A regulatory regime that benefits citizens
Transcript of A regulatory regime that benefits citizens
A regulatory regime that benefits
citizenscitizens
Rohan [email protected]
eAsia, Dhaka, 3 December 2011
This work was carried out with the aid of a grant from the International Development Research Centre, Canada and UKaid from the Department for International Development, UK.
Agenda
• The success of voice & the challenge of Digital
Bangladesh
• What can regulation contribute?
– Not a comprehensive discussion– Not a comprehensive discussion
• How to do good regulation
– Bracketing the need for new law and policy
Voice: A success in difficult
circumstances• ~100% of national territory covered by signals
• High uptake
– 99% at BOP say they have used a phone in last 3 months
– More phones than radios (and even TVs) in BOP – More phones than radios (and even TVs) in BOP
households
• Prices among lowest in the world
– Result of Budget Telecom Network (BTN) business model
• Voice has become a commodity; profits a problem �
mobilizing capital more difficult
99% of BOP have used a phone in previous 3 months
Bangladesh Pakistan India Sri Lanka Java Thailand
2008 95% 96% 86% 88% - 77 %
2011 99% 96% 89% 90% 90% 91%
Used a phone in the last 3 months (% of BOP)
2011 99% 96% 89% 90% 90% 91%
4Among BOP (OUTER SAMPLE)
SEC D& E, corresponding to those living on less than USD 2/day
Representative sample of 2,050, +/- 2% at 95% confidence interval
Household access to electricity, phone,
TV, radio, computer
70%
80%
90%
100%
Household access (%BOP outer sample)
5Among BOP (OUTER SAMPLE)
Ele
ctri
city
Ele
ctri
city
Ele
ctri
city
Ele
ctri
city
Ele
ctri
city
Ele
ctri
city
Ph
on
e (
Fix
ed
+ m
ob
ile
)
Ph
on
e (
Fix
ed
+ m
ob
ile
)
Ph
on
e (
Fix
ed
+ m
ob
ile
)
Ph
on
e (
Fix
ed
+ m
ob
ile
)
Ph
on
e (
Fix
ed
+ m
ob
ile
)
Ph
on
e (
Fix
ed
+ m
ob
ile
)
Tele
vis
ion
Tele
vis
ion
Tele
vis
ion
Tele
vis
ion
Tele
vis
ion
Tele
vis
ion
Ra
dio
Ra
dio
Ra
dio
Ra
dio
Ra
dio
Ra
dio
Co
mp
ute
r
Co
mp
ute
r
Co
mp
ute
r
Co
mp
ute
r
Co
mp
ute
r
Co
mp
ute
r
0%
10%
20%
30%
40%
50%
60%
Bangladesh Pakistan India Sri Lanka Java Thailand
20
30
40
50
60U
SD
pe
r m
on
th
Voice + SMS TCO: Brazil = Bangladesh x 23
Voice, SMS & Internet TCO: Morocco = Sri Lanka x 57
Different business model in sub USD 10 countries?
