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ETE 521: Telecommunication
Business and Management
Module 2: Trends in telecommunication
reforms, the road to NGN
Faculty: Dr. M. Rokonuzzaman
zaman.rokon@yahoo.com
Trends in telecommunication reforms, 2007, ITU

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Introduction:
 The sector has already seen the year of
“convergence”, followed by the year where
“broadband” was on everyone’s lips, along with the
more recent fascination with “Voice over Internet
Protocol” (VoIP) and “fixed-mobile convergence”
(FMC).
 Each of these recent buzz words represents part of
the same evolutionary path in which individual
service-specific networks are developing into
advanced IP-based networks capable of providing a
full range of services and applications accessible from
a wide range of devices that can function from any
location.

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 Although the sector has faced many so-called
“revolutions”, the consensus, with regard to NGN, is
that the move will be more of an evolution than a
revolution.
 Many observers expect that NGN and the Internet will
co-exist for some time – although most would agree
that the move to all IP-based networks is unstoppable.
 Even where NGN is deployed, it is also likely to include
many variants as market players leverage their
investments in today’s technology.
 In Europe, Japan, North America and the Republic of
Korea, many equate NGN with fibre (FTTx) deployments
coupled with a move to more ubiquitous and robust
wireless coverage.

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Market and Regulatory Trends:
 Buoyant ICT growth
 Developed countries, which have the majority of
the world’s fixed and broadband lines, are more
likely to migrate to fixed rather than wireless
NGN access networks as they upgrade their
existing fixed-line telephone and cable TV
infrastructure.
 Wireless access will still play a key role in
developed economies where users seek
seamless or ubiquitous coverage, and are likely
to use fixed lines while in a set location (home
or work) and mobile while on the go.

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 Figure 1.1 shows the buoyant growth in the ICT
sector over the past decade, demonstrating the
spectacular success of the mobile sector in particular.
 By the end of 2006, there were a total of nearly 4
billion mobile and fixed-line subscribers and over 1
billion Internet users.
 This includes 1.27 billion fixed-line subscribers and
2.68 billion mobile subscribers (61 per cent of which
are located in developing countries) as well as some
1.13 billion Internet users.

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 Broadband on the rise
 While access to ICT continues to grow, countries are
increasingly focusing on improving broadband use, in
particular. Broadband is necessary in order to achieve
the Information Society.
 Broadband enabled services have the potential to create
economic and empowerment opportunities and improve
lives.
 Indeed, some of the applications that are having the
greatest impact on people and businesses are closely
linked to broadband uptake.
 This is also reflected by the fact that since 2005 there
were more fixed broadband subscribers than dialup
Internet subscribers worldwide.

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 Today, however, broadband penetration is dominated
by the wealthy countries. Some 70 per cent, or nearly
three-quarters, of broadband subscribers worldwide in
2006, were located in high-income countries which
accounted for just 16 per cent of world population.
 Furthermore, two economies – India and Vietnam –
accounted for more than 95 per cent of all broadband
subscribers in low-income countries, while a single
economy – China – accounted for 94 per cent of
broadband subscribers in the lower-middle income
group (Figure 1.2).

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 The good news is that a number of developing
countries are experiencing broadband growth.
 In Peru, for example, the number of broadband
subscribers has grown by close to 80 per cent
annually between 2001 and 2006, from 22’779 in
2001 to 484’899 at the end of 2006.
 In Europe, over half the Estonian population uses the
Internet and the country has the highest penetration
of both Internet and broadband in Central and
Eastern Europe.
 But in Least Developed Countries (LDCs), there were
merely 46’000 broadband subscribers in the 22 out of
50 LDCs with broadband service in 2006.

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 In the area of broadband infrastructure, developed
markets are intent on bringing fibre closer to the end
user either as FTT Home (FTTH), where the fibre
reaches the end-user’s premises, FTT Building (FTTB),
where the fibre stops at the building; FTT Curb (FTTC)
or FTT Kerb (FTTK), where fibre stops at a curb near a
building or group of buildings; and FTT Node (FTTN)
or FTT Cabinet (FTTCab), where fibre stops at a
cabinet with telecommunication equipment that
serves a nneighbourhood.
 Collectively, these variants are termed FTTx.

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 The Asia-Pacific region today
has more FTTx services than
any other part of the world.
Japan was the first country to
introduce a FTTH network in
1999.
 In 2005, the number of
Japanese subscribers to FTTH
services increased 88 per
cent to surpass the 5 million
mark (Figure 1.3).

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 In developing countries, the meteoric rise
of mobile services has been fuelled by
improved affordability, increased network
coverage, and new service options.
 The same factors can promote wireless
broadband Internet access in developing
countries, even in countries with poorly
developed fixed-line infrastructure, as
mobile handsets that support both voice
and Internet applications become more
affordable (Box 1.1).

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 Privatization and competition trends:
 Despite the general slow-down in the sale of
state-owned incumbent operators, privatization
remains a priority for most countries that have
not yet fully or partially privatized their
incumbent operator.
 The objectives of privatization are to improve
efficiency, productivity, and service quality, as
well as to raise capital, improve management
expertise and further develop the network.

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 In addition, many countries have found
that competition is often more fair when
the state avoids being both a market player
(as owner or part-owner of the incumbent)
and a referee at the same time.
 Privatization sends the signal that policy
decisions and regulations will be fair to all
players.
 Between 1990 and 2006, some USD 83
billion was raised through privatizations of
incumbent public telecommunication
operators in developing countries.

