1. Convergence, ICT Sector Development and New Information Economies: Challenges for Policy and Regulation Professor William H. Melody Managing Director, LIRNE.NET melody@lirne.net, www.lirne.net Presentation to Workshop Convergence of Media and ICT in Egypt: Challenges, Policies and Regulation Cairo, 3 May 2006

2. Characteristics of 21 st Century Economies Driven by the services sectors Founded on information/communication networks – next generation Internet Dependent on effective reforms in the telecom sector – information infrastructure Strengthening links among local, national, regional, internatonal networks and markets

3. Stages of Telecom/Information Sector Reform Telecom Liberalization (Participation, Univ. Access) Expanding Network Capacity (Broadband) Preparing the Network Foundation for New Services Developing New Services - “killer applications!” Applying Services Productively in Different Sectors Telecom Reform & Regulation – Key Driver for Implementing Policy Reforms for the e-economy

4. INFORMATION INFRASTRUCTURE Regional Development Finance/ Banking Disaster Management Travel & Tourism Manufacturing Media & Cultural Sectors Health/Medical Government Services Education/Training Applications Electronic Services (Pay TV, VAS, Internet) Multimedia, etc. (Public, User group, Private) Content Broadcast Media Film Libraries Software etc Interactivity (Instant & Delayed) Voice Data Sound Graphics Video Telecommunication Facilities Network (Information Superhighway) Computing / Information Technology Telecommunication Equipment Manufacturing

5. Equipment Supply Telecom Infrastructure Service Development Competitive Markets Monopoly/duopoly/oligopolyCompetitive Markets Internet VAS Databases Network Management Telecom Equipment Computer Hardware Software Consumer Electronics PTOs The telecom sector value chain

6. Significance of Network Unbundling for Convergence Industry Sectors - Equipment, Operator Networks, Services Fixed and Mobile Basic Network Layers *Content *Communication Services *Network Protocols, OSS & Management *Equipment & Facility Capability

8. Convergence Sectors Drivers of Convergence Technology Industry-Supply Market-Demand Policies/Regulation Industry Specific Convergent Applications Finance Commerce Education Health Publishing Manufacturing etc. Content Telecom Computing The Dimensions of Convergence on the Information Infrastructure

9. Criteria for Economic Growth Technologies Policies Markets ApplicationsServices Regulations Policy & Regulation: Catalyst for, or Constraint upon Growth?

10. Progress with Telecom Reform Now 130+ Countries with Separate Telecom Regulatory Authorities WTO Commitments to Liberalization Industry Specific Focus of Reforms Successes, Failures, Unanticipated Difficulties, Continuing Delays Policy and Regulatory Reform is Proceeding at a Slower Pace than Technology Development or Market and Service Potential

11. Progress with Telecom Reform Regulation is often the limiting factor constraining growth It is not a simple matter of removing regulations or eliminating regulators. It is enhancing their competence and credibility. Sound regulatory foundations are needed to attract investment, foster applications of new technologies and development of new services. The speed of regulatory reforms needs to increase and be directed to providing a foundation for network-based e- Economies.

12. Information Infrastructure: Investment 1990s Mobile - licenses - operating; spectrum - network development Privatising telecom incumbents - licenses – operating; IPO - network development obligations Competitive network operators - fibre transmission - city / business LANs Software, services and content (e.g., Internet)

13. Information Infrastructure: Investment Deficiencies 21st C Local - basic services access - broadband access Universal access - voice - broadband Internet - local services and content Applications - e-economy; e-society

14. Policy, Regulation and Network Investment Licensing - paying for the privilege Annual Fees and charges Restrictions on investment opportunities Price and/or profit regulation Policy & regulatory risk

15. Unresolved Network Market Issues Public Resource Infrastructures for Telecom Networks - Rights of Way, Spectrum, Numbers, Names Interconnection Termination Number Monopolies Access Limitations in the Face of Positive Externalities Leverage Opportunities for Monopoly Nodes in the Network Achieving Faster Infrastructure Network Development

16. Elements of Policy and Regulatory Risk in Information Infrastructure Development Credibility – regulatory independence from political intervention on substantive issues Credibility – Regulatory independence from incumbent monopoly power Transparent processes Accountability for performance Competence and skills Commitment to implement policy objectives Evident fairness

17. Shifting Policy/Regulatory Priorities to Stimulate Investment From supply of network facilities to stimulation of demand to justify investment From physical capital to human capital - awareness, skill, capabilities - applications by individuals & organisations Diverse sources of private and public investment - operators, service providers, - intermediaries (e.g., Telecentres), user applications

18. Regulatory Relations Affecting Sector Investment

19. Next Generation Infrastructure (High Speed Access) Role of the Market Digital Divide Role of Government *Promote Participation & Competition *Direct Regulation *Public Sector Applications *Public Investment - eg., Broadband *Public/Private Partnerships At What Level Should Gov’t Intervene?

20. Paths to Universal Access Voice - prepaid mobile Internet, e-economy, e-society - fixed & wireless network extensions - new operators – energy, transport - radio and TV distribution networks - retail service suppliers, ISPs, VANS - greater role for intermediaries

21. Capacity – building for ICT Convergence Opportunities: Requires Investment in Human Capital Policy analysis & regulation Strategic analysis & management Innovation, experimentation & flexibility Demand-led diffusion of core skills Network linkages

22. Proactive Policy & Regulation for Implementing Convergence Opportunities Create a favourable investment environment for physical & human capital Minimize barriers to participation Facilitate demand as well as supply Apply skills and strategic management to achieve the spirit of the policy objectives Can only be done if regulatory structure is transparent and credible

23. World Dialogue on Regulation for Network Economies Mission: to facilitate an international dialogue that generates and disseminates new knowledge on frontier issues in regulation and governance to support the development of network economies

24. World Dialogue on Regulation for Network Economies Activities: Research on priority policy/regulation issues Dialogue – www.regulateonline.orgwww.regulateonline.org - e-brief Expert Forum Meetings Reports

25. World Dialogue on Regulation for Network Economies (WDR) (available at www.regulateonline.org)www.regulateonline.org Reports The Next Step in Telecom Reform: ICT Convergence Regulation or Multi sector Utility Regulation ? (2003) Stimulating Investment in Network Development: Roles for Regulators (2005) Diversifying Participation in Network Development (forthcoming late 2006)

26. World Dialogue on Regulation for Network Economies: Institutional Partners infoDev, World Bank IDRC Canada LIRNE.NET Research Partner University Centres around the world

27. World Dialogue on Regulation for Network Economies Participate in the Dialogue; review and comment on the research, www.regulateonline.orgwww.regulateonline.org LIRNE.NET, www.lirne.net www.lirne.net A Strategic Collaboration for applied research, training, policy and regulation support, relating to information infrastructure and new network economy development Center for Tele-Information (CTI), TU Denmark Economics of Infrastructures, TU Delft, Netherlands LINK Centre, Wits University, South Africa LIRNEasia, Colombo, Sri Lanka LIRNEamericas, Montevideo, Uruguay Media@lse, London School of Economics, UK