Budget Telecom Network (BTN) model
Nokia total cost of ownership study 2011
0
10
20
Ba
ng
lad
esh
Sri
La
nk
a
Ch
ina
Pa
kis
tan
Ind
ia
Uzb
ek
ista
n
Ke
ny
a
Eg
yp
t
Vie
tna
m
Su
da
n
Ira
n
Eth
iop
ia
Ca
mb
od
ia
Th
ail
an
d
Gh
an
a
Ug
an
da
Ta
nza
nia
Ha
iti
Ind
on
esi
a
Alg
eri
a
Ph
ilip
pin
es
Tu
nis
ia
Bo
livi
a
Gu
ate
ma
la
Mo
zam
biq
ue
Nig
eri
a
Se
ne
ga
l
AV
ER
AG
E
Sy
ria
Ho
nd
ura
s
Cô
te d
'Ivo
ire
Ka
zak
hst
an
Ecu
ad
or
Do
min
ica
n R
ep
ub
lic
Gu
ine
a
So
uth
Afr
ica
Ma
da
ga
sca
r
An
go
la
Zim
ba
bw
e
Bu
rkin
a F
aso
DR
C
Co
lom
bia
Za
mb
ia
Ma
law
i
Ch
ile
Ca
me
roo
n
Mo
rocc
o
Tu
rke
y
Ch
ad
Arg
en
tin
a
Pe
ru
Bra
zil
Monthly TCO
(USD)
Internet premium
(USD)
Ave: USD 11.47
Ave with Internet premium: USD 15.05
Source: Nokia
The challenge for Digital Bangladesh: Lowest
Internet users & fixed broadband subs/100 in
region (mobile broadband not reported)
12
14
16
18
Based on ITU data for 2010; ITU
data supplied by MOPT/BTRC
and their equivalents; responsibility
for errors lie with data suppliers
0
2
4
6
8
10
BD IN NP PK LK
Internet users/100
Fixed broadband/100
Computer use @ BOP low overall
83% 74% 76%
12% 16%
60%
70%
80%
90%
100%
Usage of computers (% of BOP teleusers)
Don't know what a computer is
5% 4% 2%
17% 21% 22%
83%96%
81%
83% 74% 76%
0%
10%
20%
30%
40%
50%
60%
Bangladesh Pakistan India Sri Lanka Java Thailand
No
Can't remember when, but I have used
one before
Yes
Among BOP teleusers
Not used a computer in last 12
months
Used a computer in last 12 months
Internet use similarly low@BOP; awareness problems in BD & IN
82%
98%
74%
89%78%
17%24%
40%
50%
60%
70%
80%
90%
100%
Internet use (% of BOP teleusers)
I haven't heard of the internet
No
Can't remember when, but i have used it before
Less than once a month
At least once a month
At least two to three times a month
Bangladesh Pakistan India Sri Lanka Thailand
Use the Internet (% of
BOP teleusers)2% 2% 1% 9% 21%
Among BOP teleusers
74%
0%
10%
20%
30%
40%
Bangladesh Pakistan India Sri Lanka Thailand
At least two to three times a month
At least once a week
At least two times a week
At least once a day
A challenge that can only be met . .
• By creating conditions for extending the Budget
Telecom Network model to broadband
– Low prices essential
– Costs must be kept down if low prices are to be sustained
• By enabling the build out of wireless access networks
capable of handling data cost-effectively
– Backed up by non-discriminatory, cost-oriented access to
fiber backhaul, including redundant capacity
• By offering applications that are of value to
consumers, giving them reason to use broadband
Regulatory contributions to Digital
Bangladesh• Understand that what amount to overlay networks will have
to be built; Also understand that creating platforms for
applications will require investment
– Major investments, with relatively long gestation periods, required
• Regulatory risk must be reduced, especially re licenses, renewals &
spectrum
• Develop, in consultation with stakeholders, a roadmap on
when and what spectrum will be made available
– And adhere to it
• Leverage the BTN model to achieve policy objectives, rather
than work at cross purposes to it
Reduce regulatory risk for Digital
Bangladesh networks• Market entry
– Build on recently concluded license-renewal debate to
establish coherent market entry-exit policies
– Model: Pakistan licensing policies of 2003
• Emphasized transparency and predictability• Emphasized transparency and predictability
• Resulted in all operators being brought to a level playing field
• Renewal handled in exemplary manner
– But market-entry policies are incomplete without market-
exit rules
Reduce regulatory risk . . . (market
exit)
• Who can best decide number of suppliers?
– Not Minister; not regulator; but the market
• Transparently assign as many licenses as resources
(spectrum) permit in blocks adequate for data and
voice; no point in fragmenting � increasing costs
– Allow secondary trading so operators can find the optimum
distribution of spectrum
• Create orderly exit mechanisms (ideally, known at time
of entry), so that market can settle at optimum level
– Includes rules on spectrum, secondary trading is a solution
– Also safeguards for consumers
Reduce regulatory risk . . . (scarce
resources) • Spectrum is the most critical input in providing wireless
broadband access
– Spectrum refarming is central
• All users of spectrum must understand that assignments are not for ever; that
countries that are technology-takers must realign their spectrum assignments
periodicallyperiodically
• Difficult process; I did it in 2002-04 (900 and 1800 bands)
– Requires extensive consultation with all affected stakeholders
– Lots of listening and talk
– Need to use proceeds of auctions to compensate “losers”
– Operators must be able to plan and to mobilize resources
• Not just a question of auctions versus administrative allocation
– Auctions are best, but unless embedded within a credible roadmap, they will
distort bidder’s incentives
Reduce regulatory risk . . . (road
map) • Best way to improve spectrum regulation is to set out
principles and a schedule for refarming actions (known as
roadmap)
– Build on 2009 consultation, but make principles explicit and include
time (when specific blocks will be refarmed/made available)
– To the extent possible, reduce technology bias in spectrum
assignments: e.g., why should 900 band be limited to specific
technology?
