D-REG-TTR 12-2010-PDF-E-refome telecom-BDT

TRENDS IN
TELECOMMUNICATION
reform
TRENDS IN TELECOMMUNICATION REFORM 2010/2011 ENABLING TOMORROW’S DIGITAL WORLD

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ISBN 92-61-13341-X
TRENDS IN
TELECOMMUNICATION
reform
Enabling
Tomorrow’s
Digital World
Trends in Telecommunication Reform 2010-11
This report was prepared by a team led by Nancy Sundberg, Youlia Lozanova and Makthar Fall of the BDT Regu-
latory and Market Environment Division. The team included: John Alden, Kari Ballot-Lena, Jay Chauhan, Daniel Leza,
Makthar Fall, Adrian Foster, Marco Gercke, Janet Hernandez, Raúl L. Katz, Youlia Lozanova, Rory Macmillan, Chris-
tine Sund, Nancy Sundberg, Tatiana Tropina and Stephen Young. Special thanks also to Philippa Biggs, Vanessa Gray,
Esperanza Magpantay and Susan Teltscher for their comments on chapter 1, Carmen Prado-Wagner and Susan Telt-
scher for their comments and advice on Chapter 2, Istvan Bozsoki and Nangapuram Venkatesh for their comments
on Chapter 5; Souheil Marine, Theresa Miedema and Robert Shaw for their comments and advice on Chapter 6;
Alexandre Vassiliev, Cristina Bueti, Hani Escander, Jose-Maria Diaz-Batanero and Martin Adolf for their comments on
Chapter 7, and the Market Information and Statistics Division of BDT for providing the ICT indicators.
The report was edited by Theresa Miedema. The ITU Publications Composition Department was responsible for
production of the report (cover and layout).
We would especially like to thank for their comments: Information and Communication Technologies Authority
(ICTA), Mauritius.
These contributions, together with the support from ICT ministries and regulators, and others who have pro-
vided data and background material, are gratefully acknowledged. Without their support, a report of this nature
would be impossible.
The views expressed in the report are those of the authors and do not necessarily reflect the opinions of ITU or
its membership.
ii
FOREWORD
We are pleased to present the 11th annual edition of broadband, its management and the setting of
of Trends in Telecommunication Reform. Each year, this sound policies and regulations. Consequently, an
publication aims to take stock of telecommunications understanding of the complex broadband ecosystem
and information technology developments around the and the relationship between ICTs and various dimen-
world and to draw particular attention to a key theme sions of society is essential, and a critical assessment of
in the regulation of information and communications the role of ICT regulators is now warranted. Given that
technologies (ICTs). As with past editions, the theme of ICTs touch all aspects of society, it is necessary to con-
this year’s Trends “Enabling Tomorrow’s Digital World” sider the appropriate scope of the ICT regulator’s
derives from an important meeting, the Global Sympo- mandate to create an enabling digital world.
sium for Regulators, held in November 2010 in Dakar,
Senegal. This report centres on the changing nature of This report considers the link between ICTs and ma-
ICT regulation in the 21st century. We examine ICT jor social issues like climate change and economic
regulation against the backdrop of the diffusion of ICTs growth and development. It also examines key chal-
into virtually all aspects of society and the importance lenges and opportunities for regulators in the digital
of ICTs for social, political, and economic development. age, such as the digital dividend and broadband rollout,
managing the transition from analog to digital transmis-
We stand at the threshold of the fully integrated sion, and cybersecurity. A key theme throughout the
and interconnected, digital society. Tremendous report is the evolving role of the ICT regulator in
changes have swept the sector over the last decade led preparing the foundations for the emergence of the
by the emergence of IP-based networks and broadband fully integrated and interconnected, digital society.
technologies offering greater efficiency gains, ever in-
creasing speeds, ubiquity, instantaneity and always-on We release this edition of Trends as part of our
connectivity. More powerful information technologies commitment to encourage countries to embrace
are changing business practices and cloud computing is broadband development, and build their future on
just one example. The advent of converged handheld broadband to help drive growth and deliver benefits
devices, such as smartphones, netbooks and tablets, across society. We hope that the discussion contained
offers not only access to online content but also allows in this edition helps regulators and policy-makers to
users to produce and share their own content from chart their way forward into the digital era in an in-
anywhere and at anytime. Together with the increase formed manner. We have sought to create a framework
of web-based applications, and in particular m-applica- for discussing how to navigate the complex issues re-
tions and services, they illustrate how building on lated to ICTs and digital lifestyles so that together we
broadband is transforming the way we communicate, might set a course for regulators and policy-makers as
do business and contribute to social and economic they lead us into tomorrow’s digital world. We invite
development. you to continue to engage in dialogue with us about
these issues so that we work together to ensure that
ICTs no longer just connect us to the stories in our the benefits of an integrated and interconnected digital
society; ICTs have become the story. We live in the age world are shared by everyone.
of information, social networking and the digital econ-
omy, where no citizen should feel excluded. We believe
that access to affordable and equitable ICT services, in
particular broadband, and the right to communicate,
should be considered as one of our basic human rights.
ICTs are the backbone of the knowledge economy and Brahima Sanou
therefore ubiquitous broadband networks should be Director
considered a basic national infrastructure. The health of Telecommunication Develoment Bureau
today’s society is tied to the ICT sector, the deployment
Foreword iii
CONTENTS
Page Page
1 OVERVIEW OF TRENDS IN THE ICT MARKET APPENDIX D – CHILE: THE IMPACT OF

AND IN ICT REGULATION .......................... 1 BROADBAND ON EMPLOYMENT AND
1.1 Introduction ................................................ 1 ECONOMIC GROWTH ................................. 73
1.2 A snapshot of ICT market trends................ 2 APPENDIX E – INDIA: THE IMPACT OF
BROADBAND ON EMPLOYMENT AND
1.3 Regulatory Trends: A changing world ........ 10
ECONOMIC GROWTH ................................. 75
1.4 Setting policies and regulations to foster
APPENDIX F – MALAYSIA: THE CONTRIBUTION
broadband access ....................................... 18
OF BROADBAND TO ECONOMIC GROWTH 77
1.5 Conclusion: challenges and opportunities
APPENDIX G – SAUDI ARABIA: THE IMPACT OF
in building tomorrow’s digital world .......... 20
BROADBAND ON EMPLOYMENT ............... 78
2 THE IMPACT OF BROADBAND ON THE
3 ICT REGULATION IN THE DIGITAL
ECONOMY: RESEARCH TO DATE AND
ECONOMY ................................................. 85
POLICY ISSUES .......................................... 23
3.1 Introduction ................................................ 85
2.1 Introduction ................................................ 23
3.2 Promoting Broadband Deployment and
2.2 Economic Impact of Broadband:
Use .............................................................. 86
a Review of the Literature .......................... 24
3.3 Trends in ICT Regulation ............................. 89
2.3 Economic Impact of Broadband in
Developed Countries: Case Studies ........... 31 3.4 Implementation of Cross-Sector
Activities...................................................... 95
2.4 Economic Impact in Developing
Countries: Case Studies .............................. 36 3.5 Cooperation among Regulatory
Authorities in Different Sectors ................. 108
2.5 Analysis of Case Study Results ................... 39
3.6 Conclusions ................................................. 113
2.6 Estimation of Broadband Gaps and
Investment Requirement ........................... 39
4 THE LIBERALIZATION OF ICT DISPUTE
2.7 The Role of Public Policy and Regulation RESOLUTION ............................................. 123
in Boosting the Development of
4.1 Introduction: fault lines .............................. 123
Broadband .................................................. 42
4.2 The liberalization and unbundling of ICT
2.8 Conclusion................................................... 62
and dispute resolution ............................... 125
Bibliography............................................................ 63
4.3 Dispute resolution and regulation ............ 130
APPENDIX A – METHODOLOGY AND DATA
4.4 Liberalization and unbundling of ICT
UTILIZED IN ECONOMETRIC CASE STUDIES 67
dispute resolution....................................... 137
APPENDIX B – LATIN AMERICA: BROADBAND
4.5 Conclusion: where next? ............................ 149
CONTRIBUTION TO ECONOMIC GROWTH 70
APPENDIX C – BRAZIL: THE IMPACT OF
BROADBAND ON ECONOMIC GROWTH
AND EMPLOYMENT .................................... 71
Contents v
Page Page
5 SPECTRUM IN TRANSITION: THE DIGITAL 7.3 Points of contact: where ICTs meet
DIVIDEND ................................................. 155 climate change............................................ 246
5.1 Introduction ................................................ 155 7.4 Regulation: A Potential Point of Contact? . 249
5.2 Digital Switchover (DSO) and the Digital 7.5 Adaptation: A Current Point of Contact .... 261
Dividend ...................................................... 155 7.6 Mitigation: A Current Point of Contact ..... 263
5.3 Policy Options Related to the Digital 7.7 Transformation: A Current and Future
Dividend ...................................................... 173 Point of Contact .......................................... 281
5.4 Regional Experiences.................................. 176 7.8 Going Forward ............................................ 290
5.5 Best Practices .............................................. 181 Annex 7.1 – The transformative potential of ICTs . 291
5.6. Lessons Learned ......................................... 183 Annex 7.2 – ITU integrated checklist on regulator’s
involvement in climate change issues ....... 296
6 THE ROLE OF ICT REGULATION IN
ADDRESSING OFFENSES IN CYBERSPACE .. 187 8 POSTCARDS FROM THE INFORMATION
6.1 Foreword..................................................... 187 SOCIETY: LIVING WITH ALWAYS-ON
6.2 Introduction to cybersecurity, TECHNOLOGY – THE GOOD, THE BAD,
cyberthreats and cybercrime ..................... 188 AND THE JUST PLAIN BAFFLING................. 311
6.3 Setting the scene3 ...................................... 191 8.1 Introduction ................................................ 311
6.4 The cybercrime ecosystem: An overview 8.2 The Information Society Is Here – Or Is It? 312
of roles and responsibilities....................... 197 8.3 Underlying Technologies ............................ 319
6.5 Addressing cyberthreats: Understanding 8.4 Impact on Everyday Lives ........................... 326
regulatory issues and available tools ........ 200 8.5 Has the Information Society Outrun
6.6 Role of the ICT regulator in addressing Regulation? ................................................. 338
cyberthreats70............................................ 214 8.6 Conclusion .................................................. 349
6.7 Summary of findings and conclusions ...... 226
9 CONCLUSION............................................. 357
7 CLIMATE CHANGE, ICTS
AND REGULATION .................................... 239 REGULATORY INFORMATION ............................... 361
7.1 Executive Summary .................................... 239
GLOSSARY OF TERMS ........................................... 363
7.2 What is climate change? ............................ 244
vi Contents
LIST OF FIGURES
Page
Figure 1.1: Global ICT development and growth in competition, 2000-2010 ................................................... 3
Figure 1.2: ICTs users and subscriptions and competition in selected services by region, 2010 ........................ 5
Figure 1.3: Social Networks, worldwide........................................................................................................... 8
Figure 1.4: Privatization trend of the main-fixed line incumbent ..................................................................... 9
Figure 1.5: Separate telecom/ICT regulators .................................................................................................. 13
Figure 1.6: Mandate of the Regulator, 2010 ................................................................................................... 14
Figure 1.7: Traditional Regulatory functions of the telecom/ICT regulator, world, 2010 ................................ 16
Figure 1.8: Funding of the Regulator’s budget .......................................................................................17
Figure 1.9: ICT dispute resolution trends, 2005-2010 .............................................................................17
Figure 1.10: Broadband policies and plans, 2010 .....................................................................................19
Figure 1.11: Infrastructure sharing regulation, 2010 ................................................................................19
Figure 2.1 Impact of broadband on output over diffusion process..................................................................... 26
Figure 2.2 OECD: Percentage of Impact of Broadband on GDP Growth ........................................................ 26
Figure 2.3 Conceptual view of comparative broadband regional effects....................................................... 35
Figure 2.4 Mobile data as a percentage of service revenues (2003-10) ......................................................... 61
Figure 2.5 3G Phone subscribers as a percentage of all mobile subscribers (2007-2010)............................... 61
Figure 2.6 Taxation vs. Adoption of Data Services......................................................................................... 63
Figure 3.1 The Broadband Ecosystem ........................................................................................................... 86
Figure 3.2 Reasons for Non-Adoption of Internet in Brazil and Broadband in the United States ................... 87
Figure 3.3 Estimated Internet user penetration, by region, 2010 .................................................................. 88
Figure 3.4 Top five mobile carriers by subscribers compared to Skype registered users (1Q 2010) ............... 89
Figure 3.5 Top 30 countries by number of Facebook users............................................................................ 90
Figure 3.6 Passive and Active Infrastructure Sharing..................................................................................... 91
Figure 3.7 Mobile broadband development in Morocco............................................................................... 92
Figure 3.8 Quantities of e-waste generated from PCs in Senegal and Uganda, 2005-2020 ............................ 97
Figure 3.9 Hypothetical example of cybercrime involving multiple countries ............................................. 101
Figure 3.10 M-Banking models ..................................................................................................................... 106
Figure 3.11 Ten Singapore agencies involved in the Energy Efficiency Programme Office,
including ICT Regulator............................................................................................................... 110
List of figures vii

Page
Figure 4.1 Liberalization and unbundling of ICT .......................................................................................... 127

Figure 4.2 Basic role types in dispute resolution ......................................................................................... 128
Figure 4.3 Liberalization and unbundling of ICT .......................................................................................... 129
Figure 4.4 Styles of intervention......................................................................................................... 130
Figure 4.5 Regulatory adjudication, arbitration and special tribunals.................................................. 140
Figure 4.6 Mediation in Japanese telecommunications....................................................................... 145
Figure 4.7 Mediation of sector reform in Fiji....................................................................................... 148
Figure 4.8 Multi-party hybrid dispute process for international telecommunication traffic dispute .... 149
Figure 5.1 Percentage of households with a television, 2007 ...................................................................... 157
Figure 5.2 Republic of Korea, IPTV Subscribers ........................................................................................... 158
Figure 5.3 Growth in IPTV Companies in the Republic of Korea, 2009......................................................... 158
Figure 5.4 Breakdown of television access by distribution type in the OECD – 2007 ................................... 159
Figure 5.5 Growth in Internet Radio ........................................................................................................... 160
Figure 5.6 Digital Media Growth ................................................................................................................. 160
Figure 5.7 ITU Regions ................................................................................................................................ 162
Figure 5.8 Mobile Subscriptions to Reach 5 Billion in 2010 ......................................................................... 167
Figure 5.9 Regulatory Functions ................................................................................................................. 168
Figure 5.10 Total Value Framework............................................................................................................... 174
Figure 5.11 Approach to Trading Off Market Led and Interventionist Approaches........................................ 174
Figure 5.12 Status of Digital Switchover........................................................................................................ 182
Figure 6.1 Difficulties in tracing offenders................................................................................................... 193
Figure 6.2 Example of a botnet attack ........................................................................................................ 195
Figure 7.1 The ICT ecosystem...................................................................................................................... 242
Figure 7.2 CO2 emissions from telecom infrastructure and devices, 2002 and projected in 2020 ............... 246
Figure 7.3 DEFRA and the 4E’s Model ......................................................................................................... 258
Figure 7.4 The Rationale for Environmental Taxation.................................................................................. 260
Figure 7.5 Climate Change Risk Chart.......................................................................................................... 262
Figure 7.6 The ICT Carbon Bill ..................................................................................................................... 264
Figure 7.7 The Continuing Growth in Average Broadband Speeds .............................................................. 264
Figure 7.8 High-End Handsets, Laptops, and Data Traffic ............................................................................ 265
Figure 7.9 Mobile CO2 emissions ................................................................................................................ 268
Figure 7.10 The Arithmetic of Growth .......................................................................................................... 275
Figure 7.11 Global ICT development, 2000-2010 .......................................................................................... 276
Figure 7.12 ICT services in SMART Communities .......................................................................................... 283
viii List of figures

Page
Figure 8.1 Stairway to (Digital) Heaven: The Broadband Usage Forecast .................................................... 320
Figure 8.2 Off to the Races: OECD Countries Add Fibre Throughput ........................................................... 321
Figure 8.3 Keeping Up with Japan: Broadband Speeds Using All Technologies ........................................... 322
Figure 8.4 Global FTTH Council Ranking of FTTH Penetration Rates ............................................................ 323
Figure 8.5 Global Malware Infection Rates ................................................................................................. 332
Figure 8.6 Break down of global online threats and fraudulent content, 2009............................................ 332
Figure 8.7 A Youthful Inheritance: Internet Usage Under Age 24 ................................................................ 333
List of figures ix
LIST OF TABLES
Page
Table 2.1: Research results of Broadband Impact on GDP growth ................................................................ 24

Table 2.2: Broadband Impact on Job Creation .............................................................................................. 28
Table 2.3: Research results of Broadband Impact on Employment in the United States ............................... 29
Table 2.4: Broadband-induced Productivity Improvement ........................................................................... 30
Table 2.5: Counter-cyclical government programs ........................................................................................ 32
Table 2.6: United States: Total Employment Impact of the Broadband Stimulus Plan .................................. 33
Table 2.7: Germany: Employment and Economic Impact per annum ........................................................... 36
Table 2.8: Investment required to cover unserved households .................................................................... 40
Table 2.9: Total Investment required to achieve objectives for 2014 ............................................................ 41
Table 2.10: Brazil: Breakdown of download speeds (2009)............................................................................. 41
Table 2.11: Investment required to fulfill targets ............................................................................................ 42
Table 2.12: Coverage and speed targets of selected National Broadband Plans ............................................. 43
Table 2.13: Selected Countries: Broadband Market Shares (1Q2010) ............................................................. 48
Table 2.14: Performance metrics of platform-based competition countries (December 2009) ....................... 50
Table 2.15: Market structure and demand characteristics .............................................................................. 51
Table 2.16: Options for government intervention in broadband provisioning ................................................ 54
Table 2.17: Broadband Demand Gap.............................................................................................................. 56
Table 2.18: United States and the United Kingdom: Reasons for not accessing to the Internet (2009) ........... 57
Table 2.19: Comparative Broadband Penetration (per population) (2010) ..................................................... 60
Table 2.20: Mobile Taxation approaches in selected economies..................................................................... 62
Table A.1. Data utilized in econometric studies ............................................................................................ 68
Table B.1: Latin America: Variables utilized to measure broadband impact on economic growth ................ 70
Table B.2: Latin America: Broadband impact on economic growth in Latin America .................................... 70
Table C.1. Brazil: Variables used to measure the impact of broadband on GDP growth................................ 71
Table C.2: Brazil: Impact of broadband on GDP growth ................................................................................ 71
Table C.3: Brazil: Variables utilized to estimate the impact of broadband on job creation ............................ 72
Table C.4: Brazil: Impact of Broadband on Job creation ................................................................................ 72
Table D.1: Chile: Variables used to estimate the broadband impact on job creation ..................................... 73
Table D.2: Chile: Broadband impact on job creation ..................................................................................... 73
x List of tables
Page
Table D.3: Chile: Variables used to measure the impact of broadband on GDP growth ................................ 74
Table D.4: Chile: Contribution of broadband to GDP growth......................................................................... 74
Table E.1: India: Variables used to estimate the broadband impact on job creation..................................... 75
Table E.2: India: Broadband impact on job creation ..................................................................................... 75
Table E.3: India: Variables used to measure the impact of broadband on GDP growth ................................ 76
Table E.4: India: Contribution of broadband to GDP growth ........................................................................ 76
Table F.1. Malaysia: Variables used to measure the impact of broadband on GDP growth .......................... 77
Table F.2. Malaysia: Contribution of broadband to GDP growth .................................................................. 77
Table G.1. Saudi Arabia: Variables used to estimate the broadband impact on job creation ......................... 78
Table G.2. Saudi Arabia: Broadband impact on job creation ......................................................................... 78
Table 3.1: Pros and cons of the one-to-one computing and computer lab models ..................................... 103
Table 5.1: Typical Spectrum Bands for Radio and Television Broadcast ...................................................... 161
Table 5.2: The Digital Dividend by ITU Region .................................................................................... 163
Table 5.3: Digital Dividend Decisions and Stakeholders .............................................................................. 170
Table 5.4: Estimates in Value for the Digital Dividend................................................................................. 171
Table 5.5: Choices in Technology Regulation .............................................................................................. 172
Table 6.1: A phased approach to addressing regulatory issues related to cyberthreats .............................. 202
Table 6.2: The purposes of anti-cybercrime tools ....................................................................................... 210
Table 6.3: Examples of countries that have adopted legislation or regulations in cybersecurity-
related areas, 2010 ............................................................................................................ 212
Table 7.1: Discussion paper on ICTs, climate change and regulation: scope and focus ................................ 241
Table 7.2: First, Second and Third Order effects: coverage.......................................................................... 249
Table 7.3: Total emissions stated by operators in 2007 (tonnes of CO2 equivalent) ..................................... 249
Table 7.4: Measuring GHGs from The Cloud ............................................................................................... 257
Table 7.5: Scoping BT’s GHG emissions ....................................................................................................... 267
Table 7.6: ICT Trends in More Developed and Less Developed Countries ................................................... 275
Table 7.7: ICT technology scenarios: some possible outcomes for energy use ............................................ 277
Table 7.8: Voluntary Emission Reduction Commitments of Various TSPs.................................................... 279
Table 7.9: Scope for ICTs to reduce GHGs: Selected examples .................................................................... 286
Table 8.1: Quantity of E-Waste Generated in Metric Tons/Year .................................................................. 334
List of tables xi
LIST OF BOXES
Page
Box 1.1: Bridging the mobile gap in BRIC countries ...................................................................................... 4

Box 1.2: Strategic Framework Model for regulatory reform in telecommunications .................................. 11
Box 1.3: Lithuania’s move to create a multi-sector regulator ..................................................................... 15
Box 3.1: Inhibitors to Adoption and Use of Broadband Services ................................................................ 87
Box 3.2: Imposing targeted ex ante regulation on the physical layer ..................................................91
Box 3.3: Transformative potential of wireless in broadband-based competition:
the case of Austria ...............................................................................................................92
Box 3.4: Market shares of smartphone sales to end users by OS, 2009...............................................96
Box 3.5: Ways that ICTs can reduce GHG emissions ...........................................................................97
Box 3.6: OECD recommendation on ICTs and the environment ..........................................................99
Box 3.7: Portugal’s e-escola (e-school) and e-escolinha program...................................................... 102
Box 3.8: School connectivity checklist: Issues to consider when developing initiatives ..................... 104
Box 3.9: Examples of e-health tools and services ............................................................................. 105
Box 3.10: Various types of m-Banking services .................................................................................. 106
Box 3.11: Relevant financial regulatory issues to be addressed to enable development of
m-Banking ......................................................................................................................... 107
Box 3.12: Relevant issues for coordinating competition and ICT authorities’ jurisdiction
in the ICT sector ................................................................................................................. 109
Box 3.13: Ofcom’s expanded role in enforcing digital piracy law in the United Kingdom .................... 111
Box 4.1: Vodafone Qatar v Qatar Telecom ....................................................................................... 134
Box 4.2: Evolution of telecommunication dispute resolution in the UAE .......................................... 136
Box 4.3: Arbitration in Trinidad & Tobago ....................................................................................... 137
Box 4.4: The Solomon Islands arbitration and mediation scheme .................................................... 138
Box 4.5: The UK’s Office of the Telecommunications Adjudicator (OTA) and OTA2........................... 141
Box 4.6: Telecommunications mediation and arbitration in Japan ................................................... 145
Box 4.7: Multi-party hybrid dispute process for international telecommunication traffic dispute .... 148
Box 5.1: Global media trends .......................................................................................................... 159
Box 5.2: ITU-R Resolution 749 ......................................................................................................... 164
Box 5.3: Reserving the Digital Dividend for potential future uses: the view of the UK regulator ....... 169
xii List of boxes

Page
Box 5.4: Technical Considerations in Implementing DTT .................................................................. 171

