Fixed-line Telecommunications Research Articles

Politics, policy and fixed-line telecommunications provision: Insights from Australia

Over the past 40 years, telecommunications policy worldwide has been dominated by the privatisation of former government-owned firms, the pursuit of increasing competition as well as the delegation of day-to-day operations of industry decision-making and oversight from core governments to autonomous regulators sitting at arms-length from political decision-making. One of the most (apparently) dramatic reversals of this trend has occurred in Australia where the federal government has set up a state-owned company (NBN Co) to fully replace and upgrade the fixed-line infrastructure for voice and broadband communications for the entire country. Some argued that the NBN heralded a reversal of a “failed, neoliberal” deregulation and pro-competition policy agenda in Australia, and a return to “social democratic” values. The NBN has attracted interest as a possible model for other governments looking to fund broadband infrastructure.The NBN Co's network is nearing completion. It has proved disappointing in many ways, with costs escalations, missed deadlines and a downscaling of the original full-fibre footprint to a mixed technology model (MTM). It has also proved politically divisive, with some claiming the MTM changes represent the reassertion of a neoliberal political agenda. In this paper, we trace the evolution of the fixed-line telecommunications industry in Australia from the 1980s to the present along the dimensions of privatisation, deregulation and competition in voice, broadband and policy settings. We find that contrary to popular political rhetoric, the Australian industry reforms have been characterised by only a partial and inconsistent progression towards the international policy objectives. In particular, ongoing government ownership of the incumbent created perverse incentives for both regulatory and industry actors and ensured political involvement in import network investment and operations decisions which in other jurisdictions are delegated to private-sector owners and regulators at arms-length from political influence. We contend that the NBN was not a social democratic response to failed neoliberal policies, nor was the MTM a neoliberal reassertion. Rather, the politicisation of the NBN is a function of the inability to decentralise ownership and control of the industry away from the government. These issues will continue to dominate the Australian debate, as the statutory context requires the privatisation of the NBN within five years of its projected 2021 completion. Extreme caution is warranted for jurisdictions looking to the NBN model for guidance.

RESyS: Towards a Rule-Based Recommender System based on Semantic Reasoning

The ability to be available and stay connected always for work or social issues has become a reality and a necessity for today’s Information Society. Harnessing the potential of Semantic Technologies-based reasoning for intelligent redirection of voice calls and recommender systems has been gauged as a promising field to enhance the current voice phone calling experience. Such experience might be fostered by a disruption based on rule-based recommendation and inference leveraging current state of the art technology in smartphone apps or fixed line telecommunications standards to its full potential. In this paper, we present RESyS , a software platform hinging on Semantic Technologies and rule-based recommendations which has been tested both on a research and an industry proof-of-concept business pilot, validating its major goals.

Reducing Uncertainty in Price Regulation for Fibre-Based, Open-Access Platforms

In many jurisdictions, regulation of telecommunications operators has been based on analysis of the forward-looking costs over the long run of an efficient operator. This regulatory approach, which focusses on the forward-looking replacement cost of an operators network, was viewed as assisting the achievement of a number objectives including efficient decisions by incumbents regarding technology choices and by potential competitors regarding bypass of the incumbent’s network. One acronym for this regulatory methodology is “TSLRIC” (Total Services Long Run Incremental Cost). Dissatisfaction with the practicalities, including a conclusion that the TSLRIC methodology involves arbitrary decisions rather than being predictable, has lead a growing number of jurisdictions to change their telecommunication regulatory approach to an alternative approach focussed on historical costs which is often described as a Build Blocks Modelling (BBM) methodology. This approach is viewed as assisting the objective of combining the provision of incentives for the regulated entity to invest together with the objective of ensuring that the profits of monopoly providers are limited to protect end-users from exploitation. The UK and Australia have already changed the methodology of fixed-line telecommunications regulation to the BBM methodology. In New Zealand’s case, the government has announced it intends to make this change and that it will do so by largely copying the existing BBM regulatory methodology as it applies electricity lines and gas pipeline businesses. This paper analyses the incentives provided by such a BBM regulatory methodology.

