INTUG - International Telecommunications Users Group
 International Telecommunication Union - Global symposum for regulators

Licensing and convergence

Geneva, 9 December 2004
Ewan Sutherland


Ladies and Gentlemen, welcome back for the afternoon session.

Our topic this afternoon is "Addressing convergence licensing issues".

We have a distinguished and diverse panel from countries of different sizes, different levels of economic development, different parts of the world and from different language groups. We also have two authors of chapters in this year's regulatory trends report.

Of course, everyone will have a chance to contribute in the question and answer session. You may ask questions and may listen in English, French and Spanish.

Let me give you three recent examples of convergence:
  1. Oakley has just launched the Thump, a set of sunglasses with built-in MP3 player, it is reasonable to assume that if this sells well, then future models will include more electronics. Eventually they may include a mobile phone and GPS location system.
  2. Nintendo launched its latest games console a few days ago. The DS includes a microphone socket and Wi-Fi capability, allowing gamers to talk with each other. Voice communications has become a by-product of this device and broadband access.
  3. South Korea has launched a DMB service which looks set to carry significant multimedia content to mobile phone handsets. This may take revenues that would otherwise have been carried over the 3G network.
There are a number of potential questions that we can address:
In some cases the operator or the financial backers may believe that the licence has an element of exclusivity, that it is a guarantee against competition. This has clearly been  the case in licensing of a second fixed network operator, where in several countries large sums of money have been involved. Yet it will be increasingly difficult to deliver that exclusivity and may already be impossible. Exclusivity will certainly be counter-productive in terms of national goals.

We are also to address the purpose of the fees collected, which can be used to pay for:
It is important to conduct benchmarking exercises against other countries in order to know how much broadly comparable countries are spending on their NRAs and USF. Sometimes in the more contentious cases, it would seem to be necessary to benchmark the spending of the NRA against that of the leading operators, which can  have significantly higher spending on regulatory affairs.

The question of scarcity and indeed whether it is genuine and continuing, given technological developments, will be considered in the next session. They will explain how scarce numbers and spectrum will be in the future and what NRAs might do about it.

People talk about ensuring that public authorities obtain the true economic value of resources. It is important to recall that market values change for all sorts of reasons, sometimes for no very clear reason at all. There are fashions in markets, especially in financial markets, that may assign a high value to an asset one day and a short time later assign it no value or even a negative value. That was the case in some 3G auctions where financial markets encouraged operators to keep bidding, by maintaining their high share prices, but only later reduced the prices. In one case, when an operator gave up a licence, its share price rose, indicating a negative value.

Professor Paul Klemperer called the 3G auctions in the United Kingdom "water under the bridge". It would take a lot of water to carry £21 billions under a bridge; I think the professor would get tired shovelling that lot off the parapet. 

We should learn from the past and not be fixated on the more outrageous mistakes.

Terms are thown about with great facility, but with little precision. People talk about regulatory certainty, technological neutrality and service neutrality, without clear definitions and little agreement. For the user, we are interested in the service, its qualities and its price, but seldom in the underlying technology.

We need to develop a better understanding of global best practice in licensing and to learn from each other what we can do better.

I learned a new form of time control from the Norwegian Ministry of Modernisation, it is for the Chairman to stand up when the speaker had run out of time. I am sure that will not be necessary.

That is enough from me!

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