Regulating Electronic Communications for Growth in Emerging Economies

october 9, 2013

Berkeley Research Group (UK) Ltd. | 15th Floor, 6 New Street Square | London, United Kingdom | EC4A 3BF

Gita Sorensen | [email protected]

Prepared By:

Regulating for Growth: Asymmetric Regulation of Electronic Communications in Emerging Economies

WHIte PaPer

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REGULATING FOR GROWTH | i

Contents

Contents ....................................................................................................................................................... i

1. INTRODUCING REGULATING FOR GROWTH ..........................................................................1

2. ASYMMETRIC REGULATION IN EMERGING ECONOMIES ..................................................2

2.1 Background of Economic Regulation in Electronic Communications ...........................................2

2.2 Regulatory Priorities of EEs versus DEs ........................................................................................3

2.3 Meeting the Regulatory Needs of EEs ...........................................................................................4

3. IS ASYMMETRIC REGULATION THE ‘RIGHT’ SOLUTION FOR EEs? IF SO, HOW

SHOULD IT BE IMPLEMENTED? ...........................................................................................................4

3.1 The Principle of Asymmetric Regulation .......................................................................................4

3.2 Market Power Analysis in EEs .......................................................................................................6

3.3 Asymmetric Regulation in Context ................................................................................................8

3.4 An Example - Call-Termination Markets .....................................................................................10

4. CONCLUSION ................................................................................................................................11

APPENDIX 1: DESCRIPTION AND DISCUSSION OF ASYMMETRY REGULATION OPTIONS A1

APPENDIX 2: OUTLINE OF ‘REGULATING FOR GROWTH’ INITIATIVE ................................... A5


REGULATING FOR GROWTH | 1

1. INTRODUCING REGULATING FOR GROWTH

Regulating for Growth (RfG) is an initiative to harness knowledge and experience in the

communications sector to create a series of analyses and guidelines to assist practical and ‘fit-for-

purpose’ regulation of electronic communications networks and services in emerging economies (EEs).1

The assumption that EEs simply ‘lag behind’ developed economies (DEs) in electronic communications

infrastructure and services is no longer tenable. Even high-level analysis shows that needs and priorities

differ substantially between the two groups, as does the administrative and legislative infrastructure

available to implement and operate regulatory frameworks for the sector. It is often the case that EEs

‘leapfrog’ technologies, which may also make the application of DE regulatory solutions inappropriate.

Why is regulation in EEs often based on models from DEs? Are those models fit for purpose in EEs? Or

are they used because they provide a well-documented framework with precedents supporting decision

making?

RfG will examine a series of key regulatory building blocks originating from DEs (including licensing

and allocation of scarce resources, application of asymmetric regulation, and regulation of access and

interconnection) to ascertain whether they meet the objectives and priorities of EEs and are designed to

be practical given the level of administrative infrastructure of EEs.

RfG as an initiative involves a wide range of parties with different perspectives on the electronic

communications sector and the need for regulation. Organisations provide expert resources and, in some

cases, funding for RfG to review whether regulatory approaches in developed economies are suitable for

use in emerging economies and, where they are not, proposing alternative approaches.

RfG already has commitment to participate from a number of experts, providers, and regulators. We

would welcome other organisations interested in participating. An outline of the RfG initiative is

attached in Appendix 2 to this document.

1 In this paper the term emerging economies (EEs) is used loosely to incorporate many economies in Africa, Asia, South East

Europe, South America, and the Caribbean.



Please contact Gita Sorensen at [email protected] or +447789004509 to discuss how you

could participate.

2. ASYMMETRIC REGULATION IN EMERGING ECONOMIES

This paper is intended as an example of the kind of analysis the RfG initiative would undertake (noting

that it is not a formal RfG paper and that it will most likely be incorporated into the initiative and further

developed to provide more-specific guidance). The paper focuses on the subject of asymmetric

regulation, questioning whether and how it should be applied in EEs and looking at the cost and time of

applying asymmetry, as well as the regulatory risks of not doing so.

It should be noted that although the term ‘regulation’ is used throughout the document, some

components discussed (and potentially the changes considered) would require changes to enabling

legislation and regulations.

