GIPI | Telecommunications "Liberalization"

An important step for countries seeking to promote the development of the Internet is to privatize their state telephone monopoly and introduce competition in telephone services, in order to attract investment, spur infrastructure improvements and drive down prices. The process of privatizations requires countries to set up a regulatory authority to address issues like competition, interconnection, and pricing.

Overview

There are lots of documents (free online, but usually in English) that either describe the process as a "case study" or are designed to give guidance to policymakers. Here are some pointers:

A good place to start is a short paper published by the World Bank: "Telecommunications Reform: How To Succeed" (1997) by Bjorn Wellenius. http://www.worldbank.org/html/fpd/notes/130/130summary.html
World Bank, Telecommunications Regulation Handbook - perhaps the best summary available - in PDF, six modules:
- Overview of Telecommunications Regulation
- Licensing Telecommunications Services
- Interconnection
- Price Regulation
- Competition Policy
- Universal Service
http://www.infodev.org/projects/314regulationhandbook/
OECD, Telecommunications Regulations: Institutional Structures and Responsibilities http://www.olis.oecd.org/olis/1999doc.nsf/LinkTo/DSTI-ICCP-TISP(99)15-FINAL (25 May 2000)
Regulation and Internet Use in Developing Countries, [pdf] by Scott Wallsten - using data from a unique new survey of telecommunications regulators and other sources to measure the effects of regulation in Internet development, finds regulation strongly correlated with lower Internet penetration and higher Internet access charges. More specifically, controlling for various factors, countries that require formal regulatory approval for Internet service providers (ISPs) to begin operations have fewer Internet users and Internet hosts than countries that do not require such approval. Moreover, countries that regulate ISP final-user prices have higher Internet access prices than countries that do not have such regulations. May 2003.
Telecom Privatization And Liberalization, [pdf] by William B. Garrison, ICT Program Director, The Kenan Institute of Private Enterprise.
The international trade agreement on services (the GATS) covers telecommunications and has been a major impetus for telecommunications reform. The basic principles are outlined in the WTO Annex on telecommunications: http://www.wto.org/english/tratop_e/serv_e/12-tel_e.htm (1997) and the WTO principles on the regulatory framework for basic telecommunications regulation http://www.wto.org/english/news_e/pres97_e/refpap-e.htm (1996)
A longer overview is "The WTO Agreement and Telecommunications Policy Reforms" by Peter Cowhey and Mikhail Klimenko (1999). http://www1.worldbank.org/wbiep/trade/papers_2000/bptelcom.pdf It's written for economists, but includes good descriptions of how telecom competition was successfully introduced in the Czech Republic, Hungary and Poland.
Other papers can be found at the "World Dialogue on Regulation for Network Economy," and at the site of LIRNE.net, Learning Initiatives on Reforms for Network Economies, especially at http://lirnet.net/training/resources.htm.
"Does Sequencing Matter? Regulation and Privatization in Telecommunications Reform" by Scott Wallsten, World Bank (February 2002) http://www.worldbank.org/wbi/B-SPAN/docs/sequencing.pdf An empirical analysis of whether it is better to privatize a state-owned telephone system BEFORE or AFTER creating an independent agency to regulate telecoms. A review of data gathered from dozens of countries during the past decade shows that it is clearly much better to create the agency before privatizing.
"An assessment of telecommunications reform in developing countries," [pdf] by Randeep Rathindran, Carsten Fink, and Aaditya Mattoo (World Bank October 2002) The authors find that both privatization and competition lead to significant improvements in performance. But a comprehensive reform program, involving both policies and the support of an independent regulator, produced the largest gains. Also, the sequence of reform matters: mainline penetration is lower if competition is introduced after privatization, rather than at the same time.
ITU, Best Practice Guidelines for the Promotion of Low-Cost Broadband and Internet Access (Dec 2004)

European Union Telecommunications Policy

Through a series of directives, the EU has spelled out rules for implementing the principles of competition, interoperability, technology neutrality and universal service in electronic communications, including telecommunications. Taken together, the EU's directives provide a roadmap for telecommunications "liberalization."

The regulatory framework was updated by the EU in March 2002. By 24 July 2003, all Member States of the EU must adapt national legislation implementing the new Directives. (Note: This does not include the Data Protection Directive which, as of April 2002, was still subject to negotiation between the European Parliament and the Council.)

The new directives are intended to provide a coherent and flexible approach to the regulation of electronic communication networks and services. The new policy framework takes account of the convergence of telecommunications, broadcasting and IT sectors and reinforces competition in all market segments. The proposals provide a lighter regulatory touch where markets have become more competitive yet ensure that a minimum of services are available to all users at an affordable price and that the basic rights of consumers are protected. This framework does not cover the content of services delivered over electronic communications networks using electronic communications services, such as broadcasting content, financial services and certain information society services.

