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7. Convergence

 

This module summarises Chapter 7 which addresses trends in network and service convergence, its implications for broadband competition, innovation and investment dynamics, and provides a set of good practices to respond to opportunities and challenges. It examines changes in the value chain of broadband access and services and suggests that they be addressed in a holistic fashion, covering not only network infrastructure and traditional service providers, but also content, application and the so-called over-the-top providers (OTTs). The main policy and regulatory practices relevant to convergence are explained, including convergent regulators, convergent licensing regimes and bundling practices, and issues related to Internet openness.

Explore this module

Main policy objectives
Tools for measurements and analysis
The LAC region
Leading good practices

 

Main policy objectives

Given the multilayered convergence of networks and services, policy makers are reassessing their policy and regulatory frameworks to adjust them to current and future developments. Policy objectives like those exemplified below should be at the centre of convergent policy:

  • Expand access to and use of services, applications and content. Users should be at the centre of communication policies. Policy makers should focus on frameworks that ensure that consumers and businesses benefit from greater choice in convergent networks and services over connectivity, access and use of IP-based services, applications, content and terminal devices. Consumers should be able to access any service at any time and from any place, and the regulatory framework should not only allow but facilitate the development of convergent services. Consumer choice, consumer protection and enforcing consumers’ rights should be the priority, no matter what the supporting technology and type of provider supplying the service.

  • Encouraging investment and competition in a convergent environment. Policy makers should establish an environment conducive to competition and investment. The goal should be for users to affordably and efficiently access the multitude of bundled or standalone voice, data and video services in the IP convergent world provided by such actors as access and content providers (as discussed in Chapter 4 on competition and infrastructure bottlenecks).

  • Promoting the free flow of information and innovation. Governments should promote the free flow of information both within and outside their borders to spur innovation, knowledge sharing and trade. Policy makers need to ensure the open, distributed and interconnected nature of the Internet and the functioning of its architecture and interoperability.

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Tools for measurement and analysis

To assist policy makers in fulfilling their objectives, it is crucial to conduct regular assessments of the rapidly changing and converging communications ecosystem. Policy makers need sound evidence to construct a policy framework adapted to the challenges of convergence. The indicators below offer a roadmap of areas where data is needed to understand some of the salient issues of convergence.

In relation to understanding the main players in the converging ecosystem, the following indicators are important: number of subscribers and revenues of integrated service operators (offering either fixed and mobile services or voice and broadcasting services) and data on market shares and evolution trends; data on OTT Internet providers competing for “traditional” communication services (such as voice and audio-video services or Voice over Internet Protocol [VoIP]).

To assess the state of bundled services,it is necessary to carry out: collection of data on bundled services, such as the number and percentage of bundled services, prices paid, data caps and length in time of the offer (Figure 7.1); development of methodologies for market analysis of convergent offers.

Source: Adapted from CNMC (2014), Informe Económico de las Telecomunicaciones y del Sector Audiovisual 2014,http://data.cnmc.es/datagraph/files/Informe%20Telecomunicaciones%20CNMC%202014.pdf.

The exercise of benchmarking the Internet’s opennessis a complex one and demands, at least:

  • Compilation of quantitative and qualitative information and analysis of any complaints or reports of blocking and throttling by consumers and service providers (including conflicts between operators).

  • Collection of information on peering and transit agreements for monitoring the interconnection market.

  • Collection of information on bottlenecks and restrictions to openness across the whole value chain for broadband-based services (network providers, as well as content, application and terminal equipment providers).

  • Collection of data on zero rating offers, when they are permitted and exist. Information about any other offers where broadband access to contents and application is restricted is also useful to assess trends, bottlenecks and dominance issues.

  • Measuring the extension of use of IPv6 in the country and the proportion of government services supported by IPv6.

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Overview of the situation in the LAC region

The LAC region has seen different levels of development in the implementation of convergence-related regulation and policies. While some countries in the region have been at the forefront of some issues and policy development, such as on network neutrality and IPv6, a general overview of the region shows that most countries still have not addressed key issues related to convergence. It may be the case that many of these emerging issues have yet to affect LAC countries as much as some OECD countries. This is likely to change as broadband penetration rates increase in the LAC region.

An analysis on the situation of the LAC region in terms of converged regulators, licensing regimes, bundling practices, VoIP regulation and IPv6 is included in the Toolkit.

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Good practices

Guiding principles for adapting regulatory frameworks for convergence

Given the increasing convergence towards IP broadband networks, it is necessary to review whether existing policy and regulatory frameworks will continue to apply and what measures should be taken to facilitate and seize the benefits of the transition. A first step in assessing whether to update the current communication policy and regulatory frameworks involves evaluating if the reasons that inspired and justified their introduction still hold in the new environment. Such an evaluation should consider that regulation is usually applied to correct a market failure, such as lack of competitive choice, resource scarcity or to safeguard public policy objectives (e.g. widespread access, public safety, emergency communications, economic growth, privacy, consumer empowerment and security). In areas of traditional market failure, convergence may have created opportunities for market players to play a greater role by increasing choice and diversity and reducing scarcity, while in others, market failures may still exist.

OECD countries have carried out regulatory reforms in the light of convergence. Some of the general principles guiding such policies can be used as a source of good practices for the LAC region:

  • Simplify. The guiding principle behind creating a regulatory framework adapted to convergence should be simplification of rules and procedures. Complex regulatory systems increase the costs of transaction, especially for new entrants and new services.

  • Uphold technologically neutral regulation when possible. Technology-neutral and device agnostic regulatory frameworks are not only desirable, but critical to enable convergence of communication services. In a context where most services are shifting to IP-based networks and content is being accessed on a multitude of platforms and devices, it is not advisable to tie general frameworks, which do not involve scarce resources such as spectrum, to specific networks, technologies or devices.

  • Promote investment along the whole value chain for broadband access services. Encouraging investment by all market players is fundamental for increasing broadband access infrastructure and services. Any regulatory reform to address convergence issues should ensure that adequate incentives exist to encourage investment both in the network layer (access and transit infrastructure deployment) and in the applications layer (innovative services using broadband access).

  • Promote competition and innovation. The promotion of competition and innovation should be maintained as a guiding principle of any policy reformulation seeking the benefits of convergence. Policy makers should promote an environment for innovation without favouring particular platforms or participants. New convergent regulatory frameworks should above all promote a level playing field.

More good practices related to converged regulators, licensing regimes, bundling practices, VoIP regulation, content distribution and regulation, Internet openness and Ipv6 are included in the Toolkit.

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BROWSE TOPICS OF THE TOOLKIT

Introduction •  Regulatory frameworks and digital strategies •  Spectrum policy •  Competition and infrastructure bottlenecks •  Extending broadband access and services •  Affordability, government charges and digital inclusion •  Convergence •  Regional integration •  Skills and Jobs •  Business uptake, entrepreneurship and digital content •  E-health •  Digital government •  Consumer protection and e-commerce •  Digital security management •  Privacy protection
 

 

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