Challenges in Telecom Regulation
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1 APEC Telecenter Workshop, Taipei, 2005 Challenges in Telecom Regulation Dr. C. K. Mao Chair Professor National Chiao-Tung University
2 Observations, Vision and Propositions Observations a perfect storm is forming PSTN-based telephony business ever difficult position Saturating Mobile Voice Service Emerging Wireless technology disruptive innovation Regulatory regime at crossroad Vision A Structure Change The Convergence of Fixed, Mobile, Wireless, Broadcasting, and Information Services Industry Structure: from vertical to horizontal Propositions Regulatory solutions going forward
3 PSTN --- Endangered Spicy Voice Empire -- Collapsing Price Cap, ILD Price Competition Shrinking pie Traffic shift Fixed Mobile Substitution 20% to 50% Hi-growth VOIP business 10% to 20% evaporated, up to now Core Network Obsolete and Vulnerable Expanding IP Network PSTN marginalized Venders Maintenance Capacity divested Access Network -- Challenged Bandwidth: Cable and Fiber vs. ADSL Deployment Cost: WiFi (WiMax) vs. ADSL Regulation -- Unfriendly Asymmetric Regulation vs. Mobile and Wireless Businesses USO, Interconnection charge, UNE (for incumbent), Business Stalled Broadband VAS not taking off, no promising new revenue stream
4 PSTN s Vanishing Point? Market Share* 100% Chinese Taipei:13 mn 75%? 50% PSTN Incumbent abandons PSTN service? VOIP Sub-base unable to support full scale network operation Chinese Taipei:1 mn July 04 July mn/5-month (by Skype alone in Chinese Taipei) *The fixed-mobile substitution effect not included.
5 Interplay among Alternative Technologies The Game The mantis is seizing the cicada not knowing the oriole just behind The hunter has the power to decide who wins What the hunter should really do is the creation of a win-win-win situation Regulator hunter w/ sling shot Wireless oriole Mobile mantis PSTN cicada
6 Vision: Horizontal Convergence Wireless Services, Broadcast Lines between vertical markets blurred Industry structure Change Horizontal Integration ; Vertical Division Fixed-Line Content Mobile Content Electronic Communication Content Fixed-Line Application Mobile Application Evolve Electronic Communication Application Fixed-Line Infrastructure Mobile Infrastructure Electronic Communication Infrastructure (Fixed+Mobile+Wireless+Broadcast) Vertical Regulatory Regime Horizontal Regulatory Regime
7 Propositions for New Regulatory Policy -- 1 Don t work against Technological Trend It s useless to prevent a trend from happening Don t naively copy other countries practices Differences in infrastructures status, competition intensity, consumer spending, calling pattern, Set Clear Goals Reconcile the interests of governments, incumbents, new entrants, and consumers Provide incentives to promote investment and infrastructure-based competition, and continued development of networks and technological innovation
8 Propositions on New Regulatory Policy -- 2 Policy Refocus Fixed-line incumbent s last mile monopoly had been broken by mobile and other wireless technologies Transferring the incumbent s profit to consumer or competitor is no longer a real issue going forward Mobile, wireless, cable, fiber, and the old fixed-lines should be all put into regulatory regime s overall picture in the future From asymmetric to symmetric regulation, e.g., USO issue For Developed Economies Horizontal integration (interconnection) of various electronic communication technological platforms New form of Virtual Network Operators (VNO) and Content Providers to use new hybrid infrastructure to provide broad-band multi-media seamless services at market cost More market competition force than regulation power For Developing Economies Parallel deployment of alternative electronic communication technological platform Watch the digital divide between urban and rural areas
9 Infrastructure Deployment Strategy Hi Telecom Infrastructure Composition Fixed-Line -- ADSL, Cable, Fiber F% M% W% 0% 100% Hi-end B-band Mobility Ubiquity Income Level Mobile Value Proposition Lo Wireless USO Basic Voice Hi Lo Deployment Cost Technology Novelty Lo Hi
10 Info-communication Service in the future Machine-Centric Systems Network-Centric Systems Mainframe + LAN Web-Based Application Systems Contents App Module App Module App Module Domain-Specific Application Platform Global Web-based Platform Client/Server + WAN Global Electronic Communication Platform
11 Thank you
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