Dossier

ICTs and Development

Farid GASMI & Laura RECUERO VIRTO
Telecommunications Technologies Deployment in Developing Countries
Role of Markets and Institutions
Key words: Telecommunications, Developing Countries, Universal Access

Abstract: This paper examines some policies pursued in developing countries for the provision of telecommunications services in rural areas. These policies significantly differ from those typically implemented in developed countries in their fundamental objectives, the technological strategies deployed and the market and institutional environments they rest on. A review of some representative experiences suggests that thinking about public utility reforms in this part of the world is quite a challenging exercise. We point out some economic and institutional characteristics of these countries that we believe normative analysis of the reforms should explicitly take into account.

Reamonn LYDON & Mark WILLIAMS
Communications Networks and Foreign Direct Investment in Developing Countries
Key words: Africa, capital flows, foreign direct investment, investment risk, developing countries and telecommunications.

It is widely accepted that investment is essential for the long-term economic growth of developing countries. There is some evidence that Foreign Direct Investment (FDI) in developing countries provides spill-over benefits through technology and skills transfer. Understanding the determinants of FDI inflows into developing countries is therefore an important policy objective. This paper shows that average FDI inflows into developing countries are greater in countries that have better telecommunications networks. In more recent years, this relationship can also be detected between FDI and mobile networks. The analysis has been refined to take account of countries' endowment of natural resources and the an attempt has been made to deal with the problem of endogeneity.

Asmiati RASYID
Indonesia: Liberalization at the Crossroad
Impact on Sector Performance,Teledensity and Productivity
Key words: liberalisation, privatisation, teledensity, Indonesia

Unlike in developed countries, the liberalization process in Indonesia began at a time when telecommunication infrastructure was minimal and teledensity was below 2%. The main aim of liberalization and sector reform is consequently to increase teledensity. However, the results of liberalization have not yet been envisaged. A decade after the introduction of liberalization and competition, teledensity growth and sector productivity still remain low.  The telecommunication sector's contribution to accelerating national economic growth in an effort to eradicate poverty, unemployment and improve national education has consequently been minimal.
Given the minimal infrastructure and limited state budget available, specific strategies should be implemented focused on increasing teledensity as a priority.  Mainly in the transitional period, specific initiatives will be required to anticipate "cherry picking" by new entrants and reinforce their commitment to increasing network expansion. This begs the question of whether all WTO regulations should be fully implemented immediately? Upon setting up their gateway, new entrants can immediately capitalise on subscribers developed by the incumbent operator, particularly in the metropolitan and urban areas.  Consequently, although the number of new players is rising, they are not attracting new subscribers and are failing to boost to penetration levels as a result.

Howard WILLIAMS
Internet Governance: exploring the development link
Key words: Internet governance, development, Internet resources, access.

This paper seeks to explore the issues of Internet governance from a development perspective.  The WSIS process and the report of the UN Working group on Internet Governance provide an initial framework within which to develop the issues.  These issues not only concern the equitable distribution of Internet resources and the ways in which a secure and reliable function of the Internet can be achieved, but also include issues of multi-lingualism and  local content as well as the institutional setting of Internet governance mechanisms and participation. The paper observers that realising the contribution of the Internet to development goals requires a shift in policy focus away from supply side initiatives in the telecommunications sector to more co-ordinated approaches.

Martin LUNDBORG, Ernst-Olav RUHLE & Fabian SCHUSTER

Access, Call Origination and Voice Call Termination in Mobile Networks
A comparison of approaches and consequences arising from the new regulatory framework
Key words: Regulation, mobile termination rates, LRIC, fixed-mobile substitution.

The new European regulatory framework has now entered the implementation phase in the majority of member states. This paper looks at the different approaches taken by the EU member states that have signalled the measures they have taken to-date regarding two markets of special interest. These are markets no. 15 and 16 of the EU commission's recommendation on relevant product and services markets, namely access and call origination on public mobile telephone networks and voice call termination on individual mobile networks. This paper sheds some light on the analysis undertaken so far by national regulatory authorities in member states and compares the findings with respect to the competitive situation and existence of significant market power in individual states, and proposes potential solutions. The last section contains our suggestions for a possible approach focusing on some of the key parameters for a fair regulatory model for mobile termination, which accounts for cost orientation, but also looks at the various market positions of operators that may influence whether reciprocal or non-reciprocal termination rates are feasible.