Box 5.5: Harmonization principles in migrating to DTT..................................................................... 172
Box 5.6: Amount of free interleaved spectrum in the US, UK and Italy ............................................. 177
Box 6.1: Different types of cyber-offences ....................................................................................... 191
Box 6.2: Clean-slate design of Resilient, Adaptive, Secure Hosts (CRASH)......................................... 196
Box 6.3: Hierarchy of regulatory frameworks .................................................................................. 205
Box 6.4: Content regulation as an essential component of fighting cybercrime ................................ 217
Box 6.5: Reviewing cybercrime-related regulation in Belgium.......................................................... 219
Box 6.6: CIRTs under the umbrella of the ICT Regulator ................................................................... 219
Box 6.7: Inbound and outbound traffic monitoring: The Mauritian Experience ................................ 221
Box 6.8: The ICT regulator as a law enforcement body: Spam regulation and malware .................... 221
Box 6.9: Child Online Protection: Example of how national efforts are coordinated to contribute
to a global appeal .............................................................................................................. 223
Box 6.10: International cooperation on cybersecurity and cybercrime: APEC ..................................... 223
Box 6.11: Harmonisation of cybercrime efforts in the East African region: EACO ............................... 224
Box 6.12: User awareness and capacity building in Australia ............................................................. 225
Box 7.1: CO2: The Main Greenhouse Gas ......................................................................................... 244
Box 7.2: CO2, “Simple Physics” and Human Activity......................................................................... 244
Box 7.3: Weather vs Climate ........................................................................................................... 245
Box 7.4: Tracking and Responding to Climate Change with ICTs ....................................................... 247
Box 7.5: Mobile: Absolutes and Relatives ........................................................................................ 251
Box 7.6: Active and Passive Infrastructure Sharing........................................................................... 252
Box 7.7: Insight in the impact of behavioural change on mitigating climate change ......................... 255
Box 7.8: Changing Behaviour with Social Marketing and Behavioural Economics ............................. 256
Box 7.9: Counting ICT GHGs ............................................................................................................. 266
Box 7.10: Saving Energy with NGNs ................................................................................................... 269
Box 7.11: The Green Touch Consortium: Reducing ICT Energy Use to 1000th ...................................... 270
Box 7.12: Alternative power consumption strategies by mobile operators ........................................ 271
Box 7.13: Universal Charger for Mobiles ............................................................................................ 272
Box 7.14: Cutting GHGs from routers, servers and switches ............................................................... 272
Box 7.15: Eco-friendly ICT devices ..................................................................................................... 273
Box 7.16: Off-Grid Charging Solutions for Mobile Phones .................................................................. 274
Box 7.17: Individual ICT Users: Bailing the Titanic? ............................................................................ 274
Box 7.18: Mobileone (M1) – Energy Saving Programme ..................................................................... 278
Box 7.19: Internode – Carbon Neutral ISP with Green Electricity And Renewables ............................. 278
Box 7.20: BT – Carbon Reduction Programme.................................................................................... 279
List of boxes xiii

Page
Box 7.21: Nokia Siemens Networks Off-Grid Renewables .................................................................. 279

Box 7.22: The Solar Cyber Café .......................................................................................................... 280
Box 7.23: Codes of Conduct ............................................................................................................... 282
Box 7.24: The e-Environment Toolkit................................................................................................. 283
Box 7.25: Comparison between videoconferencing and business trips in terms of energy use ........... 284
Box 7.26: Comparison of GHG emissions of postal mail and e-mail services ....................................... 284
Box 7.27: Absolute and relative decoupling ....................................................................................... 286
Box 7.28: ITU Smart Grid standards initiative .................................................................................... 287
Box 7.29: Smart 2020: A Role for ICT Regulators? .............................................................................. 288
Box 7.30: GSMA policy for government and regulatory support to assist mobile industry
to reduce its emissions ...................................................................................................... 289
Box 7.31: Intelligent Transport .......................................................................................................... 292
Box 8.1: Is Internet Access a "Fundamental Right"? ......................................................................... 313
Box 8.2: Geospatial Meets E-Government in Singapore ................................................................... 315
Box 8.3: Spreading the Word about ICTs and Rural Development .................................................... 316
Box 8.4: The Year of Social Networking ........................................................................................... 317
Box 8.5: Apps-a-Go-Go: The World of Wild and Wondrous Applications .......................................... 324
Box 8.6: U.S. iPhone Capacity Issues – a Sign of Things To Come? .................................................... 326
Box 8.7: Is It OK to Unplug? ............................................................................................................. 327
Box 8.8: The Information Society: Not Politics As Usual ................................................................... 328
Box 8.9: The Internet: Innocence Lost? ............................................................................................ 331
Box 8.10: Republic of Korea: A Wired Nation Addresses Social Change .............................................. 336
Box 8.11: Cyber-Bullying: Reaching Out To Hurt ................................................................................ 338
Box 8.12: The U.S. National Broadband Plan ..................................................................................... 342
xiv List of boxes

1 OVERVIEW OF TRENDS IN THE ICT MARKET AND IN ICT

REGULATION
Author: Nancy Sundberg, Regulatory Officer, BDT/ITU
1.1 Introduction money services, largely based on simple text messaging

(SMS), have been receiving a lot of attention. Not only
The digital world is growing at an ever-accelerating do these services bring banking services to the un-
rate. Each quarter brings fresh bulletins of higher traffic banked, but they also illustrate how ICTs can contribute
estimates, increased handset shipments, sudden shifts to poverty reduction. According to some estimates,
in market share and spiralling valuations for major and more than 364 million low income, unbanked people
emerging content players. The telecommunication/ICT could be using mobile financial services by 2012.2
industry has not just survived the aftermath of the fi-
nancial crisis – it has emerged more innovative and While the global economy is still recovering from
agile. Such growth in applications and content can only the 2009 financial crisis and the resulting economic
be achieved based on foundations of sound policies, a downturn, the ICT sector navigated these rough times
stable and enabling regulatory environment and coop- more successfully than other sectors. According to the
eration between governments, regulators and the in- OECD, the revenues of the world’s ten largest Internet
dustry. firms increased by 10 per cent in 2009 and the ICT
global industry experienced a 3-4 per cent growth the
And yet, such metrics such as those mentioned following year.3 The ICT sector is poised to continue
above only tell part of the story and fail to reflect the generating substantial revenues in the coming years,
human experience of living in tomorrow’s digital world. thanks in large part to continued growth in emerging
Every day, new subscribers access voice or Internet ser- markets.4 Economic growth in these markets will out-
vices and enter the broader information society for the pace the growth in mature markets, leading to more
first time. Most of these new subscribers live in a de- affordable ICT services for more people and, ultimately,
veloping country and are likely using a mobile phone. an increase in the number of subscribers.5
However, the full benefit to people cannot be under-
rated – each new subscriber is a new citizen of the digi- As mobile markets approach saturation in devel-
tal world, empowered to participate and access oped countries and traditional voice services revenues
communication and information services. decline, operators and service providers are turning to
new business models. Digital mobile content and appli-
But what are the implications of this digital world cations, as well as the bundling of voice, data and con-
for how we communicate? The digital world is likely to tent services, are likely to contribute to making mobile
be accessed via a mobile device, and will increasingly data an engine of growth in these mature markets. The
operate – and innovate –- at a faster rate. The mobile music industry is said to generate one-quarter of its
sector once again generated considerable discussion turnover from music downloads, streaming and bun-
and raised expectations in 2010, and will certainly con- dled mobile Internet services.6 The digital generation
tinue to do so in 2011, with increasing mobile broad- will likely use their smart phones and new mobile de-
band demand, new mobile devices on the block and vices, such as gaming consoles and tablets, more and
growth of m-applications and services. The mobile sec- more rather than PCs to access the Internet, social
tor is said to have become one of the most dynamic networks and online user generated video content,
sources of ICT micro-entreprises 1 . These micro- thus putting additional pressure on mobile operators to
entreprises can improve the lives of the low income offer high speed any-time, any-where services. At the
consumers, help reduce poverty and extend access to end of 2010, Facebook alone counted 600 million active
ICTs. Innovative services such as m-banking and mobile users7, representing more than one-third of Internet
Chapter 1 1
users worldwide. Forty per cent of active Facebook us- • Chapter Four examines the liberalization of the ICT
ers accessed the platform through their mobile devices dispute resolution field and the new opportunities
and 37 per cent of Twitter’s active users also used their opening up in this regard.
mobile device to tweet.8 At the same time, two billion
• Chapter Five explores policy and regulatory matters
videos are watched every day on Youtube.9 Demand for
surrounding spectrum management issues related
always-on and ubiquitous access to high speed broad-
to the digital switchover and the Digital Dividend.
band services, whether mobile or fixed, puts a strain on
operators’ network as bandwidth intensive applications • Chapter Six looks at the role of the role of ICT regu-
increase the need for network expansion and upgrade, lation in addressing offenses in cyberspace.
more spectrum and secured networks, hence further • Chapter Seven discusses the relationship between
investment. This raises the question of how ICT net- climate change, the ICT sector and regulation.
work operators will cope with the challenge of meeting
the exponential growth in subscription base and de- • Chapter Eight offers “postcards” from the Informa-
mand for services, as well as securing investments. And tion Society, examining what the Information Socie-
can they succeed in securing investment funds in this ty is and how it is changing every aspect of our lives
era of reduced liquidity? for the good, the bad and the just plain baffling.
• Chapter Nine offers a conclusion based on preced-
All of these exciting developments offer a world of ing chapters.
new opportunities but also come at costs that impact
governments, industry, businesses, and consumers in 1.2 A snapshot of ICT market
general. Living in the digital world is not without risks. trends
Governments need to recognize the challenges and op-
portunities associated with a digital world. ICTs have a 1.2.1 Growth and competitiveness in ICTs10
complex relationship with global issues such climate
change. Available information on the positive and nega- The ICT sector continued to show healthy growth
tive impact of ICTs needs to be shared among all ICT during 2010, fuelled by the efforts made in many coun-
stakeholders for informed decision to be taken at all tries to create an enabling ICT environment. These ef-
levels. forts resulted in an uptake of ICTs, an increasing
number of people today have access to and use ICTs.
This year’s Trends in Telecommunication Reform Prices in both developed and developing countries fell
contains nine chapters that explore these challenges over the 2008/2009 period, although ICT prices, in par-
and opportunities in building tomorrow’s digital world ticular for broadband Internet access, remain prohibi-
to harness the potential of broadband to build a safe tively high in many developing countries.11
and secure global Information Society:
• This chapter provides an overview of trends in the Liberalizing the markets, creating a pro-competitive
ICT market and in ICT regulation to set the stage for ICT environment and increasing universal access to
the following chapters. telecommunication services and ICTs have constituted
the core of telecommunication/ICT regulators’ man-
• Chapter Two examines the impact of broadband on dates since their establishment. Considerable efforts
the economy. It provides evidence, but also have been made to foster competition in telecommuni-
presents the complexities, of the conditions under cation/ICT markets over the last decade. The reform of
which broadband has an impact. It further outlines the licensing regimes in a number of countries over the
the public policy options for stimulating the dep- past five years has contributed to creating greater mar-
loyment of broadband. ket efficiency by attracting more players that offer new
• Chapter Three focuses on ICT regulation in the digi- services and deploy new technologies for the benefit of
tal economy by exploring the possible route regula- the consumers. Licensing reform, centred on the intro-
tors and policymakers can take to facilitate duction of simplified authorizations and reduced ad-
deployment of ICTs based on a multi-pronged ap- ministrative procedures was undertaken in countries
proach. like Tanzania, Kenya, Uganda, Malaysia, and Singapore.
2 Chapter 1
Figure 1.1: Global ICT development and growth in competition, 2000-2010
Global ICT development, 2000-2010

100
90 Mobile cellular telephone subscriptions
Internet users
80 Fixed telephone lines
Mobile broadband subscriptions
per 100 inhabitants 70 Fixed broadband subscriptions
60
50
40
30
20
10
0
2000 01 02 03 04 05 06 07 08 09 2010*
*Estimates
Growth in competition of selected ICT services, world

100%
2000
90% 2010
80%
70%
% of countries
60%
50%
40%
30%
20%
10%
0%
Basic Wireless Internet Cable Leased 2G 3G Int'l VSAT
services local services lines gateways
loop
Source: ITU World Telecommunication/ICT Indicators database – ITU World Telecommunication/ICT Regulatory Database
The provision of Internet and mobile cellular ser- 71 per cent of the population in developed countries
vices has been globally more competitive ever since the was online, 21 per cent of people in the developing
services were launched. More than 93 per cent of countries were using the Internet.
countries worldwide allow competition in the provision
of Internet services, up from 86 per cent in 2000. The The number countries with mobile markets open
number of Internet users has doubled between 2005 to competition grew from more than 40 in 1997 to 123
and 2010 and surpassed the two billion mark in 2010, in 2002 and then to 172 in 2010. At the same time, the
of which 1.2 billion are in developing countries. With mobile market showed strong growth and a rapidly in-
more than 450 million Internet users by end 2010, creasing number of mobile cellular subscriptions. By
China is the largest Internet market in the world12. the end of 2010, there were an estimated 5.3 billion
Looking at the percentage of online population, there is mobile cellular subscriptions worldwide. This impres-
a wide disparity between developed and developing sive figure also includes 940 million mobile broadband
countries. While ITU estimated that by end 2010, over subscriptions13.
Chapter 1 3
Box 1.1: Bridging the mobile gap in BRIC countries

Today BRIC economies represent over 40 per cent of the world’s population, and the exponential growth their mobile sector
has experienced over the past decade is emblematic of the progress towards connecting the unconnected globally. Mobile
cellular penetration in the BRIC stood at 4 per cent back in 2000, or three times less than the world average. At the end of
2010, it has grown to an estimated impressive 69 per cent.
In terms of number of subscriptions added over this period, China leads the BRIC countries with some 764 million new sub-
scriptions. In terms of relative penetration, however, Russia has accomplished a truly remarkable growth from 2 per cent to
over 164 per cent over the period. In 10 years, China and India both have managed to reach a mobile penetration rate of
sixty per cent. It is estimated that both countries have added around 300 million mobile subscriptions in 2010.
growth in mobile cellular subscriptions in BRIC

countries, 2000-2010
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000 2010 2000 2010 2000 2010* 2000 2009
Brazil China India Russia
Mobile subscription No mobile subscription
Note: * Mobile penetration as of September 2010

Sources: ITU World Telecommunication/ICT Indicators database, ANATEL, Brazil14, TRAI India15 and Cellular News16.
In developed countries, the mobile market is reach- in Africa and Commonwealth of Independent States
ing saturation levels; on average, there were 116 sub- (CIS), where an estimated 1 million lines were added in
scriptions per 100 inhabitants at the end of 2010 and a each of the two regions.
marginal growth of 1.6 per cent from 2009-2010. At the
same time, the developing world is increasing its share International gateways are now competitive in 81
of mobile subscriptions and reached an estimated 68 per cent of countries worldwide. This is the service in
per cent of global total mobile subscriptions at the end which competition has grown most over the last dec-
of 2010. The good news is that 90 per cent of the ade, as only 38 per cent of countries had opened this
world’s population and 80 per cent of the population market to competition in 2000. Competition in the pro-
living in rural areas are now covered by a mobile signal. vision of leased lines grew by 28 per cent in ten years to
reach 76 per cent in 2010. Wireless local loop (WLL)
Basic fixed services still lags behind the other ICT services were competitive in 85 per cent of the coun-
markets in terms of competitiveness, however, al- tries in 2010, up from 63 per cent in 2000.
though 70 per cent of countries worldwide have intro-
duced competition over the last decade, up from The 3G market is highly competitive as illustrated in
38 per cent in 2000. The number of fixed telephone Figure 1.2. In 2010, 95 per cent of countries worldwide
lines continued to decrease in 2010 in all regions except allow competition in the provision of those services,
4 Chapter 1
and by mid-2010, 3G services were commercially of- networks, despite the fact that DSL subscriptions repre-
fered in more than 143 countries. As indicated above, sented more than 60 per cent of total fixed broadband
the number of mobile broadband subscriptions subscriptions in 2009. There has been strong growth in
reached 940 million in 2010 and was expected to reach fixed (wired) broadband subscriptions in both devel-
1billion early 2011, up from 73 million in 2005. oped and developing countries, as total subscriptions
worldwide reached 555 million in 2010. The developing
While the penetration level of mobile broadband world’s share of fixed (wired) broadband subscriptions
services represented an estimated 5.4 subscriptions per is growing steadily and by the end of 2010, the devel-
100 inhabitants in developing countries, the average oping world accounted for an estimated 45 per cent of
penetration level is almost ten times higher in the de- global subscriptions (up from 33 per cent five years ear-
veloped world at 51.1 subscriptions per 100 inhabitants. lier). Africa still lags behind when it comes to fixed
The ongoing deployment of higher speed 3G mobile (wired) broadband where the limited number of fixed
broadband networks such WiMAX and more recently telephone lines constrains the deployment of broad-
HSPA+ and LTE systems will certainly contribute to band access via xDSL. Even though subscriptions are
greater levels of mobile broadband services uptake increasing, an estimated penetration rate of less than 1
worldwide in the near future. Twenty LTE systems were per cent illustrates the challenges that persist in in-
expected to be commercially launched by end of creasing access to high-speed, high-capacity Internet
2010.17 Regulatory measures taken in selected coun- access in the region.
tries will also contribute to accelerating the growth of
mobile broadband penetration in the near future. Ex- As the above demonstrates, developing countries
amples of such measures include the licensing of 3G lag behind in access to the Internet. While 72 per cent
services in Cape Verde, India, Gabon, Kenya and Mexico; of households in developing countries have a TV, only
spectrum refarming in the United Kingdom and Finland; 23 per cent have a computer and only 16 per cent have
and planned allocation of the bands freed up by the Internet access (compared to 98 per cent, 71 per cent
digital dividend in countries like Canada. These regula- and 66 per cent respectively in developed countries). At
tory measures have been complemented at the indus- the end of 2010, half a billion households worldwide
try level by a move towards developing next generation (or 30 per cent) had access to the Internet. The number
4G systems (IMT Advanced). of people having access to the Internet at home has in-
creased from 1.4 billion in 2009 to almost 1.6 billion in
The xDSL market remains very competitive and 2010.
faces fierce competition from cable modem and fibre
Figure 1.2: ICTs users and subscriptions and competition in selected services by region, 2010
Mobile cellular subscriptions per 100 inhabitants, 2010*

140
131.5
120.0
120
94.1
100
79.4 76.1
80
67.8
60
41.4
40
20
0
CIS Europe The Americas Arab States World Asia & Pacific Africa
* Estimates
Source: ITU World Telecommunication/ICT indicators database
Chapter 1 5
Figure 1.2: ICTs users and subscriptions and competition in selected services by region, 2010 (continued)
Internet users per 100 inhabitants, 2010*

70
65.0
60
55.0
46.0
50
40
30.0
30
24.9
21.9
20
9.6
10
0
Europe The Americas CIS World Arab States Asia & Pacific Africa
* Estimates
Competition in selected services, by region, 2010
Basic Services International gateways

Cellular mobile Internet services
100%
90%
80%
70%
% of countries
60%
50%
40%
30%
20%
10%
0%
Africa Arab States Asia-Pacific CIS Europe Americas
Note: According to responses provided to the annual ITU telecommunication/ICT regulatory survey.
Source: ITU World Telecommunication/ICT Regulatory Database
6 Chapter 1
Figure 1.2: ICTs users and subscriptions and competition in selected services by region, 2010 (end)
Broadband per 100 inhabitants 2010*
50 46.3 Mobile Broadband

45
Fixed broadband
40
35
30 25.9
23.9 24.2
25
20
15.5
15
8.7 9.7
10 7.1
5.7
2.3 3.6
5
0.2
0
Europe CIS The Americas Arab States Asia-Pacific Africa
Note: * estimates.
Competition in selected broadband services, by region, 2010
IMT 2000 (3G) Fixed wireless Broadband Cable DSL

100%
90%
80%
70%
% of countries
60%
50%
40%
30%
20%
10%
0%
Africa Arab States Asia-Pacific CIS Europe Americas
Note: According to responses provided to the annual ITU telecommunication/ICT regulatory survey.
The wide disparity between developed and devel- broadband plans. These are discussed in greater detail
oping countries in broadband penetration levels and in section 1.3 and in Chapter 2.
rates of Internet access further illustrates the need to
ensure developing countries are not excluded from the 1.2.2 Affordability of ICTs
digital information society. Recognizing the impact of
broadband on the economy and the critical need to en- The cost of ICT services affects both ICT uptake and
act policies to ensure broadband deployment, a grow- the use of ICTs, and there is also a strong correlation
ing number of countries have adopted national between the level of competition in a market, its ma-
turity, the user uptake, and prices.
Chapter 1 7
The 2009 ITU ICT Price Basket18 showed that peo- representing, at the end of 2009, 2 per cent of the av-
ple in developed countries have to spend relatively less erage GDP per capita. The number of fixed broadband
of their income (1.5 per cent) on ICT services compared subscriptions increased by 29 per cent to reach 9.7 mil-
to people in developing countries (17.5 per cent). ICT lion over that same period.21
services tend to be more affordable in developed coun-
tries and less affordable in developing countries, espe- 1.2.3 New applications and services
cially in the least developed countries (LDCs). There are
of course a few exceptions.19 Changes occurring in the ICT sector over the last
decade have significantly impacted the way people
Looking at broadband, an overall competitive mar- communicate. The impressive take-up of social media
ket, fixed (wired) broadband prices dropped by 42% be- networks, blog sites and online shared user generated
tween 2008 and 2009 compared to a 25 and 20 per content (such Youtube, Flickr, Wikipedia, etc) certainly
cent drop in the prices for mobile cellular and fixed reflects the capacity of users and consumers to
telephone services respectively. A regional comparison promptly react to and benefit from the opportunities
of prices for fixed broadband services highlights a strik- these applications and services can generate for their
ing disparity, particularly between Africa and the other professional and personal lives. These applications and
regions. On average, the price for a monthly high-speed services contribute to reducing time and distance barri-
Internet connection was almost five times the average ers and thus usher users into the global digital village
monthly GNI per capita in Africa, making fixed broad- that the world has become, as characterized by ubiqui-
band services effectively inaccessible for most people in tous access and always-on connectivity.
the region. In the Arab States and Asia and the Pacific
regions, fixed broadband prices represented 71 and 46 Besides the well-known Facebook, other social
per cent of income, respectively, compared to around networks exist throughout the world (as illustrated in
10 per cent in both the Americas and CIS. At less than Figure. 1.3) and attract many users. Facebook alone
two per cent of average monthly income, fixed broad- added around 250 million new users in 2010.22 Based
band services are by far the cheapest in Europe20, on these numbers and the total number of Facebook
where more mature markets are found. users in 2010 (600 million), it can be estimated that
more than one third of the world’s Internet users are
In Mexico, where competition in fixed broadband active users of a social network. The map in figure 1.3
services started in 2006, the price of fixed broadband also underlines the low penetration level of social net-
monthly subscription dropped by almost 60 per cent work users in Africa, in line with low Internet user pe-
between 2008 and 2009, from 40.19 USD to 18.47 USD, netration in that region.
Figure 1.3: Social Networks, worldwide23
Credits: Vincenzo Cosenzy www.vincos.it License: CC-BY-NC

