Session 2 ure_changingrules_final

Session 2 ure_changingrules_final

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  ITU/IDA ICT Regulators’Leadership Retreat Preparing for tomorrow: Regulation in a data-driven connected world Session 2: The changing rules of the game Dr. John Ure Director – TRPC Ltd (Singapore) Associate Prof. and Director - TRP, Social Science Research Centre University of Hong Kong Singapore 18-20 March 2015
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  Martha Lane Fox Houseof Lords and Founder of Lastminute.com 6th March 2015 “… it is in my strange new role in the House of Lords where, certainly, my fellow peers do not yet understand the internet.” http://www.huffingtonpost.co.uk/2015/03/06/martha-lane-fox-internet_n_6818410.html?utm_hp_ref=uk-news Warning!
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  Eight practical issues 1. Convergence and the Regulator 2.Significant Market Power and Mergers and Acquisitions 3. Technology and Copyright 4. Net Neutrality 5. Investment in Bandwidth 6. An Internet Economy 7. A Digital Economy 8. Data, Privacy, and Security
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  1. Convergence andthe Regulator • Sector-specific vs. converged regulator: Were the advantages of converged regulation ever fully specified? Ever fully realised?  One-stop shop of the public  Spectrum allocation – comes from ITU/WRC recommendations  Spectrum assignment ? – e.g. mobile network broadcast/streaming  Silos or not within FCC? Ofcom? Etc. = horses for courses? • Sector-specific vs. ICT sector-wide regulator: Regulators are the executors of policy makers (ministries) – implies ministries must be converged?  IDA model (SG) – provides ICT back-up across the board  OFCA model (HK) – confined to telecoms and broadcasting  NRCs (EU) – harmonization is the key issue 1. Convergence and the regulator
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  2. SMP andM&A • How to define markets: In a non-linear and convergent world, what becomes a close substitute?  Compete for audience? For revenue? (Subscription revenue? Usage revenue? Ad-driven revenue?) How to distinguish cross-price elasticity of demand from sudden changes in fashions and behaviour of users?  Non-linear channels of communications = Fragmentation of markets, e.g. social media ups and downs • How to estimate levels of competition: Is access the key strategic issue, given so many content and app alternatives?  Is access a bottleneck?  Non-traditional forms of access – e.g. WiFi + MVNOs (FB, Google in the USA)  Is copyright stranglehold a source of unequal competition? • M&A’s reflect different geographical markets – e.g. EU encouraging growth through consolidation? Other markets need more competition not less? US consolidation of RBOCs, but now competition from Internet companies 2. Significant Market Power and Mergers and Acquisitions
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  3. Technology andCopyright • Broadcast vs. streaming: Nielsen has agreed to revise audience ratings system to include non-linear audience estimates  Important for setting ad tariffs & therefore revenues  Can copyright be enforceable over Paul Goldstein’s ‘Celestial Jukebox’? (Copyright’s Highway: From Gutenberg to the Celestial Jukebox – 2003) – the public-private use distinction remains critical 3. Technology and Copyright “… it would be a serious mistake for policy makers (and I include the courts) to reflexively reach for a new exemption or an expanded fair use any time copyright appears to stand in the way of the roll out of some new technology. It would be a mistake because the characteristic impediment in all of these cases is not copyright, but the transaction costs associated with securing licenses under copyright. The proper target, then, is not copyright, but transaction costs, and digital facilities, including the Internet, offer dramatic possibilities for reducing these transaction costs to close to zero.” (Paul Goldstein’s Copyright’s Highway: From Gutenberg to the Celestial Jukebox – 2003 - see: http://www.sociallyawareblog.com/?s=Paul+Goldstein)
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  4. Net Neutrality •Utility model vs. Pragmatic model vs. No model?: How sustainable is a net neutrality model, and neutral with regard to which users?  √0 = EU effort to square the circle? Allow ISPs to charge for higher speeds, but preserve a minimum for all users = becomes new committed maximum?  How to handle priority cases, e.g. health systems, early warnings, etc.? – reserve channels/ at discounted prices to be vacated at short notice?  Network management – how to recognize a smoke screen? Red Flags Where: When management tools are applied in the transit between the different networks (source network and the carrier network) in the routers below the transport level What: If blocking or termination is used rather than QoS degradation Who: If it is a unilateral decision of the ISP When: If the tool applied only to (i) the source/destination or (ii) the service provider (Scott Jordan and Arijit Ghosh of the University of California, Irvine – see http://broadbandtoolkit.org/3.7 ) 4. Net Neutrality
