Inside telecommunications: 3Q 2012 trends

Regulatory trends and their potential impacts

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The EU has underlined the need for regulation that is stable over time and consistent throughout the continent for investment levels to increase.

EU unveils new regulatory approach to spur broadband investment

To boost investment in new broadband infrastructure, the European Commission (EC) has outlined plans to increase regulatory certainty for operators.

In July, the EC released a policy statement emphasizing longstanding tenets such as a level playing field in competition and the importance of technology neutrality. It also points to the direct and indirect effects of regulation, highlighting how regulated copper access prices can affect the pricing and return on other infrastructures, such as fiber, cable and wireless.

This time, the EU has returned with a set of edicts designed to reassure incumbents while creating better conditions for industry investment. On one hand, non-discrimination rules are to be toughened by ensuring equivalence of inputs for all market actors; on the other, copper access rates are to be kept stable.

The EU is also priming related measures that will help provide a more robust investment scenario, namely:

  • Establishment of public-private funding models
  • Creation of best practice in areas such as the reuse and sharing of duct infrastructure
  • Moves to ensure a single market for online content through various reforms

The new regulatory approaches are to be solidified into formal recommendations by the end of the year and will apply until at least 2020.

The EU’s new stance has been broadly welcomed by incumbents, given that reduced copper returns are no longer seen as a potential tool to boost fiber investment levels. Even so, critics argue that existing VDSL network upgrades are no more than partial at present.

What is certain is that the EU’s existing fiber penetration targets — 100 Mbps services used by half of European homes by 2020 — remain ambitious.

Spectrum harmonization in Asia-Pacific unlocking global benefits

LTE network rollouts are under way in all parts of the world. Greater access to spectrum is a vital enabler for rising mobile data consumption, and regulators in many markets have been auctioning new frequency bands.

However, recent news flow on the incompatibility of 4G devices in certain countries highlights a very real sector threat - the fragmentation of spectrum policies that hinders provision of low-cost, standardized services.

In Europe, 800 MHz and 2.6 GHz bands are in the process of being opened up to mobile operators. Yet, in Asia-Pacific, spectrum release approaches considerably vary among markets. Mindful of the long-term risks this brings, the GSM Association has called for harmonized adoption of the 700 MHz band across the region.

A number of markets in the region have already committed to freeing this band for mobile use to provide cost-efficient coverage to rural populations. The benefits of releasing 700 MHz spectrum according to the Asia-Pacific Telecommunity (APT) model are now being explored by countries beyond Asia-Pacific, including Mexico, Chile, Columbia and Ecuador.

There is a growing case for the APT recommendation to be adopted by other regions. This year’s ITU World Radiocommunication Conference saw the allocation of the 700 MHz band for mobile use in Europe, the Middle East and Africa on a co-primary basis with broadcasting services.

Although the APT 700 MHz band is not fully compatible with Europe’s 800 MHz band due to overlapping frequencies, adaptations can still be made that can create further harmonization benefits.

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