Source: Google Trends for Websites/Alexa
8 Chapter 1
Bringing web-based services to the finger tips of ernance and transport (See Chapter 3 for further ex-
mobile broadband subscribers is also changing users’ amples). In agriculture, for example, an m-agriculture
online experience. As indicated in section 1, 40 per cent tool was developed in Senegal, “mAgri”, to help to
of Facebook active users access the platform using their make agriculture value chains more efficient.26 Meeting
mobile devices and nearly the same percentage do so the needs of local demand and using local talents to
to tweet. The development of m-applications for down- become content producers are some of the main ele-
loads and the business of mobile application stores ments of successful m-applications. Innovation also re-
worldwide are attracting growing attention. Since the quires an enabling regulatory environment conducive
creation of the first mobile application store in 2008, it to the establishment of public-private-partnership and
is estimated that 185 billion applications were down- to attracting investors.
loaded.24 Some expect the downloads from mobile ap-
plication stores to reach 17.7 billion in 2011, 1.2.4 Ownership-Privatizations
representing a 117 per cent increase from the estimat-
ed 8.2 billion downloads in 2010.25 With the launch of Twenty years ago, before major reforms swept the
new devices, such as media tablets, and the growing sector, main fixed-line operators were privatized in just
number of mobile broadband subscriptions, this mar- 37 countries. Today, the incumbent operators in
ket is certainly poised to experience future growth 126 countries are partly or fully in the hands of private
mostly in advanced markets should the applications sector owners and only 34 per cent of incumbents re-
developed meet consumers requirements. main state-owned. Substantial differences exist be-
tween regions: 86 per cent of incumbents in Europe
Besides their commercial uses, m-applications and have been fully or partially-privatized; 71 per cent are
services can have a far reaching impact on the ability of fully or partially privatized in the Americas, while in the
the rural and poorer populations in developing coun- Arab States and CIS the figures amount to 52 and
tries to participate in the economy. This is illustrated by 50 per cent, respectively. With many markets already
the success of m-banking services and m-payments in privatized, privatization activity has slowed over the
countries such as Kenya, Pakistan and the Philippines. past few years, especially following the economic
M-applications are being developed to improve the downturn, as there are fewer interested investors and
provision of various services in sectors such as agricul- reduced investment funds available.
tural, health, education, financial, employment, gov-
Figure 1.4: Privatization trend of the main-fixed line incumbent
Status of the main fixed-line incumbent, 2010

90%
80% Private State-owned
70%
60%
50%
40%
30%
20%
10%
0%
CIS Arab States Asia- Africa Americas Europe
Pacific
Chapter 1 9
Only a handful of privatizations were in the pipeline measures will impact innovation and the development
in 2010. The Zambian government sold 75 per cent of of ICT markets. Setting policies in this digital environ-
Zambia’s state-owned incumbent, Zambia Telecommu- ment requires policy makers and regulators to think
nications (ZAMTEL) to the Libyan Lap Green Networks outside the box and to strike the appropriate balance
for USD 257 million, with the government retaining the between ex-ante and ex-post regulation.
remaining 25 per cent for the time being.27 In the Co-
moros, the government is in the process of selling a New business models are emerging in the ICT sec-
majority stake (51%) of Comoros Telecom. In Botswana, tor from new players. These players offer applications
the government reaffirmed its intention to privatize and services based on transfer, exchange and creation
BTC after having postponed the process in 2006. In Be- of online media and content using web-based and mo-
nin, the government initiated the process of selling a bile applications. Their new business models require a
majority stake (51%) of the incumbent operator, Benin complete rethink of the traditional approach to regulat-
Telecom, at end of 2009. The process is still ongoing.28 ing the market. For policymakers and regulators, the
starting point is to ask a basic but fundamental ques-
Opening up the ICT sector to foreign investment is tion: how should these new players and their activities
another way of introducing additional players in the be classified? Other questions flow from this starting
market. While more than three-quarters of countries point: What are the rights and obligations of these
worldwide have limited or no restriction on foreign in- players? Who should oversee their activities: the com-
vestment in their national ICT market,10 per cent re- petition authority, the telecommunication/ICT regulator,
strict investment to a minority interest29. or perhaps the authority responsible for broadcast con-
tent? Do these players fit the traditional telecommuni-
1.3 Regulatory Trends: cation policy and regulatory framework? The answer to
A changing world this last question is likely to be “no” and many coun-
tries have initiated sector reforms and adapted their
The drastic changes discussed in the previous sec- legal and regulatory frameworks accordingly. These re-
tions have confronted regulators with the challenging forms, however, raise another question: are the
task of continuously assessing and monitoring the evo- adapted legal and regulatory frameworks sufficient to
lution of a fast moving sector, measuring the progress foster innovation, attract investment and ensure af-
of regulatory reform and reporting on these matters. As fordable and secure access to enable all citizens to join
markets become more and more competitive, regula- the digital society?
tors have to carefully balance the need for targeted ex
ante regulation to anticipate and address market distor- The following section will offer answers to some of
tion, while at the same time relying on market forces in these questions by highlighting the latest institutional
areas where ICT competition is taking place. and regulatory trends worldwide.
Keeping up with the pace of convergence and inte- 1.3.1 Reforming the sector
gration of ubiquitous networks requires policymakers
and regulators to adapt their institutional structures The fast pace of economic and technological
and mandates and to adopt cutting-edge innovative change affecting the sector over the last decade
regulatory tools and best practices. prompted governments to react by launching far-
reaching reforms to restructure the sector. Sector re-
The pervasiveness of ICTs, particularly the Internet, form happened in different phases and took many
in multiple sectors of the economy requires that regula- paths and varied forms, depending on the national po-
tion be considered in a broader context. Extending the litical, social and economic circumstances and public
consultation mechanisms to include other public sector policy goals set at the highest levels. Throughout the
entities and stakeholders has never been as critical as it phases of reform, major efforts were and still are re-
is today as the global economy is building tomorrow’s quired from policy makers and regulators to keep
digital broadband world. Issues such as climate change, abreast of the changes occurring in the markets and to
data privacy and security, healthcare, education, and build understanding, knowledge, and expertise in order
online content are all integrated within the broadband to ensure effective market regulation. The fast, dynamic
ecosystem, thus bringing more complexity to the work and challenging nature of the digital economy will con-
of policy makers and regulators. Again, striking the right tinue to put pressure on regulators, requiring them to
balance between intensive regulation and light touch
10 Chapter 1
develop new skills, flexibility, open mindness and inno- model is presented in Box 1.2. The key attributes of this
vative regulatory approaches. framework consist of three major components: a sum-
mary of regulatory measures; the policy process; and
While reforming the sector can take different paths, the change management. Regarding change manage-
it typically moves through similar phases or steps to ment, regulators participating in the 2010 Global Sym-
reach specific milestones. The Information & Commu- posium for Regulators agreed on a set of best practice
nication Technologies Authority of Mauritius looked at guidelines for enabling open access that recommends
the successful process adopted by countries such as the the development of such a change management strat-
United Kingdom to reform their ICT sector in its devel- egy to assist regulators in reforming their regulatory
opment of its own change management strategy based practices in order to adequately adapt to the exigencies
on a strategic reform framework model called the of new market structures, innovations and business
“Continuum of perspectives on competitive reform in models.31
the telecommunications regulatory framework”.30 This
Box 1.2: Strategic Framework Model for regulatory reform in telecommunications

Regulatory reform is a process that takes its own time and is not deemed to be complete by a single person or one particular
Government in power. There are small increments of change that will be implemented at different points in time by differ-
ent persons to add value to the process. This is precisely why the Lindblom incremental model was chosen to fit in this pro-
posed continuum of perspectives described below.
Figure A: Continuum of perspectives on competitive reform in the telecommunication regulatory framework
Continuum of perspectives on competitive reform in the

telecommunications regulatory framework
Public
Public
Policy
policy
Regulatory Convergence objectives
objectives Interplay of Regulatory and
State Provisions through
through Competitive safety-net
Market-
Welfare
oriented
State
policy
1 2 3 4
Continuum Continuum
WTO commitment Legislative reforms Liberalisation Full competition
Government Industry Consumers

Regulator’s CRP
Source: Sustained Regulatory Reforms in Telecommunications: Strategy for Emergence of a Knowledge Economy for Mauri-
tius. MBA Dissertation, Leicester University, UK, August 2007, pp 46
As depicted in Figure A, the strategic framework model is based on a basic continuum line that (moving from the extreme
left to the extreme right) represents the move from a centrally-controlled government-focus approach, where public policy
objectives of Government are met through the welfare state, to a fully liberal and decentralized approach, where public ob-
jectives are met by adopting a market-oriented policy and where independent institutions are established to address specific
matters such as policymaking, legislation, regulation, operation, competition, consumers’ issues and dispute resolution.
Four milestones have been identified at the policy process level; these milestones are marked as nodes 1 to 4 along the con-
tinuum line. The introduction of competition in telecommunication services as per countries’ WTO commitments is the first
milestone, followed by the reform of the legislative framework (the second milestone). The third milestone is the introduc-
tion of liberalization, and finally, the fourth milestone is the emergence of full competition. It should be noted that once a
country chooses to move from left to right and has started the process by achieving the first milestone, it must continue the
reform process until it reaches the final milestone since to do otherwise will result in regulatory failures.
Chapter 1 11
Box 1.2: Strategic Framework Model for regulatory reform in telecommunications (end)
Three accompanying ‘regulatory measures’ blocks move between the identified milestones. These ‘regulatory measures’
blocks are represented in the top boxes in Figure A. The first regulatory measure block is the ‘Regulatory State,’ where public
policy objectives are achieved through a ‘heavy-handed’ approach to regulation. Moving to the right, the second ‘regulatory
measure’ block is the ‘Interplay of Regulatory and Competitive safety-net’. This second ‘regulatory measure’ block facilitates
the liberalization process in practice. The final ‘regulatory measure’ block is the ‘Convergence Provisions,’ which are required
to drive full competition and to ensure a market-oriented policy. This set of regulatory measures should be based on light
touch regulation to encourage the emergence of the knowledge society within the digital economy.
The movement from left to right across the above-mentioned continuum has usefully been described as a process of adding
value in the telecommunications regulatory reform framework since at the end of this value chain (to the right), consumers
at large are expected to benefit from higher quality and affordable ICT-based services.
It is necessary to ensure that momentum is sustained when moving along the value chain since any disruption arising either
from regulatory inertia, regulatory capture or any other form of regulatory failure will put the reform process in jeopardy.
Lastly, moving from left to right, it is suggested that a Public-Private Regulatory Forum (PPRF) be established, driven by a
team drawn primarily from the regulatory body, to establish a change management strategy and to accompany the change
in a progressive manner in order to foster the buy-in of all stakeholders on the progressive regulatory reform measures.32
The Change Management Strategy
Two important change management issues concern, first, the depth of the reform process and, second, an adequate as-
sessment of the degree of success achieved in terms of the specific key performance indicators (KPI) and milestones. A
change management framework must be developed and presented in order to make the reform successful. As depicted in
the lower portion of Figure A, a Customer Relationship Perspective (CRP) is identified for the regulators; the CRP identifies
who are the regulator’s ‘‘customers” at the different stages of the reform process. The identification of these customers
helps the regulator to establish and to pursue KPIs that responsive to those customers’ needs.
From a change management perspective, the regulatory reform process occurs through three waves of changes, i.e. from
node 1 to node 2, from node 2 to node 3, and from node 3 to node 4. The regulator’s customer in the first wave is the Gov-
ernment; the regulator’s prime functions are to issue licences and collect fees on behalf of the Government. At this stage,
the perceived value for the Government will be in terms of the conditions of the licences that allow effective liberalization;
the number of licences issued; and the amount of fees collected, amongst other things. In the second wave, the regulator’s
customers are the telecommunication operators and service providers. The functions of the regulator are to create a level-
playing field for the operators. The perceived value to the operators and service providers is now scrutinised in terms of the
regulatory tools used to safeguard competition, such as interconnection principles, fair access to scare resources, dispute
settlement mechanism, regulation of market behaviours, amongst others. In the third wave, the regulator’s customers are
the consumers. It is recognised that it takes a very long time to reach this phase since the market will require time to mature
and self-regulate itself after having gone through the first two waves. The perceived value to the consumers will be judged in
terms of the regulatory determinations made by the regulator to achieve quality and affordable service offers, safeguards
for consumers’ protection, dispute resolution on consumers’ issues, provisions to bolster innovations for consumers, the
degree of transparency adopted by the regulator, and the extent of ‘light-touch’ intervention exercised by the regulator,
amongst others.
It is vital that the regulator proceed through the reform process by initiating the different waves in a steady, but gradual
manner. Any lag between a given phase in the regulatory reform process and the CRP will only result in an ineffective and
inefficient reform with the attendant consequences being well-known by now. It is suggested that the PPRF adopt the rele-
vant KPIs while also developing others specific to its jurisdiction and communicate same to the stakeholders. It is also essen-
tial that the stakeholders be updated on a quarterly basis on the progress made in the reform process through proper
communication campaigns (e.g. meetings, press releases, newsletter and interactive sessions) and that stakeholders are ad-
vised of any deviation from the initial course of action, so that risks of opposition to the reform are minimised.
Source: adapted from a contribution received from the Information & Communication Technologies Authority of Mauritius (ICTA).
1.3.2 Telecom/ICT regulator: ago. By the end of 2010, separate regulators were es-
enablers of change tablished in more than 80 per cent of countries across
the globe, totaling 158 regulators worldwide33, up from
Establishing a separate telecommunication/ICT 106 a decade ago. The region with the highest percent-
regulator was one of the main building blocks of the age of regulators (relative to the total number of coun-
sector reform process launched more than fifteen years tries in each region) is Africa with 93 per cent, followed
12 Chapter 1
by the Americas with 91 per cent, Europe with 88 per and Internet content although, as indicated in their re-
cent, and Asia-Pacific and the Arab States with 73 and sponse to the ITU annual telecom/ICT regulatory sur-
71 per cent respectively. The CIS has the lowest per- vey 34 , no regulation in these areas has yet been
centage at 50 per cent. enacted.
Comoros established the Autorité Nationale de In the Republic of Congo, the Agence de Régulation
Régulation des Technologies de l'Information et de la des Postes et des Communications Electroniques was
Communication (ANRTIC) in 2009 following the adop- created in 2009 and established by law n°11_2009 of
tion that same year of Decree 065/PR, to regulate spec- 25 November 2010 to oversee the postal, information
trum, information technologies and communications. technology and electronic communication sectors. The
The Authority is headed by a Director-General ap- regulator is a collegial body composed of five members
pointed for a four period by the Head of State. The appointed by the Head of State and the Government
mandate of the regulator also includes cybersecurity for a six year period.
Figure 1.5: Separate telecom/ICT regulators
Countries with a separate regulator, 2010

Total: 158
6
15
40 CIS
Arab States
27 Asia-Pacific
Europe
Americas
Africa
32
38
Number of regulators worldwide, 2010
158
148 152
137
124
106
86
43
14
1990 1995 1998 2000 2002 2004 2006 2008 2010
Source: ITU World Telecommunication/ICT Regulatory Database.
Chapter 1 13
In Libya, the General Telecom Authority began Germany established a multi-sector regulator in
regulating the Libyan postal and telecommunication 2005 when the mandate of the Telecommunications
sectors two years ago. and Post Regulator (RegTP) was enlarged to incorporate
electricity, gas and rail. RegTP was renamed the Ger-
In the Solomon Islands, the Telecommunications man Federal Network Agency for Electricity, Gas, Tele-
Commission of the Solomon Islands (TCSI) started regu- communications, Post and Railway (BNetzA). BNetzA
lating the sector following the appointment of the Tele- was established as a multi-sector regulator to take ad-
communications Commissioner, by the Minister of vantage of synergies associated with the regulation of
Communications, in February 2010. network-based industries and to transfer know-how
between sectors35. In Burkina Faso, the sector reform
1.3.2.1 Structures and mandates: adapting for launched in 1998 saw the creation of a separate Tele-
efficiency communication Regulatory Authority (ARTEL) to over-
see the telecommunications sector. Mirroring the
Countries with separate telecommunication/ICT changes taking place in the sector, successive reforms
regulators have adopted different institutional and or- led to the expansion of mandates and reorganization of
ganizational structures to adapt to the fast changing ICT the Authority. ARTEL became the Electronic Communi-
environment. While the main trend in most regions was cations Authority (ARCE) in 2008 and saw its mandate
to establish a sector-specific regulator, some countries expand further to incorporate postal services in 2010.
have moved towards merging pre-existing separate
regulatory authorities into a converged regulator others In Lithuania, the process of creating a multi-sector
towards expanding the mandate of the regulator to in- regulatory authority is now underway (see Box 1.3). In
clude posts, information technology, broadcasting con- Thailand, a new law, the Act on organization to assign
tent, or spectrum management. Several countries in radio spectrum and to regulate broadcasting and tele-
the Americas, Europe and Africa regions established communications, came into force on 19 December
multi-sector agencies, either when sector reforms were 2010. This Act provides for the creation of a converged
initiated or later in the reform process, after reaching a regulator to regulate the telecommunications and
certain level of maturity of their markets. In these broadcasting markets. The new regulatory authority
cases, countries have combined and merged pre- established by the law to replace the National Tele-
existing separate public utilities regulatory agencies to communications Commission was named the National
oversee the telecommunications, postal, electricity, gas, Broadcasting and Telecommunications Commission
and/or railway sectors. (NBTC)36.
Figure 1.6: Mandate of the Regulator, 2010
Mandate of the regulator, 2010

100%
80%
60%
40%
20%
0%
Africa Americas Arab States Asia- CIS Europe
Pacific
ICT/telecom only ICT & Post ICT & Utilities ICT & Broadcasting Other
14 Chapter 1
1.3.2.2 Extending the mandate of telecom/ICT By 2010, more than 60 countries worldwide have
regulators adopted cybersecurity related legislation and regula-
tions. Europe has the highest percentage, with 38 per
Traditional regulatory functions of the telecommu- cent of countries adopting such legislation, followed by
nication/ICT regulator consist mainly of regulating ac- the Americas at 20 per cent and Africa at 13 per cent.
cess to telecommunication/ICT infrastructure and The telecommunication/ICT regulator is responsible for
services, either alone or sharing the responsibilities dealing with cybersecurity matters in 30 per cent of the
(See Figure 1.7), through licensing; managing scarce re- countries worldwide. The degree of involvement and
sources such as spectrum and numbering resources; role varies from one regulator to another according to
dealing with interconnection issues; setting and enforc- the national legislation. Chapter Six provides further
ing quality of service standards; and managing universal insight into this discussion.
access support programmes. In addition to performing
these traditional functions, telecommunication/ICT ICTs and climate change generated a lot of discus-
regulators in several jurisdictions are now responsible sion in 2010. While the relationship between ICTs, cli-
for carrying on regulation beyond those traditional core mate change and regulation is discussed in greater
activities. detail in Chapter 7, it is interesting to note that at least
13 regulators (8 per cent of the total number of sepa-
In 2010, 16 per cent of the telecommunication/ICT rate regulators) throughout the world are involved in
regulators had responsibility over broadcasting content, matters related to climate change. In Kenya, licence
sharing the responsibility with the sector ministry or conditions require that licensees ensure that the li-
another ministry in very few cases. While Internet con- censed systems do not cause environmental hazards. In
tent is not regulated in more than 44 per cent of coun- Denmark, the National IT and Telecommunication
tries worldwide, it is within the mandate of around Agency published an Action Plan for Green IT in Den-
13 per cent of telecommunication/ICT regulators. Thirty mark37 and guidelines on Green IT for public authori-
per cent of regulators include information technology ties.38
in their mandate, sharing this responsibility with the
sector ministry or other government bodies in
12 per cent of the cases.
Box 1.3: Lithuania’s move to create a multi-sector regulator

In 2010, the Lithuanian government approved the creation of a new multi-sector regulator, the Infrastructure Regulatory
Authority. This new regulator had its origins in the merger of three existing separate regulatory authorities, namely the
Communications Regulatory Authority of the Republic of Lithuania (RRT), responsible for the communications sector; the
National Control Commission for Prices and Energy (VKEKK), responsible for electricity, natural gas, heating, water, trans-
port; and the State Energy Inspectorate under the Ministry of Energy (VEI), which exercised state control over energy facili-
ties and energy (electricity, heat, fuel gas, biofuel, oil and oil product) equipment.
Although in its initial stage, this merger will require the amendment and adoption of a package of over 30 laws and regula-
tions. The main reasons for this institutional change are found in the efficiency gains expected from having one regulatory
institution dealing with infrastructure regulation that will apply harmonized principles in a consistent and use similar meth-
ods of regulation in all the regulated public sectors. Consistency and integrity of regulatory approaches is considered neces-
sary in sectors where activities of some of the players are becoming multi-sector, e.g. electricity companies are already
offering some electronic communications services. It also ensures a more stable cross-sector regulatory environment, in-
creasing the attractiveness of the markets. It is also expected that the good practice and experience learned by the tele-
communication regulator during the liberalization phase of the telecommunication sector will benefit the other sectors. This
model alleviates the financial burden of administering multiple regulatory bodies and optimizes the use of human resources.
The need to comply with EU directives requiring an independent regulatory authority for the gas and electricity sectors is
another reason for the creation of a multi-sector regulator. These are all important elements for Lithuania in the current
times of economic slow-down.
The communications regulator also recognizes that multi-sector regulation will allow it to make better use of the possibilities
of infrastructure sharing across sectors, including the joint building, development and usage of infrastructure. By dealing
with critical infrastructure collectively, issues surrounding security of infrastructure would also gain better recognition.
Source: adapted from a contribution from the Communications Regulatory Authority of the Republic of Lithuania.
Chapter 1 15
Figure 1.7: Traditional Regulatory functions of the telecom/ICT regulator, world, 2010
Regulator only Regulator and sector ministy