Alexandre de STREEL
A First Assessment of the New European Regulatory Framework for Electronic Communications
Key words: Regulation, Electronic communications, European Union, Governance principles and Institutional design.

This paper offers a first assessment of the so-called Significant Market Power regime in the European electronic communications sector nearly two years after its implementation. It details the substantive rules and the institutional design of the regime. It shows that, out of the six governance principles that the regime was deemed to achieve, two principles (flexibility and transparency) are broadly met, two principles (objectivity and harmonisation) are much better achieved than before, but still insufficiently met, and two principles (proportionality and legal certainty) may not be achieved. The paper submits that these shortcomings are due to the fact that the regime did not sufficiently take into account the incentives of regulatory agencies, was partly based on false assumptions, and did not arbitrate enough between different policy choices. Yet the paper suggests that the Significant Market Power regime should not be substantially reformed in the near future, but instead that regulators should change their attitudes: national regulators should take the principle of proportionality much more seriously and adopt a clearer strategy, while other regulatory agencies should ensure the absence of regulatory creep and greater harmonisation more actively.

Jaroslaw K. PONDER & Ekaterina N. MARKOVA
Bridging the Eastern European Digital Divide: Significance of Mobile Telecommunications in Poland and Russia
Key words: Mobile Telecommunications, Regulation, Diffusion Process, Digital Divide, Transition Countries.
 
In this paper mobile telecommunications in terms of the battle against the Eastern European 'digital divide' is investigated. The authors concentrate on the experiences of two Eastern European countries: Poland and Russia, demonstrating numerous similarities and at the same time glaring differences concerning market development, the regulatory environment, and technological deployment. While mobile telecommunications help closing the national digital divide, it becomes the source of a new gap as the diffusion process in both countries lags behind other advanced Eastern European economies. We analyse the most important barriers for the dynamic growth of mobile telecommunications and identify possible options to stimulate mobile diffusion as well as the difficulties involved in their implementation.

Ariane DELVOIE is Attorney at law in Paris since march 2002. Senior associate in the Alain Bensoussan Law Firm. Specialized both in consulting and litigation in computer agreements issues and intellectual property law in France as in the common law countries. Author of numerous articles related to IT news, notably in the following revues: la Gazette du Palais des technologies avancées, l'Informatique Professionnel, ExpertIT News.

Farid GASMI is a professor of economics at the Université de Toulouse I where he is a member of the Institut D'Economie Industrielle and the Groupe de Recherche en Economie Mathématique et Quantitative. He holds a masters and PhD degrees from the California Institute of Technology. Prior to joining the Toulouse team in 1990, he was a member of technical staff at Bell Communications Research. His research interests are in applied antitrust and regulation. More recently, he investigated issues facing public utilities that are experiencing structural reforms, particularly in the telecommunications and gas industries, in both developed and developing economies.
gasmi@cict.fr

Calestous JUMA is professor of the practice of international development at Harvard University's Kennedy School of Government and director of the science, technology, and globalization project at the Belfer Center for Science and International Affairs. He is a former executive secretary of the UN Convention on Biological Diversity and founding director of the African Centre for Technology Studies in Nairobi. He also served as Chancellor of the University of Guyana. He is co-coordinator of the task force on science, technology and innovation of the UN Millennium Project commissioned by UN Secretary-General Kofi Annan and a member of the Kenyan Presidential National Economic and Social Council. In 2005 he was elected to the U.S. National Academy of Sciences where he had previously served on boards and committees on agriculture and natural resources, biotechnology, science advice and geographical information sciences. He is founding editor of the International Journal of Technology and Globalization and associate editor of the International Journal of Biotechnology. He holds a PhD in science and technology policy studies from the Science Policy Research Unit of the University of Sussex and has received several international awards for his work on science, technology and the environment.