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 During the same period, the opening of markets to
competition has remained steady.
 Mobile and Internet services continue to be the most
competitive markets, while fixed-line services are also
becoming increasingly competitive (see Figure 1.6).
 In the first part of 2007, the Gulf countries among the Arab
States were very active in opening both their mobile and
fixed markets.
 For example, in April 2007 the Supreme Council of
Information and Communication Technology (ictQATAR)
launched a formal selection process for the award of a
mobile licence to a new entrant in the State of Qatar.
 The Telecommunication Regulatory Authority of Oman also
announced its intention to license a second national
operator.

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A growing community of
regulators:
 The establishment of a separate regulator is one of
the most visible signs of sector reform.
 Separate regulatory agencies lay the groundwork for
a favourable investment climate and the promotion of
market opportunities.
 Increasingly regulators seek to be ICT enablers and
agents of change.
 This is usually best achieved where ICT regulators
have a certain degree of autonomy from government
and industry pressures.

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 The world now has 148 national ICT-sector regulators
(Figure 1.7). Over 75 per cent of ITU Member States
have established a separate regulator, although
differences remain between regions.
 Africa counts the highest percentage of countries with
a separate sector regulator (91 per cent), followed by
the Americas (89 per cent), and Europe (80 per cent).
 The Arab States and Asia-Pacific number 62 and 58
percent, respectively. Growth in the number of
regulators is set to continue with more than five
countries having indicated their intention to establish
an ICT regulatory body in the near future.

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SELECTED REGULATORY
DEVELOPMENTS:
 International mobile roaming
 The issue of mobile roaming charges is on the agenda of
regulatory authorities and regional regulator associations
worldwide, in an attempt to find solutions for the high
international roaming charges paid by consumers using
their mobile phones while travelling abroad.
 To date, most regional groups have taken a “soft-
regulation” approach to international mobile roaming,
focusing on publishing roaming rates.
 The European Commission, however, in a watershed
measure, has decided to regulate roaming charges in the
27-country European Union block.
 This move may embolden other regional groups to take
firmer action to cut mobile roaming charges.

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 Regulating local loop unbundling and infrastructure sharing
 Countries like the United States, with inter-modal broadband
competition between cable TV and ADSL broadband providers, may
place less emphasis on local loop unbundling, and even view
unbundling as a barrier to innovation and the development of
infrastructure.
 Countries with limited inter-modal competition, such as many
European countries, have found it necessary to embrace local loop
unbundling to encourage ADSL provision and are now planning to
extend LLU to FTTx deployments.
 Regulators in Europe have vigorously enforced LLU regulation as a
means of boosting broadband deployment, and the number of
unbundled lines currently available in Europe has risen dramatically,
by nearly 80 per cent from 2005 to 2006.
 Many developing countries, in initial stages of sector reform, have
focused primarily on increasing the number of voice users, and have
principally concentrated on raising the number of voice subscribers on
mobile networks. They also had far fewer fixed local loops to
unbundle.

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 In addition to LLU, other regulatory measures are
being developed to ensure smooth competition and
market access for new entrants such as mandatory
passive infrastructure sharing and in-site sharing.
 According to ITU World Telecommunication Regulatory
Database, a majority of countries who completed the
2006 survey indicated that infrastructure sharing is
required while nearly half indicated that in-site
sharing is mandatory.
 This is the case for example in Bulgaria, Colombia,
Jordan, Madagascar, Mali, Morocco, Poland and
Turkey.

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 Interconnection
 A clear and transparent interconnection
regulatory framework is key to a
sustained competitive environment.
 Providing public access to reference
interconnection offers, agreements, and
prices is one tool regulators can use to
promote transparency, raise competitor
awareness and ensure a level playing
field among competitors.

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 VoIP regulation
 Voice over Internet Protocol (VoIP) subscribers continue to grow,
fuelled primarily by the demand for lower cost services as well as
the fact that VoIP is being integrated into a number of new
services offered on IP networks.
 Despite obvious benefits, VoIP also challenges traditional
telecommunication business models, leading some countries to
try to ban or limit VoIP.
 In many countries, incumbents have resisted offering VoIP
services to protect their lucrative long-distance and international
call revenues.
 In the process they have tried to convince regulators and policy-
makers to ban or restrict other service providers from doing so.
 Today, however, the number of countries in which VoIP has been
legalized is greater than the number of countries where it is
banned.

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 Indeed the state of VoIP regulation is
changing so quickly it is almost impossible
to keep pace. Until recently, for example,
VoIP was banned in many African and Arab
State countries.
 Today, a growing number of countries have
or are about to legalize VoIP, including,
Algeria, Ghana, Kenya, Mauritius, Nigeria,
Somalia, South Africa, Tanzania and
Uganda (Figure 1.9).

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WHAT IS NGN?
 There are numerous views of what constitutes NGN.
 Different operators that have begun the process of
NGN migration refer to their next-generation
networks differently. For some, NGN simply means
migration from a PSTN to an IP-based network.
 For others, it is a more specific reference to advances
such as international call IP trunking and IP in the
local loop.
 From a technology perspective, NGN is based on a
new architecture that modifies both the core and
access parts of a telecommunication network,
changing the way it delivers services to end-users
(Box 1.2).

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Creating an Enabling Environment for NGN:
 The transition to NGN has demonstrated
the importance of regulatory clarity when
dealing with essential facilities controlled by
the incumbent.
 Without clarity, current and future
investment by competitive providers may
be disrupted, as their investment decisions
are highly dependent on the incumbent’s
future plans.

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 In general, regulators are mindful of the risks associated
with NGN deployment so as not to stifle innovation.
 They seek to balance this goal with that of fostering
robust, competitive markets.
 Although it is not necessarily the role of the regulator to
protect investments made by competitive providers
against market risks, it is still important to consider their
interests in terms of ensuring the continued availability of
current wholesale inputs to their products during the
lifetime of the assets in which they have invested.
 Similarly, suitable migration paths for existing
infrastructure investments following the deployment of
new technologies must be ensured.