Estimating demand for fixed-line telecommunication bundles

In this study, a stated preference discrete choice experiment is applied to model subscription choices between standardized packages of fixed-line telecommunications services in a sample of individuals in Poland. We provide willingness-to-pay (WTP) estimates for telephony, broadband and pay TV offered as stand-alone services and dual or triple-play bundles. The main goal of the paper is to investigate substitutability and complementarity between various component services based on estimated valuations. Considerable preference heterogeneity towards fixed-line services is identified and explained by service profile and usage intensity.Broadband is the highest valued among fixed-line services. Fixed-line broadband and pay TV are super additive in valuations indicating complementarity. We obtain evidence of fixed to mobile substitution in voice and data, driven by unlimited mobile voice plans and data plans with higher transfer limit. On methodological grounds, choice-based WTP estimates are more adequate measure of consumer reservation prices for telecommunications services than self-reported valuations.

Are all customers really the same? Comparing service quality and satisfaction between residential and business telecommunications customers

Orientation: The study focused on the moderating role of the type of customer on the relationship between service quality and customer satisfaction.Research purpose: The study sought to examine differences in the relationship between service quality and customer satisfaction because of the type of customer.Motivation for the study: Previous studies have not examined the relationship between service quality and customer satisfaction between residential and business customers.Research design, approach and method: The study used a cross-section of 203 customers (108 residential and 95 business) in the fixed-line telecommunications sector in Zimbabwe. Moderated regression analysis was performed to test the research hypotheses.Main findings: It was established that the customer category (residential versus business) does not moderate the effect of service quality on customer satisfaction. Practical/managerial implications are, generally, that it is not necessary to segment customers by customer category (residential versus business) when managing service quality to achieve customer satisfaction.Contribution/value add: The main theoretical contribution of the study is the comparison of the effect of service quality on customer satisfaction between residential and business customers.

An econometric assessment of telecommunications prices and consumer surplus in Mexico using panel data

We analyze telecommunications prices in Mexico by using a panel data of countries similar to Mexico to estimate demand models for mobile and fixed-line telecommunications. We find that Mexico’s actual mobile and fixed-line prices are below the predicted prices based on similar countries’ prices. Mexican consumers are paying lower prices than what one would expect based on comparisons of comparable countries. We calculate that in 2011 Mexican consumers received at least $4–$5 billion (USD) in consumer surplus from these lower mobile prices and in 2010 they received over $1 billion (USD) in consumer surplus from these lower fixed-line prices. These findings are in contrast to the general perception that concentrated telecommunications markets in Mexico are resulting in high prices and harming consumers.

The Privatization of the Fixed-Line Telecommunications Operator in OECD, Latin America, Asia, and Africa: One Size Does Not Fit All

Summary This paper challenges the idea that there exists a unique model of reform for infrastructure sectors which is equally applicable across regions and countries and expected to yield similar outcomes. We perform an empirical analysis of the impact of privatization of the fixed-line activity of the traditional telecommunications operator on network expansion, tariffs, and labor efficiency in a 1985–2007 data set on a selection of 108 countries that we split into regional sub-samples. We find that the performance of privatization depends to a large extent on regional factors related to market profitability, wealth, and geography.

“The effects of market liberalization and privatization on Chinese telecommunications”

Abstract The Chinese telecommunications sector is undergoing fundamental changes as it moves towards liberalization. This paper examines how liberalization and privatization have affected the performance of Chinese telecommunications industry. We identify greater liberalization with increases competition as measured by reductions in industrial concentration and privatization with deceases in state equity-ownership in firms. With a new panel dataset of thirty-one Chinese provinces from 1998 through 2007, we examine the effects of reforms on prices and subscription levels of both of mobile and fixed line telecommunications operators within both the mobile and fixed line platforms. We find large gains in market performance from decreased concentration among mobile providers not for fixed-line service. The evidence on the effects of state-ownership is similarly mixed. We then estimate substitution patterns between these telecommunications platforms and find evidence of consumer substitution between the fixed and mobile platforms for subscription, but not usage.