Bruno LANVIN is the World Bank's leading advisor on e-strategies and is based in Geneva (Switzerland). From June 2001 to December 2003, he was manager of the Information for Development Program (infoDev), In 2000, Mr Lanvin was appointed executive secretary of DOT Force, the G-8 initiative launched by the Okinawa Summit of July 2000 to bridge the digital divide. Prior to joining the World Bank in September 2000, he was Head of Electronic Commerce with the United Nations Conference on Trade and Development (UNCTAD). During his twenty years with the United Nations, Bruno Lanvin occupied several senior positions. He was appointed deputy executive secretary of UNISTE (UN International Symposium on Trade Efficiency), in 1994 and general manager of GETUP (Global Electronic Trade UN Partnership), in 1998. From 1994 to 1998, he acted as the World Coordinator of the United Nations Trade Point Program. He has published a large number of articles and books on ICT and development. He holds a BA in Mathematics and Physics from the University of Valenciennes (France), an MBA from Ecole des Hautes Etudes Commerciales (HEC) in Paris and a PhD in Economics from the University of Paris I (La Sorbonne) in France.

Martin LUNDBORG, born in 1976, joined the PSC AG in August 2004. He holds a Masters in Business Administration from the Jönköping International Business School, Sweden. After university, Mr Lundborg took began his career as a freelancer in the venture capital market working for a subsidiary of a telecommunication incumbent and several IT-start-ups. In the 2000, he was hired as a consultant for Eutelis Consult GmbH in Ratingen, Germany where he was responsible for various telecommunication projects for both an incumbent and "alternative" carriers. He moved to Arcor AG & Co KG at the beginning of 2003. In the department for regulatory affairs he focused on data communication (i.e. DSL and ATM). For PSC AG Mr Lundborg has led several different projects on regulatory themes such as market analyses under the new European Regulatory Framework. During his career, he has gained experience in carrier management, telecommunication regulation, market research and monetary evaluations of business cases.

Reamonn LYDON is a consultant working at Frontier Economics, London. He specialises in applied econometrics, and has worked across a wide range of sectors, including: telecommunications, retail energy markets, wholesale gas supply, transportation, efficiency targets in regulation and education policy.

Ekaterina N. MARKOVA is a PhD student at the European Institute for International Economic Relations at the University of Wuppertal. She holds a diploma in business and economics from the St. Petersburg University of Economics and Finance and a Masters in economics from the University of Potsdam. Her main research interests are telecommunications, transition economies and industrial economics. In recent years Ms. Markova has received various scholarships. She is presently a fellow of the Friedrich-Naumann-Foundation. As a research assistant she  participated in an international project on transition economies, contributing research on infrastructure in transition. Throughout her the professional career in research, Ms. Markova has worked for financial institutions and consulting companies.

Sophie PERNET joined IDATE in 2000 and is a Senior Consultant specialized in the consumer market. She is in charge of the Use IT survey concerning ICT uses in the French consumer market: study in depth of the telecom demand of the households in France, arbitration between Internet, TV, telephony (based on a poll of 1500 interviews). She has carried out several studies dealing with services over broadband, and especially bundles: worldwide benchmark and opportunities of development. She has just achieved a study about the demand for mobile TV services. She also specialised in market modelling and forecast.

Gérard POGOREL is professor of economics and management at the Ecole Nationale Supérieure des Télécommunications, (ENST, Graduate School of Communications Sciences, Paris). He is currently working on spectrum assignment procedures and has presented papers/chaired panels on spectrum policy at various European Commission events. He was a member of the Steering Committee of the French Ministry of Industry "Spectrum Trading" Task Force. He also acted as evaluator, auditor, and reviewer for the NSF, Harvard Business Review, Research Policy and EU research programs in Information and Communications Technologies. He frequently sits on monitoring committees of the EU Framework Research Programme (1992-2004) and chaired both the Monitoring Panel for 2000-2001 and the Monitoring Committee of the European Union Information Society and Technologies Research Programme for 2001-2002. In 1996 he joined the international panel of experts for the World Competitiveness Yearbook, (IMD, Lausanne) and is also a director of the International Telecommunications Society (ITS). Gérard Pogrel has published numerous articles and books.
pogorel@enst.fr