Regulator and other government entity Regulator and operator
Regulator and more than one govt entity
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
n
n
s
g
g
ss
al
te
io
io
ti n
in
rin
ce
ov
ra
at
at
ns
et
be
ac
pr
oc
l
e
gu
ss
m
Lic
ap
io
al
al l
re
rd
Nu
ct
rs
pe
m
ne
ive
ice
nd
ru
Ty
on
Pr
Un
t
ta
ec
rc
Ss
Sp
te
Qo
In
1.3.2.3 Flexibility and autonomy budgets funded by two or more sources (e.g., fees,
award/auction of licence, financial income, contribu-
Regulators need to be given the flexibility to adapt tions from regulated telecommunication operators,
to the fast-changing environment to foster ICT devel- fines and penalties). As noted in the ITU regulatory self-
opment and to maintain the credibility and attractive- assessment tool, the funding sources and budgeting
ness of their national markets. They need to be given processes of regulators may impact on independence,
the flexibility to determine the internal structure of efficiency and cost of regulation and may directly im-
their organization. Regulators also need to have the pact the degree of a regulator’s autonomy and compe-
flexibility to recruit highly skilled staff, and to retain and tence when carrying out its responsibilities.
train staff to adapt to the needs of their mandates.
With regard to decision-making and the level of auton- 1.3.2.4 Dispute resolution
omy of the regulator, 86 per cent of regulators world-
wide reported being autonomous in their decision- Convergence of ICTs and market competitiveness
making. For the other 14 per cent, decisions are ap- have resulted in a growing number and variety of dis-
proved mainly by the sector ministry and in some cases putes involving not only telecommunication operators,
also by the Head of State and/or other government service providers and consumers but new players such
bodies. Having more than one source of funding and as content providers, software companies, etc. Ensuring
the ability to manage those funds reinforces regulators efficient handling of disputes in a fast changing envi-
autonomy vis-à-vis the government and the industry. ronment is essential to attracting investment, stimulat-
The budget of 18 per cent of the regulators worldwide ing competition and fostering innovation. The
is funded solely by government appropriation (see Fig- importance of adopting a regulatory framework setting
ure 1.8). This is the case for 38 per cent of the regula- clear dispute resolution mechanisms has being recog-
tors in Asia-Pacific. Ten per cent of the regulators nized by a large majority of countries throughout the
worldwide are also funded by a unique source, though world. The number of countries having established
revenues are mainly generated by fees (licence, spec- such a regulatory framework nearly doubled in five
trum, regulatory, numbering), and 72 per cent have years, from 77 in 2005 to 140 in 2010.
16 Chapter 1
Figure 1.8: Funding of the Regulator’s budget
Government
appropriation only
18%
Single source,
mainly fees
11%
more than two

sources
71%
As indicated in Chapter 4, telecommunication regu- budsman to resolve specific disputes in ICTs is a trend
lators are more familiar with network and infrastruc- that is gaining momentum worldwide. Alternative dis-
ture issues than with operating systems, applications, pute resolution mechanisms such as arbitration, media-
content and Internet services and social media. While tion and expert determination are used in more than
their mandate has evolved, most regulators today are 55 per cent of countries worldwide as these mecha-
still not well equipped to deal with the full ecosystem of nisms provide faster and less-costly redress and feature
information technologies. Therefore, reliance from the less involvement from the regulator. Appeals of the de-
government, regulators and the courts on private ac- cisions of the regulator are allowed in more than 85 per
tors such as experts, mediators, arbitrators and om- cent of the countries that have a separate regulator.
Figure 1.9: ICT dispute resolution trends, 2005-2010
Trends in dispute resolution mechanisms, world
120 2005
2010
100
nb of countries
80
60
40
20
0
Courts/litigation Formal administrative Alternative dispute resolution
adjudication (ADR) mechanisms
Source: World Telecommunication/ICT Regulatory Database.
Chapter 1 17
1.4 Setting policies and regulations zens with broadband, including Albania, Azerbaijan,
to foster broadband access Bahrain, Brazil, Colombia, China, Egypt, Finland, Ghana,
Haiti, Malaysia, Malawi, Mongolia, Nigeria, Pakistan,
There is a growing recognition at the highest gov- Peru, Sudan, Switzerland and Uganda.
ernmental levels throughout the world of the impor-
tance of broadband in today’s digital world. Its positive Promoting infrastructure sharing, open access and
impact on the economy is now clearly evident, as dis- spectrum refarming (in-band migration) are some of
cussed in Chapter 2. The need for the deployment of the innovative regulatory tools being used by telecom-
broadband next generation networks to meet the munication/ICT regulators to spur network develop-
growing demands of the information society and to en- ment and extend access to ICTs. Spectrum refarming
sure that citizens are not left out of the digital economy was permitted in 48 per cent of countries in 2010.
is a concern for many regulators worldwide. The world Spectrum refarming consists of clearing frequencies
community of regulators attending the 2010 edition of from low-value uses (by economic and/or social criteria)
the Global Symposium for Regulators (GSR) called for a and reassigning such frequencies to high-value applica-
new ladder of regulation to anchor national broadband tions40, for example using spectrum initially allocated
strategies and regulatory frameworks around the multi- for 2G services to provide 3G and higher speed mobile
faceted concept of open access and to set the right bal- broadband services instead.
ance in networks between service competition and in-
frastructure competition in order to address the Infrastructure sharing makes a lot of sense when
challenges associated with access to broadband net- deployment of multiple ICTs/broadband networks is
works and services.39 not sustainable; infrastructure sharing is also useful in
terms of connecting remote and rural areas. In the case
At least 70 governments have adopted a national of universal access, sharing facilitates the lowering of
policy, strategy or plan to promote broadband (See Fig- costs and enhances access to voice and broadband ser-
ure 1.10). Several developed countries have done so as vices. Three-quarter of the countries worldwide permit-
part of their economic recovery plans to ensure the de- ted the sharing of mobile operators’ infrastructure in
ployment of those high cost networks and to stimulate 2010. Sharing of passive infrastructure and co-
employment, as further discussed in chapter 2. Others location/site sharing are mandatory in more
have done so as part of their broader strategy to de- 45 per cent of countries (see Figure 1.11). Regulators
velop the information society and to extend universal may decide to mandate passive infrastructure and pro-
access to ICTs. Countries with as varied levels of devel- hibit active infrastructure sharing, while others may al-
opment and income as Afghanistan, Argentina, Austra- low both, or simply not intervene in this area. With
lia, Chile, Guinea, Guatemala, Ireland, Japan, Kenya, regard to open access of the incumbent’s local loop,
Latvia, Malawi, Poland, Samoa, Slovenia, Thailand and unbundling is a requirement in 60 per cent of countries
United States had adopted a national broadband policy, worldwide. In 2010, Europe and the Arab States repre-
strategy or plan of some kind by 2010. sented the regions with the highest percentage of un-
bundled access to the local loop, at 88% and 67%,
Most of the goals of broadband policies and plans respectively.
focus on building nationwide broadband infrastructure
and providing public services online (i.e., e-health, The use of targeted and innovative regulations to
e-education, e-government, e-business). An increasing foster broadband deployment will vary from one coun-
number of countries are also turning towards promot- try to another, depending on the maturity of the mar-
ing the adoption of broadband services and applica- ket, the regulatory framework, the legacy infrastructure
tions by individuals and households. and the universal service and broadband policy goals
set, among others. While support at the highest level is
One-fifth of ITU Member States have included key is creating an enabling environment, regulators
broadband as part of universal access. Both developed have an important role to play in the broadband-
and developing countries from all regions are putting ecosystem as enablers, promoters or educators, de-
forward concerted efforts towards connecting all citi- pending on the national circumstances.
18 Chapter 1
Figure 1.10: Broadband policies and plans, 2010
Has your country adopted a national policy,

strategy or plan to promote broadband? 2010
70
60
50
Nb countries
40
30
20
10
0
Yes No, but planning to
Figure 1.11: Infrastructure sharing regulation, 2010
Infrastructure sharing regulation, world 2010
140
120
100
Nb countries
80
60
40
20
0
infrastructure (towers, base Is co-location/site sharing Is infrastructure sharing for
stations, posts, ducts, etc,) mandated? mobile operators permitted
sharing mandated (e.g. Mobile Virtual Network
Operators)?
Source: World Telecommunication/ICT Regulatory Database.
Chapter 1 19
1.5 Conclusion: challenges and the full benefits of living in a digital world, driven by
opportunities in building speed, ubiquity of access and affordable prices, irre-
tomorrow’s digital world spective of the location of the networks providers and
users”.41 Regulators recognized the need to put in place
This chapter concludes by presenting the following concrete national plans and strategies to stimulate de-
extracts from the GSR10 best practice guidelines for ployment of broadband networks, particularly in devel-
enabling open access as they capture some of the chal- oping countries. They also noted that there is a definite
lenges and opportunities discussed in this chapter and need to create awareness about the risks of technologi-
set the scene for discussions in the following chapters. cal progress among consumers and take necessary
Regulators acknowledged the need for innovative out- measures for data protection, privacy, consumer rights,
side-of-the box regulation to ensure “equal and non- and protection of minors and vulnerable segments of
discriminatory access to the networks and lift potential the society.”
bottlenecks that could prevent end users from enjoying
1
As noted in the UNCTAD’s Information Economy Report 2010.
2
Mobile Banking: for concept to reality, June 25, 2009 Consultative Group for the Poor (CGAP), see
www.cgap.org/p/site/c/template.rc/1.26.10806/
3
OECD Information technology Outlook 2010,
www.oecd.org/document/20/0,3746,en_2649_33757_41892820_1_1_1_1,00.html
4
Growth returns to telecoms markets – with mobile leading the way, Insight –news by Ros Roseboro, Analysis Mason, 23 Sep-
tember 2010.
5
Ibid.
6
7
http://venturebeat.com/2011/01/12/2010-the-year-in-internet-stats/
8
www.huffingtonpost.com/2010/04/14/twitter-user-statistics-r_n_537992.html
9
10
The ICT data and statistics used in this section are based on information provided by the ITU’s Market Information and Statistics
Division, see: The World in 2010: ICT Facts and Figures at www.itu.int/ITU-D/ict/material/FactsFigures2010.pdf
11
Measuring the Information Society 2010, ITU, 2010. See: www.itu.int/ITU-D/ict/publications/idi/2010/index.html
12
2010 mobile broadband subscriptions data for China were published by CNNIC.
13
Mobile broadband subscriptions refer to the number of subscriptions to mobile cellular networks with access to data communi-
cations (e.g. the Internet) at broadband downstream speeds (defined as greater than or equal to 256 kbit/s). This refers to po-
tential mobile broadband subscriptions and not active subscriptions
14
www.anatel.gov.br
15
www.trai.gov.in/WriteReadData/trai/upload/PressReleases/786/quarterlypr12jan11erdiv.pdf
20 Chapter 1
16
See Cellular News article on China Ended Last Year with 850 Million Mobile Subscribers, 11th Jan 2011, www.cellular-
news.com/story/47337.php?s=h
17
www.lteportal.com/MediaChannel/Articles/LTE__LTE- Advanced;6/Regulation,_Standards,_Spectrum;31/LTE-
Advanced_Receives_Final_ITU_Ratification_as_IMT-Advanced;1814?1&PHPSESSID=a03c32c2c02c630101469f76a8cd557b
18
The ITU ICT Price Basket is a composite basket that includes three tariff sub-baskets (fixed telephone, mobile cellular and fixed
broadband Internet). The value for the ICT Price Basket is obtained by the simple average of the price of each sub-basket (in US$)
expressed as a percentage of a country’s monthly GNI per capita, and capped at 100 per cent. For more information on the ICT
Price Basket, see chapter 4 of Measuring the Information Society 2010. ITU, 2010.
19
Measuring the Information Society 2010, ITU, 2010 (Executive summary).
www.itu.int/ITU-D/ict/publications/idi/2010/index.html
20
Opcit.
21
ITU World Telecommunication/ICT Indicators database.
22
23
www.jeanchristophebonis.com/2010/12/11/world-map-of-social-networks-in-december-2010/
24
See www.telecompaper.com/news/mobile-app-revenue-forecast-up-190-to-usd-151-bln-in-2011
25
Idem.
26
www.manobi.net
27
Zambian Government Sells 75% Stake in Zambia Telecommunications, Cellular News, 7 June 2010,
www.cellular-news.com/story/43672.php.
28
www.yabiladi.com/articles/details/3962/benin-telecom-maroc-telecom-oppose.html
29
As per responses received to the ITU annual telecommunication/ICT regulatory survey.
30
This is in line with the established Competition Theory of Porter (Porter, 1990) and on the Lindblom incremental model
(Lindblom, C. E. and Woodhouse, E. J. (1993), The Policy-making process, 3rd Edition, Englewoods Cliffs, NJ: Prentice-Hall) and
Porter, M. E. (1990), The Competitive Advantage of Nations. New York: MacMillan Press.
31
The 2010 edition of the ITU’s Global Symposium for Regulators was held in November 2010 in Dakar, Senegal. The discussions
focused on enabling tomorrow’s digital world. The GSR10 best practice guidelines adopted during the meeting are available at:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/consultation/index.html
32
using tactics based on Kotter and Schlesinger (Thompson et al, 2005).
33
Extracted from the ITU World Telecommunication/ICT Regulatory Database on the ICT Eye. See www.itu.int/icteye
34
Ibid.
35
Adapted from the ITU Regulatory Self-assessment Tool
36
Thai law to establish telecom, broadcasting supervisor gets royal approval, in Total Telecom, 20 December 2010,
www.totaltele.com/view.aspx?ID=461151&mail=414&C=0
37
www.itst.dk/filer/Publications/Action_plan_for_Green_IT_in_Denmark/index.htm
38
http://en.itst.dk/policy-strategy/green-it/Green%20IT%20Guidelines.pdf. See also http://en.itst.dk/policy-strategy/green-
it/Green%20IT%20in%20your%20company%20-%20ideas%20and%20inspiration%20for%20a%20greener%20profile.pdf
39
GSR10 Best practice guidelines identifying best practices in designing, building out and managing open access networks, see:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/consultation/index.html
40
www.ictregulationtoolkit.org/en/PracticeNote.aspx?id=2320
41
GSR10 Best practice guidelines, www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/consultation/index.html
Chapter 1 21
2 THE IMPACT OF BROADBAND ON THE ECONOMY:

RESEARCH TO DATE AND POLICY ISSUES
Author: Dr. Raul L. Katz1, Adjunct Professor, Division of Finance and Economics, and
Director, Business Strategy Research, Columbia Institute for Tele-information
2.1 Introduction These challenges notwithstanding, the evidence

accrued by research so far is beginning to support the
The diffusion of broadband, defined as the tech- hypothesis that broadband has an important economic
nology that enables high speed transfer of data, is inex- impact. However, this impact only becomes significant
tricably linked to the emergence of the Internet. While under certain conditions. First, broadband exhibits a
at its initial stages the Internet was primarily accessed higher contribution to economic growth in countries
through dial-up means2, consumer and enterprise de- that have a higher adoption rate of the technology; this
mand prompted the development of technologies that is labeled the "critical mass theory".7 Second, broad-
facilitated access at higher speeds. As a result, starting band has a stronger productivity impact in sectors with
around the mid-1990s, telecommunications and cable high transaction costs, such as financial services, or high
TV companies began offering services that significantly labour intensity, such as tourism and lodging. Third, in
enhanced the experience of Internet use. Investment in less developed regions, as postulated in economic
and adoption of broadband soared around the world. theory, broadband enables the adoption of more effi-
Between 2004 and 2010, telecommunications and ca- cient business processes and leads to capital-labour
ble TV companies in the United States invested over substitution and therefore loss of jobs; this could be la-
97.7 billion dollars in broadband deployment.3 Chinese beled the "productivity shock theory". Fourth, the im-
companies have invested US dollars 7.44 billion in pact of broadband on small and medium enterprises
broadband since 20094, while Malaysian operators in- (SMEs) takes longer to materialize due to the need to
vested US dollars 1.6 billion since 20095. restructure the firms' processes and labour organiza-
tion in order to realize the gains from adopting the
Given that such large amounts of capital have been technology; this is called "accumulation of intangible
dedicated to the technology, it is logical that research- capital". Finally, broadband’s economic impact is higher
ers in the social sciences have begun to analyze the when promotion of the technology is combined with
economic and social impact of broadband. This tech- stimulus of innovative businesses that are tied to new
nology, however, poses challenges for researchers. First, applications. In other words, the impact of broadband
its deployment has proceeded at an incredibly fast is neither automatic nor homogeneous across the eco-
pace6. As a result, the length of time series data on nomic system. This underlines the importance of im-
broadband adoption is considerably shorter than for plementing public policies not only in the areas of
voice telecommunications, which already represents a telecommunications regulation, but also in education,
methodological challenge to the estimation of its eco- economic development and planning, science and
nomic impact. Second, since broadband is an access technology, and others.
technology for data communications, it only has an
economic effect in combination with the adoption of The purpose of this study is threefold. First, it
information technology and the implementation of or- presents the evidence generated by the different bo-
ganizational and process changes in enterprises. dies of theory regarding the economic impact of
Another research challenge is the lack of disaggregated broadband. The purpose is not only to summarize the
data that would allow researchers to quantitatively es- evidence, but also to present the complexities and
tablish the conditions under which broadband has a conditions under which broadband has an impact. In
significant economic effect. this regard, this study reviews the results of research
Chapter 2 23
conducted across the world measuring the impact of 2.2.1 Contribution to Economic Growth
broadband on economic growth and employment crea-
tion, and presents additional research carried out by Research aimed at generating hard evidence re-
this author. Second, this study presents a methodology garding the economic impact of broadband is fairly re-
for calculating the investment necessary to implement cent. The results of the research and the evidence
national broadband plans. Finally, it outlines the public generated so far fall into three categories:
policy options for stimulating the deployment of
• Contribution of broadband to the growth of GDP;
broadband and for maximizing the positive economic
impact of the technology. • Productivity gains; and
• Specific effects of broadband on economic growth.
2.2 Economic Impact of Broadband:
a Review of the Literature While the research on the contribution of broad-
band to GDP growth has confirmed its positive impact,
This section presents the research conducted to it has also yielded results that vary widely. Constrained
date on the economic impact of broadband. In review- by data availability, the analyses have primarily focused
ing the literature, it will become apparent that there is on OECD countries (generally those in Western Europe
no single approach to assessing the economic contribu- and North America) and states in the United States.
tion of broadband. Each methodology that has been
utilized so far (input / output analysis, econometric As the data in Table 2.1 indicates, most studies
modeling, measurement of consumer surplus, and mi- conclude that broadband penetration has an impact on
croeconomics case studies) will be reviewed and the GDP growth. However, one observes that such a contri-
robustness of the evidence generated will be assessed. bution appears to vary widely, from 0.25 to 1.38 per-
In reviewing the methodologies, it will also become ap- cent for every increase in 10 per cent of penetration8.
parent that the overarching condition guiding the selec- Explanations for this variance are manifold. Clearly,
tion of one approach over another is driven primarily some of the discrepancies come from the usage of dif-
by data availability. ferent datasets as well as model specifications. Many of
the problems identified stem from data availability
since researchers lack a host of useful variables and
must work at high levels of aggregation.
Table 2.1: Research results of Broadband Impact on GDP growth

Country Authors – Institution Data Effect
United States Crandall et al (2007) – 48 States of US for the pe- No statistically significant results
Brookings Institution riod 2003-2005
Thompson and Gar- 46 US States during the pe- A 10% increase in broadband pene-
bacz (2008) – Ohio riod 2001-2005 tration is associated with 3.6% in-
University crease in efficiency
OECD Czernich et al. (2009) – 25 OECD countries between A 10% increase in broadband pene-
University of Munich 1996 and 2007 tration raises per-capita GDP growth
by 0.9-1.5 percentage points
Koutroumpis (2009) – 2002-2007 for 22 OECD An increase in broadband penetra-
European Investment countries tion of 10% yields 0.25% increase in
Bank GDP growth
High Income Qiang et al. (2009) – 1980-2002 for 66 high in- 10 % broadband penetration yielded
Economies World Bank come countries an additional 1.21 percentage points
of GDP growth
Low & Middle Qiang et al. (2009) – 1980-2002 for the remaining 10 % broadband penetration yielded
income econ- World Bank 120 countries (low and mid- an additional 1.38 in GDP growth
omies dle income)
Source: Author.
24 Chapter 2
2.2.2 Impact on productivity output. Is there a linear relationship between broad-

band adoption and economic growth? Or are we in the
It is logical to assume that productivity of informa- presence of a more complex causality effect? The "criti-
tion workers, defined as the portion of the economical- cal mass" findings of research on the impact of tele-
ly active population whose working function is to communications on the economy indicate that the
process information (e.g., administrative employees, impact of broadband on economic growth may only
managers, teachers, and journalists), depends directly become significant once the adoption of the platform
on the investment in ICT capital (and adoption of achieves high penetration levels. However, Gillett et al.
broadband). (2006) also contend that the relation between penetra-
tion and economic impact should not be linear "be-
For example, research on the impact of broadband cause broadband will be adopted (…) first by those who
on productivity has successfully identified positive ef- get the greatest benefit (while) late adopters (…) will
fects. Waverman (2009) determined the economic ef- realize a lesser benefit"13 With both points of view in
fect of broadband on the GDP of 15 OECD nations for mind, it would appear that the strength of the relation-
the time period of 1980 to 2007. Broadband impact on ship is highest once the technology has achieved a cer-
the productivity of the more developed nations in the tain critical mass but before it reaches saturation (see
sample was found to be .0013 and was statistically sig- figure 2.1).
nificant at the 5 per cent level9. In other words, Wa-
verman estimated that for every 1 per cent increase in Theoretically, it appears that there is a non-linear
broadband penetration in high and medium impact in- (or inverted U shape) relationship between broadband
come countries, productivity grows by 0.13 per cent. In penetration and economic output, as well as employ-
another document, the authors commented upon the ment. At low levels of broadband penetration, we be-
productivity effect in the countries in their sample with lieve the impact of broadband on the economy is
relatively low ICT penetration (Greece, Italy, Portugal, minimal due to the "critical mass" concept. According
Spain and Belgium)10. They found that broadband im- to this theory, the impact on economic output is max-
pact on productivity was nil, which could be explained imized once the infrastructure reaches a critical mass
by the high adoption costs and critical mass thre- point, generally associated with levels of penetration of
sholds.11 In other words, for broadband to have an im- developed countries. In fact, research suggests that in
pact on productivity, the ICT eco-system must be order to achieve a material level of economic impact,
sufficiently developed. 12 It would appear, therefore, broadband must reach high levels of penetration. For
that in developed countries with high broadband pene- example, Koutroumpis (2009) found that for OECD
tration, broadband technology has an impact on aggre- countries, the contribution of broadband to OECD eco-
gate productivity levels. nomic growth increased with penetration (see fig-
ure 2.2).
In addition to measuring the aggregate economic
impact at the macro level, research on the economic As seen below, according to Koutroumpis' research,
impact of broadband has focused on the specific in countries with low broadband penetration rates (un-
processes that underlie this effect. So far, two questions der 20 per cent), an increase of 1% in broadband adop-
have been studied in detail: tion contributes to 0.008 per cent of GDP growth, while
in countries with medium penetration rates (between
• Does the economic impact of broadband increase
20 per cent and 30 per cent), the effect is 0.014 per
with penetration and can we pinpoint a saturation
cent of GDP growth, and in countries with penetration
threshold when decreasing returns to penetration
rates higher than 30 per cent, the impact of an increase
exist?
of 1 per cent in broadband adoption reaches
• What explains the lagged effect of broadband on 0.023 per cent. The implication of this finding for de-
the economy? veloping countries is quite significant. Unless emerging
economies strive to dramatically increase their broad-
A critical element of the evolving theoretical band penetration rates, the economic impact of the
framework of network externalities of broadband is the technology will be quite limited.
impact infrastructure penetration levels may have on
Chapter 2 25
Figure 2.1: Impact of broadband on output over diffusion process
Saturation point
+
ECONOMIC CONTRIBUTION OF
Critical
BROADBAND
Mass
threshold
0
0 +
BROADBAND PENETRATION
Source: Adapted from Katz (2008a)
At the same time, some authors have already however, this effect tends to diminish once penetration
pointed out a potential "saturation" effect.14 They find increases. The saturation evidence still needs to be
that beyond a certain adoption level (not yet specified), carefully tested, particularly in terms of what the op-
the effect of broadband on the economy tends to dimi- timal point is, beyond which broadband has decreasing
nish. There is evidence that supports this argument. returns. For example, in a study conducted in Germany
Czernich et al. (2009)15 found that a 10 per cent broad- by this author (discussed below), it was not possible to
band penetration rate has a significant impact on GDP identify a saturation point for broadband penetration.16
per capita: between 0.9 and 1.5 percentage points;
Figure 2.2: OECD: Percentage of Impact of Broadband on GDP Growth
0.025 0.0045
Country Average % Impact of BB on growth
High
0.004
penetration
0.02 0.0035 - Denmark, Norway,
Netherlands,
Cluster average impact on growth
0.003 Sweden, Switzerland

