World Regulatory Trends and Challenges for Caspian and Black See Region World Regulatory Trends and Challenges for Caspian and Black See Region Jaroslaw K. Ponder Strategy and Policy Unit International Telecommunication Union Advancing in Telecommunications Regulation - 1st Black Sea and Caspian Regulatory Conference – May 2006, Istanbul, Turkey Note: The views expressed in this presentation are those of the author and do not necessarily reflect the opinions of the ITU. Jaroslaw K. Ponder can be contacted at

25 May Trends: The ICT sector Trends: Regulatory environment Necessary actions ICTs: Caspian and Black See Region Policy and Regulatory Challenges Conclusions

25 May Trends: ICT Sector Progressing regulatory reform:  Pro-competitive policy / Universal service/access… Expansion of mobile industry and the Internet High innovation dynamics Falling prices of the ICTs:  Hardware / Software / Services New requirements:  Bandwidth  Generalized mobility  Convergent solutions  Open character

25 May Trends: Broadband Access T

25 May Trends: Broadband Access Broadband prices for the cheapest fifteen economies

25 May TeleCommunication Sector in Transition Meaning and character of communications  Voice, Video, Data, SoD New sell and prices strategies coming from IP-enabled flexibility on the operational level  NGS: N-play services  Falling prices of communication services and access  Traditional services lose strategic meaning  Personalization and customization Regulation  Less regulation / blurred boundaries  Migration from vertical to horizontal approach  Technological neutrality becomes meaningful

25 May Trends: ICT Sector Migration to the IP-environment  Fixed telecommunications  Incumbents: British Telecom, DT AG, KPN  Newcomers: Dialog, Metropolitan Networks  Wireless communications  Mobile telecommunications: from 2G to 4G  WiFi, WiMax  Cable TV  Broadcasting  Service and content providers Strengthened process of convergence  Technology  Market  Services  Institutional FMC? Regulatory Implications Multi-facility competition Service compet.

25 May NGNs as a global issue Technical aspects ITU-T SG 13: Rec. Y.2001 packet-based network multiple broadbandQoS-enabled service-relatedfunctions independent transport-related technologies unfettered access generalized mobility A NGN is a packet-based network able to provide telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service-related functions are independent from underlying transport-related technologies. It enables unfettered access for users to networks and to competing service providers and/or services of their choice. It supports generalized mobility which will allow consistent and ubiquitous provision of services to users. Challenges Challenges  Multimedia  Generalized mobility  Convergence  Integrity  Multi-layer orientation  Open character FG NGN SG: 11, 13, 19, 2, 12, 16, 17 Asia America Europe ITU NGN Africa

25 May IP-enabled NGNs A global issue Regulatory considerations Three background papers  Rulling new and emerging marekts  Interconnection in an IP-enabled NGN Environment  Universal Service in an IP-enabled NGN Environment Regulatory proceedings  National, Regional, International level Asia Americas Europe ITU NGN Africa Study Group 1 Tariff policies, tariff models and methods of determining the costs of services on national telecommunication networks, including next- generation networks Regulatory impact of next generation networks on interconnection

25 May NGNs as a national issue Multi-stakeholder approach Broad framework on interconnections and general regulatory framework  United Kingdom: Interconnection and Developing  India: Recommendations on Issues pertaining to Next Generation Networks  USA: Hearing on network neutrality Focused approach  Germany: e.g. IP Interconnection  Netherlands: e.g. Emerging markets Advisory forums  Australia: Industry Forum to Advise on Convergence Issues  Japan: Next Generation Network promotion forum  UK: NGN Industry Body  India: Joint Consultative Committee & NGN Coordination Committee

25 May Needs for a new regulatory paradigm under regional and intl. discussion ERG: 2006 Common Positions  Principles for IP interconnection  Regulatory principles for NGNs CEPT  Consultations on interconnection model  Many activities related to non-economic regulation CITEL and APEC-TEL  Convergence, NGN, VoIP OECD  Studies on IP related issues WTO  First considerations on Agreement on Basic telecommunications ITU  Global discussion / What rules on the IP-enabled NGNs? (March 2006) / Future of Voice (January 2007)

25 May New and Emerging markets SMP concept  Fundamental regulatory questions confronted with long term goals of the economic and industrial policy  Discussion on implications of the regulatory holidays Relevant markets  Wholesale – New access technologies do influence in particular broadband definitions  Retail – all market may be redefined New balance between ex-ante regulations and ex post remedies Effectiveness of self correcting forces in a competitive marketplace

25 May Interconnection in IP environment Distinctions in periods  Transitional and mature Competition oriented regulation  It is possible that in NGN environment the intervention in setting the interconnection agreements will be smaller New model?  Conflict between technology independence, cost based regulation, and significant market power. For the migration phase zero or low rate model for call termination may be advantageous. In the long term new model (see ECC 2005) with full separation of services provision and connectivity.