2.1 Background of Economic Regulation in Electronic Communications

Economic regulation in electronic communications2 originates from the desire to introduce competition

into the provision of fixed telecommunications services and the operation of fixed telecommunications

networks. This started around the 1980s. There was near-ubiquitous fixed network coverage in most

DEs, and in many places the operator of that network was a state-owned monopoly. Previously,

regulation had largely been limited to setting prices for telecommunications services.

Regulation also applies to mobile networks and services and other electronic communications services.

However, as many mobile operators built networks and offered services in different market conditions

from those faced by fixed monopoly operators (many mobile networks were built with private funding

and were subject to competition), the perceived need for regulation of mobile operators was

substantially less. Additionally, the concept of universal service obligation has typically been associated

only with fixed networks and services.

2 Including telecommunications and other networks and services provided electronically.

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During the 1990s, the European Commission (EC) drew up a regulatory framework for liberalisation

(introduction of competition) of telecommunications in Europe (the Open Network Platform (ONP),

introduced in 1998). The ONP framework’s primary focus was mandating interconnection and access

conditions to fixed monopoly networks. Over the next 15 years, the EC regulatory framework evolved to

address the increased market complexity caused by multiple market players and an ever-increasing set of

services offered on electronic communications networks.

2.2 Regulatory Priorities of EEs versus DEs

In order to understand what fit-for-purpose regulation for EEs looks like, one needs to understand and

articulate the overall purpose of the regulatory intervention. Analysis at the group level for EEs and DEs

requires generalisation across each group. Although individual economies may greatly differ, they tend

to share certain characteristics, which we briefly outline below.

As set out above, the main driver for regulation in the EU was to introduce competition in fixed services,

as EU member states typically had near-ubiquitous state-owned fixed networks. Investment in

alternative infrastructure was also an objective, but initially more important was the drive to improve

efficiency of the incumbent network provider. There were typically few or no unserved geographic

areas. It was expected that introducing competition, combined with improving efficiency of current

provider(s), would reduce pricing levels and increase innovation and quality.

In EEs, however, there is typically no ubiquitous network. Investment to improve coverage and

availability of telecommunications services is therefore often a high priority. Nowadays, such

investment often materialises as mobile rather than fixed networks, so the regulatory challenges are

different from those faced (at least initially) in DEs. Affordability is often also a key concern for EEs,

whereas this is a marginal issue in most DEs.

Both groups, however, aim to protect the interests of users and citizens through encouraging sustainable

competition and preventing abuse of market power. Both groups also look to the electronic

communications sector to fuel economic growth.



Based on this high-level comparison between the key priorities of the two groups of economies, it

seems that both overlap and significant differences exist.

2.3 Meeting the Regulatory Needs of EEs

In addition to specific priorities for regulation such as coverage and affordability, EEs need practical and

realistic legislative and regulatory frameworks, proportionate to the level of administrative infrastructure

in place and to the availability of specialised skills to implement the regulations. For example, the EU

regulatory framework assumes the existence of competition legislation and authorities and the

availability of established procedures for dealing with anticompetitive behaviour. This is often not the

case in EEs.

Regulatory legislation and structures should be designed therefore to focus on key priorities and operate

resiliently within the existing administrative and legislative infrastructure. The complex regulatory

frameworks often imported from DEs are not designed for either those priorities or the administrative

infrastructure. This should be considered in the context of the costs and benefits of applying asymmetric

regulation, especially the complex process of market and market power analysis.

3. IS ASYMMETRIC REGULATION THE ‘RIGHT’ SOLUTION FOR EEs? IF

SO, HOW SHOULD IT BE IMPLEMENTED?

3.1 The Principle of Asymmetric Regulation

Central to many regulatory frameworks is the concept that regulation should only be imposed if and

when a provider (of network and/or services) enjoys a position of market power. Market power means

that a company is in a position to cause significant harm to either competitors or users/consumers by

abusing that power. Some operators are therefore subject to more regulatory remedies than others (i.e.,

asymmetric regulation).

The underlying rationale for asymmetric regulation is that regulation will be imposed only when it is

needed to prevent market failure. Reasons include: regulatory intervention changes market dynamics

and therefore causes market distortion; regulation costs money; regulation is time-consuming; and



unless the regime is transparent and predictable, regulation can cause market uncertainty and increase

risk.

