International Insights – January 2009
An Update on Global Communications Issues
Hard Times ahead?
The challenging economic climate continues to be a good news/bad news story for the telecommunications industry. Recession reduces demand by some companies, whilst other businesses fail. This lowers revenue for service providers, who also find access to capital for investment difficult.
However, other companies see telecommunications as an opportunity to transform their business processes, to go “virtual”, and to seek to cut their overall business costs by investing in new communications services. The critical issue now is to secure competitive equal access to wholesale broadband services in Next Generation Access Networks (NGN/NGA) to allow service-based competition to flourish.
Regulation should be for the benefit of the economy as a whole, not just the balance sheets of the telecommunications incumbents.
INTUG’s report on NGN and NGA can be found at INTUG NGN/NGA Report and the submission to the European Commission can be found at INTUG response to Commission Consultation.
United States: Remaking American Communications?
With the inauguration of a new US President, committed to “Remaking America”, INTUG members participated in providing expert input to the Barack Obama transition team, as they examined how federal telecommunications infrastructure investment could generate economic recovery. Strong emphasis was placed on creating an open architecture which fostered more competition than that achieved by the old 1996 Telecommunications Act.
The input included advice on how to optimize the efficiency of investment in national fiber to the business and home, and the dangers of creating duopolies by forcing infrastructure competition at the expense of service-based competition.
Europe: The EU Framework Review – the final challenges
The much delayed and drawn out debate on the EU Framework review is now in its final stages. It is hoped that the “trilogue” discussions between the European Parliament, the Council of Ministers and the European Commission, under the Czech Presidency, will achieve second reading approval in the European Parliament by June, when Parliament is dissolved and elections are held. The timetable is very compressed, risking damaging compromises as a result. There is a political desire to force infrastructure competition.
The Council of Ministers agreed a revised text unanimously on November 27 (with the UK, Sweden and the Netherlands abstaining). This is now being subjected to further attempts by the European Parliament and some Member State ministries, to re-introduce previously rejected text. This is to defend the interests of incumbent operators, for example to save unionised jobs, at the behest of their controlling Governments.
Renewed attempts are being made to force “risk-sharing”, with competitive operators part-funding investment and/or signing long-term usage contracts. Geographic segmentation, in which sub-national areas are deregulated, is being encouraged, although irrelevant to multi-site businesses.
INTUG submitted a comment on the European Regulators Group 2009 work plan, jointly with the European Competitive Telecommunications Association (ECTA) and with INTUG member EVUA. This can be found at ERG Work Plan Comment.
International Roaming Charges
INTUG spoke at a European Parliament Roaming II hearing in early January, in support of the recommendation to extend price caps to text and data, and to continue reducing the caps until 2013. The GSM Association, large mobile operators, and some MEPs remain opposed. The mobile data cap is likely to be measured in kilobytes, not Megabytes (a self inflicted lesson learnt by the mobile operators who changed the metering intervals on voice to negate the voice roaming cap).
Radical reductions must be made in time for the 2012 Olympics in London! Text roaming adds very little incremental cost but considerable revenue and profit for operators. Commissioner Reding said regulation would have to continue until the mobile industry showed evidence that it was internationally competitive. She said their behavior following the Roaming I regulation demonstrated that it is not.
Fixed and Mobile Termination Rates
Most observers now support the Recommendation to reduce these, since they stifle growth in the industry and for users. The transition effect on smaller service providers suggests caution (an “asymmetric glide path”). As with roaming, there is a mindset that services are not price sensitive, and that higher volumes will not compensate for lower rates. There is some evidence from the European Regulators Group (ERG) to suggest that this is not the case, and that volumes do increase with lower prices.
INTUG Affairs – Global Reach
INTUG already holds permanent observer status at the ITU and was granted expert participant status at the OECD in December. This gives INTUG and its members an insight into the work of OECD and an opportunity to contribute to their policy making. To ensure the widest possible reach of contacts, INTUG also has a Memorandum of Understanding with the Commonwealth Telecommunications Organisation (CTO).
INTUG’s one day conference on “Broadband for All” in Rome in December, was very successful. There was a good attendance for the more internal INTUG discussions on a second day, which included fascinating reports on telecommunications progress in the developing world, and survey results on mobile and unified communications.
INTUG will be actively representing its stakeholders in a number of global events during 2009, presenting papers and acting as expert delegates, including at:
- OECD, Paris, 15-16 June and 7-8 December
- APECTEL, Singapore, 13-18 April and Mexico, 19-23 October
- Telecom World, Geneva, 5-9 October
There are two INTUG conferences/meetings arranged for 2009:
- Brussels, Tuesday/Wednesday, 19-20 May
- Paris, Wednesday/Thursday 9-10 December
All members of INTUG members are entitled to attend.
This newsletter was coordinated by Nick White, Executive Vice President, INTUG