The components of the EU electronic communications policy are:

Framework Directive - a common regulatory framework for electronic communications networks and services - addresses basic topics including the independence, procedures and transparency of national regulatory authorities, numbering, rights of way, co-location and facility sharing, and standardisation.
Access and Interconnection Directive - guidance for national regulators on how to ensure interoperability and competition - harmonizes the way in which Member States regulate access to, and interconnection of, electronic communications networks and associated facilities. The aim is to establish a regulatory framework for the relationships between suppliers of networks and services that will result in sustainable competition, interoperability of electronic communications services and consumer benefits. Defines obligation of non-discrimination.
Authorisation Directive - setting forth the rule that, except with respect to radio frequencies and numbers, the provision of electronic communications networks or services may only be subject to a general authorisation. An undertaking may be required to submit a notification, but may not be required to obtain an explicit decision or individual license or any other administrative act by the national regulatory authority before exercising the rights stemming from the authorisation. Upon notification, an undertaking may begin activity.
Universal Service Directive - the aim of this Directive is to ensure the availability throughout the Community of good quality publicly available services through effective competition and choice and to deal with circumstances in which the needs of end-users are not satisfactorily met by the market. Establishes the rights of end-users and the corresponding obligations on service providers. Defines the minimum set of services of specified quality to which all end-users have access, at an affordable price.
Regulation on Unbundled Access to the Local Loop (2000) -- gives national regulators detailed guidance on how to give new entrants access to the copper wire "local loop" of the former monopoly service provider.
Consolidated Directive on Competition in the market for communications services - addresses enabling the competitive provision of a full range of electronic communications services, including broadband multimedia and high-speed Internet
Data Protection Directive for the telecommunications sector - addresses the processing of personal data and the protection of privacy in the electronic communications sector

The EU regulatory framework can be found at: http://europa.eu.int/information_society/topics/telecoms/regulatory/new_rf/index_en.htm [Note - works in MS Internet Explorer only, not Netscape Navigator.]

Another important EU Directive is the Cable TV Directive 95/51/EC, which calls for abolition of restrictions on use of cable television networks for the provision of telecommunications services.

The main page for the EU laws and regulations dealing with telecommunications and information technology, including radio spectrum, mobile, and satellite communications is http://europa.eu.int/information_society/topics/telecoms/index_en.htm. See also http://europa.eu.int/comm/competition/liberalization/legislation/#telecom for another compilation of telecommunications liberalization policy documents.

The EU's 1998 telecom regulatory package (which will be in force until July 24, 2003) is available at http://europa.eu.int/information_society/topics/telecoms/regulatory/98_regpack/index_en.htm.

For an example, of how EU policy is being implemented in a specific country, see the overview of telecommunications regulation in Germany issued by the regulatory authority there.

United States Internet Policy

In 1997, the staff of the Federal Communications Commission issued a Working Paper entitled Digital Tornado: The Internet and Telecommunications Policy. "Digital Tornado" represented the first comprehensive assessment of the questions the Internet poses for traditional communications policy. A central theme running through the paper is that the FCC, and other government agencies, should limit regulation of Internet services. The paper states: "Because it is not tied to traditional models or regulatory environments, the Internet holds the potential to dramatically change the communications landscape. The Internet creates new forms of competition, valuable services for end users, and benefits to the economy. Government policy approaches toward the Internet should therefore start from two premises: avoid unnecessary regulation, and question the applicability of traditional rules." http://www.fcc.gov/Bureaus/Wireless/OPP/working_papers/oppwp29pdf.html

Interconnection

A necessary condition for effective competition is that new entrants have access to the incumbent's networks, on terms and conditions that are fair, non-discriminatory, and transparent. This is the concept of "interconnection." More

VoIP

The Internet, and the packet technologies upon which it is based, offer many new opportunities for expanding access to communication services. One of these is the use of the Internet Protocol (IP) to carry voice communications. VoIP can be especially important in developing countries where monopolized long distance service is too expensive for many users. In some countries, regulation of VoIP has hindered its deployment. These resources address the regulatory issues around VoIP:

GIPI Best Practices Paper, "Voice-over-IP: The Future of Communications," [pdf] April 29, 2002. This memo reviews arguments as to why regulators should adopt policies that promote - or at least do not impede -- the role of IP networks in the future of communications.
Influence of Liberalization of IP Telephony on the Telecommunications Market, [pdf], a PowerPoint presentation by Robert Horvitz, GIPI Manager, Central/Eastern Europe, Communications Regulatory Authority Symposium, 31 October 2002, Sarajevo
GIPI submission in response to the Indian regulatory authority's Consultation Paper on Internet Telephony, December 20, 2001 [pdf]. In this submission to the Telecom Regulatory Authority of India (TRAI), GIPI emphasized the importance of allowing all service providers to offer Internet telephony without further licensing so as to increase competition in the telecom sector and make telecom services available to the masses at affordable rates, as envisioned in the National Telecom Policy of 1999.
TRAI (India) recommendations on VoIP [pdf], February 20, 2002
OFTEL (Office of Telecommunciations -UK) "Frequently asked questions on the regulation of Voice over Internet Protocol services," 2 April 2002 [pdf]
Final Report - IP Based Networks: Pricing of Telecommunications Services, ITU Telecommunication Development Bureau Market, Economic and Finance Unit (2002)

Universal Service

"Universal Access and Services in Central/Eastern Europe," ITU seminar, Bratislava, Slovakia, 2002. The papers and Powerpoints prepared for the seminar are downloadable from http://www.itu.int/ITU-D/treg/Events/Seminar/Bratislava/documents.html

International and Regional Traffic

Global International Internet Capacity [pdf] - Marilyn Cade, AT&T, April 2003 - detailed PowerPoint presentation examining regional and global changes in Internet traffic flow. Notes that US is no longer the Internet switching hub for the world. Concludes that the key to local and regional telecom/Internet development is open, competitive markets.

Resources

Capacity Enhancement at the Institutional Level: Three Case Studies in Telecommunications [pdf] (World Bank) - Experience in telecom reform in Mali, Mauritania, and Morocco provides insights into the opportunities and constraints countries face in implementing reforms; proposes a three-way framework for analyzing needs and planning capacity enhancement assistance.