Technological convergence and regulation Challenges facing developing countries

Introduction
New Technologies and ICT Regulation Towards a Paradigm Shift?
Jérôme BEZZINA & Bernard SANCHEZ

Impacts of New Technologies on Regulatory Regimes
Introductory Comments
Jérôme BEZZINA & Mostafa TERRAB

Telecommunication Reforms in Developing Countries
Emmanuelle AURIOL

Structural Change in African Mobile Telecommunications
Peter CURWEN & Jason WHALLEY

Internet as a Critical Infrastructure
Lessons from the Backbone Experience in South America
Fernando BELTRÁN, Alain BOURDEAU de FONTENAY & Marcio WOHLERS de ALMEIDA

Broadband Technologies and Services in Sub Saharan Africa
The Case of ADSL, Opportunities for Operators and Challenges for Regulators
Michel ROGY

Local Software and Local Content Production Challenge in Developing Countries
Lessons from Open Source and Creative Commons Paradigms?
Jean-Jacques GAUGUIER & Rémi DOUINE

Offshore Outsourcing
Global Trends and Opportunities for North African Countries
Rachele GIANFRANCHI, Carlo Maria ROSSOTTO & Yann BURTIN

Through the Looking Glass: Civil Society Participation in the WSIS
and the Dynamics between Online/Offline Interaction
Bart CAMMAERTS

Jérôme BEZZINA & Mostafa TERRAB
Impacts of New Technologies on Regulatory Regimes
Introductory comments
Key words: regulation, convergence, technologies.

Traditional regulatory doctrine has been called into question by rapid technological change and convergence. With the migration to packet switched networks, the emergence of the internet protocol (IP) and the expansion of the mobile industry, regulators are encountering major challenges in responding to new innovations "just in time" by adjusting regulatory frameworks and legislation. The paper's objective is to discuss the foundations of such a new regulatory framework and stimulate debate on how to ensure successful ICT/telecommunications regulation in a world of technological convergence. The paper opens with a presentation of the main technological trends at stake within the core of the traditional regulatory regime. Major consequences on the ICT sector are subsequently analysed in the second section of the paper, with an emphasis on structural change that may affect the sector as a whole. Taking overall market structure into account, the third section offers indications of the probable implications of technology trends on the very roots of regulatory regimes. The conclusion tries to represent the challenges of the new regulatory paradigm by addressing the probable implications of technology trends on a specific regulatory issue, namely interconnection.

Emmanuelle AURIOL
Telecommunication Reforms in Developing Countries
Key words: telecommunication, privatization, liberalization, regulation, developing countries.

Major innovations have pushed telecommunication costs down and demand up since the mid-1980s. The new segments of the mobile and the internet markets are hence suitable for oligopolistic competition. Reforms of the former public monopoly have been necessary to accommodate the entry of new operators. It is important to disentangle the effect of market liberalization that occurred in response to technological change and demand growth from the effects of privatizations resulting from structural adjustment programs. In line with popular opinion, privatization per se did not benefit consumers much. The biggest improvements for consumers have been driven by competition from mobile telecommunication firms. Governments should concentrate on liberalizing the mobile and internet segments. For the incumbent telecom operator, allocative inefficiency combined with the critical budgetary conditions found in most developing countries favour public ownership. This is an effective way of combining the regulation of the firm with a maximum level of taxation.

Peter CURWEN & Jason WHALLEY
Structural Change in African Mobile Telecommunications
Key words: mobile, internationalisation, FDI, Africa.

This paper focuses on structural change in the African mobile telecommunications market. After identifying those multinational mobile telecommunication companies with a presence in Africa, attention is drawn to the different types of inward investors that can be observed and where they are investing. The analysis also highlights the lack of competition between the main investors, especially in the large markets outside of South Africa, and the extent to which operators are consolidating with one another.

Fernando BELTRÁN, Alain BOURDEAU de FONTENAY & Marcio WOHLERS de ALMEIDA
Internet as a Critical Infrastructure
Lessons from the Backbone Experience in South America
Key words: Internet, critical infrastructure, externalities, regulation, NAP (network access point), peering, transit, governance, South America.