0.015 - Average
0.0025
contribution to GDP
0.002 growth: 0.023
0.01
0.0015
0.005 0.001
0.0005
0 0
Low penetration 7% % % % % % % % % % %
- Greece, Portugal, Italy, 14 16 17 21 22 22 24 25 30 33
New Zealand, Austria, Broadband Penetration (2007)
Hungary, Spain, Ireland
- Average contribution to Source: adapted from Koutrompis (2009)
Medium penetration
GDP growth: 0.008 - Germany, France, Japan
Belgium, UK, Australia, US, Canada, Luxemburg
- Average contribution to GDP growth: 0.014
26 Chapter 2
Furthermore, even if evidence was found that con- an impact on indirect employment; indirect employ-
firmed the impact of broadband saturation on growth ment includes jobs related to upstream buying and sell-
in GDP or employment creation, this evidence would ing between metal and electrical equipment
not put into question the need to achieve universal manufacturing sectors, for example. Third, the house-
access to broadband in terms of the other socio- hold spending based on the income generated from the
economic benefits it yields to end users. direct and indirect jobs creates induced employment.
The final condition to be considered is that, in or- Four national studies have estimated the impact of
der to have an impact on productivity, the adoption of network construction on job creation. They all relied on
broadband needs to be complemented with “accumu- input-output matrices and assumed a given amount of
lation of intangible capital”17. Broadband does not in capital investment: USD 63 billion (needed to reach
and of itself have an economic impact. It requires the ubiquitous broadband service in the United States) for
introduction of a number of processes and organiza- Crandall et al. (2003); CHF 13 billion for Katz et al.
tional changes. These changes, as well as training and (2008b) (to build a national multi-fibre network for
other cultural factors (such as entrepreneurial spirit and Switzerland); USD 10 billion for Atkinson et al. (2009)
the willingness to take risks in an organizational trans- (as a US broadband stimulus); and USD 7.5 billion for
formation) are referred to as the accumulation of in- Liebenau et al. (2009) (needed to complete broadband
tangible capital. The accumulation of intangible capital deployment in the United Kingdom) (see Table 2.2).
enables the adoption of e-business processes that re-
sult in increased efficiency, such as streamlined access While input-output tables are a reliable tool for
to raw materials and management of the supply chain predicting investment impact, two words of caution
or better market access. The public policy implications need to be given. First, input-output matrices are static
of this condition cannot be understated. To achieve the models reflecting the interrelationship between eco-
full economic benefit of broadband deployment, gov- nomic sectors at a certain point in time. Since those in-
ernments need to emphasize the implementation of teractions may change, the matrices may lead us to
training programs and, in the case of SMEs, offer con- overestimate or underestimate the impact of network
sulting services that help firms capture the full benefit construction. For example, if the electronic equipment
of the technology.18 industry is outsourcing jobs overseas at a fast pace, the
employment impact of broadband deployment will di-
2.2.3 Impact on job creation minish over time and part of the counter-cyclical in-
vestment will "leak" overseas. Second, it is critical to
This section reviews the evidence regarding the break down employment effects at the three levels es-
impact of broadband on job creation. It distinguishes timated by the input-output table in order to gauge the
between the research focused on measuring the im- true direct impact of broadband deployment. Having
pact of broadband deployment programs (e.g., the said that, all these effects have been codified and
counter-cyclical impact of broadband network con- therefore, with the caveat of the static nature of input-
struction) and the spill-over effect that broadband can output tables, we believe that the results are quite reli-
have in terms of generating employment across the able.
economy once it is being deployed. As in the prior sec-
tion chapter, one sub-section focuses on specific effects 2.2.3.2 Broadband externalities
that broadband penetration has on job creation, such
as differential impact by industrial sector and/or re- Beyond the employment and output impact of
gions. network construction, researchers have also studied
the impact of network externalities on employment;
2.2.3.1 Broadband construction effects and their this impact is variously categorized as "innovation" or
counter-cyclical importance "network effects".19 The study of network externalities
resulting from broadband penetration has led to the
Broadband network construction affects employ- identification of numerous effects:
ment in three ways. First, network construction creates
• New and innovative applications and services, such
direct jobs necessary for the building of the facility such
as telemedicine, Internet search, e-commerce, on-
as telecommunication technicians, construction work-
line education and social networking;20
ers, and manufacturers of the required telecommunica-
tion equipment. Second, the creation of direct jobs has
Chapter 2 27
Table 2.2: Broadband Impact on Job Creation

Country Authors – Objective Results
Institution(*)
United States Crandall et al. Estimate the employment impact of • Creation of approximately
(2003) – Brook- broadband deployment aimed at 140,000 jobs per year over ten years
ings Institution increasing household adoption from
• Total jobs: approximately 1.2 million
60% to 95%, requiring an invest-
(including 546,000 for construction
ment of USD 63.6 billion
and 665,000 indirect)
Atkinson et al. Estimate the impact of a USD 10 • Total jobs: 180,000 (including 64,000
(2009) – ITIF billion investment in broadband direct and 116,000 indirect and in-
deployment duced
Switzerland Katz et al. Estimate the impact of deploying a • Total jobs: 114,000 over four years
(2008b) – CITI national broadband network requir- (including 83,000 direct and 31,000
ing an investment of CHF 13 billion indirect)
United King- Liebenau et al. Estimate the impact of investing • Total jobs: 211,000 (including 76,500
dom (2009) – LSE USD 7.5 billion to achieve the target direct and 134,500 indirect and in-
of the "Digital Britain" Plan duced)
(*) Note:
ITIF: Information Technology and Innovation Foundation
CITI: Columbia Institute for Tele-Information
LSE: London School of Economics
Source: Author
• New forms of commerce and financial intermedia- human capital statistics at a disaggregated level, such as
tion;21 counties, departments, or administrative district.27
• Mass customization of products;22
Like the relationship between broadband and GDP
• Reduction of excess inventories and optimization of growth, broadband penetration may have an uneven or
supply chains;23 negative impact on job creation under certain circums-
• Business revenue growth;24 and tances. Studies have particularly focused on two specif-
ic questions:
• Growth in service industries.25
• Does broadband’s impact on employment differ
Most of the research regarding the impact of according to industry sector?
broadband externalities on employment has been con- • Is there a decreasing return in employment genera-
ducted using US data. The evidence regarding broad- tion linked to broadband penetration?
band employment externalities appears to be fairly
conclusive (see Table 2.3). As with output, the spill-over employment effects
of broadband are not uniform across sectors. According
While the impact of broadband on employment to Crandall et al. (2007), the job creation impact of
creation appears to be positive, the impact on em- broadband tends to be concentrated in service indus-
ployment growth varies widely: from 0.2 per cent to tries (e.g., financial services, education, health care, etc),
5.32 per cent for every increase in 1 per cent of pene- although the authors also identified a positive effect in
tration. There are several explanations for this va- manufacturing. In another study, Shideler et al. (2007)
riance. 26 From a methodological perspective, these found that, for the state of Kentucky, county employ-
studies illustrate that, in order to properly measure the ment was positively related to broadband adoption in
contribution of broadband to job creation, it is advisa- the construction, information intensive, and adminis-
ble to have datasets that include time series for em- trative sectors.
ployment level, broadband penetration, and related
28 Chapter 2
Table 2.3: Research results of Broadband Impact on Employment in the United States
Authors – Institution Data Effect
Crandall et al. (2007) 48 States of US for the period For every 1% point increase in broadband penetration in a
– Brookings Institu- 2003-2005 state, employment is projected to increase by 0.2 to 0.3 per-
tion cent per year "assuming the economy is not already at 'full
employment'"
Thompson and Gar- 46 US States during the pe- Positive employment generation effect varying by industry
bacz (2008) – Ohio riod 2001-2005
University
Gillett et al. (2006) – Zip codes for the US for the Broadband availability increases employment by 1.5%
MIT period 1999-2002
Shideler et al. (2007) Disaggregated county data for An increase in broadband penetration of 1% contributes to
– Connected Nation state of Kentucky for 2003-4 total employment growth ranging from 0.14% to 5.32% de-
pending on the industry
Source: Author
The only sector where a negative relationship was sumer surplus is defined as the amount that consumers
found with the deployment of broadband was the ac- benefit from purchasing a product for a price that is less
commodations and food services industry. This may re- than what they would be willing to pay.
sult from a particularly strong capital/labour
substitution process, whereby productivity gains from The estimation of consumer surplus resulting from
broadband adoption yields reduced employment. Simi- broadband penetration is important, although this eco-
larly, Thompson and Garbacz (2008) conclude that, for nomic benefit is not captured by GDP. Greenstein and
certain industries, "there may be a substitution effect McDevitt (2009) estimated the consumer surplus gen-
between broadband and employment" 28 . It should erated by broadband adoption in the United States. In
therefore be considered that the productivity impact of their analysis for the period between 1999 and 2006,
broadband can cause capital-labour substitution and the authors determined that in 2006, the consumer
may result in a net reduction in employment. surplus generated by broadband represented USD 7.5
billion (or 27 per cent of the total USD 28.0 billion in
In summary, research is starting to pinpoint differ- broadband surplus). This was calculated on the basis of
ent employment effects by industry sector. Further- what users would be willing to pay to adopt broadband
more, broadband may create some jobs through in substitution for narrowband access. Consumer sur-
innovation in services while simultaneously having a plus can also be conceptualized in terms of the benefits
decreasing return in other employment generation due that broadband represents to the end user. The va-
to a productivity effect in labour intensive sectors. riables driving willingness to pay include the rapid and
However, we still lack a robust explanation of the pre- efficient access to information, savings in transporta-
cise effects by sector and the specific drivers in each tion for conducting transactions, and benefits in health
case. Given that the sectoral composition varies by re- and entertainment.
gional economies, the deployment of broadband
should not have a uniform impact across a national ter- 2.2.5 Impact on firm efficiencies
ritory.
Microeconomic analysis of the impact of broad-
2.2.4 Growth of consumer surplus band is converging with macroeconomic studies of the
aggregate effects of the adoption of this technology on
There are some specific economic effects of broad- economic growth as a whole to provide a fuller picture
band that are not necessarily reflected in economic of the economic externalities associated with increased
growth or employment creation. This is the case of broadband penetration. Microeconomic analysis of the
consumer surplus, which has also been found to be af- impact of broadband has helped understand the mul-
fected by the positive externalities of broadband. Con- tiple effects which broadband has on firm performance.
Chapter 2 29
Table 2.4 sets out the estimates of firm productivity en- impact on employment of broadband resulting from
hancement, as has been found by microeconomic re- productivity gains productivity is offset by the increase
search. in the rate of innovation and services, thereby resulting
in the creation of new jobs. The third effect may result
In addition to the impact on productivity, other mi- in two countervailing trends. On the one hand, a region
croeconomic studies have focused on the impact of that increases its broadband penetration can attract
broadband technology on business expansion, product employment displaced from other regions by leverag-
innovation, and new business creation. With regards to ing the ability to work remotely. On the other hand, by
business expansion, Clarke (2008) studied the impact of increasing broadband penetration, the same region can
broadband access on exports of manufacturing and lose jobs by virtue of the outsourcing effect. While we
service firms. The author found that in the manufactur- are gaining a better understanding of these combined
ing sector, firms with Internet access enabled by broad- "network effects", the research is still at its initial stages
band generate 6 per cent more foreign sales than the of quantifying the combined impact.32
rest.29 In the service sector, broadband-enabled firms
generate between 7.5 per cent and 10 per cent more 2.2.6 Conclusion
sales.30
A review of the research on the economic impact
In addition to increasing exports, broadband has of broadband indicates multiple effects. First and fore-
been found to have a positive impact on the develop- most, the evidence is fairly conclusive about the posi-
ment of new businesses. This results from the network tive contribution of broadband to GDP growth. While
effects of connectivity. When a large enough number of the degree to which broadband contributes to econom-
households are connected to broadband, the incentive ic growth varies in different studies, the discrepancies
to develop new businesses around information search, can be related to different datasets as well as model
advertising, and electronic commerce increases. specifications.
The results of microeconomic research have been Secondly, broadband has been found to have a pos-
used to estimate the impact of broadband on job crea- itive impact on the productivity at the firm level. Evi-
tion. In a study mandated by the European Commission, dence generated both at the micro-economic and
Fornefeld et al. (2008) identified three ways that macro-economic level appears to confirm this effect. In
broadband impacts employment.31 First, the introduc- addition, research has been successful in identifying the
tion of new applications and services causes accelera- existence of a critical mass, indicating that there are in-
tion of innovation, which results in an increase in creasing economic returns of broadband penetration,
employment. Second, the adoption of more efficient at least up to a saturation point. On the other hand,
business processes enabled by broadband increases consistent with the research at the ICT level, the eco-
productivity, which could either result in an increase in nomic impact of broadband could be mediated by a lag
output at current employment levels or a decrease in effect, indicating that adoption of broadband does not
employment. Third, the ability to process information automatically translate into growth but that it requires
and to provide services remotely makes it possible to the accumulation of intangible capital. Intangible capi-
attract employment from other regions through out- tal refers to the changes in business processes and firm
sourcing. These three effects occur simultaneously. Ac- culture that lead to the assimilation of improved busi-
cording to Fornefeld et al., the potentially negative ness processes.
Table 2.4: Broadband-induced Productivity Improvement

Industrial Study E Business Impact on Share of Informational activities
Sector Firm Productivity that involve external parties
Manufacturing Atrostic and Nguyen ~5 % ~25 %

(2006)
Services Rincón-Aznar et al. ~ 10 % ~50 %
(2006)
Information Fornefeld et al. (2008) ~ 20 % 100%
Source: Fornefeld et al. (2008)
30 Chapter 2
Thirdly, broadband does contribute to employment growth and job creation. It includes the following case
growth, both as a result of network construction pro- studies:
grams and spill-over effects on the rest of the economy.
• United States: employment creation triggered by
While the deployment programs are, as expected, con-
the Broadband Technology Opportunity Program;33
centrated in the construction and telecommunications
and
sectors, the impact of externalities are greater in sec-
tors with high transaction costs (e.g., financial services, • Germany: impact of the National Broadband Plan
education, and health care). on economic growth and job creation.34
Finally, beyond economic growth and job creation, The following methodologies were used in the
broadband has a positive effect on consumer surplus in above two cases:
terms of benefits to the end user that are not captured • Input/output analysis, as utilized by researchers at
in the GDP statistics. These benefits include efficient the Brookings Institution and the London School of
access to information, savings in transportation, and Economics for similar studies, was applied for esti-
benefits in health and entertainment; these benefits mating the impact of broadband construction (in
can be measured in terms of the difference between the United States and Germany) on employment
consumers' willingness to pay for the broadband ser- and GDP;
vice and actual prices.
• Micro-economic estimates, as utilized in the study
In addition, the review of the literature confirms mandated by European Commission, were used to
the existence of multiple methodological approaches estimate the contribution to employment resulting
aimed at measuring the impact of broadband. Input- from broadband externalities in the United States
output analysis has proven to be highly reliable tool to case; and
estimate the counter-cyclical impact of broadband con- • Econometric modeling, as utilized in several studies
struction programs. Econometric analysis, while limited (including studies conducted by authors affiliated
by data availability, has been proven effective in identi- with the World Bank, the Brookings Institution, and
fying the spill-over effects of broadband on the rest of MIT), was applied to estimate the impact of broad-
the economy. These results have been confirmed by band externalities on GDP and employment in
micro-economic research that has studied the impact Germany.
of broadband on fostering efficiencies and value added
opportunities at the firm level. 2.3.1 United States: employment creation
as a result of the economic stimulus
As this review indicates, most of the research so far program
has been conducted in developed nations, specifically,
either the United States or Western Europe. The chal- In the last few years, spurred by the economic crisis,
lenge going forward is to test for similar effects in de- many governments around the world have imple-
veloping countries, where data availability remains an mented programs aimed at deploying broadband in or-
even larger challenge. It appears to be particularly diffi- der to stimulate employment (see Table 2.5).
cult to find data for African countries. For example, in
seeking information to conduct the quantitative case In 2009, this author attempted to estimate the jobs
studies presented below, this author encountered that could be generated as a result of the grants to be
many obstacles to identifying adequate datasets for na- disbursed pursuant to the broadband provisions of the
tions in Africa. American Recovery and Reinvestment Act, enacted by
Congress in February 2009. The study differentiated be-
2.3 Economic Impact of Broadband tween jobs generated through capital spending in the
in Developed Countries: Case form of grants allocated to unserved/underserved
Studies areas and employment created as a result of network
externalities caused once the infrastructure was dep-
The following section sets out the results of re- loyed.
search conducted by the author in developed countries,
aimed at measuring the impact of broadband on GDP
Chapter 2 31
Table 2.5: Counter-cyclical government programs

Country Broadband Focus
United States Launched the USD 7.2 billion Broadband Stimulus program focused on providing service to
unserved and underserved areas
Australia Government plans to spend A$11 billion of total A$43 billion required for construction of the
National Broadband Network
Germany Government has announced a National Broadband Strategy with the objective of having na-
tionwide broadband access (1 Mbit/s) no later than the end of 2010 and provide 75 percent
of German households access to a broadband connection of at least 50 Mbit/s by 2014 (esti-
mated investment: EUR 36 billion)
Sweden In order to promote broadband, government provides financial incentives to municipalities to
fund two-thirds (2/3) of total Next Generation Network (NGN) investment (EUR 864 million)
Portugal Government announced an EUR 800 million credit line for the roll-out of a Next Generation
Access Network (NGAN); this is part of the first step in a EUR 2.18 billion plan to boost the
country's economy
Ireland The government will invest EUR 322 million in a National Broadband Scheme aimed at com-
pleting country coverage
Canada Has relied on four programs to promote broadband development resulting in an overall in-
vestment of C$300 million
Finland Government funds one-third of the NGN project cost (USD 130.73 million)
New Zealand Government funds US 1.03 billion investment to boost fibre over the next five years
Source: Author
The study found that approximately 127,800 jobs sumption used to estimate the network effects of the
could be created over a four year period from network stimulus program on employment was that the pro-
construction. According to the analysis, the investment gram would deploy enough lines to allow these eigh-
of USD 6.390 billion35 will generate 37,300 direct jobs teen states to reach the national average, meaning that
over the course of the stimulus program (estimated to 3,928,000 broadband subscribers would be added to
be four years). In addition, based on a Type I employ- the existing base.39
ment multiplier of 1.83, the bill could generate 31,000
indirect jobs, and based on a Type II multiplier of 3.42, Network effect-driven job gains in the targeted re-
the policy could generate additional 59,500 induced36 gions result from three combined trends: innovation
jobs.37 and the creation of new services, attraction of jobs
(from either other US regions or overseas), and produc-
In addition to network construction, the invest- tivity enhancement. The impact of innovation on the
ment in broadband would trigger new jobs as a result professional services sector was estimated by applying
of spill-over effects on the rest of the economy. The cal- the ratio of productivity gains to the creation of new
culation of spill-over effects was performed by selecting employment.40 Then this effect is applied to the econ-
those states in the US where the percentage of residen- omy of the targeted states as a whole. The impact of
tial households which have access to at least one broadband on outsourcing operates in two directions:
broadband supplier (that is to say, primarily telco or ca- broadband can facilitate the attraction of new jobs and
ble) is 93 per cent or less.38 There are eighteen states it can enable the relocation of others to regions other
that significantly lag behind the national average than the one being targeted. As a result of the uncer-
broadband penetration rate: while broadband in those tainty regarding the number of jobs that will be gained
states has been adopted by 47 per cent of households or lost, three scenarios were estimated: a pessimistic, a
(or 21 per cent of the population), the US average is 62 baseline and an optimistic scenario. In addition, in-
per cent (or 25 per cent of the population). The as- creased adoption of broadband has an impact on prod-
32 Chapter 2
uctivity because it is an enabler of more efficient busi- 2.3.2 Germany: The impact of the National
ness processes. To calculate the productivity impact, Broadband Plan on employment and
the methodology derived by Fornefeld et al. (2008), economic growth
which is based on empirical firm-level study of sectoral
productivity improvements resulting from adopting on- This case study quantifies the macroeconomic im-
line services, was applied. The jobs that could be lost as pact of investment in broadband technology on em-
a result of broadband diffusion was calculated by diffe- ployment. It also quantifies the output of two
rentiating the productivity impact in manufacturing, sequential investment scenarios: first, the "National
professional and information services and the rest of Broadband Strategy" announced by the German gov-
the service sector, and applying these ratios to sectoral ernment in 2009 and second, an "ultra-broadband"
employment.41 scenario planned for 2015-2020. The National Broad-
band Strategy aims to provide 75 per cent of German
The compilation of all employment effects calcu- households with access to a broadband connection of
lated through the above analysis results in the following at least 50 Mbit/s by 2014. The ultra-broadband plan
estimates: aims to provide 50 per cent of households with at least
100 Mbit/s and another 30 per cent with 50 Mbit/s by
These estimates point to the following conclusions. 2020.
The deployment of broadband resulting from the sti-
mulus program has moderate direct employment ef- It is estimated that fulfilling the 2014 objectives of
fects (37,300 jobs over a four year period). Indirect and the National Broadband Strategy will generate
induced multipliers are important, generating a total of 304,000 jobs over five years (between 2010 and
127,800 jobs over four years. A mid-range estimate of 2014).42 In terms of direct employment related to the
the effect of externalities on employment results in construction of broadband networks, 158,000 jobs will
136,000 jobs. In sum, a USD 6.3 billion investment in be created in equipment manufacturing, construction,
broadband network deployment results in 263,800 jobs and telecommunications. It is estimated that job crea-
over the four years of the deployment program. tion will be apportioned among the sectors as follows:
construction will benefit the most with 125,000 jobs,
followed by telecommunications (28,400) and electron-
ics equipment manufacturing (4,700).
Table 2.6: United States: Total Employment Impact of the Broadband Stimulus Plan
2009 2010 2011 2012 Total
Direct effects 9,325 9,325 9,325 9,325 37,300

Indirect effects 7,750 7,750 7,750 7,750 31,000
Induced effects 14,875 14,875 14,875 14,875 59,500
Network effects (optimis- 87,000 74,000 62,000 50,000 273,000
tic)
Network effects (mid- 46,000 37,500 30,000 22,500 136,000
estimate)
Network ef- 5,000 1,000 (2,000) (5,000) (1,000)
fects(pessimistic)
Total (optimistic) 118,950 105,950 93,950 81,950 400,800
Total (mid-estimate) 77,950 69,450 61,950 54,450 263,800
Total (pessimistic) 36,950 32,950 29,950 26,950 126,800
Source: Adapted from Katz et al. (2009a)
Chapter 2 33
Total indirect jobs generated by sector interrela- Results of the regression analysis for national time
tionships will be an estimated 71,000. The key sectors series between 2000 and 2006 indicate with high signi-
that will benefit from the indirect effects of broadband ficance levels that there is a strong impact of broad-
network construction are distribution (10,700), other band penetration on GDP growth, which tends to
services (17,000), and metal products (3,200). Finally, diminish over time. On the other hand, results from the
household spending generated directly and indirectly, analysis of the impact of broadband penetration on
will result in 75,000 induced jobs. Based on these esti- employment creation carry a low level of significance.
mates, the Type I multiplier for employment is 1.45 and Therefore, they do not allow us to indicate the exis-
Type II is 1.92. Additionally, the implementation of the tence of causality with certainty.
expected ultra-broadband evolution will generate
237,000 incremental jobs between 2015 and 2020. This In addition, the analysis tested whether the net-
figure can be broken down in a manner similar to the work effects of broadband varies by region, depending
figure from the National Broadband Strategy: it com- on the level of broadband penetration. The analysis
prises 123,000 in direct jobs, 55,000 indirect jobs and split the national territory into two groups: counties
59,000 in induced jobs. As expected, multipliers will be with a 2008 average broadband penetration rate of 31
similar: the Type I multiplier for employment is 1.45 per cent of the population and counties with an aver-
and Type II is 1.93. age broadband penetration rate of 24.8 per cent. The
analysis of the network effects in these two groups in-
In addition to estimating employment effects, indicates that the type of network effects of broadband
dustrial output and the impact on GDP were also calcu- varies by region. In counties with high levels of broad-
lated. The investment required to meet the targets of band penetration, the short-term impact of the tech-
the 2014 National Broadband Strategy (EUR 20.243 bil- nology is very high both on GDP and employment, but
lion) will generate additional production totaling it declines over time. This "supply shock" is believed to
EUR 52,324 million. This means that for each Euro in- occur because the economy can immediately utilize the
vested in broadband deployment, 2.58 Euros will be newly deployed technology. Furthermore, the fact that
generated in output. Of this, EUR 4,146 million (8 per employment and GDP grow in parallel indicates that
cent of total output) will be based on imported goods. broadband has a significant impact on innovation and
This indicates a relatively low level of output "leakage" business growth, thereby overcoming any employment
to other national economies. Of the remaining produc- reduction resulting from productivity effects.
tion, EUR 18,733 million will be additional GDP (+0.15
per cent). Again, each Euro invested in broadband dep- On the other hand, in counties with low broadband
loyment will trigger 0.93 Euros in additional value add- penetration, the impact of broadband penetration on
ed or incremental GDP. GDP is lower than in highly-penetrated areas in the
short term, but "catches up" to comparable levels over
To sum up, the incremental GDP growth achieved time. The impact of broadband on employment is
by investing in broadband deployment will amount to slightly negative in the initial years. This indicates that
EUR 33,364 million, which represents +0.12 per cent of the impact of broadband in areas with low levels of
the German GDP. This amount does not include the ad- broadband penetration is more complex than in the
ditional impact that will be achieved once the network areas with high penetration rates. It takes longer for
construction is completed. areas with low penetration rates to realize economic
growth from an increase in broadband penetration be-
The author also found that the network externali- cause the economies in these areas require more time
ties of broadband (that is to say, the positive effects in to develop and to fully utilize the technology. However,
employment and economic output resulting from en- after three years, the impact of broadband in areas
hanced productivity, innovation and value chain de- with low penetration rates is as high as the impact of
composition) are significant throughout Germany. The broadband in the more developed areas. Negative em-
analysis of these effects examined the relationship be- ployment growth during the initial stages of broadband
tween broadband penetration and economic growth deployment appears to indicate that gains in productiv-
and job creation. It found that the impact of broadband ity resulting from the introduction of new technology
on economic stimulus is highest in the first year after are the most important network effect at the outset.
deployment and tends to diminish over time. However, once the economy develops, the other net-
work effects (innovation and value chain recomposi-
tion) start to play a more important role, resulting in job
34 Chapter 2
creation.43 Therefore broadband deployment in areas As discussed throughout the review of the study
with low penetration rates will likely generate high sta- projections, the estimates were generated for several
ble economic growth (the "catch up" effect), combined years and are dependent on stages of network dep-
capital/labour substitution which initially limits em- loyment. For example, the projected creation of
ployment growth (the "productivity" effect). Figure 2.3 541,000 jobs due to network construction does not oc-
presents in conceptual fashion a comparison of the im- cur all in one year but over a ten year period. Table 2.7
pact of broadband in both regions. displays the yearly impact over time.
These differentiated effects were used to estimate The net employment effects over two time periods
the impact of the broadband plan on economic growth were calculated using these figures. Between 2010 and
and employment. It was stipulated by the author that, 2014, 407,000 jobs will be created, while between 2015
as a result of the National Broadband Strategy, broad- and 2020, the number of jobs created will be 561,000
band penetration in advanced areas will increase from jobs.47
31 per cent in 2008 to 45.9 per cent in 2014, while in
low penetration areas, the rate of broadband penetra- To sum up, the National Broadband Strategy and
tion will increase from 24.8 per cent to 37.4 per cent. the expected evolution to ultra-broadband through
This trend is largely driven by the coverage of "white 2020 will have a significant impact on jobs and the GDP
spots" and an improvement of service in "grey spots".44 of the German economy. It is estimated that a total in-
Together, these improvements amount to an incremen- vestment of nearly EUR 36 billion will generate a total
tal increase in penetration of approximately 25 per cent of 968,000 incremental jobs. Network construction will
in both regions between 2008 and 2011.45 yield 541,000 jobs. An additional 427,000 jobs will be
created after the network is deployed due to enhanced
Following the same methodology, it is estimated innovation and new business creation. From an incre-
that 162,000 jobs will be created. Areas with higher le- mental economic growth standpoint, network con-
vels of broadband penetration are expected to gain struction will yield additional value-added of EUR 33.4
132,000 jobs, while areas with low penetration rates billion, while network externalities will result in an addi-
are expected to gain 30,000 jobs.46 The differentials tional EUR 137.5 billion.
across regions are driven by the divergent effects of in-
creased broadband penetration discussed above.
Figure 2.3: Conceptual view of comparative broadband regional effects48

