Building the Regulatory Foundations for Development in

Network Economies

Professor William H. MelodyManaging Director

LIRNE.NET www.lirne.net

First ICT Policy and Regulatory Workshop

COMESANairobi, Kenya, 13 –16 August 2002

Characteristics of 21st 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

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 Societies

• Telecom Reform & Regulation – Key Driver for

Implementing Policy Reforms

INFORMATION INFRASTRUCTURE

Regional Development

Finance/ Banking

Disaster Management

Travel & Tourism ManufacturingMedia & Cultural Sectors

Health/Medical Government Services Education/Training

Applications

Electronic Services(Pay TV, VAS, Internet)

Multimedia, etc.(Public, User group, Private)

ContentBroadcast

MediaFilm

LibrariesSoftware

etc

Interactivity(Instant & Delayed)

VoiceData

SoundGraphics

VideoTelecommunication

Facilities Network(Information Superhighway)

Computing / Information Technology

Telecommunication Equipment Manufacturing

Equipment Supply

TelecomInfrastructure

ServiceDevelopment

Competitive Markets

Monopoly/duopoly/oligopoly Competitive Markets

Internet

VAS

Databases

NetworkManagement

TelecomEquipment

ComputerHardware

Software

ConsumerElectronics

PTOs

The telecom sector value chain

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

Criteria for Economic Growth

Technologies

Policies

Markets

Applications Services

Regulations

Regulation: Catalyst for, or Constraint upon Growth?

Progress with Telecom Reform

• Now more than 110 Countries with Separate Telecom Regulatory Authorities

• WTO Commitments to Liberalization• Industry Specific Focus of Reforms• Successes, Failures, Unanticipated

Difficulties, Continuing Delays• Regulatory Reform is Proceeding at a Slower

Pace than Technology Development or Market and Service Potential

Progress with Telecom Reform

• Regulation is the limiting factor constraining growth• It is not a simple matter of removing regulations or

eliminating regulators• Sound regulatory foundations are needed to attract

investment, foster applications of new technologies and development of new services.

• The speed of regulatory reforms must increase and they must be directed to providing a foundation for Network Economies

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

World Dialogue on Regulation for Network Economies

Project Initiator:• infoDev (World Bank)Foundation Partners:• infoDev • LIRNE.NET Universities (TU Delft; TU Denmark)• ITU Telecommunication Development Bureau

(BDT)• Ford Foundation and US SSRC• Others

World Dialogue on Regulation for Network Economies

Core Tasks:• Dialogue on Interactive Web Site,

www.regulateonline.org • Country Case Studies & Research

Reports• Forum Discussions among Experts• Wide Dissemination in Print & Electronic

Form

World Dialogue on Regulation for Network Economies

Dialogue Theme 2001-2002:

• The Next Step in Telecom Reform:

ICT Convergence Regulation or

Multi-sector Utility Regulation ?

World Dialogue Theme 2001-02

ICT Convergence• digitalization of the network• mobility• next generation Internet• e-commerce• media integration• restructuring of industries

World Dialogue Theme 2001-02

ICT Convergence Regulation

• access to communication channels and access to content

• new issues of competition and monopoly• privacy, security, IPR• reducing digital divides?• can content regulation be avoided ?• the most effective role for national telecom

regulators ?

World Dialogue Theme 2001-02

Multi-sector Utilities

• mergers across utilities• telecom, cable TV, electricity, gas, water,

transport• rights of way, duct sharing & co-location • universal billing• common management skills

World Dialogue Theme 2001-02

Multi-sector Utility Regulation

• to match the operators• efficiency across common functions• wider application of limited skills• independence from dominant firms?• technological convergence – power line

communication• other?

World Dialogue Theme 2001-02

The Next Step in Telecom Reform ?• Defining and Implementing Regulation to

Facilitate Growth in Network Economies• Establishing the Options, Priorities and

Boundaries of Regulation• Shaping the Most Effective Role for

Competition• Determining a New Role for Regional

Regulation

World Dialogue Theme 2001-02

The Next Step in Telecom Reform?

• The Challenge: Creating regulation that leads rather than lags technology and market developments, providing a catalyst for growth in network economies?

World Dialogue on Regulation for Network Economies

• Participate in the Dialogue; review and comment on the research, www.regulateonline.org - from 3 January 2002

• For more information contact Merete Henriksen, WDR Coordinator, henriksen@lirne.net Tel. + 45 4525 5178; Fax + 45 4596 3171

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), Technical University of Denmark, www.cti.dtu.dk

• Economics of Infrastructures, Delft University of Technology, Netherlands, www.ei.tbm.tudelft.nl/

William H. Melody

• BS, MS, PhD, D. Eng.(hon)

• Managing Director, LIRNE.NET

• Professor, Economics of Infrastructures, Delft University of Technology, The Netherlands

• Guest Professor, Center for Tele-Information (CTI), Technical University of Denmark

• Visiting Professor, London School of Economics, United Kingdom

• Visiting Professor, LINK Centre, Wits University, Johannesburg, South Africa

• Contact: email: melody@lirne.net