Effective Competition, Administrative Guidance, and Collusion in the Telecommunications Sector

The regulatory authority of the telecommunications sector in Korea has typically employed explicit or implicit administrative guidance as a means of effective competition. This paper critically reviews an administrative guidance of the Ministry of Information and Communications (the regulatory authority for the telecommunications sector until 2007) through the Korea Fair Trade Commission case of KT Hanaro Telecomm in the fixed-line telecommunications service market. Our analysis indicates that empirical evidence does not support the concerns that motivated the administrative guidance. Instead, it turned out to facilitate collusion between the dominant firm and a fledgling competitor. We suggest an alternative pro-competitive policy that provides a level playing field to fledgling competitors from the beginning and regulates predatory pricing and collusion.

Global Diffusion of the Internet XIII: Internet Diffusion in Kenya and Its Determinants -- A Longitudinal Analysis

This paper assesses Internet diffusion and its determinants in Kenya using the Global Diffusion of the Internet (GDI) framework. Kenya was selected due to its strategic importance for the economic progress of the great lakes region of Africa. An understanding of Internet diffusion in Kenya provides preliminary insight into how the process might unfold in Eastern Africa. The analysis shows that in 2008, less than 10 percent of the population accessed the Internet, with a majority of users clustered around two major urban centers. There is an indication that across the sectors of education, commerce, health, and public service, the Internet is being embraced, with potential for further diffusion. The underlying national Internet connectivity infrastructure is well established, but skewed in favor of urban centers that have high levels of electricity penetration. Vibrant competition exists between Internet service providers despite a persistent monopoly in national fixed line telecommunications provision. A few sophisticated applications of the Internet were found in several sectors. A snap shot of the state of Internet diffusion in Kenya reflects, on average, good performance on the various dimensions of the GDI framework. However, this overall picture masks the reality that the majority of the population, mostly in rural areas, lack access to basic amenities such as electricity, and hence infrastructure to support the Internet. The trajectory along which the Internet is diffusing has therefore led to the exclusion of this majority. The critical role that governments in developing countries play needs to be brought to the fore in order to ensure that the Internet diffusion trajectory is not left entirely to the commercial sector. The government’s ability to marshal resources, execute telecommunications regulation, as well as enable change remains pivotal to ensuring inclusive Internet diffusion.

Wireless connectivity and its relationship to emerging economies: the example of China

This paper explores the impact of wireless telecommunications on emerging economies while focusing on the progress made recently by China in a comparison to the US. The implications for developing economies, like China, and their potential for moving past other nations with established, traditional architectures are significant. China's lack of traditional fixed-line telecommunications architecture has prepared to seemingly 'leapfrog' other countries like the US with its use of widespread wireless technologies. Finally, we discuss the major challenges to China and the US.

Global Diffusion of the Internet XI: Internet Diffusion and Its Determinants in South Africa: The First Decade of Democracy (1994 - 2004) and Beyond

South Africa has one of the most sophisticated information and communication technology (ICT) infrastructures in Africa, and was one of the early adopters of the Internet on the continent. This paper describes a longitudinal analysis of Internet diffusion in South Africa over the period 1994 to 2004 by making use of the Global Diffusion of the Internet (GDI) framework. It also analyses the determinants of further diffusion. The analysis shows that in 2004, at the end of its first decade of democracy, less than 10 percent of the population accessed the Internet despite its relatively wide geographic dispersion. Across the education, commercial, health, and public sectors the Internet had been largely embraced, with potential for further diffusion. The underlying national Internet connectivity infrastructure was well established. Strong competition existed between Internet service providers despite a monopoly on fixed-line telecommunications provision for much of the period. The Internet was being used for sophisticated applications in several sectors. The overall analysis reflected South Africa's reputation as having one of the most developed ICT sectors in Africa. The findings are perhaps also a reflection of its status as a middle-income developing country. After major growth in the 1990s, from 2000 to 2004 growth declined significantly. Reasons identified included the monopoly telecommunications environment over much of the period, restrictive regulation, delayed implementation of policies, and the socio-economic divide in the nation. Telecommunications policy directives announced at the end of 2004 helped in reversing the trend of stagnation that had set in.

