10 Key Lessons from the GSM Association
How To Regulate Tomorrow's Mobile Market
More regulation while competition is increasing? That does
not sound right, according to the GSM Association. Instead,
given the innovative nature of 3GSM, it's embryonic status
and the current lack of market and legal certainty, regulatory
forbearance is advisable.
Below a set of key principles - recently approved by our GSMA
Regulatory Advisory Panel -as food for thought:
1. Regulators should continue to seek a balance between
the benefits and costs of intervention, on the one hand, and
regulatory forbearance, on the other. An overly interventionist approach, which could lead to
short-term benefits, could potentially stifle a dynamic
market process with inevitable and adverse competitive,
economic and even social consequences on the longer term.
In general, competition is deemed to be a better approach
to economic efficiency than regulation, and the regulators
must encourage sustainable competition for the long term.
2. Regulation should be based on clearly defined goals
and policy objectives and should be kept to the minimum necessary
to meet these objectives.
Once effective competition is established or there is a
reasonable prospect of a effectively competitive market
in the near term, regulatory forbearance should prevail
(with competition law providing appropriate safeguards).
3. Regulators should acknowledge that 'normal' competitive
markets reflect a range of operator return and should not
intervene in competitive markets where one or more operators'
return appears to be above the 'norm'.
In the mobile market, the reality is that some operators
have made good returns (on invested capital), while others
have not. This situation is not of itself a cause to regulate
away 'excess profits'. If a regulator judges from the highest
standard, and regulates accordingly, then the less performing
companies will unavoidably hit, thus further reducing already
inadequate returns and threatening long term competitive
development.
4. Regulation should fit (reflect) the market situation
and balance the micro and macro views.
For example, when in certain cases mobile termination or
roaming charges may appear high to regulators in certain
countries, these cannot be judged in isolation.
5. Regulators should be publicly accountable and act in
a transparent way.
Regulatory intervention should only be imposed after an
appropriate public consultation process, which in most cases,
will include market definition and assessment and a further
assessment as to the appropriate regulatory remedy. A full
right of appeal both on grounds of law (substance) and procedure
(process) is an essential element of the checks and balances,
which are necessary between operators and regulators.
6. Governments should adopt licensing practices that encourage
new investments in telecommunication infrastructures and facilitate
competition within the sector.
Un-harmonized license award procedures together with varying
license conditions/obligations may lead to varying investment
incentives in national markets and may eventually give rise
to some discrepancy with respect to the levels of mobile
service developments. Licensing policies and procedures
must be applied judiciously] since not only they can influence
market entry but also the post-entry conditions affecting
competitiveness and market development. For auctions to
contribute positively to economic welfare, they must meet
a set of stringent preconditions (all potential bidders
must be fully informed as to any Government imposed terms
and conditions, including fees and changes to fees). When
designing auctions, policy-makers should seek to achieve
efficient resource allocation rather than primarily aiming
to raise surplus government revenue. High license fees in
some developed countries may constrain the ability of operators
to invest in developing countries.
7. Spectrum should be allocated on the basis of achieving
economically efficient, competitive and structurally desirable
outcomes rather than to extract monopoly rents from the industry.
If the market is the best allocator of scarce resources,
as most economists would argue, it is important that countries
should be able to develop their own spectrum trading arrangements.
In principle, regulators should allow for secondary trading
of spectrum within planned internationally frequency allocations,
after a thorough consultation process with the industry
(i.e. mobile operators) evaluating the advantages and disadvantages
of spectrum trading.
8. The feasibility and commercial desirability of sharing
of facilities and infrastructure is a matter, which is operator
and market specific.
In certain circumstances, sharing can be beneficial by,
for instance, driving efficiencies through accelerated network
rollout, the potential elimination of unnecessary cost duplication
and the minimization of certain adverse environmental impacts.
Accordingly, regulators should enable commercial negotiations
on facility sharing among mobile operators to proceed subject
however to license conditions not prohibiting the proposed
form of sharing and competition not being materially and
adversely impacted by the proposed form of sharing.
9. Restrictions on the deployment of mobile networks should
be based on science and substantiated studies, and not in
response to 'public concern' which is without scientific basis.
10. Adequate consumer safeguards against the inappropriate
use of customer data are in place in most countries.
In overseeing the implementation of those safeguards, regulators
should balance the interests of consumers to data privacy,
on the one hand, and timely and easy access to services
and information on the other. Further, regulators should
look first to relevant self-regulatory industry initiatives
to achieve those objectives.
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