[Kictanet] Existing/Appropriate Regulatory Models for OFC (2days)
joseph kihanya
kihanyajn at yahoo.com
Thu Feb 1 14:28:43 EAT 2007
The regulatory framework I am afraid has to have its background against what is and has become current over the last 15 years or so globally.
It can be viewed both at the national level and at the international arena.
It is important to note that regulation in telecommunications is a public policy matter for any country. Governments must design and implement regulation based on the needs of a particular country and its peculiar historical or other circumstances, of course tending towards best practices.
Telecommunications regulation in the transition from a monopolistic and largely anti- market based approaches to supply of services, to a market based approach in a liberalized era, mandated most governments and hence societies to seek regulatory oversight. This was against an anticipated reduction of oversight given that market forces/ competition was to guide, in the long term, the development of this industry as in others. Consensus appears to be that in the short term-as a guide/ facilitator to liberalization, regulatory bodies were and are required.
It is indeed even anticipated that it is in this transitional stage that the regulators will be so busy – for the obvious reasons that the new players may gain dominance very quickly and attain the monopolistic tendencies of the historical operators.
Why is regulation in telecommunications important?
1. It authorizes new operators.
2. It removes barriers to entry.
3. It mandates interconnection between players.
4. It oversees the penetration of services in areas that commercial imperatives would not allow or pursue.
The objectives of transparent telecommunications regulation are mainly the following;
Oversee competitive markets by;
Promoting efficient supply of services.
Ensuring good QOS
Promote advances services
Enable the maintenance of efficient pricing.
Prevent abuse of significant market powers.
Protect consumer rights/privacy rights.
Facilitate interconnection thereby efficient use of telecommunication services.
Oversee the optimal use of the finite radio frequency spectrum.
From the foregoing, it is clear that, in the short term at least, most countries, Kenya included have an interest to regulate telecommunications services provision.
The question therefore only remains as to whether the OFC is within the ambit of what may be regulated in the industry.
Deregulation is a theme that is in play in most jurisdictions that have achieved above optimal competitive markets. The case of the UK under the Communications Act 2003 and the role of OFCOM are in point.
Given that there is no direct call for deregulation even under the National ICT policy 2006, it would appear that the strategies suggested at 3.3.1 in relation to information technology infrastructure would entail a fair amount of regulation. This is especially given the fact that despite encouragement of the laying of the infrastructure, only so few options will be available, Indeed, in the OFC case, perhaps 2 will be a lucky option for many for the next 5-10 years or more.
Do we then need a regulatory framework?
My answer is yes and perhaps for tempering, a hesitant qualifier.
Competition laws are likely to be the most fundamental “regulatory framework” for the OFC as indeed for any other services.
It is particular to note that even in the UK the Office of Fair Trading and OFCOM share equivalent powers in relation to fostering competition. The CCK will have to; in the very short to medium term translate from the “licenser”- facilitator of entry- primarily- to a serious competition oversight body with sound, quick and efficient determinations. If I am not wrong the only recorded competition determination relates to the cyber-café association- common pricing attempt- I stand to be corrected. Interconnection determinations have been one- Kencell vs TKL ?
This will be countered and perhaps also enhanced by an independent competition body- the workings of the anti-monopolies commissioner under the Restrictive Trade Practices Act (Chapter 504 Laws of Kenya), are highly opaque.
Other countries, such as Australia have also undergone a transformation from maintaining industry specific competition principles and statutes for the telecommunication sector to an all inclusive co- competition oversight regime in the interim and a sustainable sole competition / regulatory framework for all industries.
As such therefore, regulation for the OFC may be through the competition framework under the CA 1998 or the KICT BILL 2006.
Complete lack of regulation may therefore not be an option at all.
Whatever business model is adopted, the Key question is whether as a country in acute need of the OFC, we would facilitate its provisioning of services within the country without any regard to any oversight of any sort for whatever purpose.
At the international level.
The WTO and the ITU also anticipate regulatory oversight in telecommunications too and Kenya, being party to these organizations would be hard pressed to provision services without oversight (if that were possible), especially since the OFC will be extra-territorial.
I would suggest that a reading of this Reference paper at the WTO would elaborate on this aspect. See www.wto.org/english/tratop_e/serv_e/telecom_e/tel23_e.htm
The best regulatory models would for me therefore be within the competition framework.
It would be difficult to try and regulate any/the OFC, singularly, as it would also perhaps border on the unconstitutional, there being a bar againts discrimination under our Constitution.
Sector specific competition regulation under the CA1998 may work in the meantime but in the long run a clear policy that has a generic definition of what significant market power is, would serve the industry best.
Kihanya
----- Original Message ----
From: John Walubengo <jwalu at yahoo.com>
To: kihanyajn at yahoo.com
Sent: Wednesday, January 31, 2007 5:45:10 PM
Subject: Re: [Kictanet] Day 8 of 10 : - Projected Impact of OFC on the Stakeholders
Cool! u r on e-record- we expect something Regulatory from
you on or before Day 10.
thanx,
walu.
