Operating in a Competitive Environment

The Role of Regulation

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The Competitive Environment

In this module

 Benefits of Regulation
 The Regulatory Key
Players
 Licensing
 Key Challenges

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 Benefits of Regulation
Why regulate?

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The Competitive Environment

The Role of Regulation

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 The Competitive Environment

Benefits of Regulation for the Consumer...

 Choice
 Price
 Information
 Low switching barriers

The Competitive Environment

Benefits of Regulation for the Industry...

 Fair Competition
 Investment
 Consumer Confidence
 Stability

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 Regulatory and Industry Key Players
Who has an interest in regulation?

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The Competitive Environment

Who has an interest in regulation?

 Government
 Operators
 Vendors
 Service Providers
 Media Companies
 Consumers
 Regulatory Authorities

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 The Competitive Environment

Ofcom Principles

 Ensuring the optimal use of the electro-magnetic

spectrum
 Ensuring that a wide range of electronic communications
services - including high speed data services - is
available throughout the UK
 Ensuring a wide range of TV and radio services of high
quality and wide appeal
 Maintaining plurality in the provision of broadcasting
 Applying adequate protection for audiences against
offensive or harmful material
 Applying adequate protection for audiences against
unfairness or the infringement of privacy
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The Competitive Environment

Global Example: The ITU

 Radio communication Sector (ITU-R);

 Development Sector (ITU-D);
 Telecommunication Standardisation Sector (ITU-T)

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 The Competitive Environment

Other bodies influencing the Industry

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The Competitive Environment

Self-Regulation

Independent body funded by industry through a levy

from network operators and service providers
contracting with these operators.

“PhonepayPlus is the organisation that regulates

products or services - such as competitions, TV
voting, helplines, adult entertainment, downloads,
new alerts or interactive games - that are charged to
users' phone bills or pre-pay accounts.”

*Formerly known as ICSTIS - Independent Committee for the Supervision of Standards of the
Telephone Information Services
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6
 Licensing
Controlling the Resources

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The Competitive Environment

Spectrum Licensing
 How many licences?

 Licensing methods:
– 1st come, 1st served
– Discretionary
– Beauty Contests
– Auctions

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 The Competitive Environment

Fixed vs. Mobile regulatory differences

 Entry Fees (spectrum)

 Scope of services
 Tariff regulation (affordability)
 Universal Service Obligations
 Competition

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The Competitive Environment

3G Licensing

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8
 The Competitive Environment

Beauty Contest or Auction?

Beauty contest – typical criteria:
 Pricing & Services

 Roll-out & Coverage

 Ownership & Control

 Capital Investment

 Employment

 Skills transfer

Auction:
 “He who values it most pays the most”

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The Competitive Environment

Beauty Contest or Auction?

Arguments for Auctions:
 Transparent & objective

 Value-based for limited resource (supply/demand)

 Encourages efficiency

 Avoids criteria based on an assumed future

Arguments for Beauty Contests:

 Avoids concerns over auction costs on prices

 Allows assurance of critical factors (coverage...)

 Can take into account existing market structure

 Can encourage bidders to give performance guarantees

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9
 Key Challenges
What is changing?

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The Competitive Environment

Key Regulation challenges...

 Complexity:
– services
– technologies

 Convergence:
– fixed / mobile
– telecoms / content

 Competition:
– market structure & behaviour
– consumer concerns & behaviour

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10
 The Competitive Environment

Module Summary

 There is a clear need for

regulation
 The aim is a competitive
market
 Provides protection of the
consumer and wider
industry (incl. telcos) in the
transition to that market
 Wide scope for regulation
 There are other bodies
that influence the industry
 Licences play a key part

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