www.re-think.

com

Re:Inventing Broadband
Regulation

Executive Summary Re:Think!’s conclusions:

In this White Paper we offer our advice to the market actors and public officials We advise broadband regulators
charged with delivering the broadband vision. and entrepreneurs to respond to the
dynamic progressive technological
Regulators of broadband networks and services need not only to regulate and market environment with an
broadband, they also need to be broad in their own thinking. That requires equally far-reaching regulatory goal.
regulators who understand the dynamics of innovation and competition in the
digital networked economy. 1. We term this ‘the Entry
Condition’.
Micromanaging communications markets is no longer feasible for either domi-
nant incumbents or regulators. For both, there must be a real regulatory com- 2. Policy should be deter-
mitment to forbearance and market-induced innovation. mined primarily by the need
to set free the innovative
We consider it crucial that the innovators and entrepreneurs creating the net- forces which are creating
works, applications and services that will drive the broadband economy, be the digital economy.
supported and promoted by the regulators. Without prompt regulatory action to
prevent incumbents controlling bottlenecks, and to support open networks and 3. This can be achieved by re-
interfaces, most innovations will fail or become captive to dominant players: drawing regulation to foster
the PTTs, Microsofts and broadcasters. free and fair competition.

The advice in this White Paper is intended for both entrepreneurs and regula-
tors:
1. It helps entrepreneurs understand the opportunities and pitfalls in com-
munications regulation, by separating broadband from analogue envi-
ronments;
2. It helps regulators prevent the rationales, monopolies and markets cre-
ated out of rationed scarce analogue conditions from distorting the new
broadband markets.

Regulators of broadband networks and services need to promote innovation by

setting the conditions for market entry. That requires regulators who intimately
understand the dynamics of competition and innovation in the digital networked
economy.

Contact:

Chris Marsden, marsden@re-think.com, +44 7779 260 376

Re:Think!, info@re-think.com, 0870 112 0202, www.re-think.com

July 2001, V. 1.0  Re:Think!, 2001

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Overview and Introduction

Analogue regulation in broadcasting and fixed line telephony was dominated by
zero-sum thinking: if the public service broadcaster lost, the commercial rivals won;
if the PTT lost, the cable companies won. In re-thinking regulation for broadband,
our basic message is that regulators must create the Entry Condition for a positive-
sum game: if Internet usage grows, almost all companies gain; if mobile prices
drop, traffic increases. Almost everyone gains. ...Analogue regulation
was dominated by
In three scene-setting sections, we identify:
zero-sum thinking ...
1. emerging broadband networks and services; regulators must create
the Entry Condition for
2. the role of competition regulation in opening broadband networks and serv- a positive-sum
ices to competition; and ` game...
3. the regulatory inheritance which needs re-thinking for the broadband
economy in Europe to succeed.

The following sections identify the key areas for regulators to forbear in order to
create the ‘Entry Condition’, which should be the guiding principle of broadband
regulation:

1. licensing, including individual, class and spectrum licensing;

2. bottleneck regulation, including both network (infrastructure) and content

(copyright) bottlenecks, and the links between those two;

3. standard-setting, including transatlantic attempts to set industry-led stand-

ards for networks, services and content.

It is our belief that the existing regulatory settlements have pursued an overly broad
‘politicised’ analogue agenda, driven by the twin imperatives of protection of con-
sumers and monopolies from competitive entry, and rationing of scarce resources
allocated to those monopolies.

We take as a case study the UK, as the cautionary example for entrepreneurs and
other European regulators to watch. The UK was the first to introduce privatised
regulated communications in both broadcasting and telecoms, and a dominant in-
fluence on the European Commission and its partners in the 1980s and 1990s. At
the dawn of the broadband era, the UK has fallen behind as a result of failing to
move from ‘managed competition’ to a ‘free for all’ market.

Instead of one winner and one loser, both protected by the regulator, there should
be thousands of winners and dozens (or perhaps hundreds) of losers. Ultimately it
is the customer, viewer and European economy which will benefit.

