Committing to Consumer Friendly Regulation in Africa

A news item about the  first conference of African telecoms regulators on consumer affairs in Lagos tells us that regulators from Nigeria, South Africa and Ghana etc. stressed upon protecting and promoting consumer interests.

The article states that the conference was attended by telecoms regulators from South Africa, Ghana, Zambia, Zimbabwe, Kenya, Cameroun, Liberia, Rwanda, Benin Republic, Malawi, Angola, Sudan, Uganda, among other African countries and [It acted ]as a platform to bring together, African telecoms regulators and subscribers, to discuss common regulatory interest that will further enhance telecoms growth across Africa...Major issues raised at the conference, were multiple taxation imposed by governments in the various African countries, as well as unsolicited promo text messages that hit the subscribers' phones every minute."

Interestingly the Ghana Regulator is quoted as follows,

"...good regulation promotes competition in the provision of electronic communications networks, services and associated facilities; contribute to the development of the internal market, the interests of consumers; apply objective, transparent, non-discriminatory and proportionate regulatory principles; and promote technological and service neutrality.........

....too much regulations amounted to a “hidden tax,” because the costs of conforming to the regulations were passed on to the consumer in terms of higher costs. he explained that too many regulations might inject uncertainty into the marketplace, making it harder to raise capital and create new businesses."

I could not agree more.

Basic Broadband Now Universally Available Across Europe

As per an EC press release, Europe has achieved 100% coverage as far as basic broadband goes.

"Vice President of the European Commission, Neelie Kroes, today welcomed the milestone achievement of one of the main goals of the Digital Agenda for Europe:

“My motto is Every European Digital – now every European genuinely has the opportunity. We have more to do to improve networks and equalise the opportunity, but the opportunity is there.”

"Thanks to the extra coverage provided by satellite broadband, we have achieved our 2013 target of broadband for all. That's a great result for European citizens.

How we got to 100 % coverage?
Fixed (ADSL, VDSL, cable, fibre, copper) 96.1%
Mobile (2G, 3G, 4G) 99.4%
Satellite 100%

By the end of 2012, 99.4% of EU household had access to basic fixed or mobile broadband coverage; including 96.1% of households in rural areas. But the final 0.6% (or roughly 3 million citizens) included many families and businesses in isolated or rural areas where fixed or mobile broadband rollout is more cumbersome and expensive."

Going further,

"The Digital Agenda for Europe (DAE), has set a goal to make every European digital and ensure Europe's competitiveness in the 21st century. Essential to this goal is fast connectivity and the DAE broadband targets:

basic broadband for all by 2013;[achieved]
Next Generation Networks (NGN) (30 Mbps or more) for all by 2020;

50% of households having 100 Mbps subscriptions or higher"

 It is true that public funding has played a major role in these achievements but it is noteworthy that the same is subject to careful ex ante scrutiny to avoid market distortions that can harm the sector in the long run. I am of the opinion that India has a lot to learn from the EU's regulations in this regard.

Broadband Market in India

It is reported that,

"BSNL [with 9.97 million broadband subscriber[s] with continues to lead the table of top five internet service providers followed by Bharti Airtel (1.43 million), MTNL (1.10 million), Hathway (0.37 million) and You Broadband (0.32 million) till the month of July.

According to the data released by  the Telecom Regulatory Authority of India (TRAI), total broadband subscriber base in the country has increased from 15.19 million at the end of June 2013 to 15.24 million at the end of July 2013.

“This is a monthly growth of 0.33%. Yearly growth in broadband subscribers is 3.79% during the last one year (July 2012 to July 2013)”, it said. "

That for a country of 1.2 billion this broadband penetration is negligible and that the market is far from competitive is evident. Please see my previous posts on this issue such as,

-There is More to Broadband than Physical Infrastructure,

-Avoiding the Recreation of Monopolies in the Age of Superfast Broadband,

-Continuously Declining Wire Lines in India,

-Access Regulation as Important as nationwide Backhaul

and many others under the labels USOF India and Broadband Networks

Relevant Markets of the Future

It is interesting to think of broadband which people like me have already likened to a bridge across infrastructural gaps as being treated as a substitute to transportation, not for purposes of competition  law jurisdiction as my title may suggest, but at least as a competitor for public funding. 

