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| WDR e-Brief No. 09 |
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| Wednesday, 10 July 2002 | |
In this e-Brief* WDR 2002 draft report released – Comments requested * WDR expert forum to review 2002 and select topic for 2003 * WDR researcher to facilitate Asian linkages from Sri Lanka * WSIS plans meetings for September * Books * CTI becomes CICT – expands research and training activities * Russian telecoms to liberalise in 2010 * Subscribing and unsubscribing -------------------- The WDR  No. 09, 10 July 2002 In this e-Brief* Q&A: Why 2 competition regulators? * WDR expert forum * WDR schedule of activities * WSIS: Preparatory meeting fails to address important questions * Summer reading * India - lack of clarity hampering competition * Subscribing and unsubscribing -------------------- -------------------- Welcome to the ninth issue of the WDR e-Brief, a bi-weekly bulletin from the World Dialogue on Regulation for Network Economies (WDR). The WDR e-Brief keeps you informed of new documents and ongoing discussions on our website and features information and comment of interest to the regulatory community. Please forward the e-Brief to interested colleagues and let them know they can subscribe for free from the WDR website at http://www.regulateonline.org/. The next e-Brief will be distributed in August and will announce the final draft of the 2002 research report as well as news about September’s Expert Forum. -------------------- -------------------- Q&A: Why Two Competition Regulators: NRAs and Competition Authorities? In each WDR e-Brief we feature a question or comment posted to the Online Dialogue at http://www.regulateonline.org/dialogue/ and ask our research teams to comment. The featured question in this e-Brief comes from E. Wightman. Wightman’s question highlights potential jurisdictional conflict between regulators and competition authorities regarding competition issues in the telecom sector. The reply comes from William Melody, general manager of WDR. Question: Both convergence and multisector utility developments tend to integrate telecommunications with other industries and introduce new forms of potential competition. It seems that both national regulatory authorities (NRAs) and general competition authorities will have jurisdiction over competition issues. Doesn’t this introduce duplication and potentially conflicting competition rules in the new market environment? E. Wightman Answer: The mission of general competition authorities is to try to maintain competitive markets by preventing and punishing monopolistic practices. The threat of punishment for anti-competitive behaviour is intended to prevent it. However the effectiveness of competition law is very limited. It applies after the fact where evidence (dead competitors, damaged competition and bad behaviour) is examined in a relatively costly, time consuming legal process that can never restore the damage done to competitors, consumers and market competitiveness. Competition law is a very blunt instrument for addressing major attempts to significantly diminish competition. Its effectiveness lies much more in the good market behaviour it hopefully stimulates (which can rarely be measured) than the bad behaviour it successfully prosecutes. But the latter clearly affects the former. For firms contemplating monopoly practices, the possibility of a competition law prosecution and conviction, and its consequences, is assessed as a business risk. The severe limitations of general competition law have prompted some countries to require that proposed mergers which might reduce competition be approved in advance by competition authorities. Mergers can´t be undone after they have been implemented any easier than eggs can be unscrambled. In e-Brief #1, the Q & A examined “Competition and Regulation: Substitutes or Complements?” It emphasized that competition was perhaps the key tool of regulation in achieving its efficiency, market development and public service objectives. But the competition authority needed by telecom regulators is very different from that provided under general competition law. The latter presumes that markets are competitive, and the purpose is to punish anticompetitive practices that create monopoly power. In telecom, the established market condition is monopoly, and the purpose is to change the market structure by promoting competition. Thus, NRAs must act proactively, applying competition principles ex ante, in order to open the opportunities and provide the stimulus for pro-competitive changes in the market. General competition authorities are trying to maintain a presumably satisfactory competitive market condition by punishing aberrations. NRAs are trying to change dramatically a highly imperfect market condition. NRAs must set the rules of the game for the new more competitive market environment. The role of NRAs in the establishment and application of ex ante competition rules is especially important because of the unique technological and economic characteristics of the telecom sector. As a network industry, competitors must cooperate, and nodes or pockets of monopoly power in the network can be exploited to the extreme disadvantage of competitors and consumers. Local interconnection, access and termination services are illustrations. Ex ante competition rules are essential if competition is to develop at all. In addition, ex ante rules are needed with respect to the use of public resources (e.g., spectrum, rights-of-way, numbers), and public service responsibilities (e.g., universal service) so that competitors will know all the rules of the competitive game. As competition grows in telecom and related convergence and multisector utility markets, regulators will need to monitor the structure, conduct and performance characteristics of the dynamic, evolving markets. This will require greater attention by NRAs to the tools of analysis used by general competition authorities (market definitions, measures of monopoly power, etc.). The European Commission, in association with a new European Regulators Group (ERG) - made up of the EU country telecom NRAs - is already moving in that direction. The two competition regulators in telecom are each applying different aspects of competition principles. Ex ante competition regulation by NRAs is needed to create opportunities for, and to promote competition in former monopoly markets. Ex post competition regulation by competition authorities is needed to deter and punish monopoly practices in markets that are competitive, or becoming so. We have already seen one illustration of its application. The US FCC introduced ex ante competition rules between 1968 and 1978. AT&T flagrantly violated them, destroying many potential competitors. The competition authority (Antitrust Division of US Department of Justice) prosecuted AT&T, and AT&T was broken up in 1984. This split jurisdiction in the application of competition principles will be the model in telecom and the other network utility industries for the foreseeable future. - William H. Melody Follow the dialogue