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Emerging Broadband Networks and Services

In the 2001 “Broadband Britain” Report, the UK government committed itself: “Our
goal is for the UK to have the most extensive and competitive broadband network in
the G7 by 2005”.

With convergence – much-heralded in the past two decades – finally arriving in the
roll-out of digital networks over wired and wireless technologies, that competition is
finally arriving. However, it is in Sweden, Finland, and the Netherlands that compe-
tition is far more advanced. ...More people use
the Internet and
Broadband as % of all Households in Selected European Regions 2000/2005
mobiles than turned
35 out to vote...
% of Households with Broadband

2005
30 2000

25

20

15

10

0
Nordic Germany UK France Italy Spain
source: Jupiter MMXI

Re:Think! envisages an environment in 2005 in which the vast majority of UK citi-

zens will use the Internet at home, work, school, on their mobiles and TV, for email,
web pages, and voice calls. Internet access on PCs, TVs, mobiles, PDAs and fu-
ture devices will be ubiquitous.

Consider the possibilities going forward, in those areas of the communications

economy which have evaded analogue regulation:
1. Mobile telephony, which has achieved 70% penetration, and solved the
Universal Service problem with innovative pre-paid services;
3. Multichannel programming, which is subscribed to by the majority of fami-
lies with children in the UK. The 5m Sky subscribers have all switched to
digital in less than 3 years, with a further 3.5m cable subscribers and 1m
DTT viewers;
4. Cable infrastructure and services, which have taken 20% of market share
from BT in the local loop, with over a million digital TV households and
growing numbers of broadband PC households;
5. Hard- and software applications and services, in which companies such
as ARM and Autonomy have survived roller coaster financial markets to
become world leaders;
6. Most of all, the Internet, which has reached the majority of the population
from close to zero at the time of the last General Election, and crucially
has penetrated the vast majority of businesses, with e-commerce truly
emerging in 2000.

In short, an absolute majority of UK citizens are connected to the Internet, own a

mobile phone, use software products, and are buying digital television services
where offered. More people use the Internet and mobiles than turned out to vote on
6 June 2001, in the second New Labour landslide.

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From Analogue Regulation to Broadband Competition

Our tools for creating Broadband Europe are very simple: build on the market suc-
cesses of the past.

The market successes have been based on light touch regulation, permitting viewer
and user choice to decide winners from losers. This has allowed software, hard-
ware and networks to proliferate, from personal computers to the Internet to mobile
communications. Governments learned that attempting to pick winners here, from ...Advanced under-
disastrous D-MAC systems for satellite TV, to ICL/Bull/Siemens Nixdorf ‘national standing of broadband
champion’ computing, would always lose out to entrepreneurial market-guided
enterprise in the end.
bottlenecks in both
networks and services
That is not to deny that competition regulation has played its part in ensuring mar- informs competition
ket forces can operate properly. decisions...
1. The essential facility regulation of BT’s network by Oftel to allow other
providers to offer voice calls from the mid-1980s, and now DSL over the
local loop in 2001, has created much network competition.

2. The UK pursuit of alternative infrastructure investment has led to the crea-

tion of a fibre-optic based cable network covering 60% of the UK popula-
tion in just a decade, which is also arriving in divesting European telcos’
cable systems (e.g. Telia in Sweden, DTelekom in Germany, KPN in Neth-
erlands).

3. The duopoly replaced by four, and soon five, UK mobile operators has led
to a booming mobile market.

4. For much of the 1990s, the UK led the way in network regulation. Offset-
ting local loop unbundling delays – common all over Europe and the US,
even in Germany and the Netherlands – Oftel has secured unmetered
Internet access at internationally competitive rates.

Competition regulation has played its part beyond telecom regulation, also. In glo-
bal computing and Internet markets, the two key regulators are the European Com-
mission and the U.S. government. Computer hardware and software markets have
been opened by the U.S. antitrust (competition) cases settled with IBM (1982),
Intel throughout the 1990s, and Microsoft’s appeal is pending. Internet backbone
and software cases have been settled by the combined efforts of U.S. and Euro-
pean regulators in AOL-TimeWarner (2000), AT&T-TCI (1999), Warner Music Group-
EMI (2000), MCI-WorldCom (1998), and Microsoft European cable (2001). In all
cases, advanced understanding of broadband bottlenecks in both networks and
services informed the competition authorities’ decisions.