Thus, a post titled "Building railways not broadband is a ‘strategic mistake" quotes a Microsoft personnel as saying that "The UK government is making “a strategic mistake” investing billions of pounds into railways rather than broadband." The said executive has criticized  "the government for not investing into the technologies needed to make mobile working a reality for more, instead sticking with the traditional investments for the commute to work. “The one negative fact about the future is the current and previous governments think we need to build railways instead of broadband infrastructure and networks,” 

I am not sure that the two investments are mutually exclusive for a country like U.K, but certainly one can envisage that the future would be one where mobile work or tele-commuting predominates. One can quite easily stretch one's imagination to a scenario where the broadband becomes more important than the railways when it comes to interacting with co-workers.

In developing countries broadband already compensates for lack of roads, hospitals, schools, work opportunities, social services etc.  My articles on the subject can be seen here.

Technology and Universal Service

I have two pieces of information to share. Both of them are related to technology and  telecom penetration.

The first is the welcome initiative on the part of the  Reserve Bank of India (RBI) in exploring  the possibility of providing SMS-based mobile banking through a single application on all types of handsets.

It is reported that,

"A Technical Committee on Mobile Banking has been set up to "examine the options/alternatives including the feasibility of using encrypted SMS-based funds transfer using an application that can run on any type of handset for expansion of mobile banking in the country," the central bank said.The panel will conduct an in-depth study of the challenges faced by banks in taking mobile banking forward to the desired level. At the end of July, there were about 70 lakh users of mobile banking, which is currently offered by 78 banks.The panel will also examine "any other optimum solution" that would take mobile banking to every nook and corner of the country, in addition to drawing a road map for implementing the solutions or options recommended."

With mobile penetration outstripping land lines in India and smart phones becoming affordable, this measure could greatly address the yawning financial inclusion gap in the country. As an interesting aside, the promotion of mobile banking  is identified by the Economist as one possible way to reduce channelization of rural household savings into financially less productive assets such as cows, in India! The article is called Udder People's Money and makes for interesting reading. Please also see my previous post on mobile VAS.

The second is news about the use of  television and radio channels to transmit cellular signals when systems are pushed beyond capacity as during a disaster. "Mai Hassan, a PhD student has managed to [change] the shape of the wireless signal so she could transmit on channels that use radio or television frequencies. She then had to change the direction of transmission away from the original channel. Instead of using traditional antennas, which transmit signals in all directions , she used smart antennas in mobile phones. Smart antennas transmit signals in a single direction and can steer the beam to any direction. By manipulating the direction of the cellular signals, Hassan was able to transmit calls and texts to a receiver while avoiding any interference with the original radio and televisions signals."

Please see my previous posts on disaster communications. I am of the view that keeping the public (rather than only official first responders) connected is of critical importance during disasters.

National Broadband Plans-The Largely Un-examined Competition Debate

I recently came across a very interesting post on the subject of competition in OFC roll outs. This well written post by Paul Budde argues that (in the Australian context but extrapolating through examples to the international context) either we do not really need infrastructure competition in OFC infrastructure or at least it is not a very practical possibility. He cites USA and Europe as examples of lack of nation-wide fixed line competition.

It would take much more than a blog post to analyse his arguments but I would like to make one simple counter argument. Why must we have a nation wide network? In vast countries like India, USA and Australia even regional or sub regional fixed networks would be a feasible option. In non viable areas, competitive service provision may be seeded by Universal service funding. Please see my post on the Indian USOF model at Broadband Networks through the Infrastructure Sharing Route. This model did succeed in creating potential competition to the incumbent with USOF subsidy even in a remote region of the country. Other posts on infrastructure sharing could also be viewed. 

