World Regulatory Trends and Challenges for Caspian and Black See Region

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

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

3. 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 Jaroslaw.Ponder@itu.int

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

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

6. TeleCommunication Sector in Transition • Meaning and character of communications • Voice, Video, Data, SoD • 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 • Technological neutrality becomes meaningful Jaroslaw.Ponder@itu.int

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

8. NGNs as a global issue Technical aspects ITU-T SG 13: Rec. Y.2001 A NGN is a packet-based network able to provide telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service-relatedfunctions are independent from underlying transport-related technologies. It 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. Challenges • Multimedia • Generalized mobility • Convergence • Integrity • Multi-layer orientation • Open character Europe Africa ITUNGN America Asia FG NGN Jaroslaw.Ponder@itu.int SG: 11, 13, 19, 2, 12, 16, 17

9. 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 Regulatory proceedings National, Regional, International level IP-enabled NGNsA global issue Europe Africa ITUNGN Americas Asia • Tariff policies, tariff models and methods of determining the costs of services on national telecommunication networks, including next-generation networks • Regulatory impact of next generation networks on interconnection http://www.itu.int/osg/spu/ngn/ Study Group 1 Jaroslaw.Ponder@itu.int

10. 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 &NGNCoordination Committee Jaroslaw.Ponder@itu.int

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

12. 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 Jaroslaw.Ponder@itu.int

13. 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. Jaroslaw.Ponder@itu.int

14. 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 Jaroslaw.Ponder@itu.int

15. 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 Jaroslaw.Ponder@itu.int

16. Customer interests protection • Universal service and access • Consumer emergency calls (E112/E911) • Consumer protection and privacy (e.g. SPAM, SPIM) • Quality of services • Authenticated caller or sender identification • Disability assistance • Data protection and privacy issues Jaroslaw.Ponder@itu.int

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

18. 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 regulations and ex post remedies Jaroslaw.Ponder@itu.int

19. 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 • Balancebetween facility based competition and service based competition should be preserved Jaroslaw.Ponder@itu.int

20. 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! Jaroslaw.Ponder@itu.int

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

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

23. Digital Opportunity Index percentage of population covered by mobilecellular telephony internet usersper 100 inhabitants Utilization Opportunity ratio of broadband internet subscribers to internet subscribers mobile cellular tariffsas a percentage of per capita income DOI ratio of broadband mobile subscribers to mobile internet subscribers internet access tariffs as a percentage of per capita income proportion of households with a computer Proportion of households with fixed line telephone mobile cellular subscribers per 100 inhabitants mobile internet subscribers per 100 inhabitants proportion of households with Internet accessat home Infrastructure Infrastructure Jaroslaw.Ponder@itu.int

24. Digital OpportunityIndex New ITU’s Series Jaroslaw.Ponder@itu.int

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

26. DOI: In-depth analysis Jaroslaw.Ponder@itu.int

27. DOI: Use Jaroslaw.Ponder@itu.int

28. Digital OpportunityUtilization WISR 2006New ITU’s Series Jaroslaw.Ponder@itu.int

29. DOI: Opportunities Jaroslaw.Ponder@itu.int

30. DOI: Infrastructure Jaroslaw.Ponder@itu.int

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

32. Challenges • Progress in regulatory reform • Pro-competitive policy approach • Enabling regulatory environment • Infrastructure development, modernization… • Voice over Internet Protocol… • Mobile telecommunications • Dissemination of 2.5G / 2.75G / 3G • Mobile Virtual Network Operators • Licensing: Emerging technologies Jaroslaw.Ponder@itu.int

33. 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 We all build the Information Society together! Jaroslaw.Ponder@itu.int

34. 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 Jaroslaw.Ponder@itu.int

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

36. 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 Jaroslaw.Ponder@itu.int

37. ITU – InternationalTelecommunication Union Jaroslaw.Ponder@itu.int

38. ITU’s Strategy and Policy Unit (SPU) http://www.itu.int/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… Jaroslaw.Ponder@itu.int