Table 1: Converging Networks, Converging Services

Broadband Networks Emerging Services Example
Mobile 3rd Generation Mobile commerce Location-based
shopping
Digital Subscriber Lines Peer-to-Peer File-sharing: MP3,
Napster, Gnutella
Cable Modems Video-on-Demand Video conferencing,
enhanced e-learning
Wireless Local Area • A pplication • S oftware
Networks and Service sharing: .NET,
Fixed Wireless Access Providers Hailstorm
• M achine-to- • P rocessor-
Machine sharing:
distributed
computing

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Regulatory Cynicism
Unfortunately, the regulatory past is not confined to attempts to set networks and
services free. Too much of the regulatory inheritance is of utility regulation: protect-
ing consumers by rationing services, redistributing revenues from profitable to so-
cially desirable functions, imposing taxes on urban and business users in order to
aid the rural user (Laffont & Tirole 2000).

There is a history of monopoly and duopoly in fixed telephone and television serv- ...True competition
ices, the two most entrenched and politically powerful sectors of the communica- will encourage mass
tions industry. In return for protection from aggressive incentive regulation, the in- penetration of
dustries agreed to universal service and public service obligations; the former for
all households to access phone and TV services, the latter to ensure the positive
services...
nature of content on those services.

Transatlantic telecoms regulatory experts Naftel and Spiwak (Naftel and Spiwak
2000) argue that regulators and established corporates engage in elaborate games
of ‘regulatory cynicism’, in which legislation explicitly designed to encourage de-
regulation and market entry is reduced to games in which powerful companies
arbitrage the regulator to secure protection from true competition. It reflects the
business reality that the next best investment to a monopoly is a duopoly, and the
next best to that is an oligopoly. For monopoly, read copper local loop. For duopoly
read cable and telecoms infrastructures. For oligopoly, read the mobile sector.

Regulatory stability is of course vital to capital investment. However, too many

regulators have become cynical by nature. They have been waiting two decades
and more for convergence and value-added services – consider video-on-demand,
a dirty word in telecom circles for all its failed promises. In the absence of business
models which have succeeded in adding value services, they will be tempted to
retreat to permitting oligopoly (if not monopoly and duopoly any longer) in network
markets. The absence of true competition will encourage rent-taking from consumers
rather than truly market-oriented pricing and mass penetration of services, repeating
the vicious circle of failed entrants, unproven value-added services, and hence
limited broadband investment by capital markets.

The collapse in telecom share prices in the past year, for vendors, telcos, alternative
infrastructure builders and most disastrously broadband services, will encourage
regulators and survivors to plan for continued starvation by capital markets. That
would be a disaster, not only because it signals indefinite oligopoly in networks and
insufficient incentive to create new services markets, but because it lays waste to
the Internet-inspired creativity, which emerged in the latter half of the 1990s. It
permits European telecoms to ignore the US Silicon Valley-inspired innovation
revolution, which is creating true competition in formerly oligopolistic markets, such
as operating system software, and broadband local area networks.

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Broadband Regulation Lags Behind Markets and

Technology

Regulators need to remember that telecoms is no longer a utility, that failures in the
market are a natural element in competition, and that enhanced stock market volatility
is a fact of capital investment in the broadband economy. The TMT sector rose and
then fell far faster than the traditional economy, and will rise (and no doubt fall)
even faster in future. That is good reason not to build regulation for oligopolies, but The planned OfCom is
to accept that the TMT sector has fundamentally altered competitive strategies in
favour of dynamic growth, innovation and instability. The regulators’ job is not to … a reshuffling of the
stop this dynamism but to encourage competition and let the market - and investors regulatory
and consumers - feel the pain and the reward. deck-chairs amongst
analogue ‘clients’
A Step Change from Analogue Duopoly to Broadband
Innovation Regulation

