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Date: Thu, 23 Mar 2000 10:27:44 +0100
From: "Bruce Girard"
The editorial, abstracts, a book review and two articles from Telecommunications Policy 24-5 (June 2000) are now online at http://www.tpeditor.com .
The theme of the issue is "A New Phase in Network Transformation".
The online article, by Jorgen Abild Andersen, Director General of the Danish National Telecommunications Agency (NTA) presents a summary of telecom liberalization achievements in Denmark to date, and outlines the next steps in implementing the government's recent policy pronouncements.
In this month's online book review, Dr. Bert Sadowski of Delft University of Technology looks at Shapiro and Varian's recent contribution, "Information Rules: A strategic guide to the information economy".
Also online, the Current Statistics section presents new data about mobile expansion in OECD countries.
See the table of contents and the note from the editor below for more information on the issue.
Telecommunications Policy Volume 24, No. 5 (June 2000) Theme: A New Phase in Network Transformation
TABLE OF CONTENTS
FROM THE EDITOR -- William H. Melody
POLICY FORUM
Jorgen Abild Andersen - Next Steps in Telecom Liberalisation in Denmark Full article Online
CASE STUDY
Morten Falch & Anders Henten - Digital Denmark: From Information Society to Network Society Abstract online
FULL LENGTH ARTICLES
Michael Latzer & Natascha Just - EU Competition Policy & Market Power Control in the Mediamatics Era Abstract online
Emilio Lera - Changing Relations Between Manufacturing and Service Provision in a more Competitive Telecom Environment Abstract online
Noel D. Uri - Measuring Productivity Changes in Telecommunications Abstract online
CURRENT STATISTICS
Sam Paltridge - Mobile Communications Update Full article Online
BOOK REVIEWS
C. Shapiro, and H. Varian, Information Rules: A Strategic Guide to the Network Economy. Reviewed by Bert Sadowski The TP Review of the Month Online
Stephen B. Adams and Orville R. Butler, Manufacturing the Future. Reviewed by Michele Javar
T.H. Chowdary, Telecom De-monopolization in India Reviewed by Anupama Dokeniya
FROM THE EDITOR
There are growing indications that technologically advanced countries and regions are entering a new phase in the transformation of telecom networks into information infrastructures for building information societies. Until recently, the new services -- mobile and value-added Internet -- have been, and have been treated by policy and regulation as supplemental and complementary to basic network services. In some respects they have received infant industry treatment. They have grown dramatically and are on the verge of becoming integrated components of the basic network, and serious competitors for some traditional public network services for an increasing proportion of users.
In a very short period of time these services have become the driving forces behind network expansion and enhancement, as well as the direction and pace of technological change. In these countries the objectives of telecom reform are expanding from a focus on efficient, competitive and universal telephone service, to the speed and conditions under which high speed Internet access is being rolled out and made accessible for e-commerce and other applications.
These developments are requiring that policies and regulations which have treated mobile and value-added Internet services differently from traditional network services be reassessed in light of the new market conditions and the more ambitious policy objectives now being adopted. The new conception of universal service is universal access to high speed Internet services. This, in turn, is prompting many countries to revisit their "information society" vision policy statements of only five or six years ago.
The Nordic countries always have ranked among the leaders in benchmark indicators of telecom development. Denmark in particular has been explicit and relatively transparent in spelling out its policy goals, implementation plans, regulatory standards and targets for achievement. Its "Information Society 2000" Report (1994) was distinctive not only because it contained much more substance than the vision statements of most countries, but also because Denmark information society developments were going to be led by public sector service applications rather than private sector information technology production as was the claim by nearly all other countries. Also, the detail and quality of the public Annual Reports of its national telecom regulator set a standard that few national regulators have achieved. As the past year has been a very active one for the Danish government, with the issuance of several major reports and policy statements, Denmark provides an interesting case study from which to identify unfolding developments in telecom reform and information society policies and plans. Denmark is likely to be a forerunner for a similar pattern of activity in many other countries.
