World Regulatory Trends and Challenges for Caspian and

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 - 1 st 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 K. Ponder can be contacted at Jaroslaw. Ponder@itu. int 25 May 2006 the opinions of the ITU. Jaroslaw. Ponder@itu. int

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

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 25 May 2006 Jaroslaw. Ponder@itu. int 3

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

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

Tele. Communication Sector in Transition • Meaning and character of communications § Voice, Video, Data, So. D • 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 2006 Jaroslaw. Ponder@itu. int § 25 May Technological neutrality becomes meaningful 6

Trends: ICT Sector • Migration to the IP-environment § Fixed telecommunications Incumbents: British Telecom, DT AG, KPN q Newcomers: Dialog, Metropolitan Networks Multi-facility competition q § Wireless communications Mobile telecommunications: from 2 G to 4 G q Wi. Fi, Wi. Max q § Cable TV § Broadcasting § Service and content providers Service compet. • Strengthened process of convergence § Technology § Market § Services § 25 May Institutional 2006 Regulatory Implications Jaroslaw. Ponder@itu. int FMC? 7

NGNs as a global issue Technical aspects ITU-T SG 13: Rec. Y. 2001 Europe Africa ITU NGN America Asia Challenges § Multimedia § Generalized mobility § Convergence § Integrity § Multi-layer orientation § Open character 25 May 2006 A NGN is a packet-based network able to provide telecommunication services and able to make use of multiple broadband, Qo. S-enabled broadband transport technologies and in which service-related functions are independent from underlying transport-related technologies. It technologies 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. FG NGN Jaroslaw. Ponder@itu. int SG: 11, 13, 19, 2, 16, 17 8

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 Europe Africa ITU NGN • Regulatory proceedings § National, Regional, International level Americas Study Group 1 Asia • Tariff policies, tariff models and methods of determining the costs of services on national telecommunication networks, including nextgeneration networks • Regulatory impact of next generation networks on interconnection http: //www. itu. int/osg/spu/ngn Jaroslaw. Ponder@itu. int 9 / 25 May 2006

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 25 May 2006 Jaroslaw. Ponder@itu. int 10

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, Vo. IP • OECD § Studies on IP related issues • WTO § First considerations on Agreement on Basic telecommunications • ITU § Global discussion / What rules on the IP-enabled NGNs? 25 May 2006) / Future. Jaroslaw. Ponder@itu. int 11 (March of Voice (January 2007)

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 25 May 2006 Jaroslaw. Ponder@itu. int 12

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

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 25 May 2006 Jaroslaw. Ponder@itu. int 14

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 25 May 2006 Jaroslaw. Ponder@itu. int 15

Customer interests protection • Universal service and access • Consumer emergency calls (E 112/E 911) • Consumer protection and privacy (e. g. SPAM, SPIM) • Quality of services • Authenticated caller or sender identification • Disability assistance • Data protection and privacy issues 25 May 2006 Jaroslaw. Ponder@itu. int 16

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

Conclusions • 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 25 May 2006 Jaroslaw. Ponder@itu. int regulations and ex post remedies 18

Conclusions • 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 • Regulatory policy should take into account the dynamic efficiencies to be achieved in the ICT sector • Balance between facility based competition and service based competition should 25 May 2006 be preserved Jaroslaw. Ponder@itu. int 19

Implications for the region • NGNs may develop much faster in countries with poor infrastructure • Regulatory 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! 25 May 2006 Jaroslaw. Ponder@itu. int 20

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

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

Digital Opportunity percentage of population covered by mobile cellular telephony internet users per 100 inhabitants ratio of broadband internet subscribers to internet subscribers mobile cellular tariffs as a percentage of per capita income internet access tariffs as a percentage of per capita income ratio of broadband mobile subscribers to mobile internet subscribers DOI proportion of households with a computer Proportion of households with fixed line telephone mobile cellular subscribers per 100 inhabitants Inf ras tru ctu 25 May 2006 re n tio za ili Ut Op po rtu ni ty Index mobile internet subscribers per 100 inhabitants proportion of households with Internet access at home Jaroslaw. Ponder@itu. int e r u ct u tr s ra f n I 23

