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Chapter Highlights from ITU Internet Reports 2003: Birth of Broadband

Chapter Five:  Regulatory and Policy Aspects

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“Market opening by itself has often not been sufficient to bring about the development of meaningful competition. There is still a tendency for the incumbent to dominate.”

Like other communications technologies, broadband raises a number of regulatory and policy issues. For example, should governments regulate broadband? What policy instruments are best suited to promoting competition? Research seems to indicate that where both the private and the public sectors interact to create the right framework, broadband growth makes greater headway. Tethered by government regulations and guidelines that are geared to fostering a healthy level of competition, broadband operators can still grow their services and networks profitably. Similarly, by lifting or modifying certain restrictive regulatory practices, governments can considerably boost the supply and demand cycle. From there, a virtuous circle of social gain and economic growth can emerge.

In addition to competition trends and policies, this part of the report looks at, inter alia, how regulation can facilitate the market entry of new broadband providers, ensure fair competition in the marketplace and promote near-universal broadband service provision.

In spite of the trend towards market liberalization, especially in broadband services, there still remain significant concerns as to the true extent of meaningful competition in communications markets worldwide. Figure 4 (top chart) shows levels of competition across different sectors worldwide.

With broadband, one notable trend has been for incumbents to continue to dominate in markets where they have been allowed to compete alongside new entrants, and this is also true for historically competitive markets such as mobile and Internet services. In 2002, incumbents operating in member countries of the Organisation for Economic Co-operation and Development (OECD) controlled more than 80 per cent of the broadband access market, while those in the European Union (EU) controlled more than 90 per cent of the broadband market (see Figure 4, lower chart).

These figures corroborate the reality that, even in countries where telecommunications markets have been liberalized, market opening by itself has not been sufficient to bring about the development of meaningful competition. Of course, this in part reflects commercial realities such as limited market size, lack of economic stability, and poor returns on investment, as well as the recent collapse in investor confidence, all of which affect new players’ ability to compete effectively with an established incumbent operator. But it also reflects current government processes for setting competition policy. In this context, it has become increasingly important for countries to have the necessary policies and institutions in place to deal effectively with the increasing quantity and complexity of competition issues that are retarding the development of meaningful competition. Once the policy environment is right, then it can then be left up to the dynamic between business and consumers to determine the pace and direction of broadband market development.

Figure 4:  Broadband competition

Competition across different ICT market sectors

 

Incumbents still have the largest market shares in the European Union

Note:      ULL = Unbundling the local loop.

Sources: ITU World Telecommunication Regulatory Database, ECTA.

 

Relevant links

ITU Country Case Studies on Broadband

ITU Trends in Telecommunication Reform 2002

ITU World Telecommunications Regulatory Database

National Telecommunications and Information Administration (NTIA)

Government of Canada

World Trade Organization (WTO)

ITU New Initiatives Workshop on Competition Policy in Telecommunications

Telecommunications Regulatory Handbook, World Bank/ITU

OECD Broadband Access for Business Report   

OFTEL

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