The radical transformations that have been reshaping the world of telecommunications are uniquely decentralized and, yet, they increasingly provide the lifeblood of our new societies. In this paper we study the internet as a critical infrastructure whose efficiency depends upon the proper and efficient functioning of its market structure. Our objective is not to propose the role governments should play. It is not to suggest regulation. It is exclusively to highlight the vulnerability of the economy to the lack of competition and associated problems due to inefficient market structures. The analysis in this paper is buttressed by the unique in-depth empirical research one of the authors has already carried out on internet in South America, covering many of its national idiosyncrasies, and its various forms of governance. South America is particularly interesting in view of the different ways in which networks came to interconnect with one another and the diversity of governance one finds at points of internet traffic exchange. This subject will form the basis for further work.

Michel ROGY
Broadband Technologies and Services in Sub Saharan Africa
The Case of ADSL, Opportunities for Operators and Challenges for Regulators
Key words: ADSL, Sub Saharan Africa, business models, regulation.

Sub Saharan African (SSA) countries generally suffer from a lack of fully rolled out fixed infrastructure to enable the spread of ICT use among the population, especially in remote and/or rural areas. Nevertheless, the rapid development of dial-up internet access out of the existing footprint of the fixed network provides a clear indication of latent demand for internet access. Average annual growth of internet dial-up traffic, approximately around 40%-60%, is currently mainly driven by increases in the number of customers, through both private (residential) and public (cyber café) access. Various broadband initiatives have therefore been launched and the number of African countries offering commercial ADSL services tripled to 15 in 2004 from just 4 (Tunisia, South Africa, Nigeria, Senegal) in March 2003. Achievable penetration rates (typically 3% of fixed lines after 2 years, 5% after 5 years, 10% after 10 years) provide a sound basis for companies, which are fairly concentrated geographically, a basis that has been reinforced by the significant fall DSL equipment costs. In SSA countries, confronted both with the development of broadband internet usage and the liberalisation of fixed telecommunications, the major challenge for regulators is to ensure an appropriate set of options for "DSL Make or Buy" with respect to ALL the various players in the market (non infrastructure-based ISPs, infrastructure based-ISPs, infrastructure-based telcos (voice, data, internet, retail and wholesale etc.) whilst preventing incumbents from abusing their dominant position.

Jean-Jacques GAUGUIER & Rémi DOUINE
Local Software and Local Content Production Challenge in Developing Countries
Lessons from Open Source and Creative Commons Paradigms?
Key words: Digital Divide, IPR, Copyright, Open Source, Creative Commons

The G8 Digital Opportunity Task Force qualifies the digital divide as follows: "digital divide" is, in effect, a reflection of existing broader socio-economic inequalities and can be characterized by insufficient infrastructure, the high cost of access, inappropriate or weak policy regimes, inefficiencies in the provision of telecommunication networks and services, as well as lack of locally created content. The goal of our article is to study how the open source and creative commons paradigms could give policymakers tools with which to achieve the production of content and interface at a local state. The first part of this article presents the role of local software and local content in the policy agenda of developing countries to bridge the digital divide and challenges the choice of IPR as the main policy tool. The second and third sections introduce the open source paradigm and the creative commons paradigm respectively.

Rachele GIANFRANCHI, Carlo Maria ROSSOTTO & Yann BURTIN
Offshore Outsourcing
Global Trends and Opportunities for North African Countries
Key words: Information Technology, North Africa, Offshoring, FDI, Business environment.

The rise of the global offshoring business, a high-growth, technologically-advanced, and sometimes labour intensive market, holds major opportunities for North African and European countries. It presents a match between developed countries' demand for services and developing markets' desire to improve their trade balance (by increasing exports), boost economic growth (by generating wealth and reducing unemployment) and intensify technological transfer (by enhancing specialized skills and growing the number of different types of services supplied). An even more important effect is that the activities developed through offshoring will be ready to serve domestic North African markets as soon as they have reached greater economic maturity. This will benefit additionally the balance of trade by reducing the need to import services. Algeria, Egypt, Morocco and Tunisia have already begun to reap the benefits of the current offshoring trend of companies in large European economies and could further develop related business activities by introducing key reforms. In response to existing challenges and to enhance the attractiveness of FDI and offshore investment, the paper identifies four determinants of offshoring and indicates short-term, highly-targeted initiatives that should enable North African countries to attracting the offshoring wave to their shores.