In order to apply asymmetric regulation, it is critical to first determine who has market power in which

markets. Asymmetric regulation therefore relies on market power analysis. The ONP framework used a

simple rule to determine whether a provider had market power—any provider with more than 25 percent

market share in a predefined market had market power and therefore should be regulated to prevent

abuse of such power.

Over time, as markets have become more complex through market entry and competition, this approach

has been refined (and made considerably more complicated) into one that requires regulators to first

define markets where regulatory intervention could be justified (‘relevant markets’ susceptible to ex ante

regulation) and then establish whether a provider(s) hold(s) a position of market power. If so, the

potential market failure caused by an abuse of such market power is identified, and remedies are

designed to prevent that (or those) market failure(s).

This process is set out in the EC market review guidelines,3 and it took some EU regulators more than

two years to complete the first time. Thus, it is considered complex even in EU member states with well-

developed administrative infrastructures.

Asymmetric regulation requires detailed analysis to define ‘relevant markets’ susceptible to ex ante

regulation4 and the subsequent analysis of providers in these markets to ascertain whether one or more

provider(s) enjoy(s) a position of significant market power (SMP).5 If SMP is found, then the underlying

‘market failures’ leading to the SMP position need to be identified, and remedies need to be designed to

prevent the abuse of that SMP.

3 European Commission, “Commission guidelines on market analysis and the assessment of significant market power under

the Community regulatory framework for electronic communications networks and services,” 2002/C 165/03 (July 11, 2002),

accessed at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2002:165:0006:0031:EN:PDF 4 Regulatory intervention to prevent abuse of market power, rather than ex post intervention to punish or remedy abuse that

has taken place. 5 SMP is defined by the European Commission as ‘a position where an undertaking has the power to behave to an appreciable

extent independently of competitors, customers and ultimately consumers.’



3.2 Market Power Analysis in EEs

Despite the differences in priorities identified above, it is difficult to see why the rationale behind

asymmetric regulation (reducing regulatory intervention to where it is required, and thus reducing

market distortion, costs, and time) is not valid in both groups of economies. The benefits of asymmetric

regulation seem clear. However, it is important to look also at the costs. Asymmetric regulation requires

market reviews, and the most significant regulatory cost of asymmetric regulation is likely to be the

market review process.

It would be possible to estimate the costs of the market review process in a number of EEs and, from

that, a cost range for the process. This paper, however, takes a more qualitative approach. Four potential

methods of performing a market power analysis have been identified, and relative benefits and costs/risk

have been estimated for each on a scale of 0 to 10 (see Figures 1 and 2). I have considered the following

factors:

a. Cost of implementing the option

b. Time to implement

c. Regulatory risk of implementation (including both over- and under-regulation of providers with

and without SMP)

The options are:6

1. Using market share thresholds to determine whether a provider has SMP

2. Setting market share bands for presumption of SMP, and performing limited additional analysis

to test presumptions

3. Developing a reduced set of analyses to be performed across all markets, independently of

market shares

4. Performing the full EU market analysis process

6 The four options are described in more detail in Appendix 1 to this paper.



The basis for comparison (Option 0) is a situation where no market analysis is undertaken, and providers

are subject to full regulation as though they had been found to have SMP.7 The relative risk/cost/time

levels would be likely to change with market conditions.

For a market with a single significant fixed operator and two mobile operators of similar size, the

relative costs/risks and benefits could look as illustrated in Figure 1.8

(Figure 1 is illustrative only)

This illustration reflects that there is some (although only moderate) risk of over- or under-regulation if

everyone is subject to full SMP regulation, but that due to the limited complexity of the market, the risk

could potentially be reduced substantially through relatively limited market analysis to achieve

asymmetric levels of remedies. Full EC market reviews may be unlikely to reduce substantially that

level of risk whilst substantially increasing the time and costs of the process.

In a market with several fixed and mobile operators of different sizes, the graph could look as

follows:

7 This option could be modified to include a minimum-size/turnover threshold for certain regulation to apply so that very

small providers would not be caught. 8 Please note that the graphs are intended to be illustrative only. The crossover point should not be interpreted as favouring a

specific option.

