Comments on "Mobile vs fixed networks: economics and regulation, the African experience" by Laurent Gille

Transcription

1 Comments on "Mobile vs fixed networks: economics and regulation, the African experience" by Laurent Gille Laure JAUNAUX Orange Labs

2 Substitution or complementarity between mobile and fixedline communications? This paper shows that in Africa the mobile has overtaken fixed in terms of numbers of subscribers, revenues and traffic. This presentation is interesting in demonstrating how the fixed-mobile crossover has implications for the design of future policies and regulation. In developing countries, mobile is not overtaking fixed but also substituting for it. The question arises here are: could mobile be seen only as a substitute to fixedline communications? Mobile and fixed-line communications can serve different needs in different situations : could we only provide internet services through mobile technology? If the answer is "no" how could we do to develop telecom infrastructure? What is the role of regulation? This paper tends to answer to these questions adopting an approach based on a LRIC model. 2 Orange Labs

3 LRIC model The key variable of this model is the traffic and so TRX (Transmission Receptor Unit) We often said that an operator to discharge traffic prefers increase the number of BTS than the number of TRX. In rural areas in Africa, what is the issue :the lack of BTS or the lack of TRX? You have a problem of coverage also in Africa. In rural areas, you often need just one TRX per BTS. Mobile Operators can deploy BTS with ranges up to 35km How does your model take into account this reality? 3 Orange Labs

4 Competition and the development of telecom infrastructure in Africa Against the unsatisfactory background of telecom infrastructure in both fast growing urban as well as rural areas, it is often claimed that competition from mobile operators or mobile adoption also brings benefits for the development of fixed-line infrastructure. Two cases studies in mind : Ivory Cost : fixed-line penetration increased in areas where the operator faced competition from mobile providers Sources : (Laffont J-J & T. N'Guessan, 2002, "Telecommunications reform in Côte d'ivoire", Same factual evidence in Senegal, fixed-line penetration increased in areas where the operator faced competition from a mobile provider. Sources : Azam, J-P., Dia M & T. N'Guessan (2002, "Telecommunication sector reforms in Senegal. What is you point of view? Do you have more recent data on the impact of competition on the development of fixed-line infrastructure in Africa?. 4 Orange Labs

5 Technology-neutral regulation? Studies have noted that, in the absence of regulation, interconnection charges may be used by an incumbent firm either to prevent rival networks from becoming effective competitors (Armstrong 1998) or to facilitate collusive outcomes under network competition (Laffont, Rey & Tirole 1998a, 1998b; Armstrong 1998; Carter & Wright 1999). Both possibilities suggest a role for the regulation of termination charges. The presentation recommend symmetric regulation and undifferentiated call termination the issue is to determine the right termination rate Regulators, however, face a dilemma when determining rules and charges for termination. If only the dominant carrier's termination charges are regulated, entrant networks may have a competitive advantage and competition may be able artificially biased in favour of new entrants. At the same time, studies concerning mobile termination rates highlights that a decrease of mobile termination rates to 2c per minute (as compared to 9c today on average in the EU) could lead to mobile penetration being 9% lower than otherwise. Secondly, in Africa they are countries with different levels of economic and telecom infrastructure development, are the recommendations in terms of regulation the same for all countries? For countries with high level of inequalities, high termination rates could enable the poorest people to have access to telecommunications tariffs discrimination 5 Orange Labs