Tariff-quality equilibrium and its implications for telecommunications regulation

This paper provides an empirical analysis of the effects of telecommunications liberalisation on the fixed line telecommunications operators’ strategy formulation in Hong Kong. The analysis is based on an innovative experimental methodology to measure the level of quality of the major telecommunications operators in an international simple resale-based competitive market. A major finding is that intensified competition will lead to a tariff-quality equilibrium. Consequently, we discuss an appropriate regulatory regime for service quality.

How Does Trade Sale Privatization Work? Evidence from the Fixed-Line Telecommunications Sector in Developing Economies

This research examines the of privatization transaction strategy on enterprise performance in developing economies. Focusing on trade sale privatization, we use an event-driven data strategy and time-series regression techniques on data covering fixed-line telecommunications operators between 1980 and 1998. The results show performance benefits are realized when privatization trade sales introduce large-block foreign shareholdings and hybrid forms of governance, such as joint ventures or consortia. These hybrid governance structures capture more complex ownership during privatization restructuring, particularly when compared with the dispersed shareholdings of share issue privatization, which show no discernable effect on performance. We argue traditional financial models are too focused on large-scale market-driven mechanisms at the expense of institution-building mechanisms, and as such fail to capture important contributors to performance improvement. We advance a comparative institutional lens to better understand how firms effects matter for privatization restructuring and performance.

Privatization: The key to better government

Over the past 40 years, telecommunications policy worldwide has been dominated by the privatisation of former government-owned firms, the pursuit of increasing competition as well as the delegation of day-to-day operations of industry decision-making and oversight from core governments to autonomous regulators sitting at arms-length from political decision-making. One of the most (apparently) dramatic reversals of this trend has occurred in Australia where the federal government has set up a state-owned company (NBN Co) to fully replace and upgrade the fixed-line infrastructure for voice and broadband communications for the entire country. Some argued that the NBN heralded a reversal of a “failed, neoliberal” deregulation and pro-competition policy agenda in Australia, and a return to “social democratic” values. The NBN has attracted interest as a possible model for other governments looking to fund broadband infrastructure.The NBN Co's network is nearing completion. It has proved disappointing in many ways, with costs escalations, missed deadlines and a downscaling of the original full-fibre footprint to a mixed technology model (MTM). It has also proved politically divisive, with some claiming the MTM changes represent the reassertion of a neoliberal political agenda. In this paper, we trace the evolution of the fixed-line telecommunications industry in Australia from the 1980s to the present along the dimensions of privatisation, deregulation and competition in voice, broadband and policy settings. We find that contrary to popular political rhetoric, the Australian industry reforms have been characterised by only a partial and inconsistent progression towards the international policy objectives. In particular, ongoing government ownership of the incumbent created perverse incentives for both regulatory and industry actors and ensured political involvement in import network investment and operations decisions which in other jurisdictions are delegated to private-sector owners and regulators at arms-length from political influence. We contend that the NBN was not a social democratic response to failed neoliberal policies, nor was the MTM a neoliberal reassertion. Rather, the politicisation of the NBN is a function of the inability to decentralise ownership and control of the industry away from the government. These issues will continue to dominate the Australian debate, as the statutory context requires the privatisation of the NBN within five years of its projected 2021 completion. Extreme caution is warranted for jurisdictions looking to the NBN model for guidance.