Convergence and Regulation in Brazilian Telecommunications Jose - - PowerPoint PPT Presentation

Convergence and Regulation in Brazilian Telecommunications

Jose Rogerio Vargens

Consultant at Oi Telecom PhD on Economics

ACORN-REDECOM Fifth Annual Conference, Lima, May 19th 2011

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Convergence in telecommunications

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Convergence and Regulation

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Two routes for the convergent regulation

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Main paths to meet convergence in Brazil

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Convergence in telecommunications

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Convergence and Regulation

3

Two routes for the convergent regulation

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Main paths to meet convergence in Brazil

Technical definition Commercial definition

Convergence is the transmission and the processing

• f any codified information as a bit in digital format,

allowing communication among any type of networks and users interfaces.

WHAT IS CONVERGENCE?

Regulatory definition

Convergence means to make it possible to the user the access to information and communication at anytime, anywhere and on any interface (anytime, anyplace, anydevice). Convergence is to allow the development and the

• ffer of many kinds of information and

communication services on any type of platform and its access by the greatest number of users. Convergence in Telecommunications

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Convergence in telecommunications

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Convergence and Regulation

3

Two routes for the convergent regulation

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Main paths to meet convergence in Brazil

Restrictions of private initiative. Control of prices by regulator. Quality and universal service obligations.

CLASSIC APPROACHS OF REGULATION

Freedom of private initiative. Antitrust and competition protection. Costumer protection. Convergence and Regulation

Natural Monopoly Regulation Competition Regulation

Combine isonomic and asymmetric rules based market power differences among firms.

CONVERGENT APPROACH FOR TELECOM REGULATION

Isonomies Asymmetries 1. Technological neutrality 2. Freedom of services offer to all firms 3. Absence of institutional-regulatory entry barriers 4. Competition and costumer protection 5. Interconnection 6. Policies to digital inclusion Some pricing control and quality and service obligations applied to firms with significant market power. (the Six Principles)

Convergence and Regulation

Imperfect Competition Regulation

CONVERGENT APPROACH FOR TELECOM REGULATION

Industry Pressures Technical change Competition Globalization Competition Regulation Natural Monopoly Regulation Imperfect Competition Regulation The Six Principles

Convergence and Regulation

Convergence Technical Commercial Uncertainty Big and fast changes Difficult to regulate

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Convergence in telecommunications

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Convergence and Regulation

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Two routes for the convergent regulation

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Main paths to meet convergence in Brazil

Demands broad review of the national regulation framework. International experience: Europe.

UNIFICATION OF GRANTS

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Electronic Communication Service (ECS)

• Private: confined to private environments,

without commercial offer.

• Accessible to the public, by commercial
• ffer.

Telephone Service Available to Public (TSAP)

• Rights and duties additional to ECS

Accessible to Public. Universal Service (US)

• The minimum set of services affordable to

all users.

SOURCE: ANACOM (www.anacom.pt).

European System of Grants

Two routes for the convergent regulation

Adjustments to suit the regulatory framework to convergence, without alter the 1997 General Telecom Act.

ADJUSTMENTS IN THE MULTI-AWARD SCHEME

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Regulation of the Ministry of Communications Broadcasting

• Sound: (Radio)
• Sound and Image (TV)

Source: Elaborated by the author.

Model of grants for telecommunications in Brazil

STFC SMP Pay-TV Broadcast SCM

Anatel Regulation STFC (Fixed Telephony) Fixed Switched Telephone Service SMP (Mobile Telephony) Personal Mobile Service Pay-TV Cable TV /MMDS/DTH/TVA SCM Multimedia Communication Service

Two routes for the convergent regulation

Is the current multi-award system in Brazil compatible to the technological convergence in the telecommunications industry? Yes, since tree conditions are met: Condition 1 – All the service universe has to be covered by the existing grants.

• The system of grants must enable the framework of all existing services and all services that may be
• developed. In Brazil, SCM meets this purpose.

Condition 2 – Absence of restrictions and barriers to the acquisition of grants.

• The grant itself is not scarce resource and therefore should not have economic value.

Condition 3 – Full freedom to provide services.

• Firm that has all grants must be able to provide all telecommunication services.
• Firm that has two grants can provide convergent services between them.

ADJUSTMENTS IN THE MULTI-AWARD SCHEME

2 Two routes for the convergent regulation

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Convergence in telecommunications

2

Convergence and Regulation

3

Two routes for the convergent regulation

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Main paths to meet convergence in Brazil

Regulation Broadband policy

Implementation of the PGR (General Update Plan on BrazilianTelecom Regulation) by the regulator Anatel, to meet a model of imperfect competition regulation. Implementation of the National Broadband Plan published by the government in 2010, to expand broadband services.

• Brazil had 7,12 fixed broadband accesses/100 inhabitants in 2010. Argentina had

12,89 and Chile 10,51 accesses/100 inhabitants.

Eliminate legal restrictions

Maintenance of the 1997 General Telecommunications Act (Law 9.472/97). Changes in Cable Act and Fust Act.

• CABLE ACT (Law 8.977/95): to open the Cable TV market to all firms.
• FUST ACT (Law 9.998/00): to permit universal fund be used to subside other

services, not only fixed telephony.

Main paths to meet convergence in Brazil

Thank you!

jose.vargens@oi.net.br jose.rogerio.vargens@gmail.com

Jose Rogerio Vargens

Consultant at Oi Telecom PhD on Economics