regulation the only policy alternative?

Critical Areas of Stimulus Plans Infrastructure & Broadband Access Human capacity Building Cybersecurity & safer internet Universal Service Stimulus Plans

Critical Areas of Stimulus Plans Infrastructure & Broadband Access Human capacity Building Cybersecurity & safer internet Universal Service Stimulus Plans

Critical Areas of Stimulus Plans Infrastructure & Broadband Access Human capacity Building Cybersecurity & safer internet Universal Service Stimulus Plans

Critical Areas of Stimulus Plans Infrastructure & Broadband Access Human capacity Building Cybersecurity & safer internet Universal Service Stimulus Plans

Is effective regulation the only policy alternative? Non- financial regulatory Strategies - Regulatory impact analysis -Facilitating low-cost technologies - Infrastructure Sharing Market Stimulus

Is effective regulation the only policy alternative? Non- financial regulatory Strategies - Regulatory impact analysis -Facilitating low-cost technologies - Infrastructure Sharing Financial Regulatory Strategies - Public funding incl. stimulus plans - Private public partnership - Non-ICT funding Market Stimulus

Is effective regulation the only policy alternative? Non- financial regulatory Strategies - Regulatory impact analysis -Facilitating low-cost technologies - Infrastructure Sharing Financial Regulatory Strategies - Public funding incl. stimulus plans - Private public partnership - Non-ICT funding Lending Support - Reduction of fees and taxes - deferment of fees and taxes Market Stimulus

Summary & Conclusion ICT sector continues to expand due to its dynamics Evolving Technology New services - convergence Increasing affordability - Reduction in prices More involvement in daily life Trends being the same, disparities continue to exists among various regions Effective regulations & regulators pave the way for growth in the sector Additional policy tools are available and applicable for giving stimulus in various areas The regional and/or national needs are the main drivers of stimulus actions

Thank you Onder Cetinkaya Telecommunication Development Bureau Projects Division e-mail: Onder.Cetinkaya@itu.int  Phone: +41 22 730 5441  www.itu.int