0

2

4

6

8

10

Option 0 Option 1 Option 2 Option 3 Option 4

Risk

Cost

Time



(Figure 2 is illustrative only)

In this scenario, the increased market complexity would cause a substantially higher risk of over- or

under-regulation if full SMP regulation was applied to providers, and that risk could be substantially

reduced through market analyses. The risk levels of options 3 and 4 are equal in this illustration due to

the assumption that there is a limited amount of reliable data, and therefore increased analysis may not

increase the accuracy of the outputs.

In addition to the factors included above, a further factor is significant in many EEs—the lack of reliable

data. In all economies, regardless of how developed they are, it is hard to obtain the information required

by the regulator to perform reliable market reviews. In EEs, the systems used by providers may retain

even less data, and this presents a significant risk factor to performing detailed market reviews. The risk

of over- or under-regulation for all options 1 through 4 therefore may be higher than indicated above.

3.3 Asymmetric Regulation in Context

Remembering the regulatory priorities of EEs of affordability and attracting investment to build

infrastructure and develop services, the benefits of asymmetric regulation should be considered

alongside other aspects valued by potential investors. These would include regulatory certainty and

transparency.

The burden of more regulatory controls (e.g., imposing SMP-style regulation on all licensees or

choosing a lower-cost option for determining SMP) may be outweighed by benefits of certainty and

transparency of how regulatory decisions are made, and what those regulatory decisions will be.

0

2

4

6

8

10

Option 0 Option 1 Option 2 Option 3 Option 4

Risk

Cost

Time



Regulatory certainty requires a clearly defined framework, preferably one that is used in a region or a

group of countries such that a body of precedents is developed to assist both regulators and providers in

anticipating regulatory decisions and reducing legal challenges. No such consistent framework and body

of precedents exists for EEs; this is often cited as one reason for using the established DE frameworks

such as that of the EU. It is hoped that RfG will assist in the creation of a more fit-for-purpose

framework and body of precedents for EEs. A representative of a large regional9 provider and investor

commented:

Despite fixed networks being far from ubiquitous in emerging markets, the regulatory

frameworks being applied remain essentially similar to those of the European Market

with robust ex-ante regulations and loosely applied ex-post regulations often not

supported by appropriate competition frameworks and competent competition authorities.

The existing ex-post competition assessment and adjudication processes take too long

and as consequence those affected by anti-competitive activities, either price or non-

price, have been materially and in some cases fatally damaged before any corrective

actions are taken… It is essential that emerging markets recognise the need to streamline

the regulatory approach; to recognise the need to consider how best to ensure investor

confidence and stability in the regulatory framework; and to reduce the total tax and fees

burden levied on the sector. Adjustments in these areas will yield significant benefits not

least of which will an improved probability of achieving digital agenda aspirations within

an appropriate timeframe and at retail prices that remain affordable to the masses and not

just the elite.

Bashir Gwandu, former regulator of Nigeria and current chair of the Commonwealth ITU Group and the

ITU Radiocommunications Advisory Group, adds, “Effective regulatory strategies for the developed

world are in most cases not as effective in the developing world in view of the differences in the level of

education, rights awareness, and existence of established and well-tested legal system that protect

citizens from abuse of market power.” He further states,

9 Across Africa, the Middle East, and Asia.



In some EEs, where smaller niche operators have been licensed, is not only the national

dominant operator that can abuse market power. It could be a small operator that might

be dominant in a small geographical area where other operators do not have coverage. In

such cases when regulating we apply rules across the board and not only to the national

dominant operator. So, the techniques used in the developed world whereby dominance is

first identified before applying specific regulatory mechanism may not necessarily

provide the desired and timely results.

Additionally, whilst regulation should provide certainty to large investors and current network operators,

it is important that the electronic communications sector provide a fertile platform for local initiatives

from small- or medium-sized entrepreneurial companies [inset quotes from smaller operators and

incubators].

Juliey Nomah, chairperson of the African Incubator Network, says, “When competition is introduced, it

is critical that careful thought is given to the controls on licensees to prevent abuse of dominance and to

ensure that the market provides opportunities for innovation by smaller companies. This should be

enshrined in the telecommunications sector policy and in the licensing terms for network and service

providers.”

3.4 An Example - Call-Termination Markets

A further example of how emerging markets may differ from developed markets is in the presumption of

SMP in termination of calls to directly connected customers.

