3.6.1 Diversification of participation
- The overall purpose of the new regulatory paradigm must be to open as many paths to network development as possible and resist attempts to control or restrain these developments unless there is clear evidence of harm to the public interest, a relatively rare circumstance. This implies promoting the diverse range of different business models and organizational forms. Telecom has traditionally been dominated by large companies benefiting from economies of scale and scope in single networks. These kinds of players will continue to play important roles in the area, but regulation should also seek to promote other organizational forms, including alternative operators, and more demand-led initiatives, such as end-user organized networks. New technologiesnow permit many diverse participants to be part of expanded networks where the full economies of scale and scope can still be realized.
- Among the different areas of regulation, universal service/access stands out as the central issue in present regulatory developments in developing countries. This does not mean that other regulatory issues are less important. Interconnection is of crucial importance and so is the management of limited resources. Rather, it means that the different regulatory issues should all be guided by the aim of increasing access.
- Technology leapfrogging involves the technical aspects of implementing new technologies in existing technological environments; it involves the economic, including financial aspects, the power and broader social interests related to existing and new technology systems, and involves a wide range of other socio-economic factors. The prospects of technology leapfrogging in the ICT area seem relatively good in relation to backbone infrastructures as well as access infrastructures and the services delivered, for instance the fast growth of mobile telephony in comparison with fixed line telephony in many developing nations. The overall recommendation is to take advantage of such potentials for technology leapfrogging by developing a regulatory framework that favors an open technology environment and technology change. Successful technology leapfrogging requires open markets and credible regulation. Without institutional change there can be no real progress with technological leapfrogging.
- Infrastructure and/or service competition has become an important issue. The background is that infrastructure- or facility-based competition is often seen as more sustainable than service-based competition, where alternative operators competing with the incumbents have to rely on the infrastructure elements provided by incumbents. The best policy, however, is to support all kinds of competitive strategies. Instead of viewing service- and infrastructure-based competition as alternative policy options, an optimal policy is to consider them as complements. The reason is that infrastructure and service markets partly are different market segments with different market players.
- It is important to implement the basic principle of cost based regulation, without adopting the complex and costly methods, such as LRIC, employed in some of the large developed countries. Knowledge of cost characteristics and benchmarks will facilitate the establishment of reasonable retail as well as wholesale prices, which will encourage competition and network investment. Furthermore, cost based regulation can also be used as a tool for promoting technology changes. Knowledge of the costs of different technology solutions can be used to shape regulations so that market players have incentives to take up new technology solutions.
- In developing countries, the problems of quality of service (QoS) are among the biggest issues in telecom. Often quality is poor on all parameters. This applies to the PSTN technology and also applies to Internet technology. The areas where regulation can have a role to play are in connection with service level agreements (SLAs) in relation to interconnection between dominant market players and competitors. Furthermore, QoS for end-users can be secured by way of regulatory provisions. Users will often experience that the QoS does not correspond to the promises made, for instance with respect to transmission speed or the quality of VoIP services. There are, however, good reasons to hesitate with respect to strict regulatory interventions in the field of QoS on the Internet. One reason is the very dynamic character of the Internet and the continuously changing technology solutions used. Another reason is that the Internet-environment mostly is competitive, and that regulatory intervention, accordingly, should be light-handed.
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