post a question or make a comment at http://www.regulateonline.org/dialogue/ . -------------------- -------------------- WDR Expert Forum September 12 & 13 - "Designing Next Generation Regulation" The WDR Expert Forum will be held September 12 - 13, 2002 in Copenhagen, Denmark. It will be hosted by LIRNE.NET’s partner, the Center for Tele-Information (CTI) of the Technical University of Denmark. The Forum will bring together 30-40 leading experts from around the world to discuss next generation telecom regulation, to critically assess the draft research report being prepared by the LIRNE.NET research teams, and to review suggestions for next year's World Dialogue Theme. About forty experts from regulatory agencies, government ministries, international organizations, academia and other organizations will bring a diversity of informed views to help shape the final report on this year's dialogue theme, as well as the direction of next year's theme. Forum participants will be acting in their individual capacities, not as representatives of organizations. For more information, including about how to participate (online and in-person), see http://www.regulateonline.org/news/experts.htm or write LIRNE.NET Coordinator, Merete Henrikson at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . -------------------- -------------------- WDR and e-Brief Schedule of Activities The WDR e-Brief will be going offline for most of July and August, but the research teams will continue to work and to receive your input to the draft report to be presented at September’s Expert Forum. There will be a special issue of the e-Brief in August, to announce the release of the final draft of the research report and to invite you to comment on it before it is discussed at the Expert Forum. In September regular twice-monthly publication will begin with the first issue reporting on the Expert Forum and introducing next year’s research topic. The WDR / Intelecon news service will continue as usual, with news of particular significance to the regulatory community and the WDR research team on the first page of http://regulateonline.org and all news archived at http://regulateonline.org/intelecon. -------------------- -------------------- WSIS: Preparatory meeting fails to address important questions The first Preparatory Committee Meeting of the World Summit on the Information Society (WSIS) took place in Geneva July 1-5, without reaching agreement on many of the issues on the agenda. Attended by nearly 1,000 delegates, representing 141 governments, plus numerous international agencies, civil society organisations and private sector associations and entities, the five day meeting had two main items on its agenda -- to determine the rules and procedures of the summit and preparatory process, and to begin discussions on the agenda and themes. At the end of the week, it had only partially achieved its objectives. Many interventions stressed the enabling role of government, and made implicit reference to regulatory matters, but it was the World Bank that most visibly stressed the need for regulatory issues to be one of the main axes around which the Summit agenda should be organised. Full story and links at: http://regulateonline.org/news/prepcom1.htm -------------------- -------------------- Summer reading Two new books have appeared in the last few weeks with significant contributions from WDR staff. WDR researchers Rohan Samarajiva and Amy Mahan are co-editors, with Robin Mansell of the London School of Economics, of Networking Knowledge for Information Societies: Institutions and Interventions. Amy Mahan also collaborated with Bruce Girard (editor of the e-Brief and director of WDR’s internet strategy) and Seán Ó Siochrú on Global Media Governance. Networking Knowledge for Information Societies: Institutions and Interventions http://www.comunica.org/netknowledge/ Global Media Governance http://www.comunica.org/gmg/ -------------------- -------------------- Lack of clear-cut regulation hampering competition in India 26 June 2002 – According to a Business Standard report, out of 48 telecommunications licenses issued by the government in the past year, only seven licensees have begun to offer services. This is due to a lack of clear-cut regulations in critical areas like interconnection. The Ministry of Communications can claim credit for quick implementation of the objectives laid out in the New Telecom Policy of 1999, including competition in long-distance, Internet telephony, introducing fourth cellular operators and allowing unrestricted entry in basic telephony. However, much regulatory work remains to be done before customers see the benefits of competition. For instance, the fourth cellular operators were not given frequency spectrum until last month, almost ten months after licenses were awarded. Even now, companies like Idea Cellular have not been allocated spectrum in Delhi. Sanjeev Aga, chief executive officer of Idea Cellular, said: "We were planning to launch services in Delhi by June. But since the spectrum has not yet been allocated to us by the government, we are not certain when we can foray into the Delhi market." http://regulateonline.org/intelecon/A-India-020626.htm -------------------- -------------------- Questions and support If you have questions about WDR, send them to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it For technical matters, contact us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or see the Frequently Asked Questions section in the Online Dialogue. http://www.regulateonline.org/dialogue/ -------------------- -------------------- Subscribing and unsubscribing The WDR e-Brief is a bi-weekly bulletin from the World Dialogue on Regulation for Network Economies - http://www.regulateonline.org. Subscribe from the site or by sending a message to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it with the subject wdr e-brief list . To unsubscribe, send a message to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it -------------------- -------------------- Bruce Girard This e-mail address is being protected from spam bots, you need JavaScript enabled to view it edits the e-Brief with assistance from Divakar Goswami. Archives: http://www.comunica.org/w-agora/index.php?bn=wdr_ebrief -------------------- -------------------- The purpose of the World Dialogue on Regulation is to critically examine ideas and evidence. Unless otherwise indicated, the views expressed in content appearing on the WDR website, the Online Dialogue and the WDR e-Brief are the personal views of the individuals submitting them. Content does necessarily reflect the views of LIRNE.NET, infoDev, the World Bank, the International Telecommunication Union or any other organisation associated with the World Dialogue on Regulation. -------------------- -------------------- World Dialogue on Regulation c/o LIRNE.NET Technical University of Denmark Center for Tele-Information, Building 371 2800 Kgs. Lyngby, DENMARK Email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it Phone: +45 4587 1577 - Fax: +45 4596 3171 http://www.regulateonline.org -------------------- |