High Broadband Penetration Landkreise Low Broadband Penetration Landkreise
HI GDP HI GDP
Economic Impact
Economic Impact
Employment
Employment
LO LO
T+1 T+2 T+3 T+4 T+1 T+2 T+3 T+4
Increase in Increase in
BB BB
penetration penetration
• High economic growth initially, • High stable economic growth

diminishing over time ("supply shock"
("catch up" effect)
effect)
• Capital/labor substitution limits
• New Economic Growth (innovation,
new services) employment growth ("productivity effect")
Chapter 2 35
Table 2.7: Germany: Employment and Economic Impact per annum

2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
EMPLOYMENT (in thousands)
National
Construction
60.8 60.8 60.8 60.8 60.8 304.0

Strategy
Network
Ultra
39.5 39.5 39.5 39.4 39.5 39.5 237.0
Broadband
Total 60.8 60.8 60.8 60.8 60.8 39.5 39.5 39.5 39.4 39.5 39.5 541.0
Network externalities 24.0 35.0 44.0 54.0 54.0 54.0 54.0 54.0 54.0 427.0
Total 60.8 60.8 84.8 95.8 104.8 93.5 93.5 93.5 93.5 93.5 93.5 968.0
GROSS DOMESTIC PRODUCT (in Billion Euros)
National
Construction
3.8 3.8 3.8 3.8 3.8 18.8

Strategy
Network
Ultra Broad-
2.4 2.4 2.4 2.4 2.4 2.4 14.6
band
Total 3.8 3.8 3.8 3.8 3.8 2.4 2.4 2.4 2.4 2.4 2.4 33.4
Network externalities 13.9 14.5 14.9 15.7 15.7 15.7 15.7 15.7 15.7 137.5
Total 3.8 3.8 17.7 18.3 18.7 18.1 18.1 18.1 18.1 18.1 18.1 170.9
2.4 Economic Impact in Developing broadband on economic growth and job creation en-
Countries: Case Studies tails specifying regression models where GDP growth,
employment and other output metrics are a function of
This section summarizes research conducted by the broadband deployment and broadband penetration.
author primarily at the aggregate macro-economic level. Details on the methodology and data utilized are in-
It aims to substantiate the existence of an economic cluded in Appendix A.
impact of broadband on GDP growth and job creation
in developing countries. It includes the following case In applying this approach in developing countries,
studies: the study was confronted with major methodological
problems due to the lack of sufficiently large time series
• Latin America and the Caribbean: contribution of
and sample sizes and sufficiently disaggregated indica-
broadband to GDP growth;
tors. First, the lack of availability of large sample sizes
• Brazil: the impact of broadband on employment for the selected cases impacts the robustness of the
and economic growth;49 estimates. In the case of developed countries, for ex-
• Chile: the impact of broadband on employment ample, Katz et al. (2010a) were able to rely on over 424
and economic growth;50 observations regarding economic, control and broad-
band variables for German counties. The availability of
• India: the impact of broadband on employment this many observations is rare in the case in the devel-
and economic growth; oping world. Accordingly, the results presented in this
• Malaysia: the impact of broadband on economic section must be prefaced with a word of caution. Sam-
growth; and ple sizes lower than 30 observations limit the robust-
ness of estimates. In only three of the nine models
• Saudi Arabia: the impact of broadband on em- presented below (economic growth for Latin America
ployment. and economic growth and employment creation mod-
els for Chile), the number of observations exceeded this
In all of these case studies, the analysis was con- threshold.
ducted using econometric modeling similar to the one
utilized for the studies conducted by researchers affi- Secondly, the lack of a sufficiently large time series
liated with the World Bank, MIT, and the Brookings In- prevents the construction of models based on simulta-
stitution. This approach for measuring the impact of neous equations, such as the one developed by Kou-
36 Chapter 2
troumpis (2009). As a result, it is difficult to control for 2.4.2 Brazil: the impact of broadband on
endogeneity. The only approach that could be reliably economic growth and employment
used for this issue was a cross-lagged regression. The
authors recognize that this methodology has some limi- To estimate the economic impact of broadband in
tations regarding endogeneity control. Brazil, an attempt was made to replicate the analysis
conducted at the country level for Germany in the con-
Thirdly, in light of the fact that the contribution of text of a developing country. However, the lack of dis-
broadband to GDP growth increases with penetration, aggregated data prevented the specification of a model
it is important to note that the economic effects of with robust estimates. As a result, the model built to
broadband in developing countries could be quite li- estimate the impact of broadband on Brazilian GDP
mited, given the low levels of broadband adoption in growth relied on a database for the 27 states of Brazil.58
these countries prior to 2008.51
The coefficient for broadband penetration rate of
2.4.1 Latin America: contribution to the change is not statistically significant, which demon-
Continent economic growth strates that its impact is not uniform across all Brazilian
states. However, the author believes the estimation is
valid because it is consistent with the results of similar
In a prior paper, this author presented a simple re- studies (e.g. Koutroumpis, 2009). Thus, while recogniz-
gression model linking Latin American broadband pe- ing the model’s limitations, it is expected that in Brazil,
netration and economic development.52 In this case, when controlling for education level and departing
this author attempted to advance the research by de- point of economic development, an increase of 1 per
veloping a multi-variate equation based on the endo- cent in broadband penetration could contribute 0.008
genous growth model53. This model has been used by percentage points to GDP growth.
several authors to assess the impact of broadband and
other telecommunications technologies on a country's In addition to estimating the impact of broadband
economic growth.54 on GDP growth, this author also studied the impact of
broadband on Brazilian employment. In this case, a
According to the model results55, an increment of cross-sectional sample similar to that one utilized by
1 per cent in broadband service penetration could gen- Katz et al. (2010a) for Germany was constructed, where
erate an additional 0.0158 to the GDP growth of the the dependent variable was the rate of change of un-
region.56 This estimate was used to calculate the contri- employment. According to the model results, a change
bution of broadband to the growth of GDP in Latin of 10 per cent in the broadband penetration could re-
America and the Caribbean. Based on IMF projections, duce the unemployment rate by 0.06 percentage points.
the economic growth in the region between 2009 and It is estimated that Brazilian unemployment in 2009
2010 will be 3.4 per cent, resulting in an aggregate GDP was 7.7 per cent, and that by 2010, it would fall to 7.4
of US 3,925 billion. The model specified above indicates per cent59, which would imply a reduction of 3.89 per
that the elasticity of broadband with regard to GDP cent. According to these estimates, if broadband pene-
growth is 0.0158 per cent.57 In light of the possibility of tration were to grow by 20 per cent, the impact on the
sample bias and given the lack of time series, it is advis- rate of change of unemployment would be a further
able to define a reasonable elasticity range. The author 0.138 per cent. Thus we would expect such a deploy-
considers appropriate to define a range from the esti- ment of broadband to drive a rate of decrease of un-
mate derived in this study to the one derived by Kou- employment from the original 3.89 per cent to 4.03 per
troumpis (2009) for OECD countries with broadband cent.
penetration lower than 20 per cent: 0.008 per cent.
Thus, by relying on both estimates and considering the 2.4.3 Chile: the impact of broadband on
growth of broadband in the region (37 per cent per an- employment and economic growth
num), one can conclude that the technology contri-
buted between USD 6.7 billion to USD 14.3 billion. This The availability of an extensive database of quarter-
economic impact includes direct effects from the tele- ly data for Chile allowed the development of a panel of
communications industry and indirect spill-overs. time series data for each of Chile's administrative re-
gions from 2001 until the fourth quarter of 2009. A
model including level of economic activity and broad-
band penetration was specified.60 In addition, an alter-
Chapter 2 37
native model was proposed which aimed to study the crease in penetration would result in an increase of
possible effects of human capital and specialization on 0.3128 percentage points in regional GDP.
the level of employment. According to the methodolo-
gy used, other specific characteristics of each region The results of this model should be carefully inter-
that could have an impact on the labour market are preted because of the potential bias. It is possible that
controlled by the fixed effects of the panel data. the causal casual relationship between the dependent
variable (GDP growth 2007-2008) and the independent
The economic activity variable remained unaltered variable, (broadband penetration growth 2007-2008)63
between the two specifications; in both cases, it was runs in both directions, which would yield biased and
significant and positive. The coefficient of broadband inconsistent estimates of the structural parameters.
penetration is significant61 and positive in both specifi- This endogeneity problem seems to cause a strong up-
cations. The small variation between the two specifica- wards bias, producing a high coefficient in comparison
tions suggests the robustness of the following to those of other studies and prior models.
conclusion: an increase in 1 percentage point in broad-
band penetration would contribute nearly 0.18 percen- In conclusion, while the econometric models of the
tage points to the employment rate. Today, the Chilean impact of broadband on Indian employment have
workforce comprises 6,500,000 individuals, which yielded strong estimations, the one focused on under-
translates to a 93 per cent employment rate. It is esti- standing the contribution of the technology to GDP
mated that broadband deployment, which reached a growth has to be discarded until better data sets are
penetration rate of 9.78 per cent, contributed 1.76 per- available.
centage points to the employment rate; this amounts
to the creation of 114,426 direct and indirect jobs. 2.4.5 Malaysia: the contribution of
broadband to economic growth
In addition to estimating the impact of broadband
on job creation in Chile, this author estimated its con- This case study estimates the contribution of
tribution to the country's GDP growth. Broadband pe- broadband to GDP growth in Malaysia.64 The indepen-
netration was found to be statistically significant and dent variable, growth in broadband penetration per
with the expected equation sign in terms of contribut- household, has a statistically significant coefficient with
ing to GDP growth in Chile. Accordingly, a 10 per cent the expected positive sign. It indicates that an increase
increase in broadband penetration would result in an of 10 per cent in broadband penetration would contri-
increase of 0.09 percentage points in regional GDP. bute 0.7 percentage points to regional GDP growth.
This result has to be put in the context of an economy
2.4.4 India: the impact of broadband on in which the service sector contributes more than 55
employment and economic growth per cent to the GDP. It should be noted that this estima-
tion, based on penetration per household, is lower than
In the case of India, a data availability problem the 1.78 per cent contribution to GDP growth per 10
similar to the one encountered for Brazil was identified. per cent of broadband penetration per household es-
Therefore, the analysis had to be conducted at an ag- timated for Malaysia by McKinsey and Co Inc (2009).65
gregate level, which impacted the robustness of esti-
mates. In order to estimate the impact of broadband 2.4.6 Saudi Arabia: the impact of broadband
on Indian employment, a database containing informa- on employment
tion for India's 20 telecommunications circles was com-
piled.62 According to the model specified on this data, To estimate the impact of broadband on Saudi em-
an increase in 1 percentage point in broadband pene- ployment, a database containing information for its
tration growth results in 0.028 percentage points in- thirteen provinces was compiled. 66 The control va-
crease in the employment rate. riables (the amount of institutions authorized to pro-
vide health services and percentage of households with
Broadband’s contribution to India’s GDP growth public provisioning of potable water) had statistically
was also estimated. In this model, broadband penetra- significant coefficients with positive signs.
tion was found to be statistically significant and exhi-
bited the expected positive sign. According to the The independent variables (the change in broad-
coefficient of broadband penetration, a 10 per cent in- band penetration, change in the number of domestic
tourism trips, change in the number of projects publicly
38 Chapter 2
funded, and change in the value of publicly funded vestment costs calculation. The first is the conventional
projects) had a negative impact on the level of unem- engineering approach, which is based on estimating the
ployment. It was found that a 10 per cent increase in coverage requirements, and then using those estimates
broadband penetration decreases the change in the to project the necessary investment to fulfill them. This
unemployment rate by 2.4 percentage points. This is the methodology followed for the investment estima-
coefficient seems high in comparison to those found in tion of Australia's National Broadband Plan. The second
studies for other countries and it should be noted that approach, labeled "top-down", begins by first deter-
because of lack of reliable data, a human capital varia- mining the amount of financial resources to be invested
ble could not be included. Thus the broadband variable and then sizing the amount of coverage that will be
could be capturing the effect of the missing human cap- achieved given those resources. To some degree, this is
ital variable. the approach that has been followed in the United
States with the Broadband Technology Opportunity
2.5 Analysis of Case Study Results Program. Since this Program was part of the stimulus
package passed by the US Congress, specific plans for
The results of the above analyses validate the posi- the construction of broadband networks were not spe-
tive contribution of broadband to GDP growth for de- cified in the relevant legislation. Instead, the funds
veloping countries and regions. While limited in the available for broadband deployment are assigned
number of countries studied, these analyses safely con- through grants, with the specific construction plans de-
firm that broadband has a directionally positive eco- fined as the grants are given out. The third approach
nomic impact. While it is not optimal to compare does not estimate an investment amount. Labeled the
model results across geographic units, the following "public policy" framework, it defines targets, (such as
conclusions can be drawn. All studies, with the excep- coverage and speeds), but leaves the amount of in-
tion of Brazil, yielded statistically significant coefficients. vestment required unaddressed. This is the approach
However, due to data limitations, some of the country adopted in Germany's and Brazil's National Broadband
cases are based on a low number of observations Plan and, to some degree, in the United States.
which may jeopardize the consistency of estimators.
However, Koutroumpis (2009), Katz et al. (2010a), the 2.6.1 The National Broadband Plan in
cross-sectional Latin American model and the Chilean Germany
models exhibit higher levels of reliability.
According to estimates based on publicly available
The results of the analyses also validate the positive data published in the German National Broadband
contribution of broadband on employment creation for Strategy, of all 39.7 million German households 67 ,
less developed countries and regions. In this case, all 39 million – approximately 98 per cent of all house-
prior research, as well as the results of this study, indi- holds – have access to some type of broadband tech-
cates that broadband has a positive impact on job crea- nology. Of these households, 36.7 million have DSL
tion. In particular, the German study and the Chilean capability, 22.0 million are passed by cable TV networks
case, which are based on extensive datasets, yield sta- (and therefore are potentially connected via a cable
tistically significant positive coefficients. The other cas- modem), and 730,000 can access the Internet via fixed
es (India, Brazil, and Saudi Arabia) have also yielded wireless or satellite technology. Furthermore, it is esti-
statistically significant coefficients for the explanatory mated that 10.9 million households are able to connect
variable (broadband penetration) with sensible signs – to the Internet via VDSL, while only 240,000 household
positive when the independent variable is employment connections could be based on FTTH. These estimates
and negative when it is unemployment. are based on announcements of fibre optics technology
being deployed by telecommunications operators and
2.6 Estimation of Broadband Gaps municipal networks.
and Investment Requirement
In addition to improving coverage, Germany plans
The previous section provided an assessment of to increase the access speed of residential broadband
the economic returns, both in terms of growth and users. As of 2009, the National Broadband Strategy re-
employment creation, of broadband deployment. It is ports that 98 percent of all German households have
obvious that the construction of the infrastructure access to broadband Internet with transmission rates at
comes at a cost, which needs to be calculated. Policy a minimum of 384 Kbps, and 92 percent of households
makers have taken three approaches to the issue of in- are served by lines with speeds of at least 1 Mbit/s.
Chapter 2 39
About 2.8 million households are in “grey spots”, mean- • Upgrade to VDSL: It is assumed that the remaining
ing that they have broadband access of between 384 50 percent of households will be upgraded from
Kbps and 1 Mbit/s. The remaining "white spots", which DSL to VDSL.
comprise 730,000 households, or two percent of all
German households, are located in areas with low Longer term "ultra-broadband" aspirations, as
population densities or near the outer boundaries of mentioned in other government reports69, foresee the
already connected areas. completion of a national ultra-broadband network in-
frastructure by 2020. While this aim has not been de-
The Federal Government of Germany has agreed fined in terms of clear policy objectives in the National
on the following two broadband strategy targets: Broadband Strategy, one can assume a set of "aspira-
tional" targets for 2020:
• Nationwide capable broadband access (1 Mbit/s)
no later than the end of 2010, and • Deploy FTTH to 50 percent of households;
• The provision of access to a broadband connection • Deploy VDSL to the next 30 percent of households;
of at least 50 Mbit/s to 75 per cent of German and
households by 2014, specifically with the goal that
• Offer broadband services under 50 Mbit/s to the
such access lines should be available as soon as
remaining 20 per cent of the population.
possible throughout the country.68
The action required to meet these targets is to up-
There are four deployment actions required to
grade an additional 25 percent of households to FTTH,
meet these targets. First, the 730,000 unserved house-
which, when added to the 25 percent upgraded by
holds (white spots) will be covered by a mix of wireless
2014, reaches a total 50 percent.
and wireline technology. The second action will be to
upgrade the 2.8 million "grey spot" households to
The calculation of total investment required to
broadband access of at least 1 Mbit/s. The third target
meet these targets has been conducted for each objec-
of the National Broadband Strategy is that 75 percent
tive by relying on costs per line. The combined wireline
of households will have broadband access of at least
and wireless costs required to cover the unserved
50 Mbit/s by 2014, with higher bandwidths to follow.
households will total EUR 924 million, which is broken
This objective is structured in two stages:
down in Table 2.8.
• Upgrade to FTTH: Given that VDSL technology dep-
loyed in dense cities is limited to 50 Mbit/s, it is as- The calculation of VDSL and FTTH deployment re-
sumed that 9.92 million households (representing lies on cost per line data gathered from a number of
25 percent of the total number of German house- sources.70 The cost calculation relies on figures that as-
holds) will be upgraded to FTTH. Since the current sume increasing cost per household as deployment of
number of households served by VDSL is 10.9 mil- the technology network increases.71 Based on these
lion and given that these households are located in figures and the number of lines to be deployed, the
the major 50 German cities, it is assumed that the investment required to meet the FTTH target is
majority of them will be migrating from VDSL to EUR 12,236 million, and the investment required to
FTTH. meet the VDSL target is EUR 6,747 million. The total in-
vestment required to fulfill the 2014 National Broad-
band Strategy will be EUR 20,243 million (see Table 2.9)
Table 2.8: Investment required to cover unserved households

Technology Number of households Cost per line Total Investment
EUR (EUR in millions)
DSL 250,000 1,200 300
Wireless 480,000 1,300 624
Total 730,000 924
Source: Katz et al. (2010a)
40 Chapter 2
As a result, the incremental investment required to cational or device accessibility reasons. Pursuant to this
meet the FTTH target of 50 percent households served assumption and considering the 40 per cent growth in
by 2020 will be EUR 15,690 million.72 broadband that has taken place since 2008, the last
year that household penetration data were collected,
2.6.2 The National Broadband Plan in Brazil we estimate that broadband coverage amounts to ap-
proximately 49 per cent of households.
Broadband infrastructure in Brazil is still underde-
veloped. There are 11,489,000 broadband lines in the Brazil's National Broadband Plan does not define
country, which represent 7.1 per cent penetration per coverage targets. For the purposes of this estimate, it is
person or 18.88 per cent per household73. Broadband stipulated that the country will achieve universal access
deployment is uneven, ranging from 52 per cent of of 1 Mbit/s. With this in mind, it is necessary to esti-
households in states like the Federal District to 0.30 per mate how many existing lines need to be upgraded to
cent of households in Roraima. In addition, service 1 Mbit/s and how many lines need to be deployed to
download speeds exhibit significant shortfalls (see Ta- achieve universal access. Assuming that current cover-
ble 2.10). age is 49 per cent of households and that 57 per cent of
total lines are under 1 Mbit/s, it is estimated that
While no public information is available regarding 16,260,000 lines would need to be upgraded. In addi-
broadband coverage (e.g. households being passed by tion, assuming that coverage reaches 49 per cent of
broadband infrastructure), it is assumed that the de- households, the supply gap would amount to
mand gap amounts to 20 per cent. This means that in 26,469,000 households. In sum, the fulfillment of the
addition to the population that currently subscribes to stipulated target will require upgrading 16,260,000 lines
broadband, an additional 20 per cent of households and deploying 29,470,000 additional lines.
can purchase service but do not due to economic, edu-
Table 2.9: Total Investment required to achieve objectives for 2014

Target Amount (EUR in millions)
Address the unserved "white spots" 924

Upgrade the "grey spots" 336
Deploy FTTH to 25% of households 12,236
Deploy VDSL to 50% of households 6,747
Total 20,243
Source: Katz et al. (2010a)
Table 2.10: Brazil: Breakdown of download speeds (2009)

