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Executive Development Program Lesotho Telecommunications Authority July 2529

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persuasion. negotiation. 9/5/09. 20. Regulatory Intervention. Rules and enforcement ... Persuasions: shaming; deadlines; photographic evidence; dramatic techniques; ... – PowerPoint PPT presentation

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Title: Executive Development Program Lesotho Telecommunications Authority July 2529


1
(Executive Development Program)Lesotho
Telecommunications AuthorityJuly 25-29
Fair Trade Transition to Competition

NetTel_at_Africa
University of Zambia
2
  • prepared presented
  • by
  • David Mukosa

3
Sessions Learning Objectives
  • a) Provide learners with knowledge on
    competition as it relates to market structure and
    performance
  • b) Explore the importance of fair competition to
    create efficient, cost effective markets

4
Sessions Learning Outcomes
  • Upon successful completion of this executive
    development session, the learner will be able to
    explain
  • the effective role of regulators in a
    competitive telecommunication market and in
    markets in transition from monopoly to
    competition

5
Fair Trade and Transition to Competition
Sessions Summary
  • Defining Fair Trade
  • Stages of transition to Competition
  • Market Structures
  • Advantages and disadvantages of different Market
    Structures
  • Challenges in Transition to Competition
  • Concerns of the Regulator on transition from
    private to competitive markets

6
Fair Trade and Transition to Competition Session
Summary /ctd
  • Regulatory Intervention
  • Enforcement in Competitive Markets
  • Appeals during transition time
  • Group Activity

7
Defining Fair Trade
  • Partnership based on

Fair Trade
transparency
dialogue
transparency
fair play
8
Stages of Transition to Competition
Government
Remove barriers that protect existing Monopoly
provider from competition by New entrants
Monopoly
Competition
Policy Makers
Take affirmative steps to promote competition in
sector of market previously void of competition
Legal Reforms
Introduce competitive safeguards to Prevent
exercise of market powers by incumbent during
transition, e.g. conditions governing
interconnection
Privatization
Regulation
9
Methods of Introducing Competition
  • Policy Makers
  • Not restrict and complicate methods of entry
    resulting in higher prices to consumers
  • Encourage efficient entry by letting market place
    select preferred approaches
  • Methods
  • Facility based Competition
  • Unbundling of Network
  • Resale

10
Why Fair Trade is Important
  • Some of the factors are that, it
  • Facilitates competition
  • Supports an efficient market place

11
Market Structures
  • Market Structures
  • Monopoly
  • -market with single seller/provider,
  • competition deficiency
  • Duopoly
  • - market with two sellers/providers
  • - one providers change of pricing
    (may) trigger an
  • equal reaction

12
Market Structures
  • Oligopoly
  • - market with multiple providers with
  • unequal power
  • Perfect competition
  • market with many buyers and sellers
  • of product where no single seller or
  • buyer is powerful enough to affect the
    price
  • of the product

13
Advantages and Disadvantages of Different Market
Structures
14
Regulatory Challenges
15
Challenges in Transition to Competition
  • Residue of old monopoly and its interests
  • Managing a new market
  • Dealing and adapting with market forces
  • End of cross subsidy

16
Benefits of Competition
  • Forces firms to perform efficiently
  • Gives choice to consumers
  • Instills logical balance of goods and service on
    the market
  • Encourages innovation
  • Reduces prices and increases quality of service
    commensurate with price

17
Zambias example of Technology Change due to
Competition
AMPS
1995
GSM
1997
GSM
1998
GSM
2003
18
Concerns of the Regulator on transition from
private to Competitive Markets
  • Service quality
  • Universal Access
  • Interconnection
  • Number portability and numbering as a regulatory
    issue
  • Data collection by the regulator to effectively
    monitor transitional markets
  • Independent regulator necessary in liberalized
    market 

19
Regulatory Intervention
  • Regulators can seek compliance with the law by
    resorting to formal enforcement and prosecution.
    However, alternative avenues of enforcement to be
    considered are
  • education
  • advice
  • persuasion
  • negotiation

20
Regulatory Intervention
  • Rules and enforcement
  • standards and benchmarks
  • enforcement strategies

21
Regulatory Intervention /ctd
  • When to intervene
  • preventive actions
  • law-based interventions
  • harm based interventions

22
Regulatory Interventions
  • How much to enforce
  • perfect compliance (ideal!)
  • cost of enforcement
  • sanctions according to law

23
Pyramid of Enforcement Strategies
Command regulation
Insistent strategy
Persuasive strategy
Enforced self-regulation
Ian Ayres John Braithwaite
24
Sanctions Pyramid
Criminal prosecution
Notices improvement prohibition
Warnings infractions written warnings, verbal
warnings
Persuasions shaming deadlines photographic
evidence dramatic techniques education and
advise
Ian Ayres John Braithwaite
25
Regulatory Intervention
  • Reasons for intervention
  • - Limit predatory pricing and anti-
  • competitive behavior
  • - Improve economic efficiency by
  • requiring shared infrastructure
  • - Amend interconnection terms

26
Regulatory Intervention /ctd
  • One other reason regulatory intervention is
    necessary is for the implementation of government
  • policy, e.g universal access,
  • e-commerce, education

27
Discussion 1
  • Is strict enforcement (e.g legalistic
    enforcement), likely to produce undesired
    side-effects?

