1. 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 – 25-27 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 Jaroslaw.Ponder@itu.intJaroslaw.Ponder@itu.int

2. 25 May 2006Jaroslaw.Ponder@itu.int2Agenda Trends: The ICT sector Trends: Regulatory environment Necessary actions ICTs: Caspian and Black See Region Policy and Regulatory Challenges Conclusions

3. 25 May 2006Jaroslaw.Ponder@itu.int3 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

4. 25 May 2006Jaroslaw.Ponder@itu.int4 Trends: Broadband Access T

5. 25 May 2006Jaroslaw.Ponder@itu.int5 Trends: Broadband Access Broadband prices for the cheapest fifteen economies

6. 25 May 2006Jaroslaw.Ponder@itu.int6 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

7. 25 May 2006Jaroslaw.Ponder@itu.int7 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.

8. 25 May 2006Jaroslaw.Ponder@itu.int8 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

9. 25 May 2006Jaroslaw.Ponder@itu.int9 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 http://www.itu.int/osg/spu/ngn/ 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

10. 25 May 2006Jaroslaw.Ponder@itu.int10 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

11. 25 May 2006Jaroslaw.Ponder@itu.int11 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)

12. 25 May 2006Jaroslaw.Ponder@itu.int12 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

13. 25 May 2006Jaroslaw.Ponder@itu.int13 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.

14. 25 May 2006Jaroslaw.Ponder@itu.int14 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

15. 25 May 2006Jaroslaw.Ponder@itu.int15 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

16. 25 May 2006Jaroslaw.Ponder@itu.int16 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

17. 25 May 2006Jaroslaw.Ponder@itu.int17 Conclusions We all build the Information Society together!

18. 25 May 2006Jaroslaw.Ponder@itu.int18Conclusions 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

19. 25 May 2006Jaroslaw.Ponder@itu.int19Conclusions 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

20. 25 May 2006Jaroslaw.Ponder@itu.int20 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!

21. 25 May 2006Jaroslaw.Ponder@itu.int21 Information and Communication Technologies in Caspian and Black See Region We all build the Information Society together!

22. 25 May 2006Jaroslaw.Ponder@itu.int22 Measuring Opportunities 1/3 DOI Opportunity Utilization Infrastructure Digital Opportunity Index WISR 2006 New ITU’s Series

23. 25 May 2006Jaroslaw.Ponder@itu.int23 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

24. 25 May 2006Jaroslaw.Ponder@itu.int24 Digital Opportunity Index New ITU’s Series

25. 25 May 2006Jaroslaw.Ponder@itu.int25 Digital Opportunity Index WISR 2006 New ITU’s Series

26. 25 May 2006Jaroslaw.Ponder@itu.int26 DOI: In-depth analysis OpportunityInfrastructureUseDOIRank Bulgaria0.960.340.220.5146 Romania0.930.260.200.4653 Turkey0.970.300.080.4558 Russia0.960.250.130.4560 Iran0.890.160.030.3695 Georgia0.920.120.130.3984 Kazakhstan0.940.170.020.3889 Ukraine0.910.170.020.3793 Azerbaijan0.900.150.020.3699 Moldova0.680.140.070.30115 Turkmenistan0.720.070.000.26127 Kyrgyzstan0.550.090.010.22134 Armenia0.700.150.020.29120 Tajikistan0.530.050.010.20140 Czech Republic0.980.420.130.5143 Poland0.980.390.190.5239 Hungary0.980.430.240.5534

27. 25 May 2006Jaroslaw.Ponder@itu.int27 DOI: Use Internet per 100 inhab. Fixed broadband to total Internet subs. Mobile broad-band to total mobile Bulgaria0.240.420.00 Romania0.210.390.00 Turkey0.090.140.00 Russia0.120.270.00 Iran0.070.020.00 Georgia0.040.340.00 Kazakhstan0.070.00 Ukraine0.070.00 Azerbaijan0.050.00 Moldova0.090.130.00 Turkmenistan0.00 Kyrgyzstan0.030.00 Armenia0.070.00 Tajikistan0.010.020.00 Czech Rep.0.290.080.00 Poland0.220.360.00 Hungary0.220.490.00

28. 25 May 2006Jaroslaw.Ponder@itu.int28 Digital Opportunity Utilization WISR 2006 New ITU’s Series

29. 25 May 2006Jaroslaw.Ponder@itu.int29 DOI: Opportunities Mobile population coverage Internet affordability Mobile affordability Bulgaria0.980.970.92 Romania0.970.870.96 Turkey0.96 0.98 Russia0.950.960.98 Iran0.700.990.98 Georgia0.950.890.92 Kazakhstan0.940.920.97 Ukraine0.910.930.90 Azerbaijan0.970.870.86 Moldova0.920.580.54 Turkmenistan0.500.680.98 Kyrgyzstan0.400.570.68 Armenia0.810.430.87 Tajikistan0.300.470.83 Czech Republic0.990.98 Poland0.98 Hungary0.990.98

30. 25 May 2006Jaroslaw.Ponder@itu.int30 DOI: Infrastructure % households with fixed line Mobile per 100 inhab. % households with Internet Mobile Internet per 100 inhab. % households with PC Bulgaria0.830.590.100.030.15 Romania0.620.470.060.040.12 Turkey0.820.510.070.010.11 Russia0.600.510.050.000.11 Iran0.650.060.040.000.07 Georgia0.330.230.00 0.06 Kazakhstan0.610.160.020.000.05 Ukraine0.530.270.010.000.03 Azerbaijan0.530.180.020.000.04 Moldova0.530.140.01 0.03 Turkmenistan0.350.000.010.000.01 Kyrgyzstan0.330.060.010.000.04 Armenia0.670.050.020.000.02 Tajikistan0.200.020.00 0.01 Czech Rep.0.621.000.190.010.30 Poland0.750.600.260.010.36 Hungary0.710.860.140.090.33

31. 25 May 2006Jaroslaw.Ponder@itu.int31 Challenges for the Countries in Caspian and Black See Region We all build the Information Society together!

32. 25 May 2006Jaroslaw.Ponder@itu.int32Challenges 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

33. 25 May 2006Jaroslaw.Ponder@itu.int33 Thank you very much for your attention! Jaroslaw K. Ponder International Telecommunication Union Strategy and Policy Unit E-mail: Jaroslaw.Ponder@itu.intJaroslaw.Ponder@itu.int http://www.itu.int/spu Tel: 00 41 22 730 60 65 We all build the Information Society together!

34. 25 May 2006Jaroslaw.Ponder@itu.int34Resources Full version of this presentation and others focusing on regulation: www.itu.int/osg/spu/presentations/ www.itu.int/osg/spu/presentations/ NGN regulatory and policy resources: http://www.itu.int/osg/spu/ngn/ ngn-policy-regulatory-resources.html http://www.itu.int/osg/spu/ngn/ ngn-policy-regulatory-resources.html ITU activities on NGN: www.itu.int/spu/ngn www.itu.int/spu/ngn

35. 25 May 2006Jaroslaw.Ponder@itu.int35 International Telecommunication Union We all build the Information Society together!

36. 25 May 2006Jaroslaw.Ponder@itu.int36 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

37. 25 May 2006Jaroslaw.Ponder@itu.int37 ITU – International Telecommunication Union

38. 25 May 2006Jaroslaw.Ponder@itu.int38 ITU’s Strategy and Policy Unit (SPU) http://www.itu.int/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…