World Dialogue on Regulation

The most recent number of Regulatel’s online magazine, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , is dedicated to discussions of convergence issues in the region. What frameworks, models or fundamentals can regulators draw upon to inform a transition to convergence regulation? The different articles in this number offer perspectives on this challenge.

Why is the transition to convergence regulation such a challenge for the region? Julián Sesena and Diego Soro provide a schematic of an ideal regulatory scenario, for which there is a progression from addressing underdeveloped infrastructure by creating favourable conditions for investment in the sector, to balancing investment and development of competition in all sectors of the market, and finally arriving at mature market conditions for which the benefits of competition are extended to end-users.

Simply put, the luxury of such a progression has not been possible for Latin America. Sesena and Soro, for example, observe that US and EU liberalization was undertaken with conditions of 35-40 lines per 100 inhabitants (and household penetration at 80-90 percent); whereas for Latin American markets, liberalisation occurred with teledensities hovering around 7-10 percent (and household penetration on average falling between 20-40 percent). These are radically different regulatory conditions, and differences persist with the advent of convergence – both between regions, and within them. Further, as noted by Lenin Manuel López,  competition (especially for local telecom markets) has already taken so long to establish, that the future looks to be a continuation of asymmetrical regulation rather than convergence regulation. Universal service goals have been undertaken alongside creating conditions for competition and now alongside rapid technological change which creates new opportunities (both for USOs and markets) – but increasingly while undermining the revenue base of (especially incumbent) fixed line operators under current regulatory conditions and market structures.   

Thus, while Latin American telecom sectors are still catching up – particularly for fixed line infrastructure roll-out, technologies are evolving and bringing new services which challenge current market models and scenarios. Luis Borges comments that the market model of the past five years will no longer be applicable in the next five years. Regulatory regimes will have to adapt and respond to spectrum allocation, interconnection, and security and privacy issues – and ultimately will have to commit issues such as to network neutrality and ex post competition regulation. Osiris Sosa, begins with a definitional framework, outlining the different forms and manifestations of convergence across different domains: convergence of services, infrastructure convergence, telematic convergence and technological convergence – all of which have a distinct set of implications for markets and their regulation.

An article from Motorola representatives, Luis Lara and Mario Ocampo, provides a view onto the private sector’s aspirations for the future market and the supporting regulatory environment that will enable users to benefit from new services. Most of the article reads like advertising copy, exclaiming the benefits of Seamless Mobility. And indeed, many of the applications described are what we working towards achieving for users in an information society. But, given the new regulatory framework envisioned by the Lara and Ocampo, only a small portion of the population will actually be extended these services, as the ideal Motorola regulatory conditions presume a mature market scenario and don’t take into account how to reach what will result in a largely untapped market. The Motorola contribution of the vision of Seamless Mobility in contrast to the other articles in this number of This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   illustrates how such opportunities need to be framed in terms of overarching Information Society policies and corresponding regulation to support these.

As illustrated in particular in the study by César Cancho and Kristian López, Affordability analysis of public telecom services in Peru, there are still massive disparities in the region of reach of telecom services and their work assesses ability to pay for services, in terms of an analysis of how to extend infrastructure reach beyond the capital to underserved rural areas and other urban centres. For Peru, there are large disparities not only between rural and urban centres, but also between infrastructure access in Lima and other urban centres. The conclusion to this study points to a real access gap, rather than market failure and hence the need for a focus on subsidies to achieve universal access goals.

Another area of focus is on the need for increased regulatory harmonisation across regions. Victor Mulas describes the benefits of this for the different stakeholders. Operators would be able to seamlessly offer their services across countries ascribing to a common regional framework, thus more easily increasing their market. Likewise, equipment providers would be able to reduce their costs in supplying to a regional rather than segmented market. Benefits from these economies of scale would be passed on to consumers in terms of lower prices and a wider range of services and applications. And finally, regulators will benefit from working under the auspices of a common framework, allowing for sharing of expertise and experience, and in providing coordinated responses to new developments. Another example of convergence regulation concerns licence reform allowing for single licensing for service provision across platforms (such reform in different forms has begun in Argentina, Guatemala and Peru). Drawing on the EU experience as an example, Mulas goes on to caution that regional harmonisation will be difficult to achieve without a supranational framework with enforcement mechanisms.

Many of the articles look to the EU as a reference point for harmonising regulation across different countries (and curiously, only one author references ELAC 2007). There is a tension in this focus. Evolving technology and emerging services are largely being developed by the private sector in mature market conditions. Thus, we look to markets where these technologies and services are now available for guidance on how to regulate them, and we also look to these markets as they exemplify where we want to end up. But, because of disparities in actual conditions, regulators are faced with discerning which elements are most essential for the region.

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This e-mail address is being protected from spam bots, you need JavaScript enabled to view it  - Number 6 - Contents

Hacia la Convergencia Tecnológica. Retos en la Regulation
Luis Borges, Telefónica de España

Análisis de la Capacidad de Pago por Servicios Públicos de Telecomunicaciones en el Perú
César Cancho, Texas A&M University and Kristian López, Pontificia Universidad Católica del Perú

“Seamless Mobility”: La Visión de Motorola sobre la Convergencia Tecnológica y Retos Regulatorios
Luis Lara and Mario Ocampo – Motorola de México

La Complejidad de la Armonización entre la Convergencia y la Regulación
Lenin Manuel López, INDOTEL

Hacia la Convergencia: Importancia de una Armonización Regulatoria
Victor Mulas, Telecommunications Management Group, Inc.

Regulación y Banda Ancha
Julián Sesena and Diego Soro – ROSE, España

Marco Regulatorio en las Redes Convergentes
Osiris Sosa, INDOTEL