25 May Open character and reality Telco Model versus Internet Model Similar to the internet  NGN offers horizontally integrated model with separated NGN services and NGN Transport layer Market structure  Very different Who determines the openness  Vertically integrated services and network operators together with regulatory obligations Meaning of the contnet providers still underestimated in the discussion

25 May Next Generation Universal Service Definition of the universal service and the scope of the services to be included  Inclusion of the broadband in Europe triggered very difficult debate Possible change of approach  Migration to the universal access approach Unified prices and affordability NGN is much more efficient  CAPEX and OPEX up to 40% lower  More services on the network Universal service funds  Possible sources of financing Customer protection

25 May Customer interests protection Universal service and access Consumer emergency calls (E112/E911) Consumer protection and privacy (e.g. SPAM, SPIM) Quality of services Authenticated caller or sender identification Disability assistance Data protection and privacy issues

25 May Conclusions We all build the Information Society together!

25 May NGN will bring significant changes for the regulatory framework The changes will be implemented rather in a way of natural evolution then drastic revolution Competition is key to the NGN; on the other hand NGN fosters competition  new entrance opportunities for operating companies as well as newcomers / NGN creates new markets and reinforce position of some market players New balance between ex-ante regulations and ex post remedies

25 May Effectiveness of self correcting forces in a competitive marketplace The tempo of the NGN deployment depends on the effective regulation Regulatory proceeding determine incentives to invest for both new entrants and incumbents dynamic efficienciesRegulatory policy should take into account the dynamic efficiencies to be achieved in the ICT sector BalanceBalance between facility based competition and service based competition should be preserved

25 May Implications for the region develop much fasterNGNs may develop much faster in countries with poor infrastructure harmonization pro-active participationRegulatory harmonization and pro-active participation in the debate on the future regulatory paradigme is crucial It diminishes investment risk that is very high in transition economies anyway Please do not wait and give your voice to this debate!

25 May Information and Communication Technologies in Caspian and Black See Region We all build the Information Society together!

25 May Measuring Opportunities 1/3 DOI Opportunity Utilization Infrastructure Digital Opportunity Index WISR 2006 New ITU’s Series

25 May Digital Opportunity Index DOI percentage of population covered by mobile cellular telephony internet users per 100 inhabitants Proportion of households with fixed line telephone mobile cellular tariffs as a percentage of per capita income internet access tariffs as a percentage of per capita income ratio of broadband internet subscribers to internet subscribers ratio of broadband mobile subscribers to mobile internet subscribers mobile cellular subscribers per 100 inhabitants proportion of households with Internet access at home mobile internet subscribers per 100 inhabitants proportion of households with a computer Opportunity Utilization Infrastructure Infrastructure

25 May Digital Opportunity Index New ITU’s Series

25 May Digital Opportunity Index WISR 2006 New ITU’s Series

25 May DOI: In-depth analysis OpportunityInfrastructureUseDOIRank Bulgaria Romania Turkey Russia Iran Georgia Kazakhstan Ukraine Azerbaijan Moldova Turkmenistan Kyrgyzstan Armenia Tajikistan Czech Republic Poland Hungary

25 May DOI: Use Internet per 100 inhab. Fixed broadband to total Internet subs. Mobile broad-band to total mobile Bulgaria Romania Turkey Russia Iran Georgia Kazakhstan Ukraine Azerbaijan Moldova Turkmenistan0.00 Kyrgyzstan Armenia Tajikistan Czech Rep Poland Hungary

25 May Digital Opportunity Utilization WISR 2006 New ITU’s Series

25 May DOI: Opportunities Mobile population coverage Internet affordability Mobile affordability Bulgaria Romania Turkey Russia Iran Georgia Kazakhstan Ukraine Azerbaijan Moldova Turkmenistan Kyrgyzstan Armenia Tajikistan Czech Republic Poland0.98 Hungary

25 May DOI: Infrastructure % households with fixed line Mobile per 100 inhab. % households with Internet Mobile Internet per 100 inhab. % households with PC Bulgaria Romania Turkey Russia Iran Georgia Kazakhstan Ukraine Azerbaijan Moldova Turkmenistan Kyrgyzstan Armenia Tajikistan Czech Rep Poland Hungary

25 May Challenges for the Countries in Caspian and Black See Region We all build the Information Society together!

25 May Progress in regulatory reform Pro-competitive policy approach Enabling regulatory environment  Infrastructure development, modernization…  Voice over Internet Protocol… Mobile telecommunications  Dissemination of 2.5G / 2.75G / 3G  Mobile Virtual Network Operators  Licensing: Emerging technologies

25 May Thank you very much for your attention! Jaroslaw K. Ponder International Telecommunication Union Strategy and Policy Unit Tel: We all build the Information Society together!

25 May Full version of this presentation and others focusing on regulation: NGN regulatory and policy resources: ngn-policy-regulatory-resources.html ngn-policy-regulatory-resources.html ITU activities on NGN:

25 May International Telecommunication Union We all build the Information Society together!

25 May ITU - International Telecommunication Union The oldest specialized UN agency with more than 140 years of experience in communication sector Headquarters in Geneva plus regional offices ITU staff: more than 750 from more than 80 countries 189 member states, more than 640 sector members ITU Agenda for Change Structure of the ITU  ITU-T – Telecom Standardization  ITU-R – Radio-communications  ITU-D – Development Bureau

25 May ITU – International Telecommunication Union

25 May ITU’s Strategy and Policy Unit (SPU) New Initiatives Programme  Digital Bridges (2005)  Ubiquitous Network Societies (2005)  Today’s Networks Tomorrow (2005)  What Rules for IP-enabled NGNs? (2006)  Digital Transformations in the Information Society (2006)  Regulatory Environment for Future Mobile Multimedia Services (2006) Many other activities…