Regulators in the EU have worked for approximately 10 years with the presumption that network

operators have SMP in the market for terminating calls to their directly connected customers—simply

because one can only call a person by using the network that person is connected to. In many emerging

markets, however, customers own and can be reached on two or even three phones. This can be caused

by market situations, such as a lack of interconnection between networks or on-net pricing that makes it

attractive for people to make only on-net calls, even if it means having several network subscriptions

and phones (or phones with dual SIM card slots). This particular market condition could challenge the



presumption of SMP in call-termination markets, unless the market condition is considered temporary

due to other market failure(s).

4. CONCLUSION

Although this paper has only touched on some of the challenges in developing a specific element of a

regulatory framework suitable for EEs, it has also clearly identified that simply ‘downsizing’ or even

copying frameworks from more DEs (such as the EU framework) will not likely be a suitable solution.

Useful guidelines exists for regulators and providers in EEs (including the ICT Regulatory Toolkit,

published by the ITU and infoDev),10

but as these guidelines and toolkits do not articulate how best to

meet the specific needs of EEs, it can sometimes be difficult to determine which parts of the toolkit to

apply.

It appears that substantial benefits could result from more in-depth analysis of how best to meet the

needs of EEs, and this paper is intended to be an initial step in that process. With the involvement of a

wide range of parties (including governments, regulators, academics, current and future providers, and

investors), we at Berkeley Research Group hope to initiate an effort to crystalise the specific needs of

EEs through the RfG initiative. RfG should articulate an approach for a practical and ‘fit-for-purpose’

regulation that regulators and governments can refer to alongside other frameworks when introducing or

updating electronic communications regulation.

10

infoDev and International Telecommunications Union, ICT Regulation Toolkit, accessed at:

http://www.ictregulationtoolkit.org/en/index.html

http://www.ictregulationtoolkit.org/en/index.html


REGULATING FOR GROWTH | A1

APPENDIX 1: DESCRIPTION AND DISCUSSION OF ASYMMETRY

REGULATION OPTIONS

OPTION 1: USING MARKET SHARE THRESHOLDS ONLY TO DETERMINE

WHETHER A PROVIDER HAS SMP

This option would require a relatively small amount of market data (revenues and customer numbers by

service line) and could be done relatively quickly. Below I explore the potential risks of this option.

In markets with only a small number of providers, and where historically one provider was a monopoly,

this approach could be appropriate. However, many EEs, as described above, are often characterised by

a single historic monopoly in fixed services with only limited geographic coverage and subscriber

numbers, whereas there can be two or more mobile providers with substantially higher coverage and

higher subscriber numbers.

As the regulatory framework would need to address the market situation across all electronic

communications, the SMP test would need to be flexible enough to address both fixed and mobile

market conditions. Supposing that a market share level of 40 percent11

was to be set as the threshold for

SMP, it is possible that both mobile providers and the incumbent fixed provider would fall into that

category. This result may be acceptable for the fixed provider in a relatively static fixed market. But if

the two mobile providers compete strongly, it is possible that neither of them hold SMP in a specific

relevant market. This could result in over-regulation of the mobile providers.

In more complex market situations, heavy competition from market entrants could pose significant

competitive constraints on a large incumbent provider and therefore reduce the larger provider’s market

power. As market structures become more complex with an increased number of providers, and where

markets experience rapid growth, the simple market share test will likely become gradually less useful.

A threshold of 25 percent, as used in the ONP framework, would increase the risk of over-regulation,

11

The European Commission framework (2002) says that a market share above 40 percent can create a presumption of SMP,

although all other tests still need to be performed to establish that. It also says that a market share above 50 percent would

almost certainly result in an SMP finding.



but that could, from a consumer protection perspective, be considered more acceptable than risking

under-regulation.

OPTION 2: SETTING MARKET SHARE BANDS FOR PRESUMPTION OF SMP AND

PERFORMING LIMITED ADDITIONAL ANALYSIS TO TEST PRESUMPTION

The principle behind this idea is to create upper and lower thresholds below and above which it is very

unlikely that a provider will or will not enjoy SMP. The band therefore would identify providers that

may have SMP and for which more detailed analysis would be required. These limits could be perhaps

35 percent and 60 percent12

—analysis could determine the optimal levels, or the level could be left

variable for each regulator to determine (through open consultation). Therefore, the additional tests

required below and above these thresholds would be limited. Market shares falling between these

thresholds would require more tests, which could be ‘tiered’ so as to reduce overall effort and time

consumed.