Regulation

Networks
+
Innovation

Computing Broadcast
Video

Telephony

Time

Having accepted that convergence is finally occurring, regulators might reason-

ably be expected to assume that their job – beyond competition regulation and
content filtering for minors – is coming to an end. Preventing the monopolies from
the analogue environment from encroaching anti-competitively into broadband is
essential. But beyond the need to ensure transparency and prevent illegal cross-
subsidy (admittedly a complex task) regulators can refrain from interfering in the
broadband market.

With the end of scarcity and the increased scope for original production, the obvi-
ous rationales for intervention beyond competition regulation are disappearing fast.
Unfortunately, the well-documented phenomenon of regulatory capture can come
into play, where long-established regulators are ‘managed’ by their ‘clients’, the
large, well-resourced and familiar corporate interests.

To safeguard against this danger, it is necessary to make a clean break with the
past, rather than merge five UK regulators into one without fundamentally redraw-
ing both mission and, consequently, personnel. The planned OfCom is just such a
merger, a reshuffling of the regulatory deckchairs amongst analogue clients. Many
European broadcast and telecoms regulators have not even merged offices, let
alone functions (in part due to their state-federal division of powers between cul-
ture and commerce).

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Entrants as the New Focus of Regulation

We propose an alternative mode of operation: an entry-based system of regulation
in which the new ‘clients’ are not the government-picked winners of the past, but
all new entrants willing to invest in competitive and innovative services and
networks. By constantly taking market entry conditions as their watchword for
regulatory success, a broadband OfCom can separate its success from that of its ...Investors recognizing
previous clients, the telcos and broadcasters.
positive-sum games will
We are not suggesting that the regulator biases itself in favour of named entrants look for
– the folly of the Mercury-BT duopoly of the 1980s or the BBC-ITV duopoly of the innovatory entrants to
1960s onwards. There is a critical distinction between entry – our watchword for provide new services
regulation – and entrants – picking the competition. Entry does not presuppose and grow the sector...
that a named competitor emerges: if the markets do not invest in competitive
infrastructure that will not happen.

Entry should not be decided by the regulator. Rather, the market should decide.
We are convinced that the more broadband networks and services are regulated
in the manner of the computer hardware and Internet markets, the more likely
entry will be. The more such regulation resembles that of broadcast and telecoms,
the less open markets will be.

Investors recognizing positive-sum games will look for innovatory entrants to provide
new services and grow the sector. Markets asked to judge zero-sum games will
pick winners or desist from investing in such low margin contests.

In the following sections, we identify three critical areas in which regulators can
set the ‘market entry condition’ for broadband networks and services: licensing,
gateway regulating and standard-setting. We focus on the inter-relationship between
these fields, in that dominance of any one field by one competitor can lead to
regulatory problems in another, where that dominance can be leveraged unfairly.
It is vital that the regulator works seamlessly between divisions in order to monitor
the effects of one field on the others.

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Licensing for Market Entry

Individual Ration Books in the Analogue Era

The basis for communications regulation in the past was the individual licence.
Companies who wanted to offer the public communications services were required
to apply individually for licences, to guarantee levels of quality of service, to detail ...A vicious circle of
their prices, network architectures, content and programmes, employment and train-
rationing and market
ing provisions and so on. British Telecom is regulated by Oftel under the terms of its
licence under the 1984 Telecommunications Act. Other companies offered near- distortion was created
monopoly licences also have individual licences, several in the case of cable com- by successive regula-
panies. tory interventions...
In exchange for receiving the privilege of a rationed service, companies promised
governments to use their radio spectrum and/or right to roll out infrastructure for the
public good. Regulators even required prior censorship of programming on televi-
sion. Profits were secondary. A vicious circle of rationing and market distortion was
created by successive regulatory interventions.