Jaroslaw K. PONDER currently works for the strategy and policy unit at the International Telecommunication Union (SPU/ITU). He obtained his M.A. degree in economics from Warsaw University (Poland). He is completing presently his Ph.D. thesis in economic sciences at the European Institute for International Economic Relations (EIIW) at the University of Wuppertal (Germany), which focuses on the telecommunication sector. In recent years Mr. Ponder has taken an active role in numerous international conferences and summits dealing with development of the information society and advancements in the new economy both in Western and Eastern Europe, as well as USA. Mr. Ponder has won many scholarships. During his professional career he has held official positions in the public sector, contributing to legislative projects that have impacted public policy. In 2004 Mr Ponder joined the International Telecommunication Union (Geneva, Switzerland). In 2004 he was a consultant at the market, economics and finance Unit (MEF/ITU), before moving to the strategy and policy unit (SPU/ITU) in 2005.

Isabelle POTTIER is attorney-at-law and head of the research and publications department of the law firm Alain Bensoussan. She has particular expertise in drafting studies on the assessment and legal protection of new technologies as well as on electronic evidence and archival.

Alain PUISSOCHET joined IDATE in 1991 where he is currently head of the Digital Electronics Division. He keeps constant track of new technologies and their development and implementation. He oversees and produces studies on the strategic aspects of new technologies and new equipment, and carries out expert evaluation missions for projects in this domain. He also contributes to several foresight activities. He is particularly interested in technologies and applications concerning the audiovisual world, as well as new terminals (set-top boxes, digital TV, flat panel displays) and their enabling elements (broadband access, domotics networks, components). Alain Puissochet worked for 17 years in the semi-conductor sector and has a great interest in Asian countries. He developed a major expertise in R&D policies led both by companies and Public Authorities, and led the assessment of large R&D programmes, such as JESSI and ITEA. He is also doing techno-economic analysis on ICT projects. He is a computer engineer and gained his degree from the French Graduate School of Computing and Mathematical Sciences (ENSIMAG -Grenoble) in 1968.

Asmiati RASYID is a member of the faculty for telecommunications business management at STMB (Graduate School of Telecommunications and Information Business Management) in Bandung. She graduated as a telecommunications engineer from ITB (Institute Technology of Bandung) in 1985 and obtained a masters degree in engineering and the management of telecommunications networks from the INT (Institut National des Télécommunications) in France in 1995. She graduated from professional certificate programs for astronautic engineering and satellite communications technology at UCLA (University of California, Los Angeles) in 1991. 
Before becoming a lecturer and researcher, Ms. Raysid worked for PT Elektrindo Nusantara for four years in Jakarta (1985-1989) as a systems engineer. She was involved in several projects to develop satellite communications in Indonesia. In 1989, she joined PT Telekomunikasi Indonesia and is now heavily involved in satellite business development and satellite leasing in the South East Asian market. She has also taken part in an international project as a satellite expert, and collaborated with AOTC Australia on the deployment of telecommunications infrastructure in Cambodia in 1992 (UN Project). Since 1998, her activities have focused on government and business policies. She is the founder of the Center for Indonesian Telecommunications Regulations Study (CITRUS).

Laura RECUERO VIRTO is a PhD student in economics at the University of Toulouse, France and a member of the Groupe de Recherche en Economie Mathématique et Quantitative (GREMAQ) at this university. She first joined the University of Toulouse in 2003 for a master's degree in the Economics of Networks. Prior to coming to Toulouse, she attended the Polytechnic University of Madrid, Spain where she obtained an MBA in 2003 and a Telecommunications Engineering degree in 2001. Her professional experience includes working for Nortel Networks, the Centre National d'Etudes Spatiales (CNES) in France and the European Space Agency in The Netherlands in the field of radio communications (mobile and satellite). Her recent research interests focus on the field of public utilities reforms in developing countries. She is currently working on the impact of markets and regulatory institutions on the deployment of telecommunications technologies in rural areas of developing countries.
recuerovirto@hotmail.com