– Change and certainty
• All should recognize that nothing is permanent in spectrum assignments
• But change should be predictable and the path decided through extensive
consultation based on principles
Reduce regulatory risk . . . (other
scarce resources) • Costs (time and money) of obtaining rights of way
are escalating
– Multiple levels of government involved
• Not necessary to rewrite laws/Constitution
• Simply enact amendments that provide for compulsory arbitration • Simply enact amendments that provide for compulsory arbitration
and time limits
• Numbers are a finite resources that is running out
because all (regulators and operators) are treating it
as infinite
– Consider pricing and incentives to reuse
– Start work on numbers/addresses for a converged world
Focus on high priority tasks and pull
back from others
• As retail prices come down, greater attention must
be paid to vertical price squeeze
• Building on inchoate decision to separate BTCL’s
backhaul operations create PPP to manage publicly
funded backhaul (including international)
• Pull back from tariff regulation
– A form of banded forbearance exists in Bangladesh
• Why not make it formal, allowing reallocation of regulatory
resources and reducing regulatory risk
How to regulate well
• Focus on legitimacy = acceptance in the eyes
of others
• Sources of legitimacy
– Expertise– Expertise
– Transparency
• Fair procedure, including consultation
• Willingness to explain reasons for actions
– Openness to review and appeal
Expertise � legitimacy
• Requires good hiring procedures
– Focus on those willing to learn; continual need for new
knowledge
• Ability to hold and motivate good people
• Consistent focus on training
• Now, both Ministry and BTRC require expertise
• Without expertise, little basis for ex-ante, sector-
specific regulation
– But state of markets and technology are such that
individual expertise alone is not enough
Procedural legitimacy
• When things are done the right way, more
likely that outcomes will be seen as right
• In addition, serves to appeal-proof decisions
• Also permits regulatory authorities and staff • Also permits regulatory authorities and staff
to draw from a range of information sources
and to assess the veracity and value of
information
Explain, explain
• Regulators should behave like idealized
bureaucrats, not as quasi-judges
– Reasons for decisions must be given to
• Stakeholders• Stakeholders
• General public via the media
Appeal and review
• Appeal and review should not be seen solely
as causes of delay
• To the extent appeals and reviews can be
done expeditiously, they relieve the pressure done expeditiously, they relieve the pressure
on the regulatory agency
For more . . .
• Samarajiva, R. (2010). Leveraging the budget telecom network business model to bring
broadband to the people, Information Technology and International Development, 6, special
edition: 93-97. http://itidjournal.org/itid/article/view/630/270
• Samarajiva, R. & T. Iqbal (2009). Banded forbearance: A new approach to price regulation in
partially liberalized telecom markets, International Journal of Regulation and Governance,
9(1): 19-40.
• Samarajiva, R. (2006). Preconditions for effective deployment of wireless technologies for • Samarajiva, R. (2006). Preconditions for effective deployment of wireless technologies for
development in the Asia-Pacific, Information Technology and International Development,
3(2): 57-71. http://itidjournal.org/itid/article/view/224/94
• Samarajiva, R. (2004). Getting from dysfunctional government to e(ffective) government:
Mapping a path in Sri Lanka, International Journal of Regulation & Governance, 4(2): 171-85.
– A discussion of designing a Digital Bangladesh like initiative with regulatory reforms and details on spectrum refarming
• Samarajiva, R. (2002) Why regulate?, chapter 2 of Effective regulation: Trends in
Telecommunication Reform 2002. Geneva: International Telecommunication Union.
• Samarajiva, R. (2001). Regulating in an imperfect world: Building independence through
legitimacy. Info, 3(5), 363-68.