Convergence and next generation regulation
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1 Convergence and next generation regulation Dr. Alison Gillwald Adjunct Professor, University of Cape Town Management of Infrastructure Reform & Regulation Namibia Polytechnic ICTPRR, 2012
2 Convergence?...technological, market or legal/regulatory capability to integrate across previously separated technologies, markets or politically defined industry structures. Convergence also involves an important international component, as many services and information sources that were traditionally controlled on a domestic level are being provided on a global basis. ITU (1999) Trends in Telecommunication Reform: Convergence and Regulation, Geneva, p.2
3 Digitsation & efficiency processes of compression and decompression of digital bits explain the technological efficiency inherent in convergence. allows for use of less bandwidth and the freeing up of greater parts of the medium for the transmission of increased bits. because with digital compression smaller bits are being transmitted, money is saved.
4 Technological and economic convergence Divergent customer perception and behaviour Fixed telephony Mobile telephony Broadcasting Internet Source: David Souter, CRASA, 2009
5 Convergence Sectors Computing Content Telecom Drivers of Convergence Technology Industry-Supply Market-Demand Policies/Regulation Industry Specific Convergent Applications Finance Commerce Education Health Publishing Manufacturing etc.
6 Convergence or divergence? In addition for historical and circumstantial reasons, convergence is uneven, globally, nationally and within national ICT sectors. Currently there appears to be far more convergence between the traditionally distinct areas of telecommunications, IT, broadcasting and other media at the top end of the value chain where content production occurs. Convergence at the distribution level is most evident between broadcasting and telecommunications. Less investment in duplicate infrastructure frees capital for customer support, applications and content development and delivers greater dividends for further investment.
7 Figure 2: Convergence / integration and divergence / disintegration IT Telecom Broadcasting Other media Content/ services Software based content Telecom based services and content Broadcast programs Film, music, newspapers, etc. Transport/ software Generic software Network services Transmission Cinemas, video rentals, etc. Equipment/ hardware Hardware Telecom equipment Broadcast equipment Reproduction of films, printing, etc. Source: Henten, Falch and Tadoyini (2000) at 4
8 Technological convergence services sector restructuring enable by digitalisation. It is the transition between two structural models for service delivery. The traditional model is dominated by analog or physical technologies favouring mass production, domestic market focus, and vertically and horizontally integrated corporate structures. Conversely, the new service delivery model uses digital programmable networks that favour mass customization, an international market focus and vertical separation between the services the users see and the underlying delivery platform. Australian Convergence Review (2000) p3 at So traditionally the market structure has been vertically integrated, convergence drives and is stimulated by a structural separation between vertical layers: infrastructure, connectivity and applications and content
9 Technological convergence 2 telecommunications utility traditional vertically integrated between customers equipment, services and infrastructure Broadcasting traditionally integrated distribution of content and in subscription broadcasting been extended to customer equipment. Disintegration of these to some degree through where use across platform but not uniform or even - traditional broadcasting transmission permits massive download speeds but no return path. Telco, much slower but return path Challenges especially in last mile.
10 Market convergence convergence of content production is related to service conv convergence provision of news content across newspapers and, or television and on provision content of development news content across across different newspapers platforms and, however or television not straig and medium. on a website and services such as Internet offered over telecom networks or over DVB networks. convergence of services and content means that there is likely to be content development across different platforms however is not straight-forward and in order to be competitive requires extensive adaptation to the medium. convergence of services and content means that there is likely to be greater competition, providing consumers with greater choice on price and quality between services offered across different platforms. a convergence in equipment production is related to
11 Market convergence 2 convergence of distribution is related to network convergence Convergence of distribution and transmission between broadcasting and telecommunications is perhaps best evidenced in the cable network. Although many equipment producers have historically provided services across the different sectors both in production and consumer equipment, there is increasing evidence of convergence of equipment, especially end user terminals, the most advanced of which provide for multipurpose usage from Internet access to video storage
12 Figure 3 - ICT INFRASTRUCTURE for the E-economy 13 Finance/ Banking Travel & Tourism Health/Medical Regional Development Manufacturing Government Services Disaster Management Media & Cultural Sectors Education/ Training Content Broadcast Media Film Libraries Software etc Applications Electronic Services (Pay TV, VAS, Internet) Multimedia, etc. (Public, User group, Private) Telecommunication Facilities Network (Broadband Sup erhighway) Interactivity (Instant & Delayed) Voice Data Sound Graphics Video Computing / Information Technology Telecommun ication Equipment Manufacturing
13 Infostructure required for e- economy Expansion of the bandwidth capacity in national and international networks to reduce unit networking costs and provide for high capacity services; Expansion of bandwidth for local connections to business and residence users to facilitate the increasing demands for high-speed services. Internet services development which helps stimulate demand for new next generation Internet services Development of innovative applications of new internet services throughout the economy and society to business, government, education entertainment etc. Melody,W (2002) World Telecommunications Markets: International Handbook of Telecommunications Economics, Vol
14 Regulation in age of convergence Convergence has been a major driver of the merger of traditionally distinct regulatory institutions into single regulatory agencies. In some cases this has involved simply the physical merger of staff into a single onestop shop for industry. In other case it is taking longer and involves the complete overhaul of policy and legislative arrangements for a converged environment. From a regulatory perspective, the higher the possibility of substitution of activity, the greater the likelihood that the term industry will be used over sector.
15 25 Preparing South Africa for Next Generation Networks, Services and Regulation Horizontal licensing The regulatory environment includes generic provisions arising from the legislation which apply to all activities which fall under the Act. Certain standard licence conditions apply to both individual and class licences. Certain further conditions will apply to all individual licensees, and certain licensees will have special conditions and undertakings relating to their licences. Source: Malaysian Communications and Multimedia Commission 2001 Malaysia has found that many service providers invest in similar infrastructure to provide commodity type services which result in cost inefficiencies which are passed on to customers and make the Less investment in duplicate infrastructure frees capital for customer support, applications
16 Institutional design - multi sector regulation Rationale for merging traditionally distinct communication sectors has been further extended to other traditional public utility areas with the concept of multi-sector regulation. This would result in a single agency that regulates multiple sectors of the economy such as telecommunications, energy, water and transportation. A number of justifications have been made in favour of the establishment of multi-sector regulators. The first is the existence of commonalities in the object of regulation. rights of way Sectors such as telecommunications, energy and transport all require rights of way. a common use of regulatory skills as well as economics of regulation. With the liberalisation of various sectors - including telecommunications - and with this a concomitant global increase in regulatory activity, regulatory skills are a scarce commodity. A multi-sector agency would have economies of scale in administrative and support services, as well as technical expertise. Reduces the risk of industry capture and political capture. This it is argued is because a regulator with responsibility for numerous sectors will be less likely to fall under the influence of a single line ministry.
17 This research is made possible through the support of
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