This option would require more data than the simple market share test, but the process could be run

sequentially (so that the data collection to perform the required analyses would be undertaken after the

initial market share analysis and targeted at markets where providers fall into the middle bracket of

market shares), rather than needing to collect information from providers up front. The costs of this

analysis and the time required to perform it would be higher than for the simple market share test.

Whilst not including the full EC framework tests for all market situations, this option seeks to reduce

costs and time, as well as the risks of over- or under-regulation. In markets experiencing significant

growth (and thus change), such as in many EEs, market shares could change relatively quickly.

Therefore, even with the more detailed additional analysis in the middle category, there remains a risk of

over- or under-regulating as a result of reduced analysis. In my view, however, that risk would be

substantially reduced relative to option 1.

12

The intention would be to set the limits to capture the vast majority of potential SMP providers, but at the same time limit

the more detailed analysis to only where it is needed and has the greatest risk of market failures resulting from over- and

under-regulation.



OPTION 3: DEVELOPING A REDUCED SET OF ANALYSES TO BE PERFORMED

ACROSS ALL RELEVANT MARKETS AND ALL PROVIDERS, INDEPEDNENTLY

OF MARKET SHARES

This option takes away the reliance on market share as thresholds for presumptions and level of analysis

require. It could still include some ‘soft thresholds,’ such as those in the current EC framework, but all

markets and providers would be subject to the same level of analysis, in principle. The number of

parameters and level of analysis undertaken would be lower than prescribed in the EC market review

guidelines in order to achieve a reduced time and resources burden on regulators and providers.

Defining the parameters to include in this analysis would need to be based on empirical data and hands-

on knowledge of market dynamics in EEs. A focus on parameters for which reliable data is most likely

to be available could be a useful starting point, as the availability of reliable and comparable data is

often a significant issue. Designing analytical tests that require data that is difficult to retrieve and audit

can lead to the results being challenged, and specifying significant data-collection requirements can

impose a significant resource and monetary burden on providers, so it should be considered carefully.

However, there is the risk of not identifying the correct parameters to enable robust analysis and

decision making. There is also a risk of not being able to collect the necessary data, and that the data

collected may not be sufficiently reliable to perform the necessary analyses. Additionally, as complexity

increases, the risk of incorrect implementation of the prescribed analyses increases for this option over

and above the first two options.

It is not obvious that the risks are higher for under- or over-regulation. The increased complexity of the

analysis also increases regulatory uncertainty and could impact negatively on investor confidence.

OPTION 4: APPLYING THE EC MARKET REVIEW GUIDELINES IN FULL

The European Commission has already described this option in substantial detail, but it is worth looking

at the risks of using this option in EEs.



If applied by experienced practitioners using accurate and reliable data, this option should reduce the

risk of over- or under-regulation. However, given the difficulties in getting the necessary data and

history of many EU regulators finding the analysis difficult to perform, it is arguable that the risk of

over- and under-regulation could increase. In my analysis, I have assumed that the risk remains

unchanged from option 3, with the additional data and analysis outweighing the other risks.



APPENDIX 2: OUTLINE OF ‘REGULATING FOR GROWTH’ INITIATIVE

Regulating for Growth (RfG) is an initiative that aims to identify areas in which regulatory objectives

and priorities differ between developed economies and emerging economies, to the extent that

regulatory approaches in developed economies may not be suitable or fit for emerging economies.

It is the intention that RfG should to attract a wide representation of stakeholders to participate in the

initiative in order to ensure that the approach taken is balanced and representative.

RfG will identify a series of topics for which a subgroup will take the responsibility to produce analysis

in accordance with a standard format outlined below.

The outputs produced should be a set of guidelines with underlying supporting analysis. The guidelines

should be authoritative, yet informal—not formal recommendations. They should carry weight because

of the broad representation in the group that developed the guidelines and provide a policy reference

framework for all stakeholders (governments, regulators, investors, providers, and consumers). They

would be intended as guidance to supplement the application of (for example) the World Bank ITC

Toolkit and regulatory frameworks such as that used in the EU.