Speed Percent of lines
128 kbps-255 kbps 9.5 %

256 kbps – 511 kbps 21.2 %
512 kbps – 0.99 kbps 26.6 %
1 Mbit/s – 1.99 Mbit/s 24.3 %
> 2 Mbit/s 18.5 %
Source: Cisco/IDC (2010)
Chapter 2 41
The calculation of the total investment required has adoption of broadband by certain social groups and
been conducted for each program (upgrades and dep- firms that may not be naturally inclined to adopt the
loyment of new lines) by relying on costs per line. It is technology. This section is based on a review of best
estimated that the cost per upgraded line is USD 300, practices in countries that have succeeded in reaching a
while the cost to deploy a new broadband line would high level of performance in the development of their
average USD 450.74 As such, the combined wireline and broadband sector. In particular, best practices in the
wireless costs required to cover the unserved house- broadband policy domain will be reviewed for certain
holds are summarized in Table 2.11. European countries (Germany, Sweden, Netherlands),
Asia (Republic of Korea, Japan, Singapore), and Latin
As a result, in order to achieve universal access to America (Chile and Brazil).
broadband and to upgrade lines providing speeds of
under 1 Mbit/s to lines providing speeds of 1 Mbit/s, 2.7.1 National broadband planning as a tool
Brazil will require an investment of USD 18 billion.
In recent years, several countries in the developed
2.6.3 Conclusion and developing worlds have formulated national
broadband plans; these plans outline both coverage
This section presented a methodology for estimat- and service targets, as well as policies, with the purpose
ing investment requirements to meet deployment tar- of achieving near or complete universal broadband ser-
gets as stipulated in national broadband programs. By vice. National broadband plans touch upon four broad
applying the methodology to the German and Brazilian policy areas:
cases, it was possible to gauge the significant funding
• The assignment of government assets necessary
requirements of these plans. Assuming that a large por-
to reach universal broadband service coverage:
tion of that investment will come from the private sec-
the primary focus in this policy area is spectrum al-
tor, it is pertinent to explore the policy frameworks that
location. As indicated in the previous section, wire-
will be relied upon to stimulate the funding of future
less broadband is the primary platform for reaching
deployment.
unserved and underserved geographic regions in
developed countries (also called "white" and "grey"
2.7 The Role of Public Policy and zones). It is also widely recognized that wireless
Regulation in Boosting the broadband will be the primary technology used to
Development of Broadband provide ample broadband coverage in developing
countries. By definition, wireless requires wide
We turn now to a consideration of the policy tools
spectrum bands to be able to provide broadband
necessary to promote broadband deployment and
access at adequate quality levels, which is primarily
adoption in order to realize broadband’s potential to
an issue of download speeds. In this sense, national
contribute to economic growth and the creation of jobs.
broadband plans tend to focus, in many cases, on
The policy tools required to stimulate the deployment
policies aimed at reassigning frequency bands (in
of broadband range from the formulation of national
particular, allocating the “freed” spectrum resulting
broadband plans to the enactment of competition poli-
from the digitalization of broadcasting) or searching
cies and the identification of cases where the govern-
for "white spaces" (unutilized bands) and assigning
ment should intervene in order to address specific
them to the wireless mobile communications
market failures. In addition to supply-oriented policies,
sector.
additional measures need to be enacted to promote
Table 2.11: Investment required to fulfill targets

Program Number of house- Cost per line Total Investment
holds USD (USD)
Upgrade 16,290,000 USD 300 4,887,000,000
New deployment 29,470,000 USD 450 13,261,500,000
Total 18,148,500,000
Source: Author
42 Chapter 2
• Investment in promotion of adoption programs: plans focus on how to lower economic barriers to
primarily oriented at addressing demand gaps, entry. Relevant policy initiatives could include infra-
these programs focus on: universal service policies; structure sharing policies, which can range from
the stimulation of the adoption of broadband stipulating rules for duct, mast ,and tower sharing
through digital literacy; economic subsidies; dep- to lowering pole attachment costs (in aerial net-
loyment of public access centres; and the devel- works) to joint trenching rules. This policy area
opment of eGovernment applications in order to could even lead to potential investment by gov-
promote adoption of broadband. ernment to deploy national backbones aimed at
lowering backhaul costs for broadband wireless
• Adoption of a competition policy: based on the
players.
premise that competition among service suppliers
is the right model to stimulate broadband supply,
In addition to formulating policies in the four areas
national broadband plans, either implicitly or expli-
mentioned above, broadband plans tend to stipulate
citly, tend to define the most appropriate way to
targets to be achieved in terms of deployment, adop-
develop market competition in the supply of this
tion, and quality of service. It should be noted however,
service. This involves an endorsement of either fa-
that there still is not complete agreement among coun-
cilities-based competition (also referred to as plat-
tries about what the appropriate goals for broadband
form-based competition) between vertically-
should be (see Table 2.12)
integrated players such as the telecommunications
incumbent and the cable operator or service-based
As Table 2.12 indicates, the primary area of con-
competition (through unbundling of the telecom-
sensus around national plans is the need to achieve
munication network of the incumbent operator
universal (or near-full) penetration of broadband ser-
and the sharing of incumbent facilities). If competi-
vice, which implies the recognition of broadband as a
tion between fixed broadband suppliers does not
public good requiring full adoption by the population.
exist or is not feasible, policies could outline per-
In this context, developing countries that are at a lower
formance rules (e.g., rules related to coverage and
rate of broadband penetration than developed coun-
quality of service) that must be followed by the
tries tend to define coverage targets that, while ambi-
monopoly provider.
tious, shy away from full coverage. In terms of quality of
• Removal of any potential supply obstacles: related service (as defined by download speeds), there does
to the aforementioned belief that that competition not seem to be full agreement across countries.
among service suppliers is the right model to sti-
mulate broadband supply, national broadband
Table 2.12: Coverage and speed targets of selected National Broadband Plans
Country Coverage Targets Speed Targets
(as percent of households) for Percent Households
United States 100 % (2012) • 4 Mbit/s (100%) (2012)

• 50 Mbit/s
Germany 100 % (2014) • 1 Mbit/s (100%) (2014)
• 50 Mbit/s (75%) (2014)
Singapore 100 % (2012) • 100 Mbit/s (95%) (2012)
Australia 100 % (2012) • 12 Mbit/s (100%) (2012)
United Kingdom 100 % (2012) • 2 Mbit/s (100%) (2012)
Malaysia 75 % (2010) • (33%) 50-100 Mbit/s
• (42%) 1.5 Mbit/s
Brazil 50% of urban and 25% of rural households • 75% (512-784 kbps)
European Union 100 % (2013) • 30 Mbit/s (100%) (2020)
• 100 Mbit/s (50%) (2020)
Sources: Author with reference to National Broadband Plans of specified countries
Chapter 2 43
There is no shared conception among the plans ment. Once this vision is developed, it is critical to build
about what the minimum acceptable download speed consensus between policy makers and civil society
should be or what an appropriate "ultra-broadband" around the criticality of broadband usage. This should
target is. Part of the reason why there is not full con- be part of a public debate among all parties that have
sensus on such targets is because the stipulation of an impact on deployment and assimilation of broad-
such targets is, in many cases, based on political imper- band technology. Using this shared vision as a founda-
atives rather than substantiated on careful quantitative tion, the targets should be defined based on rigorous
analysis of costs and social and economic returns. For analysis of investment and social and economic returns,
example, national broadband plans rarely discuss the as well as policy tools. The targets provide the context
expected economic payoff of achieving universal for the development of specific projects and programs.
broadband service or the relative benefits of deploying Using the integrated vision as an overarching target de-
high speed access in certain regions of a given country. velopment goal, proactive, multi-year government
The need to ground the setting of targets on careful planning represents the next step.
technological and economic analysis is particularly im-
portant since, as shown in the previous chapter, targets Some countries embody what can be considered
have a logical impact on investment requirements. best practices in the field of national ICT (and broad-
band) planning. In the Republic of Korea, for example,
Despite the lack of agreement on targets and policy starting in 1995, the government began preparing and
tools, national broadband plans represent an initiative implementing five year plans with objectives ranging
that can have a high impact at multiple levels: from broadband universalization to becoming a global
IT leader. A significant feature of the Korean govern-
• They create awareness, both within civil society
ment-sponsored ICT planning process remains its holis-
and government entities, about the economic and
tic character.75 ICT Master Plans are conceived as tools
social importance of broadband service;
for facilitating the transition into an advanced informa-
• The plans represent a way of building consensus tion society. This implies that planning vectors include
and promoting coordination between all areas of not only the deployment of broadband infrastructure
government that may have an impact on deploy- but also address services, applications and demand
ment and utilization of broadband; promotion policies. This last point represents a critical
• National broadband plans have the potential to be- point of departure from the broadband development
come state-level policies that transcend the politi- plans in other developed countries. Planning efforts in
cal electoral cycles; and other nations tend to have a heavy focus on broadband
deployment and, while recognizing the positive spill-
• They help build accountability for plan fulfillment at overs that networks will have on other sectors, they
the highest levels of government, particularly the leave promotional efforts in these related components
executive branch. of the broadband eco-system to market forces; this ap-
proach could be labeled as "build it and they will come".
Each of these four areas will be further discussed in Contrary to this philosophy, Korean policy makers tend
sections 2.7.1.1, 2.7.1.2, 2.7.1.3, and 2.7.1.4. to use their planning tools (influenced by industrial pol-
icy considerations) to address all the components of
2.7.1.1 Creating awareness at the highest the eco-system in an inter-connected fashion, generat-
national level ing incentives for broadband adoption in the areas of
applications and services to follow through the build-up
The national broadband plan represents a valuable of broadband networks. Additionally, with support of a
policy tool for articulating a vision of why universal government research institute, the Korean Information
broadband service represents a critical societal chal- Society Development Institute (KISDI), policy makers in
lenge from an economic growth perspective. From a this country were able to develop and refine a broad-
practical standpoint, the development of such a vision band technology strategy based on rigorous economic
comprises four sequential steps. First, governments analysis.
need to publicly reaffirm the collective imperative of
deploying broadband as a means of supporting social A country with a sector-wide planning tradition
and economic development goals. This requires defin- similar to the Republic of Korea is Japan. The initial
ing a consensus around objectives and values that link push for strategic planning in the broadband area
technology adoption to economic and social develop- started in 2001, when the government developed the
44 Chapter 2
first e-Japan Strategy. The strategic planning process potential market failures in achieving universal broad-
enabled the formulation of annual priority policy pro- band deployment.
grams focused on implementing of objectives such as
the universalization of broadband. Similarly, in Sweden, Most broadband plans address the models of pri-
the Information Society for All bill led to the develop- vate and public investments according to a segmenta-
ment of the Broadband Support Program (2001-2007) tion of geographic areas. The model, popularized by the
which focused funding on deploying broadband in rural regulatory authority in the United Kingdom, Ofcom, in
and isolated areas and building a national backbone. In 2006, differentiates between "black" areas (where plat-
2007, the telecommunications regulator issued a form-based competition and good broadband service is
broadband strategy with the objective of achieving uni- expected), "gray" areas (where at least one service pro-
versal service, and finally, in November 2009, the gov- vider is expected to offer service although quality might
ernment released its National Broadband Strategy. not be consistent) and "white" areas (where service is
not available). Based on this categorization, broadband
In Estonia, the first integrated effort to create an in- national strategies, as adopted in countries such as the
formation society occurred in 1998, when the parlia- United Kingdom, Germany, Spain and Brazil, outline
ment adopted the Principles of Estonian Information principles of private competition in “black” and some
Policy. This principles and objectives set out in this bill "gray" areas while stipulating that public-private part-
were further refined by the Principles of Estonian In- nerships and/or outright government investment will
formation Policy 2004-2006, which was adopted in address the market failure in "white" zones. Numerous
2004, and the Estonian Information Society Strategy broadband plans have articulated the principle of geo-
2013, which was approved in 2006. The Estonian In- graphic segmentation, ranging from the European Un-
formation Society Strategy 2013 established the objec- ion State Aid guidelines to the National Broadband
tive that by 2013, 75 per cent of Estonian residents will Plans in Brazil, Germany and the United States. The role
be able to access the Internet, while household broad- of the government in broadband deployment will be
band penetration will amount to 70 per cent. addressed in detail in section 2.7.3.
As these examples, particularly that of the Republic In addition to defining the respective public and
of Korea, indicate, best practices in national broadband private sector roles, national broadband plans can arti-
plan formulation include the articulation of a vision; the culate the respective roles of specific government enti-
integration of broadband goals with the fulfillment of ties that may contribute either on the demand or
objectives in other areas of the ICT eco-system (applica- supply side to meet broadband penetration targets. As
tions and services); and a follow-up and continuity built such, national broadband plans serve to outline the
around the ongoing formulation of plans and programs. government responsibilities in areas as diverse as
Science & Technology (for deployment of broadband in
2.7.1.2 Coordinating policies from different support of research programs), Education (for promot-
private and government entities ing digital literacy), Health (to foster adoption of
eHealth programs), and General Administration (to
As indicated above, national broadband plans need promote eGovernment applications). For example, the
to be complemented with detailed blueprints for their National Broadband Plan of the United States spells out
implementation. These roadmaps are helpful in gene- that more and better targeted funding for research and
rating the appropriate frameworks for introducing development (R&D) can have an impact on broadband
changes in the regulatory arena. In particular, the adop- supply. As such, the plan considers making R&D tax
tion of a clear blueprint guiding broadband develop- credits permanent to stimulate development of ultra-
ment is critical in terms of defining the respective roles broadband technologies. At the same time, it proposes
of the public and private sectors and the potential con- coordinating the creation of development test-beds
struction of public-private partnerships. As mentioned with the National Science Foundation and the Depart-
in the introduction of this study, the private sector is ment of Defense.
expected to assume primary responsibility for investing
in the development of broadband. Along these lines, it 2.7.1.3 Developing state policies that go beyond
is important to determine what the right policy me- electoral cycles:
chanisms are for stimulating investment from the pri-
vate sector. Additionally, it is important to determine In addition to plan formulation and program devel-
what the role of the public sector will be in addressing opment, a related best practice in the area of national
Chapter 2 45
broadband planning has to do with continuity and dis- tional Broadband Plan was developed by the Secreta-
cipline in follow-up. Broadband plans may be more ef- riat of Strategic Affairs of the President of the Republic
fective when not subject to political imperatives or the and directly approved by the President of the country.
need to address an infrastructure-based counter- In China, strong leadership from the top has been a key
cyclical policy at times of economic crisis. If endorsed feature in China’s broadband plan development. The
by policy-makers as a primary component of the vision Ministry of Information Technology reports to the
of the country's future, national broadband plans country's State Council and is a member of the State
should become a permanent and ongoing fixture of Information Leading Group (SILG). The SILG approves
economic development. and modifies the regulatory framework and future di-
rections for the telecommunications industry. In Co-
Several countries have reached this level of per- lombia, the recently announced digital plan was
formance in broadband planning. In Chile, for example, presented to the Nation by the country President, in
the government is undertaking its third iteration of an conjunction with all members of his cabinet.
updated Digital Agenda; each version of the Digital
Agenda comprises an evaluation of results of past In some cases, governments at their highest levels
measures and the formulation of new targets and poli- extend their sector intervention beyond multi-year
cy tools. In the Republic of Korea, each plan is assessed planning by actively shaping the broadband industry
in terms of its results at the end of the planning horizon structure. In the Republic of Korea, the government in-
and the results of the assessment are fed back into the tervened in the market "in a focused and strategic
formulation of the next iteration. In that sense, ICT way"76 at several points in the development of the sec-
planning in the Republic of Korea has become the em- tor, shaping industry structure either with the purpose
bodiment of state policies that capture a strategic vi- of creating national champions, fostering export-led
sion, which in itself represents a consensus of all industries, or addressing sector sustainability. The Ko-
societal forces in the country. Similarly in countries with rean government often negotiated with the giant con-
a different political system like China, institutional cen- glomerates (called chaebols) over their participation in
tralization of broadband policy making was reinforced the broadband sector.77 Similarly, the government fos-
with government sponsored planning. Senior leader- tered the consolidation of alternative broadband ser-
ship performance reviews are tied in tangible ways to vice providers at times of financial crisis.
achieving detailed annual planning targets that specify
network capacity expansion, coverage, penetration, In another example, the Brazilian executive led a
and quality standards. process aimed at the creation of a national telecom-
munications champion by promoting the merger of two
2.7.1.4 Building ownership and accountability of of the three major regional local exchange carriers, Bra-
the executive branch sil Telecom and Oi, into a single Brazilian-owned com-
pany. This required the modification of the original
Complementing multi-year planning and discip- Telecommunications Law. The Japanese experience al-
lined follow-up, leadership at the highest levels of gov- so represents an example of a fine-tuned combination
ernment in the promotion and oversight of broadband of top-down sector planning with the creation of a set
policy appears to be another best practice. This places of incentives to stimulate facilities-based competition.
responsibility for steering the development of the While not explicit, the Japanese government has con-
broadband sector squarely in the hands of the Presi- stantly adapted the regulatory framework to facilitate
dent. In doing so, the Executive Branch can act as a the moderate consolidation of the broadband sector in
coordinator among government entities and foster a order to build a competitively sustainable regime.
single national objective to be followed. Broadband
deployment and penetration is the result of the com- 2.7.2 Competition policies to stimulate
bined intervention of many government entities, which infrastructure investment
requires a higher coordinating figure to make sure all
departments proceed according to the same guide- Recognizing that the private sector has primary re-
lines. In addition, by placing the fulfillment of national sponsibility78 for funding broadband network deploy-
broadband objectives within the realm of the executive ment, policy mechanisms need to define what the
branch, the government conveys to the public and pri- appropriate incentives are to promote private sector
vate sectors the importance that broadband holds for investment. In that regard, this section focuses on ar-
the future of the country. For example, in Brazil, the Na- ticulating the appropriateness of platform-based com-
46 Chapter 2
petitive models. It proceeds first by reviewing the main (such as product innovation), service-based competi-
tenets of platform-based competitive models and then tion is not as effective in fostering infrastructure in-
provides examples of countries that have implemented vestment. Owing to the strategic behavior of vertically-
such regulatory frameworks. While endorsing this integrated operators, wholesale access negatively af-
model, it is agreed that some situations might prompt fects these operators’ rate of investment and their
governments to define alternative competition policies, rhythm of product innovation tends to decline. This is
around service-based models. what economic theorists refer to as the 'inverted U' be-
haviour80, which means that, in determining asymme-
The development of facilities-based competition, trical regulation over an incumbent operator (e.g. the
also labeled inter-platform or intermodal competition, obligation of wholesale access), there is an optimal lev-
is one of the major overarching objectives of the dere- el of competition that encourages innovation and in-
gulation of the telecommunications industry. This mod- vestment. Beyond that point, the level of innovation
el is based on competition between vertically- tends to decline because it does not hold strategic val-
integrated operators that manage their own network ue for the integrated operator to share with its compet-
infrastructures and have sufficient stand-alone capacity itors any innovation capable of generating competitive
for investment and innovation. advantage. The implications of this point are funda-
mental. First, if the regulatory obligations of providing
The classic example of inter-platform competition wholesale access reach beyond an optimal level, they
is that of the cable TV operator that supplies services can have negative social and macroeconomic conse-
such as audiovisual content distribution, broadband quences in terms of limited broadband infrastructure
access, and telephone services in direct competition investment and product innovation. Second, if the new
with the telecommunications operator, which supplies entrants do not “climb up” the investment ladder, the
the same range of services79. The benefits of this model competition model must be reconsidered. This is why
include the possibility of multidimensional competitive the determination of the appropriate competitive
dynamics (prices, services, and user service quality), model is critical for the broadband industry's future de-
while stimulating each operator to increase its level of velopment. An examination of the industry structure
investment (and, consequently, innovation) in its own (not only the existence of cable, but also of an inde-
network. The arguments against this modal suggest pendent wireless player) is an important step in this de-
that insofar as it typically involves only a few firms, in- termination.
ter-platform competition, does not generate sufficient
static efficiencies. In other words, it can lead to tacit Two caveats need to be made at this point. First, a
collusion between players, with the resulting sub- temporary stage of service-based competition is cer-
optimization of prices for end consumers. tainly better than no competition at all. Service-based
competition models could work as temporary boosters
Inter-platform competition stands in contrast to of broadband penetration, as the European experience
service-based competition, which is defined as the indicates. Second, since in general inter-platform com-
model where industry players without infrastructure petition is the best model to promote economically-
deliver services to the market by leasing capacity from sustainable broadband sectors, some countries with no
an incumbent network operator at a regulated whole- cable presence might have to consider a mixed model
sale price. By gaining access to the dominant operator's where service-level features are combined with a wire-
infrastructure at a regulated wholesale price or through line versus wireless platform.
sharing agreements, new entrants can enter the market
and set themselves up as viable competitors. Once this These two competition models assume different
occurs, the new entrant will start investing in its own policy approaches when it comes to broadband promo-
infrastructure when it reaches a certain critical mass of tion. Infrastructure-based competition is based on the
subscribers. Accordingly, infrastructure acquisition from competition between vertically-integrated operators
the wholesaler becomes the first step in the with access to non-replicable passive infrastructure (e.g.
'investment ladder'. Thus, at least conceptually, service- ducts, poles, and in-house wiring). This model recog-
based competition is a temporary stage in the transi- nizes, however, that broadband economics do not allow
tion to inter-platform competition. for full competition in all geographies and therefore de-
fines principles for state aid and public backhaul in un-
In contrast to platform-based competition, which derserved areas. On the other hand, broadband
tends to meet the objectives of dynamic efficiency service-based policies foster competition among hori-
Chapter 2 47
zontally-integrated operators which have access to but also a second mobile/landline telecommunications
wholesale resources (e.g. bitstream, radio access spec- operator and at least one mobile operator competing
trum sharing). It assumes the existence of a single net- with the landline operators on an intermodal scale.
work shared across players competing on the basis of
service and pricing. Because of the enormous econo- Those who propose service-based competition ar-
mies of scale resident in broadband access, a service- gue that the countries mentioned above represent the
based policy might lead to the emergence of a single exception to the rule of building viable competition. In-
transport player that can achieve national coverage. In deed, the argument is based on the fact that in these
other words, whether the chosen broadband competi- countries, the position of cable TV is quite developed
tion model is infrastructure-based or service-based, the and has created a natural inroad for the creation of in-
economics of the technology will result in a single op- ter-platform competition. Yet, it is interesting to note
erator (either supported by the State or a nationally that while this is true, the regulatory authorities in
deployed transport player) serving the rural and iso- these countries did not adopt the inter-platform com-
lated regions of a country. petition model by building on cable TV’s position, but
rather adopted such a model after experimenting with
Infrastructure-based competition requires the exis- service-competition models and identifying its limita-
tence of two or more nationally-deployed players, tions. Accordingly, beyond any structural determinism
Ideally, such a model should comprise a national tele- (based on the axiom "service-based competition was
communications carrier, a single (or regionally focused) never given any consideration because there is a strong
cable TV operator, and a stand-alone "pure play" wire- cable industry") or an orderly progression in the 'in-
less carrier. Table 2.13 presents information from five vestment ladder' process, the countries that have
countries around the world that have implemented adopted the platform-competition model have done so
such a model based on such an industry structure. on the basis of experimentation and testing, which led
them to recognize its advantages. All the regulatory au-
The industry structure in the countries depicted in thorities of these countries tried initially to implement
Table 2.13 not only includes a facilities-based telecom- a service-competition model.
munications operator and one (or more) cable operator,
Table 2.13: Selected Countries: Broadband Market Shares(*) (1Q2010)
United States Netherlands Republic of Chile Canada

