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Regulatory Trends: New Enabling Environment

Regulatory Trends: New Enabling Environment. International Telecommunication Union Workshop on ‘Future of Voice’ Geneva January 15-16, 2007. Aniruddha Banerjee. Gary Madden Joachim Tan. CEEM. What the Workshop Established --- Markets. “Voice market” is more complicated than “voice”

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Regulatory Trends: New Enabling Environment

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  1. Regulatory Trends: New Enabling Environment International Telecommunication Union Workshop on ‘Future of Voice’ Geneva January 15-16, 2007 Aniruddha Banerjee Gary Madden Joachim Tan CEEM

  2. What the Workshop Established --- Markets • “Voice market” is more complicated than “voice” • Voice revenues are important but declining • Mobile is major source of revenue growth • Broadband revenue is smaller but growing rapidly • DSL and cable modem dominate broadband access • Mobile, fibre, and satellite access solutions evolving 2

  3. What the Workshop Forecast --- Market Structures • Structural separation of networks, services, and applications • Possible consequences • Network access bottleneck avoided by inter-modal competition • Strategic positioning of firm in single or multiple markets • New business models required to identify and maintain revenue sources 3

  4. What the Workshop Forecast --- Network Intelligence • Intelligence moves to the network’s edge • Possible consequences • Consumer is sovereign --- determines access, service and application bundle • Service provider/application developer can reach targeted consumer • Innovations in applications stimulated 4

  5. What the Workshop Established --- Broadband • Broadband technology is scalable • Possible consequences • Barriers to entry attenuated • Aggregated demand for under-serviced markets • VoIP market growth • Other applications stimulated 5

  6. What the Workshop Established --- Convergence • Convergence • Networks / platforms • Terminals / devices • Markets / services • Possible consequences • Competition at all “levels” • Innovation at all “levels” 6

  7. An Economist’s Spin on the Forecasts • Suggest effective competition can occur “naturally” • Access markets --- inter-modal competition • Structural separation --- makes maintenance of vertically integrated markets more difficult • Scalable technology --- encourages strategic entry • More competitive access markets • Easier entry with less vertical structure creates • Price competition (static) • Innovation in all markets (dynamic) 7

  8. Dynamic Competition and Efficiency Technology-driven and disruptive Price-incremental cost disequilibria Long run resource allocation Innovation, short-term rents, first-mover advantages Market Structure and Regulatory Policy Market Structure/Policy • Competition among few, but effective • Proportional to Scalability • Control within/edges of access network • Resist reflexive (especially ex ante) regulation or mandating single standard • Maintain interconnection Standards and Multi-Sided Markets • Direct and indirect network effects • Large installed bases • Sunk and switching costs • Geography • Co-evolution/co-existence if interconnection 8

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