Sunday 5 February 2012

Contents of module

Introduction

In most countries around the world, telecom services used to be provided by a single operator. While not ideal, this arrangement worked adequately well in most places. Telecom technology had always changed only slowly and any new operators, even if they had been licensed, would not have been able to provide much that was different.

The situation has now radically changed. Since the mid-1980s, telecom technology has been developing by leaps and bounds, opening up a vast range of new service opportunities. At the same time, multiple operators now provide the services that were provided by just one previously.

This change reflects the fact that most governments now appreciate that a competitive environment is essential if their countries are to benefit fully from this telecom revolution. They understand that no single company has the resources - or breadth of vision - to take advantage of all the new opportunities available, and therefore the regulations must be changed to permit and encourage competition.

The introduction of competition with multiple operators requires much more than just the issuing of new licences. The whole structure of the industry has to change. For example, in a monopoly situation the one operator was able to use the radio spectrum largely in the way it wished. Now, with multiple operators, this limited resource must be allocated fairly between operators, and only an independent body with the necessary authority (i.e. a Regulator) can do this.

Similar issues arise in many other aspects of the industry after the introduction of competition. There is a need to manage the numbering system equitably among the operators,

Furthermore, the incumbent operator has built up a virtually impregnable position over the years, and is in a position to stifle any new competition that it meets if allowed to do so. Regulation is therefore necessary to ensure that fair competition develops.

Actions Required

The need for regulation and where it is required can be seen from the scope of responsibilities placed on Regulators in the different countries. The actions required of an independent regulator usually include many of the following elements:

  • to protect user interests;
  • to secure the benefits of competition for different groups of users;
  • to provide users with good quality service and choice;
  • to provide users with this service and choice at a reasonable price;
  • to consider user complaints;
  • to promote fair competition in the network;
  • to promote fair competition in the provision of services;
  • to change the industry structure to one where competition flourishes;
  • to enforce compliance by licensees with the terms of their licences;
  • to stimulate innovation in the telecoms industry;
  • to encourage investment in the industry;
  • to prevent anti-competitive behaviour by any operator or group of operators;
  • to prevent anti-competitive behaviour by any service supplier or group of suppliers;
  • to manage the numbering plan;
  • to ensure interconnection between the operators;
  • to manage common resources such as radio spectrum; and
  • to advise government on telecoms policy.

Case Study

The areas where the Hong Kong telecoms industry is regulated are listed in the Hong Kong Telecommunications Ordinance. The relevant passage, Section 7 Part III of that Ordinance, is quoted below.

Notes

The Chief Executive in Council referred to in the passage is the head of Hong Kong’s government, a position similar to that of President in countries elsewhere.

The Secretary is the Chief Secretary for Administration, the head of the civil service.

The Authority is the Telecommunications Authority, the person appointed to be the Regulator of the Hong Kong telecoms industry.

The Gazette is a regular government publication in which government notices are published.

Part III

Control of Telecommunications

  1. Subject to Part IIIA, the Chief Executive in Council may, for an exclusive licence under this Ordinance -

    1. determine the conditions of the licence including (but not limited to)-

      1. the period of validity
      2. the payment of fees and royalty
      3. the frequency of any payments
    2. grant the licence; and
    3. publish notice of the grant of the licence as he sees fit.
  2. The Secretary may by regulations prescribe -

    1. the general conditions, including the period of validity, for a carrier licence other than an exclusive licence; and
    2. the fees payable including for the grant and renewal of a carrier licence other than an exclusive licence and by way of annual fees.
  3. Before making a regulation under subsection (2), the Secretary shall-

    1. by notice in the Gazette invite members of the public who are interested to make representations by a date not less than 21 days after the notice is published and as specified in the notice; and
    2. consider the representations received by the date.
  4. The Secretary may by order published in the Gazette amend the Schedule.
  5. The Authority may issue a licence other than an exclusive licence.
  6. For licences other than exclusive licences and carrier licences, the Authority may determine -

    1. the form of licences;
    2. the conditions of licences;
    3. the period for which a licence is valid;
    4. the types of licences, including class licences, to be issued;
    5. the fees payable including for the grant and renewal of licences and by way of annual fees.
  7. Without limiting the general nature of the conditions that may be prescribed for or attached to a licence, the conditions may relate to-

    1. the manner of service provision;
    2. interconnection;
    3. interference;
    4. adherence to technical standards;
    5. compliance with directions, guidelines, codes of practice, regulations, this Ordinance and international obligations;
    6. universal service obligations;
    7. accounting practices;
    8. the provision of information;
    9. tariffs;
    10. network coordination;
    11. protecting customer information;
    12. prohibiting unfair market practice;
    13. the regulation of a dominant licensee; and
    14. the provision of performance bonds.
  8. The Authority shall publish in the Gazette the form of a licence he issues together with the general conditions to be imposed under the licence.
  9. The Authority shall maintain a register of licences and general conditions he publishes in the Gazette.
  10. The Authority may authorise the provision of ancillary and associated services under a licence and, where such services are so authorised, the licence shall be deemed to be granted in respect of those services.
  11. Where the Authority refuses to issue a licence to a person, he shall provide to the person his reasons in writing for the refusal.

Further Reading

The need for a telecoms-specific regulatory body is now accepted in a growing number of countries. However, over the past 10 years, New Zealand has stood out as a country that did not believe that such a Regulator was necessary, and the country’s Competition Commission was all that was required. However, after its victory in the country’s general election at the end of 1999, the new government commissioned a study looking into this and related issues.