Auctioning Scarcity at the Start of Liberalisation

In the 1980s, more market-oriented measures were introduced, including franchise

auctions for terrestrial and cable television, and spectrum auctions. Unfortunately,
the artificial scarcity of both infrastructure and spectrum caused by previous over-
regulation has warped these auctions. Public concerns have ‘squatted’ on their
spectrum, notably the Ministry of Defence and BBC, leaving little for new entrants.
This drove up the price of broadcast licences in the 1990s, of 3G mobile licences in
2000, and continues to create problems for government in assessing demand for
DSL provision, fixed wireless access, restricted service licences for television, and
digital audio broadcasting.

Private Bandwidth Trading in the Future Present`

In contrast Internet service providers in the UK do not require a licence to operate.

Quality of Service is built into Service Level Agreements, and recourse for system
failure is with courts not regulators.

Where there is scarcity, as for instance for backbone capacity, it is overcome by

investment and engineering innovation. Because traffic is growing so rapidly, rein-
vestment in the network is to the advantage of all players (despite some short sighted
retrenchment in the last year), and a virtuous circle of growth and innovation re-
sults.

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Case Study: ‘Intelligent Spectrum’

The many justifications for licensing in the analogue narrowband world largely disap-
pear in the broadband environment.

Concerns regarding content delivery, network integrity and rationing are overcome
by private contract, standard-setting and reinvestment in a competitive market.
Re:Think! argues that individual licences should only remain for actors with Signifi- ...Broadband wireless
cant Market Power inherited from the analogue past. All other players should be devices will proliferate
assumed to require no licence, except the most generic registration (class licensing). creating huge opportu-
To illustrate how revolutionary regulators can be, consider spectrum licensing.
nity for new applications
and services...
The lack of spectrum for commercial use due to ‘bandwidth hogging’ by government
departments, especially the MoD, and the broadcasters, led to a regulatory para-
digm in which the regulator (the Radiocommunications Agency) licensed all other
spectrum as a scarce resource. The primary concern has been pollution (interfer-
ence) and illegal ‘pirate’ use of spectrum.

That is changing fast. Increased use of intelligent multiplexing devices, including IP-
based laptops for wireless LANs, is allowing far more use of available spectrum than
previously thought possible. (See “I Want My WiFi!” at http://www.re-think.com/
knowledge1.htm for examples). It is a tragedy for 3G to be almost the final victim of
rationed individual licensing before the ‘intelligent spectrum revolution’ begins.

Allied to these technical changes, the government’s advisor on spectrum, Professor

Martin Cave (Cave 2001), has suggested that a ‘secondary market’ be created for
spectrum rights: if you aren’t using your bandwidth, then instead of hogging it in case
you might need it later, lease it to someone who can make use of it.

These two changes, one technological, the other market-led regulatory, can revolu-
tionize spectrum usage. The government (and MoD, BBC and other broadcasters)
will discover the true market value of their services and spectrum, and are likely to
release far more spectrum onto the market as demand is established. Broadband
wireless devices will proliferate creating huge opportunity for new applications and
services.

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Regulating the gatekeepers

Broadband networks and services operate in a complex and interdependent value
chain, based on Internet Protocol and a huge variety of open and closed systems.
Digital networks can carry all data, voice and rich media (video and audio) on an
end-to-end basis. This interoperability can be jeopardised by both network (infra- ...The narrowband
structure) and content (copyright) bottlenecks, and the links between those two.
Internet is invigorating
Telecom and broadcast networks used to be proprietary: they were closed and for competition and inno-
therefore guaranteed quality. Now that there is a global data standard, IP, the engi- vation because
neering challenge is to ensure that quality over open systems. The narrowband anyone can communi-
Internet is invigorating for competition and innovation because anyone can com- cate (and compete) with
municate (and compete) with anyone.
anyone...
Vertical Analogue Regulation Prevents Convergence