Bart CAMMAERTS
Through the Looking Glass: Civil Society Participation in the WSIS
and the Dynamics between Online/Offline Interaction
Key words: WSIS, Civil Society, multi-stakeholderism, Internet, Internet governance

Struggles for social change have become much more complex and need to be fought on several fronts at the same time, on a local, a national, as well as on an international stage. In this paper the focus will be the international level and, more specifically, the tensions and lessons that can be learned from civil society involvement in (formal) multi-stakeholder processes. The case concerned here is the UN World Summit on the Information Society (WSIS) and its preparatory process. The paper will critically assess the summit in terms of outcomes and process from a civil society perspective and the role of the internet in that process. To do this, some of the results of a worldwide survey on civil society participation will be considered and will provide an indicative picture of the way in which civil society players perceive the implementation of participatory discourses within a context that goes beyond the nation state and the use of the internet in that respect. Furthermore, this will be complemented by an in-depth analysis of the internet governance caucus and their mailing list. The survey reveals that some believe the glass to be half-full, others half-empty, while some even think that it is totally empty. In many ways this debate can be related to the difference between 'what ought to be', paraphrasing Gramsci, and 'what is possible'. This tension between utopia and realism also exists within civil society. A continuum can be observed, going from those that think a lot has already been achieved to those that feel (much) more needs to be done.

Emmanuelle AURIOL is professor of economics at the University of Toulouse I and Director of its Institut Universitaire Professionnalisé (IUP) for economic engineering. Her previous posts include associate professor at the Ecole Polytechnique in 2000 and 2001 and she regularly visits the U.S. universities of Berkley, California and the Massachusetts Institute of Technology (MIT). Her research focuses on the regulation of natural monopolies and duopolies, industrial economics (the problem of standardisation and certification), as well as on the internal organisation of companies and problems relayed to the management of human resources. Emmanuelle Auriol also lectured at the Marciac summer university, organised for the Mission d'Animation des Agrobiosciences from 2002 to 2004.

Fernando BELTRAN is currently a senior lecturer at the ISOM department of the University of Auckland Business School. He also leads the Pricing in Next Generation Networks Research Group (PING), where he is currently developing research projects on the application of computational mechanism design methods for the allocation of network resources in next-generation wireless communcations. He holds a Ph.D. in applied mathematics from SUNY at Stony Brook, N.Y., USA and a B.E. from the Universidad de Los Andes, Bogota, Colombia, where he was previously an associate professor and researcher for the industrial engineering department.

Jérôme BEZZINA is a regulatory economist in the policy division of the global information and communication technologies department of the World Bank. He joined the World Bank in 2004 as a regulatory specialist. His current duties involve design preparation and supervision of telecom sector reform in a number of African and MENA countries. Jerome Bezzina also provides policy and capacity-building support to governments in the region on an ad-hoc basis. Prior to joining GICT, Jerome worked for 4 years as director of studies and head of the regulatory and policy division at the Institut de l'Audiovisuel et des Télécommunications en Europe (IDATE). Before joining IDATE at the end of 2000, Jerome had worked as a modelling manager at the regulatory department of the French telecommunications operator Cegetel and as a professor and researcher at ENST, the French telecoms school. Jérôme Bezzina holds a Ph.D in economics

Alain BOURDEAU de FONTENAY, is visiting scholar and senior affiliated researcher with the Columbia Institute for Tele-Information (CITI), Columbia University, co-founder of the International Telecommunications Society (ITS), and co-founder of de Fontenay, Savin & Kiss, a leading international telecommunications consulting firm with clients in six continents. Formerly Bellcore's distinguished member of technical staff, Alain Bourdeau de Fontenay's recent research activities have focused on organizing an international research team to work on the economics of the "Exchange Commons" to better account for the dynamic, institutional, and organizational nature of exchanges highlighting the embedded nature of markets, the key interdependence between innovation and externalities, and of the vertical nature of firms. His research involves applications of the Exchange Commons to issues such as peer-to-peer, internet infrastructure, economies of scale and scope and transaction cost analysis.
Fontenay@aol.com & ad2239@columbia.edu

Yann BURTIN joined the World Bank in 1996. He has worked on telecom, postal and ICT sector  reform in several countries, including Algeria, Tanzania, Niger, South  Africa, Romania and Russia.He has an advanced degree in industrial organization  from  the University of Pierre Mendès in France and the University of Exter in the UK.
yburtin@worldbank.org

Bart CAMMAERTS is a lecturer at the media and communication department of the London School of Economics and Political Science. His teaching covers the relationship between media, communication, democracy and citizenship. His research interests include alternative media, the use of media by social movements and activists, e-democracy and internet-use in multi-stakeholder processes. He chairs the communication and democracy section of the European Consortium for Communication Research (ECCR).