28
Enforcement in Competitive Markets
  • Enforcement methods by govt.
  • - licensing
  • - arbitration
  • - regulations
  • - ministry instructions
  • - review amend interconnection
  • agreements

29
Food for Thought
  • How much political interference / influence do
    governments (or politicians) exert on regulators
    and operators?

30
Appeals during transition time
  • administrative judge
  • administrative process
  • dispute resolution board
  • appeal to ministry
  • appeal to court

31

Group Activity
32
  • - Company Y applied for a license and was given
    10MHz of operational bandwidth.
  • Company Z applied for license and requested a
    10MHz bandwidth, which was given.
  • Later, company Q made an application for a mobile
    license, the regulatory authority realized there
    was a shortage of bandwidth and that company Y
    and Z were only using 60 of their allocated
    bandwidth each. Company Z has however refused to
    relinquish their unused bandwidth. What should
    the regulatory agency do and why?

33
Reading Material
  • Principles and Practices of Interconnection
    Networks, William James Dally Brian Towles
  • Handbook of Telecommunications Economics, Vol 1.
    Martin E. Cave,Sumit K Majumdar Ingo Vogelsang
  • Pricing Communication Networks, Costas Cour
    coubetis Richard Weber
  • Competition in Telecommunication, Jean-Jacques
    Laffont and Jean Tirole

34
  • H. Intven, J. Oliver and E. Sepu'lveda,
    Telecommunications Regulation Handbook, Module 3
    - Interconnection (2000)
  • http//www.infodev.org/projects/314regulationhandb
    ook/
  • Asia-Pacific Economic Cooperation (APEC)
    Telecommunications and Information Working Group
    materials on interconnection from1999
    http//www.apectelwg.org/apecdata/telwg/interTG/AT
    TZ2FG1.htm
  •  

35
  • International Telecommunication Union, Trends in
    Telecommunication Reform 2000-2001 -
    Interconnection Regulation
  • Michael Klein and Philip Gray, Competition in
    Network Industries- Where and How to Introduce
    it, Note No.104, Private Sector, The World Bank
    Group, January 1997
  • W Melody, Telecom Reform - Principles, Policies
    and Regulatory practice, Chapter 5-
    Interconnection Cornerstone of Competition
    (2001)

36
  • International Forum on Dispute resolution in
    Telecommunications (R Hill and J Watkinson eds),
    White paper - Telecommunications Disputes
    Specificities, Problems, Solutions (17 June 1999)
  • (http//www.icc-uk.com/rhill.html)
  •  
  • Telecommunications Association of Southern Africa
    (TRASA), Guidelines on Interconnection for SADC
    countries, 29 May 2000

37
  • Oftel's November 2000 report on "Consultation on
    future interconnection arrangements for dial-up
    Internet in the United Kingdom"  
  • 1997 EU Directive on Interconnection. The WTO
    Reference Paper is at http//www.wto.org/english/n
    ews_e/pres97_e/refpap-e.htm

38
  • http//europa.eu.int/ISPO/infosoc/telecompolicy/re
    view99/Welcome.html
  • "Telecommunications Interconnection A Literature
    Survey, Prepared for Asia Pacific Economic
    Cooperation (APEC) Organization," by Julian K.
    Wright, Eric K. Ralph and D. Mark Kennet (2000).
  • "Setting Up Interconnection Regimes References
    for Regulators," US Federal Communications
    Commission (FCC) (22 Nov 2002 

39
  • Links to laws and policies of a number of
    countries can be found at http//www.itu.int/ITU-
    D/treg/related-links/links-docs/interconnectlegisl
    .html
  • The UK policy at http//www.oftel.gov.uk/publicat
    ions/1999/competition/gii799.htm  

40
  • The OECD has materials on the interconnection
    policies of its members at http//webnet1.oecd.org
    /oecd/pages/home/displaygeneral/0,3380,EN-document
    -41-1-no-no-5001-0,FF.html  

41
The End___________________
  • Thanks for your Attention
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