It is hoped that the outputs will sit alongside other resources including the Regulatory Toolkit, prepared

for the World Bank and the ITU.

The outputs would be freely available to all interested parties under a ‘no liabilities’ principle.

PROJECT SCOPE

Initial topics identified to be covered include:

1. Defining Policy Objectives and Regulatory Priorities for Emerging Economies

2. Investment/Coverage Incentives

2.1. USO scope and funding



2.2. License restrictions (limitations to types of services or types of infrastructure that can be built

and operated under specific licences—general licences versus silo licences)

3. Asymmetric Regulation

3.1. Market failures and remedies

3.1.1. Access and interconnection

3.1.1.1. Impact of new technologies?

3.1.2. Retail

3.1.3. Consumer protection

4. Allocation of Scarce Resources

4.1. Spectrum

4.2. Numbers and names

5. Fees and Charges

5.1. General fees

5.2. Spectrum

5.3. Taxes

6. Compliance

6.1. Incentives

6.2. Penalties

Each task should result in a paper that:

1. Identifies objectives and priorities of the activity in developed economies (DEs)

2. Reviews these against outputs from task 1 (Defining Policy Objectives and Regulatory Priorities

for Emerging Economies)

3. Reviews DE regulations against EE objectives and priorities



4. Discusses regulatory options

5. Presents case studies and outcomes

6. Presents quantitative analysis of options, where appropriate

7. Provides guidance on regulatory options for different market conditions

We envisage that the work will be done in phases. Task 1 should precede all other tasks, as it will inform

all tasks and subtasks.

STRUCTURE AND PARTICIPANTS

Two levels of participation are envisaged:

Sponsors will contribute financially to the organisation of the initiative and to specific analysis

required to support the work of the subgroups. Sponsors will also contribute resources and

expertise to participate in subgroups (travel costs should be covered by the participants

themselves).

Participants will contribute resources and expertise to participate in subgroups (travel costs

required should be covered by the participants themselves) and data, where applicable and under

confidentiality agreements, to support the analysis.

It is expected that work can be done using telephone and email to avoid or at least minimize travel costs.

OUTLINE PLAN AND TIMING

Recruitment of sponsors and participants: October 2013

Kickoff for task 1: November 2013

Official launch at IIC 2013

Task 1 outcome announcement: Q1 2014

Subsequent tasks to be completed by August 2014



Final outputs and one-day workshop: IIC 2014

ORGANISATION

Overall Management: BRG

Steering Group: Sponsors and two to three participants (one standalone operator and one regulator as

minimum to ensure cross-representation)

SG Tasks:

Formally approve scope and formulate more detailed task descriptions

Develop delivery timetable to meet main milestones, as set out above

Allocate tasks to working groups (and participate in these)

Approve budget for academic work

Sign off outputs

Manage external communications and ensure coverage, as appropriate

Working Groups

All sponsors and participants plus analysts. A WG would typically have two to five members

WG Tasks:

Provide detailed specification of each task (and subtasks)

Collect data from all members of the initiative (if confidential, then this could be done by

BRG and/or academics)

Undertake activities 1 through 5 and 7 set out above in description of what RfG papers

should cover. (sometimes with contribution from analysts)

Specify and manage analysts and other contributions from external parties

Complete and sign off outputs for review by SG

About Berkeley Research Group

Berkeley Research Group, LLC (www.brg-expert.com) is a lead-ing global expert services and consulting firm that provides inde-pendent expert testimony, authoritative studies, strategic advice, data analytics, and regulatory and dispute support to Fortune 500 corporations, government agencies, major law firms, and regula-tory bodies around the world. BRG experts and consultants com-bine intellectual rigor with practical, real-world experience and an in-depth understanding of industries and markets. Their expertise spans economics and finance, data analytics and statistics, and public policy in many of the major sectors of our economy, in-cluding healthcare, banking, information technology, energy, con-struction, and real estate. BRG is headquartered in Emeryville, California, with 25 offices in the United States, Australia, Canada, Latin America, and London, UK.

www.brg-expert.com

Technology

Regulating Electronic Communications for Growth in Emerging Economies