In the Policy Forum article for this number of TP, Jorgen Abild Andersen, Director General of the Danish National Telecommunications Agency (NTA) presents a summary of telecom liberalization achievements in Denmark to date, and outlines the next steps in implementing the government's recent policy pronouncements. He notes that high speed access is seen as "The Danes Admission Ticket to the Network Society", and outlines a future program of regulation focused heavily on promoting new technological opportunities and encouraging innovation, identifying a clear conception of regulation as promoting dynamic competition, not the static conception of neoclassical economic theory. But to be able to implement these policy objectives effectively, the NTA likely will need greater independence from government than is currently provided.
Morton Falch and Anders Henten examine the new Danish information society report, "Digital Denmark", in the context of the first report in 1994, the successes and failures in attempting to implement its provisions, and the changes in the Danish conception of its information society. The shift in terminology from "Information Society" to "Network Society" identifies a significantly changed conception, from a focus on information to communication, and from a view of information and communication technologies and services reshaping society to one of societal policies using the technologies and services to better achieve society's fundamental policy objectives. In Denmark that means the strengthening, not the dismantling of its welfare state.
Natascha Just and Michael Latzer address the likely effectiveness of European competition policy in the next phase of convergence between media and telematics, and particularly the inherent conflicts arising between economic rationales and cultural concerns, and between national and EU priorities. They show how EU competition policy is characterized by intense fragmentation. Convergence is not only making this more apparent, but also creating additional problems. They suggest a new approach designed to bring greater coherence and effectiveness to EU competition policy in future.
Emilio Lera analyzes the changing relations between manufacturing and services provision in a more competitive telecom environment. His analysis provides evidence documenting the not well-appreciated fact that telecom reform has had at least as great an effect upon the equipment manufacturing sector as on the services provision sector. Traditional partnership arrangements have been broken, national markets have become global, and the formerly distinct telecom, computing and consumer electronics industries have converged. But within the industry, specialization, innovation and new forms of relations with customers and suppliers are essential to success. Lera shows how the relations between manufacturers and service providers are being reshaped in the new environment, and how the traditional role of manufacturing is being continuously redefined.
The process of telecom reform has been associated with the introduction and widespread application of price cap regulation which highlights the role of productivity improvement as a key element in price regulation. In the early stages, the productivity numbers were simply subjective judgments reached by negotiation between the incumbent operators and their regulators. Then studies estimating actual productivity improvement began to play a more important role. But a telling criticism of the straightforward application of productivity estimates has been that most of the productivity improvement of incumbent public telecom operators (PTOs) is attributable to the technological improvements generated by the equipment manufacturing industry, not direct PTO improvements in the services provision activities. Noel Uri tackles that problem and introduces an approach to measuring productivity change that allows a decomposition of the productivity estimate into two components, technical efficiency and changes in technology. This approach will be helpful to regulators in future attempting to sort out productivity improvements arising directly from PTO activities, and from technological improvements purchased from the equipment industry.
Finally, should anyone have doubts about the explosive growth of these new services, Sam Paltridge summarizes current statistics gathered by OECD. As of June 1999, in the OECD area there was one mobile phone for every four inhabitants, although there was a wide variation among countries, ranging from Finland with more than 60 mobile subscribers per 100 inhabitants, to the US with slightly less than 30, to Mexico with about five. The OECD data shows that 20% of Finnish household only use a mobile phone. For future policy development the data documents that the more competition there is, the greater the market growth. Paltridge reports that countries with four or more mobile operators "have vastly outperformed the other market structures."
Indeed a new phase of network transformation is upon us. Mobile and value-added Internet services are at the heart of it. The old market and policy models are about to be displaced. The articles in this number of TP will help us better understand the new environment and develop the new models necessary for the next phase in telecom network transformation.
William H. Melody Editor
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Bruce Girard bruceg@tbm.tudelft.nl / bgirard@comunica.org Faculty of Technology, Policy and Management Delft University of Technology, The Netherlands Office: (31-15) 278.85.48 Fax: (31-15) 278 7925 Mobile: (31-6) 2039.6958 ```
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