Convergence and Regulation in Brazilian Telecommunications Jose Rogerio Vargens Consultant at Oi Telecom PhD on Economics ACORN-REDECOM Fifth Annual Conference, Lima, May 19 th 2011
1 Convergence in telecommunications 2 Convergence and Regulation 3 Two routes for the convergent regulation 4 Main paths to meet convergence in Brazil
1 Convergence in telecommunications 2 Convergence and Regulation 3 Two routes for the convergent regulation 4 Main paths to meet convergence in Brazil
Convergence in Telecommunications WHAT IS CONVERGENCE? Convergence is the transmission and the processing Technical of any codified information as a bit in digital format, allowing communication among any type of definition networks and users interfaces. Convergence means to make it possible to the user Commercial the access to information and communication at definition anytime, anywhere and on any interface ( anytime, anyplace, anydevice ). Convergence is to allow the development and the Regulatory offer of many kinds of information and definition communication services on any type of platform and its access by the greatest number of users.
1 Convergence in telecommunications 2 Convergence and Regulation 3 Two routes for the convergent regulation 4 Main paths to meet convergence in Brazil
Convergence and Regulation CLASSIC APPROACHS OF REGULATION Restrictions of private initiative. Natural Monopoly Control of prices by regulator. Regulation Quality and universal service obligations. Freedom of private initiative. Competition Antitrust and competition protection. Regulation Costumer protection.
Convergence and Regulation CONVERGENT APPROACH FOR TELECOM REGULATION Imperfect Combine isonomic and asymmetric rules based market power Competition differences among firms. Regulation 1. Technological neutrality Isonomies 2. Freedom of services offer to all firms 3. Absence of institutional-regulatory entry barriers (the Six Principles) 4. Competition and costumer protection 5. Interconnection 6. Policies to digital inclusion Some pricing control and quality and service obligations Asymmetries applied to firms with significant market power.
Convergence and Regulation CONVERGENT APPROACH FOR TELECOM REGULATION Industry Pressures Convergence Uncertainty Technical change Technical Big and fast changes Competition Commercial Difficult to regulate Globalization The Six Principles Imperfect Natural Competition Competition Monopoly Regulation Regulation Regulation
1 Convergence in telecommunications 2 Convergence and Regulation 3 Two routes for the convergent regulation 4 Main paths to meet convergence in Brazil
Two routes for the convergent regulation 1 UNIFICATION OF GRANTS Demands broad review of the national regulation framework. International experience: Europe. European System of Grants Electronic Communication Service (ECS) - Private: confined to private environments, without commercial offer. - Accessible to the public, by commercial offer. 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).
Two routes for the convergent regulation 2 ADJUSTMENTS IN THE MULTI-AWARD SCHEME Adjustments to suit the regulatory framework to convergence, without alter the 1997 General Telecom Act. Model of grants for telecommunications in Brazil Regulation of the Ministry of Communications Broadcasting - Sound: (Radio) SMP - Sound and Image (TV) Anatel Regulation Pay-TV STFC STFC (Fixed Telephony) Fixed Switched Telephone Service SMP (Mobile Telephony) Personal Mobile Service Broadcast Pay-TV SCM Cable TV /MMDS/DTH/TVA SCM Multimedia Communication Service Source: Elaborated by the author.
Two routes for the convergent regulation 2 ADJUSTMENTS IN THE MULTI-AWARD SCHEME 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.
1 Convergence in telecommunications 2 Convergence and Regulation 3 Two routes for the convergent regulation 4 Main paths to meet convergence in Brazil
Main paths to meet convergence in Brazil Implementation of the PGR (General Update Plan on BrazilianTelecom Regulation) by the regulator Anatel, to meet Regulation a model of imperfect competition regulation. Implementation of the National Broadband Plan published by Broadband the government in 2010, to expand broadband services. policy - Brazil had 7,12 fixed broadband accesses/100 inhabitants in 2010. Argentina had 12,89 and Chile 10,51 accesses/100 inhabitants. Maintenance of the 1997 General Telecommunications Act Eliminate (Law 9.472/97). legal Changes in Cable Act and Fust Act. restrictions - 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.
Thank you! Jose Rogerio Vargens Consultant at Oi Telecom PhD on Economics jose.vargens@oi.net.br jose.rogerio.vargens@gmail.com
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