Peter CURWEN is visiting professor of telecommunications strategy at Strathclyde Business School, Glasgow and also researches and publishes on a private basis. He was previously professor of business economics at Sheffield Hallam University. His primary research interest concerns the manner in which a rapidly changing environment affects the structure of the mobile telecommunications industry and its strategic implications for major companies in that sector. He has published three books on telecommunications, including Telecommunications Strategy: Cases, Theory and Applications (Routledge, 2004) with Jason Whalley.
pjcurwen@hotmail.com

Rémi DOUINE is a PhD student in economics at ENST, Paris, France. His research primarily focuses on peer-to-peer networks and movie industry economics. He is also working on how information and communication technologies are reshaping the economic and legal framework of copyright and 'droit d'auteur'.
douine@enst.fr

Jean-Jacques GAUGUIER is a PhD student in economics at the University of Paris Dauphine, France. His research focuses on applied theoretical microeconomic issues. His recent research topics include open source software and innovation financing
jean-jacques.gauguier@dauphine.fr

Rachele GIANFRANCHI is an ICT specialist. She joined the World Bank in 2001 as a consultant for telecom and ICT policy. She is based in Belgrade, Serbia and specializes in economic and policy analysis related to licensing, converging network  infrastructure and ICT Development. She has an MA in international economics from Johns Hopkins University - SAIS - and a degree in political science from the University of Firenze, Italy.
rgianfranchi@worldbank.org

Michel ROGY is an associate director with TERA Consultants. Prior to joining TERA, Dr. Rogy was director of business planning at LD Com and director of the enterprises business unit at 9Telecom. Dr. Rogy has extensive professional experience in regulatory affairs, interconnection issues, marketing, sales and customer care. His academic qualifications include a degree in telecommunications engineering, a DEA in industrial economics and a PhD in economics.

Carlo Maria ROSSOTTO is a senior regulatory economist. He joined the World Bank in 1998 and has monitored sector regulatory reform and privatization in several telecommunications-related projects analysing the fiscal impact of sector reforms and financial and organisational sector restructuring. He holds post-graduate degrees in  economics and business administration from Bocconi University Milan and in financial and commercial regulation from The London School of Economics.
rossotto@worldbank.org

Bernard SANCHEZ joined IDATE in August 2004 as director of studies, in the "Industrial Analyses" department. He is now in charge of the regulation and competition division. Before joining IDATE, he was a senior economist at Enerdata, a French consulting firm specialized in energy sector analyses, where he was in charge of market liberalization, energy forecasts and energy efficiency policy assessment. Bernard SANCHEZ holds a Ph.d in economics (1996).
b.sanchez@idate.org

Mostafa TERRAB is the manager of the Information for Development (InfoDev) program. He joined the global information and communication technologies department of the World Bank in 2002 and was the lead regulatory specialist within the policy unit. Prior to joining the World Bank Group he was director general of the Morrocan telecommunications regulatory agency (ANRT). Mr Terrab holds an engineering diploma from the Ecole Nationale des Ponts Et Chaussées (Paris, France), a masters in science and a Ph.D. in operations research from the Massachusetts Institute of Technology (MIT).

Jason WHALLEY is a senior lecturer in the department of management science at the University of Strathclyde, Glasgow. Prior to joining the department, he worked at TNO – Strategy, Technology & Policy in The Netherlands and undertook doctoral research on the internationalisation of the Baby Bells. His research interests include internationalisation, mobile service development and telecommunications policy development in mountainous developing countries.
jason.whalley@strath.ac.uk

Márcio WOHLERS de ALMEIDA is a research expert on Information Society Development with the United Nations - ECLAC (Economic Commission for Latin America and the Caribbean). His field of specialization and research includes universal access in an internet environment. He has acted as special advisor to the Ministry of Communications in Brazil. He has a PhD and is a professor on leave of ,UNICAMP – State University of Campinas (Brazil), where he teaches and does research into the economics of telecommunications.
marcio.wohlers@cepal.org