Broadcast Telecoms Computing

Services Applications Networks

BBC BT IBM
gulatory Barrier

gulatory Barrier
B r

B r
Regulatory

Regulatory

BBC BT IBM
R

BBC BT IBM

Horizontal Broadband Regulation For Interface Bottlenecks

Video Voice Data

Services Applications Networks

Akamai Vodafone Worldcom

Interface
n face / Bottle
Bottleneck?
k

RealPlayer Vizzavi Microsoft

Interface
I rface / Bottle
Bottleneck?
c

Vivendi Virgin AOL

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Case Study: AOL buys Time Warner

To take an example, many experts were concerned that AOL in buying Time Warner
could exercise market power over the latter’s cable systems (infrastructure) and
content such as CNN (copyright), thus controlling the vertical value chain.. As a
result, AOL agreed to restrictions on offering its services over its cable systems,
allowing other service providers and content owners equal access.

That goal of lowering entry barriers is exactly what we recommend to communica- ...the whole communi-
tions regulators generally. The message of the AOL case is that it is important to cations value chain
ensure that the old telco and broadcast bottlenecks are not replaced by new rests on industry-led
broadband vertically integrated bottlenecks. standard setting...

Setting Open Standards to Ensure Interoperability and

Innovation
Interoperability can be created by opening up bottlenecks created by market power.
A more sure-fire route towards interoperability is to ensure that the market struc-
ture is designed for end-to-end access, like the Internet itself. To do that, govern-
ment and regulators need to encourage open standards. Though it is the last area
discussed, it offers the best and first hope for minimal regulation, because the
whole communications value chain rests on industry-led standard setting.

There are three basic methods of creating standards, by government, by industry

in closed groups, and by open standard setting. An example of the first is the disas-
trous ‘squarial’, of the second the video recorder wars of the 1980s between
Betamax, VHS and Video2000, of the third is the Internet itself.

It’s easy to see how government would like to set standards: it’s a form of regula-
tion by other means. Communications technologies are too dynamic and fast-mov-
ing for too ‘hands-on’ an approach, and disasters like High Definition Television
and the digital terrestrial software language, MHEG5, show that government should
not intervene directly unless industry-led standards manifestly fail to benefit con-
sumers.

Closed industry groups, whether one or several corporations, can all too easily use
standard setting to regulate the rest of the market. With the Windows operating
system in over 90% of PCs shipped from factories, it’s clear that Microsoft is a
more or less benevolent dictator in PC software, and has used that to bundle word
processor, email and Internet browser applications and the rest into its operating
system. In telecoms, the control that BT and other telcos in the International Tel-
ecommunications Union had over switched telecoms engineering, is an example of
closed standard setting.

Open industry groups work together to create an interoperable standard, recognis-

ing that positive-sum games can benefit all. The degree to which groups are open
is, of course, a matter of degree. Where one company is far more advanced in a
technology, it is more likely to resist co-operating with its competitors, and access
to any group becomes vital. Companies such as Dell, Intel and Microsoft are known
to leave standard setting groups to develop their own standard having gathered
intelligence on the other players. This is normal competitive conduct in most cases.

An example of a system of open source development is the Linux General Public

Licence for software, developed in global non-profit collaboration. Other examples
of voluntary standard setting which produce interoperable standards are those de-
veloped by the Internet Engineering Taskforce and the World Wide Web Consor-
tium. The standards involved can be responsible for trillions of dollars worth of
data, far larger than any UK communications sector. Open standards are begin-
ning to dominate communications, just as IP is dominating data traffic.

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Case Study: Digital TV Set-Top Boxes

Take a European example of regulators acting to help interoperability develop. It is

the critical example of European viewers’ access to the Internet over digital TV, in
which the continent leads the world.
...Governments
Set-top boxes for digital TV were originally proprietary, growing out of the ‘squarial’ persuaded dominant
disaster and Sky’s takeover of BSB in 1990. In 1991-3, the European Commission actors that
resisted the idea that they should mandate a new government-led standard, in- interoperability
stead seeking industry consensus on an open standard, in the formation of the
was in the best interests
Digital Video Broadcasting Group (DVB: see Watson Brown 1999 and Marsden
2001). of the industry and view-
ers...
Because the pay-TV operators were so advanced in technology and markets com-
pared to the terrestrial broadcasters, they resisted in the ‘first generation’ of STBs,
but agreed to work towards a standard for ‘second generation’ boxes. Pressed by
the Commission in 1999, they agreed to a new interface based on the Java lan-
guage (McGowan 2000), which is being introduced in Finland in autumn 2001.

