Telecommunications

The digital and communications revolution shows no signs of slowing down. Consumers increasingly use digital services not just for their internet (including mobile internet) requirements, but also for their television and telephony needs. By taking advantage increasingly of social media, often on mobile platforms, consumers have greater access to information about products and services. At the same time consumers are increasingly sharing experiences of products and services across fora. This makes online safety and protection of personal information of growing importance for consumers.

Having fast and high-quality broadband internet is rapidly becoming a prerequisite for a competitive, innovative and sustainable knowledge economy. However, the telecommunications market has a number of structural characteristics that dampen competition; network effects, costs for expansion, replacement and adjustment of the telecom networks are high, leading to restricted market access.

One route around these problems is the provision of unbundled access to the infrastructure of incumbents, giving competitors a chance to access and remain active in the telecom market. Widening access to multiple providers means that:

  • Consumers benefit from competition among different providers by being able to select services from many providers of broadband internet access;
  • Consumers get more choices through new investments, lower prices, and the introduction of new services;
  • The improved competition eventually reduces excess capacity that had been built during market access restrictions.

Net neutrality

Having an open Internet system is centrally important for a number of less directly economic factors. For example, freedom of information for citizens and consumers is more likely to drive the development of innovative services than limited or restricted information flows. Competition authorities are therefore often involved in attempts to provide rules on net neutrality: where services that are the same must be treated equally by the internet provider.

  • Net neutrality rules, among other things, prohibits broadband access providers from prioritizing traffic, charging differential prices based on the priority status, imposing congestion-related charges, and adopting business models that offer exclusive content or that establish exclusive relationships with particular content providers.
  • Not having such rules means that internet providers adopt economically inefficient business models and network management practices due to a lack of sufficient competition in the provision of broadband access services.
  • By such market behavior, providers could create an artificial scarcity in which consumers are obliged to buy uncompetitive products.

Economic development

As part process of sculpting more dynamic economies developing economics increasingly introduce market forces to the telecommunications market. This process involves both letting go of national control of information systems, but on the on the other hand creating opportunities for exponential economic growth. The positive impacts of such a move tend to be:

  • Liberalization of the telecom market reduces transaction costs for both households and enterprises, facilitates job creation by private sector development, and enhances access to financial services.
  • Liberalization of telecom markets hence causes a more geographically balanced distribution of wealth.
  • Telecommunications liberalisation often triggers, or acts as a platform for innovation and new entrants in complementary markets.

Online safety

Long gone are the days when the Internet could be viewed as a frivolous or elitist tool. It has evolved into a global communications and commerce platform that is increasingly accessible to wide cross sections of the world’s populace. However, the accessibility of this resource has been accompanied by many complications and challenges. Among these challenges, and of key interest in ensuring consumers trust traders and each other online, is the security and control of personal data.

The problem of online security straddles the line between consumer, information and competition policy. Agencies need to develop rules, in conjunction with other competent agencies to ensure safety online. These include:

  • Online fraud: Spam is considered a vehicle for fraud, viruses, malware, and spyware. Open access to the net increases the creation of spam and potentially increases the vulnerability of the economic system.
  • Consumer education: spam is often used to target vulnerable populations often in poor social or medical conditions.

Resources:

Competition assessment toolkit, OECD, 2011. http://www.oecd.org/daf/competition/46193173.pdf

Net neutrality and consumer welfare, Journal of competition law and economics, 2010. http://jcle.oxfordjournals.org/content/6/3/497.abstract

China’s Telecommunications sector and the WTO: Can China conform to the telecom regulatory principles?, China in the new millennium, 1998, http://books.google.nl/books?hl=nl&lr=&id=BIGnLYA4PtsC&oi=fnd&pg=PA193&dq=telecom+competition+china&ots=Y4Y2QfWfof&sig=q8EW8BVkGurymLInGoG-u3NTFao#v=onepage&q=telecom%20competition%20china&f=false

The Benefits from Competition: some illustrative UK cases, DTI economics paper, 2004 http://www.berr.gov.uk/files/file13299.pdf

Market outlook, The Netherlands Authority for Consumers and Markets, 2013. https://www.acm.nl/en/publications/publication/11305/Market-Outlook-Authority-for-Consumers-en-Markets/

Safety and security on the Internet; Challenges and advances in Member States, World Health Organization, 2011. http://www.who.int/goe/publications/goe_security_web.pdf