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  5. Investment inBandwidth • Options  “Bend” – Regulators do not legitimately determine market outcomes, but do legitimately determine the creation of a market  Bend in favour of the carriers – Happens for SOTEs; issue of ‘capture’; = off- the-books capex for Government  Bend in favour of new entrants – Free up facilities licences; simplify convergent licensing; facilities sharing; make markets contestable. [cf. AT&T’s response to Google in US cities; HKT’s broadband response to competition in Hong Kong early 1990s, etc.]  Hybrid models – Wholesale/retail – open access/open entry  Innovation models – Facilitate use of new technologies, e.g. dynamic spectrum assignment, WiFi nets + MVNOs, HetNets, etc. Note: Carriers have options – utilities, mobile apps, Internet, CDNs, etc. 5. Investment in Bandwidth
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  6. An InternetEconomy • Basic connectivity – Remains a supply side issue for all developing countries;  1st hurdle = international bandwidth - How to increase? More licences? Liberalize resale? – a key issue = bring down transit prices!  2nd hurdle = national backbone coverage – More licences? Capacity resale by public utilities/private corporations? Sharing of towers?  3rd hurdle = nationwide coverage of mobile networks – Most citizens in developing countries access Internet by wireless devices • Elasticity of demand – Encourage ISPs to realise latent demand  Price elasticity of access is low, income elasticity is higher – typically >0.4% overall? – FB and others trying to promote the value of usage via apps to team up with carriers • IPv6 – Anticipate the Internet-of-Things! • Peering – Carrier-neutral IXPs needed; IPX for 4G LTE on its way? 6. An Internet Economy
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  7. The DigitalEconomy The following based upon forthcoming ISOC (23 March 2015) ‘Unleashing the Potential of the Internet for ASEAN Economies’: • Digital economy here refers to a stage of development wherein the Internet has become an embedded part of the underlying infrastructure of all major sectors of the economy • Key policy & regulatory challenge – How to leverage the Internet economy into a digital economy and society? Two preconditions:  Interconnection of networks (economic of scale or ‘network’ economies) – e.g. telecoms, mobile, payments, banking, travel reservations, etc.  RIOs, role of central bank, incentives, market forces, etc.  Interoperability (economies of scope) – Apps on different platforms work across different networks – e.g. mobile bank and payment networks, collaborative working for enterprise, e-government services, etc.  Mostly market driven, but role for planning, especially in public services 7. A Digital Economy
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  8. Data, Privacy,and Security • Data privacy – Can reliance upon ‘consent’ work in an interconnected world of Big Data, wearable devices, etc.?  Should the emphasis shift towards “accountability” of the data controller? (NB. EU focus on location; USA and APEC on accountability)  Anonymous vs. pseudonymous vs. self-reg. vs technology fixes to data usage? • Cross-border data – Costs of compliance rising as more privacy laws enacted  Need for alignment? For industry codes of practice = ex-post regs. • Localization requirements – Part security (unrealistic?) and part protection of local industry  Keep FDI open for partnerships; “warehouse” for sensitive data?;  Cyber breaches reporting? Cyber liability schemes? Based upon ACCA/APCC (2014) Report on Cloud Data Regulations A contribution on how to reduce the compliancy costs of Cross-Border Data Transfers http://trpc.biz/report-on-cloud-data-regulations/ 8. Data Security, Privacy
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  8. Data, Privacyand Security Summary of Data Privacy Laws and Data Transfer Provisions Y/N means laws agreed but not yet implemented Country General law on personal data privacy protection Separate regulator Register of data controller Sector- specific regulation “White list” countries or requirement on data controllers to ensure protection on data transfers Individual consent required for data transfers Contract obligations accepted as reason for data transfers Companies required to appoint ‘Data Protection Officer’ Australia Y Y Y Y Y Y Y N New Zealand Y Y N Y Y Y Y Y India N N N Y Y Y Y Y Indonesia Proposed N N Y N Proposed N N Hong Kong Y Y Y/N Y Y/N Y Y N Japan Y N N Y Y Y Y N Malaysia Y Y Y Y Y Y Y N Philippines Y/N Y/N N Y Y Y Y Y Singapore Y Y N Y Y Y Y Y South Korea Y N N Y Y Y Y Y Taiwan Y N N Y Y Y Y N Thailand Y N N Y Y Y Y N EU Y Y Y Y Y Y Y Proposed UK Y Y Y Y Y Y Y Y USA N FTC N Y N By sector Y Varies 8. Data Security, Privacy
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  Questions Thank You Dr. JohnUre [email protected]