--- joseph kihanya <kihanyajn at yahoo.com> wrote:
> Thanks Walu for the discussion moderation.
>
> I am doing something on the regulatory framework and will
> post by day 10.
>
> On operators I would expect that there woulda be a
> reciprocation in price and QOS issues.
> I would expect that there would be publicly accessible
> interconnection agreements under the non-discriminatory
> technology-neutral Open Access principles .
> I would also expect that there would have to bea busines
> realignment to conform with new entrants at the local
> lvel who the operators would indeed agree not to want to
> "take over" asa soon asa a ROI looks good.
>
>
> On the regulator, the paradigm shift in allowing
> competition and enforcing it would be key.Competition
> alone despite all that is siad about it is not known to
> benefit consumers largely where duopolies or oligopolies
> exits. product and price shadowing takes centre stage and
> one is not sure that the alternatives are not
> exhorbitant.
>
> The regulator must also enforce QOS.
>
> The consumer must be ready for a vibrant market and take
> up alternatives that make the best "cents".He /She must
> be able to walk out..and perhaps to an
> ombudsman(regulator) where QOS is not as per SLA or
> other "promises.Whining loudly may help(See South
> Africans vs Telkom SA in the Daily News recently)
>
> Kihanya
>
>
>
> ----- Original Message ----
> From: John Walubengo <jwalu at yahoo.com>
> To: kihanyajn at yahoo.com
> Sent: Wednesday, January 31, 2007 10:11:24 AM
> Subject: [Kictanet] Day 8 of 10 : - Projected Impact of
> OFC on the Stakeholders
>
>
> I must thank all for your valuable views shared over the
> last two days regarding the previous theme :- what are
> the
> Best Models for Provisioning submarine OFC.
>
> Three models seem to have persisted throughout the
> discussion, namely, Open Access (EASsy), Private-led
> (Flag), and our famous Consortium models. Where Mucheru
> mentions separation of Cable ownership from Cable
> Management fits in squarely with the Open Access
> thinking,
> whereby, the investors in the cable (Govt, Public,
> Private
> Companies) appoint an independent management Agent (at a
> fee) to Operate the Cable on their behalf on a
> cost-recovery, open access basis. i.e Open to current and
> future Operators wishing to connect to the landing points
> or invest further in the cable on equal basis). The
> cable
> becomes an essential service or public good, from where
> Operators can compete to offer (other) Services at a
> Profit.
>
> Flag- a Private Investment initiative came in with a
> variant model where the cable is –privately owned but
> promises to open access to the Landing points - but aims
> to maximise returns on the investments made on the cable
> infrastructure by reselling capacity at market rates.
> They
> also aim to play only at the Infrastructure level, rather
> than at all levels, namely Infrastructure (cable) and
> Services (Network and Application), opting to leave that
> to ISPs and ASP(Application Service Providers)
>
> Nobody really pushed the Consortium model, but probably
> Badru did hint strongly for such a model when he
> mentioned
> that Commercial interest should be let loose to play
> dynamically with the market forces. The Consortium model
> is where a group of Operators get into a private, closed,
> commercial agreement aiming to build, own and operate a
> submarine cable with aim of maximising their returns
> (profit) in the shortest time possible –social
> connotation
> notwithstanding.
>
> And this is where the Consumer has suffered. The
> short-terms interests of investors must be balanced
> against
> the long-term social benefits that would accrue from a
> affordable bandwidth provisions. Alex and LK seem to be
> voice of the consumer here, urging the Regulator to flex
> their muscle – probably now and more in future when the
> OFC
> is laid-out.
>
> In all this, the various financing options were not so
> pronounced as noted by Michael J. Apart from IPO
> recommendation from Kai and Bill, the financing models
> (Equity, Debt, etc) has not quite come through and I hope
> someone could make comment on that within the remaining
> three days as we discuss our next theme:- What is the
> likely impact of the above models on the existing
> stakeholders (Operators, Regulator and Consumers)? That
> is, what do we see as the roles of the above stakeholders
> in the new dispensation of the Optical Submarine Cable.
> The
> efloor is again open and we have two days on this one.
>
> walu.
> Nb: a Face2Face meeting will follow up after this online
> discussion where all these issues will be streamlined.
> ~~~~~000~~~~~~
> Theme Reminder:
> 1) Why OFC (1day)
> 2) Existing Business Models for OFC provisioning (2days)
> 3) Existing/Appropriate Regulatory Models for OFC (2days)
> 4) Best Model (Business+Regulatory) for E. Africans
> (2days)
> <Ongoing-Open>
> 5) Projected Impact on Stakeholders (2days)
> <Pending>
> 6) Reconciling Stakeholder interests/Conclusions (1day)
> <Pending>
>
>
>
>
>
>
>
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