As so often, developing an open standard has required convincing all market play-
ers, including the dominant actors, that the market would grow based on that any-
to-any interoperability. In this case, a combination of manufacturers (including
Microsoft, Motorola), software programmers (including Canal Plus and Sun, author
of Java), and governments persuaded dominant actors that interoperability was in
the best interests of the industry and viewers.

Oftel has needed to regulate several BSkyB subsidiaries, in detail as great as au-
thorising usage of the source code used in interactive TV applications, in order to
open up this proprietary system to competitors.

Government action can be seen as a vital last resort in standard setting, encourag-
ing an otherwise impossible industry compromise. Other classic case studies in
broadband standard setting include 3G and 4G networks, the MPEG4 video stand-
ard and the new 3G software language. Often, industrial policy concerns prevent
interoperability between European and U.S. standards (Naftel and Spiwak 2000).
The European Commission is well supported by UK regulators, notably the DTI ,
Oftel and the Radiocommunications Agency, and it is to be hoped that this stand-
ards supporting work is continued in OfCom, whatever its composition.

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Conclusion: Re-inventing Broadband Regulation

Regulators of broadband networks and services need not only to regulate broadband,
they also need to be broad in their own thinking. That requires regulators who inti-
mately understand the dynamics of competition in the digital networked economy.
… regulators need to
They need to focus on the regulatory goal of a ‘Broadband Europe’, and accept that create open markets,
there will be some losers amongst those companies who fail to adapt from the in which companies
rationed analogue environment to the broadband networks and services markets. stand or fall based on
Rather than steer a smooth path for companies, regulators need to create open their innovation and
markets, in which companies stand or fall based on their innovation and service
offering to customers.
service offering to
customers...
Creating that market entry condition is the critical task of the broadband regulator.

We have shown in this White Paper some of the key areas for entrepreneurs and
regulators to address in order to create the ‘Entry Condition’ which should be the
guiding principle of broadband regulation:

1. licensing;

2. bottleneck regulation;

3. standard-setting.

This approach:

o Ensures competitive pressures which drive international competi-

tiveness,

o pursues diversity and plurality of voice,

o encourages entrepreneurs into the communications market,

o accelerates convergence of the media, IT and telecoms sectors,

o enhances cross-sectoral investment prospects by regulatory com-

mitment to fairness to entrants.

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Illustrative Bibliography
A Short Article Based on this White Paper
Marsden, C. (2001) Shuffling the Regulatory Deck Chairs’, Inside Digital
TV, 28 March 2001 at http://www.re-think.com/pdfs/IDTV4-06.pdf

Communications Convergence and Regulation

Blackman, C., and Nihoul, P., eds. (1998), Telecommunications Policy, Vol. 22 No. 3:
Special Issue - Convergence Between Telecommunications and Other Media: How
Should Regulation Adapt?

Commission of the European Communities (1997): Green Paper on the Convergence

of the Telecommunications, Media and Information Technology Sectors, and the
Implications for Regulation: Towards an Information Society Approach. COM(97)623.
HTTP: www.ispo.cec.be/convergencegp/97623en.doc

Marsden C. & S. Verhulst (eds.) (1999) Convergence in European Digital TV Regula-

tion London: Blackstone Press

Telecoms Regulation and Regulatory Reform

Naftel, Mark and Spiwak, Lawrence (2001) The Telecoms Trade War, Hart Publishing,
http://www.phoenix-center.org/telindex.html

Laffont, J.J. and Tirole, J. (2000) Competition in Telecommunications, MIT Press

Marsden, C. (2000)(ed) Regulating the Global Information Society, Routledge, New

York.