Ernst-Olav RUHLE (d.o.b. 1969) joined PSC AG in July 2002. He is an economist who studied at the University of Hannover. From 1993 to 1995 he worked as a researcher at the Wissenschaftliches Institut für Kommunikationsdienste (WIK) in Bad Honnef. He subsequently joined RWE Telliance, the telecom subsidiary of RWE AG, Essen. From October 1998 to March 2001 Dr. Ruhle was managing director and headed the regulatory department of Telekom Austria, Vienna. In the period from March 2001 to June 2002 he was director of interconnection, roaming and regulatory affairs at 3G Mobile Telecommunications, a UMTS licensee in the Austrian market. He has published several books and numerous articles on regulatory issues. In March 2004 he became managing director of Piepenbrock Schuster Consulting AG.

After completing studies in Business Administration and passing the first state examination in Law, Attorney Dr. Fabian SCHUSTER (born in 1962) became a research assistant under the auspices of the Chair in Business Administration (specialising in Human Resources) at the University of Bamberg. In 1994-1995, he was employed as an attorney in a large law firm of economic consultants. From 1996 to 1998, he was inhouse counsel to Thyssen Telecom AG and its subsidiaries. Besides assuming responsibility for the regulatory sector (including interconnection) and for contracts and agreements subject to telemedia law, Mr Schuster was also involved in issues of company and labour law. Today, he advises clients in all branches of telemedia, labour and company law. He is also an assistant lecturer at the University of Cologne and holds regular seminars with Prof. Gerald Spindler at the University of Göttingen.

Michael SCHIPP is Research Associate at Communication Economics and Electronic Markets research centre (CEEM) since 2001. Michael's research focus is network economics. Michael is currently developing his expertise in e-market competition modelling. An early outcome of this research program is a model of network investment contained in a competitive game between an incumbent firm and a virtual entrant.
michael.schipp@cbs.curtin.edu.au
www.cbs.curtin.edu.au/business/research/ceem-research-centre

Nathalie SONNAC, who was awarded a PhD in economics in 1996, is an associate professor at the University Paris II and a researcher at CARISM and CREST/LEI. She obtained in 2004 an "Habilitation à diriger des recherches" in Information & Communication Sciences. Her research focuses on media economics (press, TV broadcasting and the internet) and the information economy. Her publications include: Economie de la presse, with Patrick Le Floch (Ed. La Découverte, coll. Repères, 2005) and several articles in refereed journals.

Alexandre de STREEL is associate professor at the economic faculty of the University of Namur (Belgium) and a researcher at the law department of the European University Institute of Florence (Italy). His research interests focus on electronic communications regulation and competition policy. In 2000-2003, he was an expert at the European Commission, where he was involved in the negotiation of the new regulatory framework and has published extensively on this topic in telecommunications and antitrust reviews (World Competition, European Competition Law Review, Journal of Network Industries, Info, Cahiers de droit europeen, Journal des Tribunaux de droit europeen). He holds degrees in law (University of Brussels) and economics (University of Louvain).

Bruno TEYTON is head of the Department Marketing and Forecasting at IDATE. Before IDATE, he was a Consultant in the sector of telecommunications economy, at Sirius then at the BIPE. Bruno Teyton has acquired a deep experience in the fields of technico-economical modelization for telecommunication services, regulatory studies and managing marketing studies (polling, panels¼) using statistical and econometric tools. He is a graduate statistician and economist from ENSAE (1992) and has passed a post graduate diploma in industrial economy (University Paris XIII - ENSPTT 1992).

Howard WILLIAMS, Strathclyde Business School, acts as senior ICT policy advisor to the World Bank and the UN Working Group on Internet Governance. At Strathclyde he runs the Masters in Communications management; an ICT capacity building programme designed for developing countries. 
howard.williams@strath.ac.uk

Mark WILLIAMS is an economist at Frontier Economics in London. He specialises in the privatisation, liberalisation and regulation of utility industries and has experience of advising government agencies, regulators and operators throughout Europe and in emerging markets. Mark was the author of a chapter on telecommunications regulatory frameworks for developing countries in the new edition of Telecommunications Law and Regulation (OUP, 2005).
mark.williams@frontier-economics.com