Perhaps the inability to fathom such a model comes from historical reasons wherein in almost every country the incumbent managed to protect its monopoly by harping on the economies of scale issue and the best option with the state was to regulate prices etc. Regulating monopolies cannot solve inefficiency and lack of drive to innovate that plagues all monopoly service provision. Readers are invited to read my previous posts on NBN and NOFN. Today both networks are delayed and mired in roll out problems. There is a news item about NOFN planning to impose heavy penalties on its vendors who are delaying roll out. Need I say more. I have written earlier cautioning against the faddish nature of national broadband plans and the fact that they are likely to recreate monopolies with the usual set of associated problems.

Also, unlike Mr Budde, I am not so sure that mobile networks can ever be considered perfect substitutes for fixed lines. European regulators seem to agree with me.  

I do agree that service level competition is very critical, but as far as competition in broadband goes, if it is there at every level-all the better. 

Fixing the Market Efficiency Gap in India

I had mentioned in my post titled, "Regulate in Haste Repent at Leisure" about TRAI's recent recommendation in favour of  a considerable reduction in reserve price of spectrum and those relating to permitting spectrum trading. I had stressed that what is important is that all regulation must be based on sound economic analysis placing consumer interests above all. The latter includes a healthy, viable and competitive telecom sector. Another related post is "Regulate in Haste Repent at Leisure-Comments from EU and India" These are all under the labels Telecom Regulation & Competition

A lot has been said about the regulatory deficit in India. A recent article by Sanjeev Aga literally agonsies about this issue in relation to the Department of Telecommunications processing of TRAI's above mentioned recommendations.

A long quote from this article is added here as the writer is interesting and eloquent in his anguish:

"But let us even assume this Trai exercise eventually ends well. Would that address sector issues? Unfortunately, no. Consider policies that allow intra-circle roaming before an auction, and disallow it afterwards. Or those that confer technology-neutrality in 1999 and withdraw it in 2012 in the name of unliberalised-spectrum. For the jargon-challenged reader, spectrum liberalisation and technology neutrality mean the same thing (the Danish Business Authority website offers a clear explanation of this). Such ad-hocisms abound because policies are not supported by robust policy institutions. The better type of investors watch policy, but they derive confidence only from the quality of institutions behind the policy.

Planning Commission member Arun Maira worries that since we are not fixing institutions, India is falling apart. A complex, high growth, trillion-dollar economy, with money power sloshing around, has outgrown the governance model of the 1950s. Among the handful of quality policy institutions we have is the Reserve Bank of India, and that is a product of the Raj. The notion that ministers and ministry departments should run sectors such as hydrocarbons, aviation, telecom, power, or railways is anachronistic. The DoT has capable Indian Telecom Service officers who ran fixed line operations in Bharatiya Sanchar Nigam Ltd's earlier avatar. A quirk of fate finds them designing policy for mobile telephony of tomorrow for which they have been provided neither exposure nor training. With no symmetry between authority and consequence, between work and appreciation, self-respecting people must resent being reduced to their present pass. When spewing out penalty notices becomes a defence mechanism, you sense that these people may be present physically but they have seceded emotionally! What is true of telecom is equally true of several other sectors. The old is dying and the new cannot be born!

Having two policy institutions for telecom, DoT and Trai, was always a crazy idea, an outcome of confused intention and timid disposition. Like in every advanced international jurisdiction, telecom policy formulation should have been tasked to the regulator from its inception. Now, better late than never! But for this Trai will have to step up its game. Amending the Trai Act is a mere first step. The regulator would be tested on its sector knowledge, in widening the talent pool to attract the best, in the quality of its output, in the confidence inspired in investors, in the moral authority exerted, and in the thought leadership provided to India and to the world.

India is at a juncture where the absence of quality governance institutions is strangling growth. This has been the single biggest cause of the economic downturn. Second-generation reforms are not about mindlessly repeating what was done 20 years ago. They require dismantling mental blocks and building quality governance institutions for at least half-a-dozen sectors, of which telecom is one. This fond wish must now await any new government. Meanwhile, the Telecom Commission and the Empowered Group of Ministers should rally in support of the Trai recommendations."

I have written about a possible way forward-Providing a competition policy framework to our regulation. The article is titled "Of Airwaves, Incumbents & Good Governance-The Urgent Need for A Robust Competition Policy Framework"