Regulation matters

22 May 2006
00:00

For all the talk of markets and competition, telecoms is still the world's most heavily regulated business.

No other industry routinely has its own body of competition law and dedicated agencies to manage technologies, frequencies and god knows what else.

To take a few random examples, Asian regulators today are dealing with NGN, mobile TV spectrum, 3G licensing and adult content over mobile, to name a few issues.

The best snapshot on regulation is the annual US Trade Representative 1377 review. Notwithstanding its US bias, it is not afraid to point the finger at countries it believes are allowing unfair practices to block competition.

This year the usual suspects make an appearance: China, for continuing to drag its feet in allowing foreign players to enter the market; India's VSNL, which dominates India's international capacity segment, for the high cost of cable landings; Japan for cross-subsidies in the guise of universal service charges; Telstra for its general anti-competitive behavior.

There's a focus on mobile termination, where both Japan, Germany and Mexico are given a ticking off.

Unusually, Singapore gets marked down for the difficulty competitors have in accessing SingTel's ducts. The regulator, IDA, denies this. However, it doesn't deny the related complaint that SingTel's practice of appealing decisions to the minister has reduced transparency and predictability.

IDA issued a statement demanding the claims be retracted. So far, USTR has not responded.

Yet without doubt the most important regulatory battle anywhere today is in Europe, where the EC has proposed the abolition of roaming charges. Roaming by its nature defies regulation, and operators have waxed fat over the years as a result. Now that the EC is doing something about it the squeals from the operators have been loud indeed.

The GSM Association has argued, variously, that roaming rates can't be separated from other mobile services, that charges are coming down anyway and that more regulation could harm investment.

In its latest announcement, it declares confidence in the belief "that roaming tariffs will continue to fall" thanks to competition. For consumers paying five or ten times the standard rate for a roaming call, that truly is a comfort.

In the past week the European Regulators' Group (ERG), representing 25 countries, has weighed in. The ERG agrees that the attempt to manage retail pricing is cumbersome and could have "unintended consequences" for consumers.

You can be sure that remark is now prominently displayed on the GSMA Web site. But not the rest of its response. "Mobile roaming charges are simply too high and do not represent a fair deal between customer and operator," said ERG chairman Kip Meek, who calls for the regulation of roaming at the wholesale level.

Inevitably, as this affects some of Europe's biggest companies, politicians are going to get involved.

The carriers may well be able to fight a draw. But if the EC wins, watch to see the flow-on effect on roaming charges worldwide.

Robert Clark is a Hong Kong-based technology journalist and analyst [email protected]

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