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

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

DOI: In-depth analysis Opportunity Infrastructure Use DOI Rank Bulgaria 0. 96 0. 34 0. 22 0. 51 46 Romania 0. 93 0. 26 0. 20 0. 46 53 Turkey 0. 97 0. 30 0. 08 0. 45 58 Russia 0. 96 0. 25 0. 13 0. 45 60 Iran 0. 89 0. 16 0. 03 0. 36 95 Georgia 0. 92 0. 13 0. 39 84 Kazakhstan 0. 94 0. 17 0. 02 0. 38 89 Ukraine 0. 91 0. 17 0. 02 0. 37 93 Azerbaijan 0. 90 0. 15 0. 02 0. 36 99 Moldova 0. 68 0. 14 0. 07 0. 30 115 Turkmenistan 0. 72 0. 07 0. 00 0. 26 127 Kyrgyzstan 0. 55 0. 09 0. 01 0. 22 134 Armenia 0. 70 0. 15 0. 02 0. 29 120 Tajikistan 0. 53 0. 05 0. 01 0. 20 140 Czech Republic 0. 98 0. 42 0. 13 0. 51 43 Poland 25 May 2006 Hungary 0. 98 0. 52 39 26 34 0. 98 0. 39 0. 19 Jaroslaw. Ponder@itu. int 0. 43 0. 24 0. 55

DOI: Use Internet per 100 inhab. Fixed broadband to total Internet subs. Mobile broad-band to total mobile Bulgaria 0. 24 0. 42 0. 00 Romania 0. 21 0. 39 0. 00 Turkey 0. 09 0. 14 0. 00 Russia 0. 12 0. 27 0. 00 Iran 0. 07 0. 02 0. 00 Georgia 0. 04 0. 34 0. 00 Kazakhstan 0. 07 0. 00 Ukraine 0. 07 0. 00 Azerbaijan 0. 05 0. 00 Moldova 0. 09 0. 13 0. 00 Turkmenistan 0. 00 Kyrgyzstan 0. 03 0. 00 Armenia 0. 07 0. 00 Tajikistan 0. 01 0. 02 0. 00 Czech Rep. 0. 29 0. 08 0. 00 Poland 25 May 2006 Hungary 0. 22 0. 36 Jaroslaw. Ponder@itu. int 0. 49 0. 00 27

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

DOI: Opportunities Mobile population coverage Internet affordability Mobile affordability Bulgaria 0. 98 0. 97 0. 92 Romania 0. 97 0. 87 0. 96 Turkey 0. 96 0. 98 Russia 0. 95 0. 96 0. 98 Iran 0. 70 0. 99 0. 98 Georgia 0. 95 0. 89 0. 92 Kazakhstan 0. 94 0. 92 0. 97 Ukraine 0. 91 0. 93 0. 90 Azerbaijan 0. 97 0. 86 Moldova 0. 92 0. 58 0. 54 Turkmenistan 0. 50 0. 68 0. 98 Kyrgyzstan 0. 40 0. 57 0. 68 Armenia 0. 81 0. 43 0. 87 Tajikistan 0. 30 0. 47 0. 83 Czech Republic 0. 99 0. 98 Poland 25 May 2006 Hungary 0. 98 Jaroslaw. Ponder@itu. int 0. 98 0. 99 0. 98 29

DOI: Infrastructure % households with fixed line Mobile per 100 inhab. % households with Internet Mobile Internet per 100 inhab. Bulgaria 0. 83 0. 59 0. 10 0. 03 0. 15 Romania 0. 62 0. 47 0. 06 0. 04 0. 12 Turkey 0. 82 0. 51 0. 07 0. 01 0. 11 Russia 0. 60 0. 51 0. 05 0. 00 0. 11 Iran 0. 65 0. 06 0. 04 0. 00 0. 07 Georgia 0. 33 0. 23 0. 00 0. 06 Kazakhstan 0. 61 0. 16 0. 02 0. 00 0. 05 Ukraine 0. 53 0. 27 0. 01 0. 00 0. 03 Azerbaijan 0. 53 0. 18 0. 02 0. 00 0. 04 Moldova 0. 53 0. 14 0. 01 0. 03 Turkmenistan 0. 35 0. 00 0. 01 Kyrgyzstan 0. 33 0. 06 0. 01 0. 00 0. 04 Armenia 0. 67 0. 05 0. 02 0. 00 0. 02 Tajikistan 0. 20 0. 02 0. 00 0. 01 Czech Rep. 0. 62 1. 00 0. 19 0. 01 0. 30 Poland 25 May 2006 Hungary 0. 75 0. 60 0. 26 Jaroslaw. Ponder@itu. int 0. 86 0. 14 0. 01 0. 36 30 0. 33 0. 71 0. 09 % households with PC

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

Challenges • Progress in regulatory reform • Pro-competitive policy approach • Enabling regulatory environment § Infrastructure development, modernization… § Voice over Internet Protocol… • Mobile telecommunications § Dissemination of 2. 5 G / 2. 75 G / 3 G § Mobile Virtual Network Operators § Licensing: Emerging technologies 25 May 2006 Jaroslaw. Ponder@itu. int 32

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

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

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

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 25 May 2006 Jaroslaw. Ponder@itu. int 36

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

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