Government Broadband Strategy

E-envoy (2001) ‘UK Online: The Broadband Future’, Office of the e-envoy, 13 February
2001, http://www.e-envoy.gov.uk/ukonline/ukonline_menu.htm

Network Effects, Strategy and Regulation

Shapiro, C. and Varian, H.R.(1999) Information Rules: A Strategic Guide to the Net-
work Economy, Harvard Business School Press

Figueiredo, R.J.P. and Spiller, P. (2000) Strategy, Structure and Regulation: Telecom-
munications on the New Economy, 2000 L.REV. M.S.U.-D.C.L. 1 at pp253-285

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Spectrum Reform

Cave, Martin (2001) Independent Spectrum Management Review Consultation Pa-

per, http://www.spectrumreview.radio.gov.uk/conpaper.htm

Croxford, I. with Marsden, C. (2001) I Want my WiFi!, http://www.re-think.com/

knowledge1.htm

Digital Television Bottlenecks and Regulation

Cave, M. and Cowie, C. (1996) Regulating Conditional Access in European Pay

Broadcasting Communications and Strategies, No.23, 3rd quarter at 119, IDATE:
Montpelier;

Cave, M. and Cowie, C. (1998) Not Only Conditional Access. Towards a Better
Regulatory Approach to Digital TV, Communications and Strategies, No 30, 2nd
Quarter, 1998 at pp 77-101;

Cowie, C and Marsden, C. (1999) Convergence: Navigating Through Digital Pay-

TV Bottlenecks 1 Info 1 at 53-66, Cambridge: Camford Publishing

Open Code and Regulation

Lessig, L. (1999) The Limits in Open Code: Regulatory Standards and the Future
of the Net, 14 Berkeley Technology Law Journal 2 at 759-770

Standard Setting and Regulation

Marsden, C. (2001) Cyberlaw and International Political Economy:

Towards Regulation of the Global Information Society, 2000 L.REV. M.S.U.-
D.C.L. 1 at pp253-285

Watson Brown, Adam (1999) Industry Consortia and the Changing Roles of
Standards Bodies and Regulators, 325 IPTS Report, Institute of Prospective
Technology Studies, Seville, Spain, also through DGXIII, at http://www.jrc.es/
pages/f-report.en.html

Kahin, Brian and Abbate, Janet eds. (1995) Standards Policy for Information
Infrastructure, Cambridge MA: MIT Press

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Annex 1 - Companies and Organizations mentioned in this white paper

Company/Organisation Website

America Online (AOL) http://www.aoltimewarner.com/

ARM http://www.arm.com
AT&T http://www.att.com
Autonomy http://www.autonomy.com/
BBC http://www.bbc.co.uk
British Telecom http://www.bt.com
BskyB http://www.sky.com
Bull http://www.bull.com/
Canal+ http://www.vivendiuniversal.com
Department of Trade and Industry http://www.dti.gov.uk
Deutsche Telekom http://www.telekom.de
Digital Video Broadcasting Group http://www.dvb.org
E-envoy http://www.e-envoy.gov.uk/
EMI http://www.emigroup.com/
European Commission http://europa.eu.int/ISPO/
IBM http://www.ibm.com
ICL (International Computing Ltd) http://www.icl.com/
International Telecommnunications Union http://www.itu.int
Internet Engineering Task Force (IETF) http://www.ietf.org
ITV http://www.itv.co.uk
KPN http://www.kpn.com
MCI WorldCom http://www.worldcom.com/
Mercury http://www.cwhistory.com/history/html/Mercury.html
Microsoft http://www.microsoft
Ministry of Defence http://www.mod.gov.uk
Motorola http://www.motorola.com
OfCom http://www.ofcom.gov.uk
Oftel http://www.oftel.gov.uk
Radiocommunications Agency http://www.radio.gov.uk
Siemens Nixdorf http://www.wincor-nixdorf.com/eng/pressemit/index.html
Sun Microsystems http://www.sun.com
Telia AB http://www.telia.com
Warner Music Group http://www.wmg.com/
World Wide Web Consortium (W3C) http://www.w3c.org

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