Korea
Broadband • Telco 1 (20.3%) • Telco 1 (41.7%) • Telco 1 (42.7%) • Telco 1 (44.3%) • Telco 1 (20.3%)
• Telco 2 (11.8%) • Cable (36.6%) • Telco 2 (23.4%) • Cable (38.5%) • Cable (16.1%)
• Cable (35.5%) • Telco 3 (15.6%) • Telco 2 (1.2%) • Telco 2 (11.1%)
• Telco 3 (6.4%)
Content Dis- • Cable (39.9%) • Cable (68.7%) • Cable (85%) • Cable (51.7%) • Telco 1 (17.1%)
tribution • Telco 1 (4.49%) • Telco 1 (14%) • Telco 1 (7.3%) • Telco 1 (17.0%) • Cable (20.0%)
• Telco 2 (3.25%) • Telco 2 (4.9%) • Telco 3 (17.5%) • Telco 2 (1.7%)
Companies • Telco 1: ATT • Telco 1: KPN • Telco 1: KT • Telco 1: • Telco 1: Bell
• Telco 2: Veri- • Telco 2: Voda- • Telco 2: SK / Telefonica Canada
zon fone Hanaro • Telco 2: ENTEL • Telco 2: Telus
• Telco 3: T- • Telco 3: T- • Telco 3: LG • Telco 3: • Cable: Rogers
Mobile Mobile Telmex / Claro
• Telco 4: Sprint • Cable: UPC, • Cable: VTR
• Cable: Com- Ziggo
cast, Cablevi-
sion and TWC
(*) Number in brackets depicts market share
Sources: Author, based on national regulatory agencies and telecom and cable operator reports
48 Chapter 2
The industry's initial response to these regulatory countries tend to have a high level of penetration. Can-
intentions included the entry of a large number of vir- ada, while being in 11th position within OECD countries,
tual competitors and a reduction in prices but at the has a broadband penetration of 82 per cent of house-
same time, a deceleration of investment (as in the holds. The United States, which holds the 15th in terms
United States and Chile).81 At the same time, the indus- of OECD broadband ranking position among OECD
try started a process of consolidation giving rise to countries, has a penetration rate in excess of 80 per
players who competed in every sector of the industry cent in 35 states comprising 85 per cent of the coun-
(primarily, telephony, broadband, mobile and content try's population. Similarly, Chile exhibits the highest
distribution), demonstrating the actual viability of inter- broadband penetration among its Latin American peers.
platform competition.82 The consolidation of the cable Second, with respect to pricing, the US, Canada and
and mobile industry in the Netherlands is one example Netherlands are within the mid-range of OECD coun-
of a phenomenon that can also be seen in the mobile tries; while the Republic of Korea has high minimum
industry in Chile, the telecommunications and cable in- broadband prices, these prices do not appear to have
dustry in the United States and the broadband sector in materially impacted the level of adoption relative to
Korea. other OECD countries. Finally, with the exception of the
United States and Canada, access speeds in the other
In view of this consolidation, the national regulator countries are among the highest of their peer groups.
in those countries recognized that the process for creat-
ing strong competitors with good financial health and a This anomaly can be explained by the peculiarities
capacity for maintaining a certain rate of innovation of the two North American countries. While as adver-
and investment had to do less with an 'investment lad- tised download speed, the US lags other OECD coun-
der' and more with the natural "creative destruction" tries, both telecommunications incumbents and cable
associated with competition and returns to scale that operators offer services in excess of 20 Mbit/s, while
characterize a capital-intensive industry such as tele- deployment of fiber and DOCSIS 3.0 is well ahead than
communications. At the present time, the platform- most service based competition countries. Canada's
competition model has finally been adopted by the delay in introducing higher speed offerings and deploy-
regulatory authorities in all of these countries. In short, ing fibre is explained by the specific failed privatization
the adoption of the inter-platform competition model of Bell Canada which delayed any infrastructure up-
arises not so much from structural determinism as from grade plans of this incumbent83.
the combination of the regulator's pragmatism and in-
dustry consolidation processes, resulting in an industry The successful experience of infrastructure-based
model that is both viable and balanced and that ulti- competition models needs to be considered as a model
mately allows for achieving universal broadband policy in the context of country specific circumstances. For ex-
targets. ample, it is very likely that in countries where the indus-
try structure comprises a single full service-based
The question that still needs to be asked at the pre- provider and a stand-alone wireless player, an infra-
sent time is to what extent have these countries sacri- structure-based model could likely result in market fail-
ficed static efficiencies in favour of consolidation? In ures (e.g. large broadband unserved areas). In this
other words, are we witnessing a situation where the situation, regulators need to pragmatically recognize
joint dominance of a few operators is leading to market that wholesale obligations of access on the telecom-
failures in terms of broadband development? Again, munications operator could be the more appropriate
the study of the above cases shows that this is not the approach to stimulate entry of new players and boost a
case. The following Table indicates that in the transition competitive regime. Alternatively, if the presence of a
towards the inter-platform competition models, the cable TV operator is limited to certain regions of the
end user interest in innovation and low prices has been country (as it is so often the case), a hybrid model that
preserved. combines infrastructure-based competition in selected
geographies with service-based competition in others
The table illustrates that in countries in which the might be the most appropriate approach. In fact, the
inter-platform competition model was adopted, there latter approach, labelled "geographic segmentation"
were no noticeable market failures with regard to the has been implemented in many developed countries
development of broadband. First, the four developed around the world.
Chapter 2 49
Table 2.14: Performance metrics of platform-based competition countries (December 2009)

Metrics United States Netherlands Republic of Chile(*) Canada
Korea
Broadband Population 26.4 % 37.1 % 33.5 % 10.4 % 29.59 %

penetra-
tion Households 63.5 % 77 % 95.9% 31.5% 82 %
Relative position OECD:15 OECD: 1 OECD: 5 LATAM: 1 OECD: 11
Broadband Minimal subs- $ 19.99 $ 20.83 $ 27.48 $ 30.47 $ 22.49
pricing cription ($ PPP)
Relative position OECD: 14 OECD: 16 OECD: 29 LATAM: 2 OECD: 22
Average Advertised down- 14.3 32.8 100.0 1.5 19.6
download load speed
speed (Mbit/s)
Relative position OECD: 23 OECD: 5 OECD: 4 LATAM: 1 OECD: 15
Fibre as a percentage of broad- 4.9 % 11.3 % 48.8 % 0% 0%
band accesses
(*) Note: While Chile is an OECD country since May 2010, this author considers it more pertinent to evaluate it against its Latin
American neighbours.
Sources: Author, based on data from OECD and National Regulatory Authorities
2.7.3 Role of government intervention in According to the geographic segmentation prin-

promoting broadband deployment ciple, determining where government involvement is
necessary is the first policy decision. Communities in a
Should the government actively intervene in the specific country need to be divided into one of three
development of broadband? The role of government in groups: those that are, or can be, served by market
promoting the deployment of broadband can be in- forces; those that can become self-sustaining if they are
ferred from the paradigms governing the application of given assistance with initial investment; and those that
universal service policies to wireline communications. cannot become self-sustaining and require ongoing
Nevertheless, the broadband challenge might require funding.
new types of government intervention.
There are two potential routes that governments
While agreeing that private sector investment is can take in order to address this particular market fail-
the primary funding of broadband development, one ure. The first is to directly enter the unserved regions as
should recognize that, in some cases, broadband mar- a service provider. The second approach is to generate
kets are not sufficiently developed to offer sound finan- the necessary stimuli in order to render the market
cial investments for carriers. If one assumes that the more attractive to private sector investment. In general,
government needs to address this potential market state-owned facilities are the less desirable option.
failure, the question remains as to what is the best way They tend to be less innovative, lack checks and bal-
for the state to intervene. It is initially assumed that pri- ances, require more regulation (especially to enforce
vate sector investment tends to gravitate to areas open access), and may have unintended consequences
where demand and demographic density guarantee an for utility behaviour (e.g., pricing distortions, "erosion
appropriate rate of return (see Table 2.15). of public good" syndrome84, etc.). Some of these risks
will be addressed below.
50 Chapter 2
Table 2.15: Market structure and demand characteristics

MARKET STRUCTURE
More than 3 2-3 operators One operator No operator
operators
Dense urban areas

HIGH
DENSITY AND SIZE OF DEMAND
with high business and

residential density
Urban areas/towns
MEDIUM with primarily
residential density
Rural areas with
LOW sparse residential
density
VERY Rural areas with very
LOW low density
Source: Author͘
If the generation of appropriate incentives to ease largest cost item. In wireless broadband networks, the
the burden of private investment is the more suitable primary cost category is backhaul infrastructure.85
approach, how can those areas of stimuli be deter-
mined? A sustainable broadband business is predicated Government intervention can render a private sec-
on the number of potential subscribers, the average tor business case sustainable by taking several initia-
revenue to be derived per user, the capital investment tives that positively impact the investment model. First,
required to enter the market, and its recurring operat- governments can put in place mechanisms in order to
ing expenses. In this context, a broadband business reach the level of critical mass that makes entering the
case faces two structural market challenges (or "choke market a worthwhile venture for providers. It can do
points") and two strategic and/or operational con- this directly by adding its own demand to the natural
straints. To begin, the broadband market in a small market, or indirectly by subsidizing subscribers to make
community may be too small. If primary demand is not prices more affordable. If demand is low because there
sufficient, even if a company is a monopoly and com- is little interest or too few potential adopters, the for-
pletely controls the market, network deployment may mer is probably the best the course of action. If the
not be profitable. The demand challenge has to do with area is too poor to afford broadband at prices sustaina-
building critical mass and, consequently, leveraging the ble to providers, the latter strategy may be the best
industry economies of scale. While larger company size course of action. Government can also help lower the
does not necessarily lead to lower costs, companies capital expenditures in the targeted area by providing
that have higher market share in the communities tend low-cost real estate for central facilities. Alternatively, it
to have lower unit costs. can provide grants to fund capital investments or reduc-
ing the costs of obtaining rights of way and/or spec-
Second, investment in equipment may be too high trum access. Some of these policy tools are reviewed
relative to operating profits. This leads to lengthy hori- below.
zons for a positive return on the investment, or, in other
words, puts a heavy burden on businesses in the short Bundled demand
run. Strategically, businesses can also face challenges if
a low market share in a structurally small market nega- Generally, the best way to induce private invest-
tively affects revenue streams. Thus, because of comment in broadband infrastructure is to “bundle de-
petition, a large investment may not have a profitable mand”. The government does not need to artificially
return unless a business is able to capture a sufficient intervene in the market; it can act as an anchor user to
share of demand. The capital expenditure structural guarantee revenues during the ramp-up phase of
challenge differs according to the type of network: in broadband installation. Local governments can pro-
fixed broadband networks, construction costs are the actively coordinate demand for broadband access from
Chapter 2 51
public administration, public safety, local schools, and to regulate backhaul costs, although in general, states
health care facilities in order to create an "anchor te- do not have the capacity to do so. A way to address this
nant". Once the demand "consortium" is structured, last issue is to provide grants for capital investment,
the government negotiates a wholesale rate and long- particularly backhaul capital costs or recurring expenses.
term contract with a broadband service provider in or- These grants could take several forms: a subsidy for
der to create a flow of revenues that eases the initial purchasing backhaul services (e.g. T-1 lines) from an
economic pressure and reduces investment risk. Addi- operator or direct underwriting of government-owned
tionally, the government can stimulate demand from backhaul facilities that could offer services at a lower-
the private sector by working at the grass-roots level. than-market pricing to remote operators.
Centralized efforts such as the establishment of Broad-
band Expertise Centres and library access and demon- Government as a risk taker
strations are also helpful. Such efforts are particularly
useful to spreading broadband knowledge, conducting In the last resort, if private investment does not
training, and developing interest among organizations flow after suitable incentives are provided, govern-
that do not utilize broadband. This will be discussed in ments can act as a risk taker without resorting to public
more detail in the sections below. The Netherlands has ownership. One possibility is to subsidize the incum-
developed a number of good practices in this regard. bent telecommunications carrier and upgrade broad-
band to the “utility” status. In greenfield situations,
Subscriber subsidies governments can contract for the construction of a uni-
versal access network. This may induce strong competi-
Subscriber subsidies should be used sparingly be- tion for government contracts and lower the initial
cause of their distortion potential. However, in certain costs of the operation. Afterward, the government can
cases they can be very beneficial. As mentioned above, auction the right to operate the broadband infrastruc-
a subsidy targeted at economically-disadvantaged sub- ture to highest qualified operator. This process gives the
scribers is one of the appropriate uses of this approach. government the option of creating a monopoly for
Such a subsidy addresses the social inclusion problem wholesale-only or an open access “utility” operator. In
that faces governments that are seeking to ensure uni- effect, any loss that is sustained upfront is a one-time
versal service. Fiscal incentives are also a useful form of infrastructure subsidy much like building a highway sys-
subsidy: a reduction in taxes to small and medium en- tem.
terprises has been found to stimulate broadband adop-
tion in industries that have a strong impact on In most countries, local governments already play a
economic output. In Sweden, for example, tax incen- role in broadband deployment. In the US, there is a le-
tives are given to businesses and residential tax- payers gal framework allowing municipalities to operate a
who signed up for broadband services: 50 per cent of broadband operator in response to a failure of the pri-
the costs are deductible up to a maximum of 5000 SEK vate sector to deliver service. By 2009, there were
(or roughly USD740).86 66 municipalities that are already operating fibre net-
works and over 40 more that are planning to do so. In
Infrastructure sharing Sweden, there were 136 municipalities with fibre-based
networks in 2009. In Germany, there were 25 city net-
In order to reduce backhaul costs, infrastructure works in 2009, some of which controlled 50 per cent of
sharing (e.g., backbone and towers) should be allowed the local market (e.g., Cologne and Hamburg). Finally, in
and encouraged. Infrastructure sharing alleviates cost the Netherlands, there are currently 16 municipal fibre
pressures on competing providers. If multiple broad- projects covering most major cities (e.g., Amsterdam,
band providers are not sustainable, sharing or consoli- Rotterdam, and Almere). However, it is important to
dation may produce a broadband access “utility”. It mention here that there is no single business model
allows operators to capture economies of scale and re- driving municipal broadband networks. Municipal net-
duce investor risk, which is tantamount to lowering works can follow one of the following schemes: 1)
costs. closed networks, where the municipality directly pro-
vides retail services; 2) the municipality is a wholesaler
There are several other ways to reduce costs to to a single retail service provider; 3) the municipality
network providers in a given area. National regulators offers open access or wholesale transport to multiple
may reduce right of way or access costs (e.g. spectrum retail service providers; and 4) the municipality offers
costs or pole attachment fees). They may also attempt dark fibre.
52 Chapter 2
It should be noted that public investment in broad- ability to assume institutional responsibility. The terms
band could come at the expense of three risks: and conditions of network access might not be clearly
specified, and the regulatory authority could be over-
• First, municipal networks have the potential to
stretched. In sum, a lack of coordination and coherence
create access bottlenecks. While funding is typically
may cause deregulation and liberalization of telecom-
provided to municipalities in order to deploy infra-
munications to conflict with government re-entry into
structure in areas where infrastructure competition
the broadband market89.
is not feasible, these broadband service providers
can start behaving as commercial entities, either by
International experience is helpful in outlining the
deploying infrastructure in areas where competi-
areas of opportunity for and the risks associated with
tion was feasible or regularly refusing to provide
government intervention. The evidence above indicates
dark fibre or access to their infrastructure to com-
that the only case where government intervention is
petitors. In Sweden, for example, where funding
sustainable is when it aims to alleviate the constraints
was provided to municipalities in order to deploy
of businesses and stimulate private investment. Gov-
infrastructure in areas where infrastructure compe-
ernment intervention that aims to preempt private in-
tition was not feasible, these municipal broadband
vestment is not likely to prove sustainable (see
service providers begun to behave as commercial
Table 2.16).
entities. As the regulator noted, providers deployed
infrastructure in areas where competition was feas-
According to Table 2.16, government intervention
ible or regularly refused to provide dark fiber or
in situations where a broadband enterprise is sustaina-
access to their infrastructure to competitors87.
ble and profitable could result in the "crowding out" of
• Second, municipal networks may shift their mission private investment; this has been the case with some
from public to commercial service. In a display of municipal networks in European countries, such as
non-competitive behaviour, municipalities can post Germany and Switzerland. On the other hand, if the
broadband investment in their wholly-owned elec- broadband business is not profitable or sustainable, the
tric utility’s balance sheet to benefit from lower more appropriate form of government intervention is
borrowing costs. That has been the case with mu- the alleviation of the "choke points" or structural con-
nicipal networks in Germany and Switzerland. straints of the business case. Finally, government inter-
• Finally, even if the public service mission is not vi- vention could be conceived as appropriate in cases
olated, some municipal networks experience diffi- where, even after incentives are put in place, the pri-
culties serving their customers. This may take the vate sector would not invest.
form of operating inefficiencies (which prevent
them from showing a positive financial profile), In sum, government should intervene in broadband
cumbersome customer provisioning in a multi- and wireless deployment, but only by facilitating mar-
provider system, and/or difficulty in managing the ket forces, not by preempting them. This process re-
network and resolving service problems. That has quires strong cooperation between governments,
been the experience in the United States and Can- communities, businesses, and operators to identify
ada with some of the municipal fiber networks88. supply and demand conditions and tailor services to
unmet needs. Specifically, in the areas where broad-
In a risk profile similar to the one linked to direct band is deployed, it is important to identify the barriers
entry into local access networks, direct state invest- to consumer adoption; in the areas where there is no
ment in backbone networks may also be problematic. broadband service, it is important to identify the bar-
To begin, the government entry in the provisioning of riers to sustainable market entry. The next step would
long-haul fibre optics can be jeopardized by the lack of be to develop a plan that incentivizes private invest-
coordination between the time of policy formulation ment, for example, by promoting public-private part-
and the launch of the company, resulting in lengthier nerships, encouraging market competition, refining
delays. Furthermore, the public broadband provider supportive regulation, and modifying spectrum man-
may lack operating and business independence and the agement policies.
Chapter 2 53
Table 2.16: Options for government intervention in broadband provisioning

IS PROJECT SUSTAINABLE AND PROFITABLE?
YES NO
• Alleviate the constraints of the busi-
ness case to stimulate private invest-
IS GOVERNMENT
INTERVENING?
• Preemption ("crowding out") of private ment

YES investment (Germany, Switzerland,
• Re-creation of access bottlenecks (US)
Netherlands)
• Erosion of the public utility model (US,
Sweden)
NO • Market addresses the need of public

• Supplier of last resort
good
Source: Author͘
2.7.4 Stimulating innovation in applications tion, while high speed broadband should be availa-
and services ble to 90 per cent of the population.
• By the same year (2010), 80 per cent of the popula-
Countries that have succeeded in building a highly
tion should value ICT as a tool to address social
developed broadband sector have transitioned from
needs; this should be measured by the level of
developing policies on a sector-by-sector basis (tele-
adoption and assimilation of applications and ser-
communications, software, science and technology,
vices, particularly in the eGovernment domain.
and computing) to an integrated and comprehensive
mode of policy-making. An integrated approach to ICT • Finally, in the same year (2010), 80 per cent of the
policy development recognizes the interconnected do- population would be ICT literate in order to feel at
mains of ICT (infrastructure, demand, production, and ease accessing the Internet and computer technol-
adoption) and sectors (telecommunications, broadcast- ogies.
ing, and IT applications and devices). This integrated
policy approach has two primary dimensions. Interestingly, the goals in Japan's 2006 strategy
comprise infrastructure, digital literacy and social objec-
Outline overarching objectives for the ICT sector tives.
An integrated policy approach translates initially in- Link broadband deployment to industrial policy
to the formulation of a vision of the future of ICT for objectives
the country; this vision then guides the multi-year
planning effort. In the Republic of Korea, for example, In addition to formulating an overarching vision for
each of the multiple plans formulated by the Govern- the ICT sector, moving from a sector-specific regulatory
ment has been guided by an overarching visionary ob- policy to a comprehensive industrial policy recognizes
jective such as "reach world class ICT performance that the development of a telecommunication sector
levels by 2010" (1996-2000 First National Informatiza- and the creation of export-oriented IT services and
tion Promotion Plan), "build a knowledge-based socie- software industries have to be linked. In the Republic of
ty" (Cyber Korea 21), "development of broadband Korea, policy makers determined that meeting demand
leadership" (Broadband IT Korea Vision 2007), and domestically and leveraging the industrial power of big
"broadband convergence and ubiquitous networks" (u- conglomerates could allow the country to build an ex-
Korea Master Plan). port base in electronics, IT, and communications. Initial-
ly, however, objectives were articulated in terms of
In Japan, the government developed an overarch- meeting internal demand for an upgraded telecommu-
ing strategic policy in 2006 labeled u-Japan, which was nication infrastructure and entering the electronics
guided by three targets: arena. According to this approach to ICT sector devel-
opment, incubation of an export-oriented industry is
• Elimination of non-broadband served areas, estab-
linked to funding adoption of its products in the domes-
lishing that by the end of 2010, broadband service
tic market. A key policy objective of all Korean master
should be available to 100 per cent of the popula-
54 Chapter 2
plans has been the articulation of industrial policies need to increase the adoption of the service through
such as R&D promotion, the development and diffusion the expansion of the technological coverage. The un-
of industry standards, training of ICT resources, the derlying assumption is that by reducing the obstacles
promotion of e-Government applications, and the pro- for infrastructure investment, the digital divide chal-
vision of seed capital for infrastructure deployment. lenge would disappear. Yet, while without a doubt
The Development Fund benefits from private sector supply-side issues such as the gap in investment contri-
contributions through spectrum licensing fees, a per- bute heavily to the digital divide, demand for broad-
centage of revenues from operators, and interest earn- band services also plays a key role in explaining service
ing loans. As such, one of the fund’s primary objectives penetration. The following section identifies the causes
is to reinvest the profits of the ICT sector in the sector of the demand gap and outlines a set of policies aimed
itself. Over time, the guiding principle for the formula- at tackling these issues.
tion of policies evolved toward "building the informa-
tion society". Based on the overarching goal of 2.7.5.1 Inhibitors of broadband adoption the
developing an advanced information society, Korea broadband demand gap
formulated several successive master plans, which fea-
tured both supply and demand-side policies. Finally, For the purposes of this study, the digital demand
Korea's policies regarding broadband development gap is defined as the number of households that
were always focused on the development of an applica- choose not to purchase a subscription to broadband
tions and services sector both benefiting and acting as services even though they are served by a network. His-
a stimulus for infrastructure usage. As a result, the de- torically, this statistic has not been easy to calculate be-
velopment of broadband acted as a stimulus for the cause broadband coverage (in other words, the amount
creation of a content industry. Among the newly- of households that have the capability to access broad-
created industries, Korea counts an $8.3 billion online band services) is usually not measured by public or reg-
gaming industry, a $ 3.4 billion domestic content indus- ulatory agencies. However, the last year has seen the
try, as a well as a home-grown Internet search sector.90 development of numerous national broadband strate-
gies91 which have necessitated a thorough analysis of
With a similar objective of promoting the devel- the broadband coverage gap. For example, in the Unit-
opment of an equipment manufacturing industry, the ed States, according to the FCC, 92 per cent of all US
Ministry of Information and Communication in Japan households were capable of broadband access via ca-
set up the ICT International Competitiveness Enhance- ble modem and 82 per cent could purchase service via
ment Program in 2007 aimed at promoting Japanese DSL. In the National Broadband Plan releasedin 2010,
products and developing world markets through a col- the number of unserved or underserved housing units
laboration of industry, academia, and government. This amounted to 7,000,000. However, penetration statistics
program has been actively endorsed by the ICT manu- indicate that only 62 per cent of US households sub-
facturing sector. In addition, the development of ICT scribed to the service. Thus, 30 per cent of households
strategies has been constantly supported by large do- that had the capability of acquiring broadband access
mestic high technology companies such as Canon, Mit- chose not to subscribe.
subishi, Nintendo, Panasonic, Sony, and Toshiba.
Similarly, several Latin American countries, such as Pa- This gap in broadband service demand was also
nama and Brazil, link broadband development goals identified in Germany. According to the National
with objectives to expand their presence in interna- Broadband Strategy, published in 2009, 98 per cent of
tional software markets and/or creating a local call cen- all households (39.7 million) in Germany are capable of
ter industry. purchasing broadband access. Coverage is divided as
follows: 36.7 million households have access to DSL
2.7.5 Stimulating broadband demand platforms; 22 million are served by cable television (and
therefore could access the Internet through cable
Thus far, the debate surrounding the digital divide broadband); and 0.73 million are capable of subscribing
in the use of Internet and broadband has been primari- to wireless broadband through satellite or other fixed
ly focused on the statistics regarding computer owner- wireless services. Table 2.17 estimates the demand gap
ship and broadband penetration. The major issue in the for a number of countries.
eyes of public policy and public opinion has been the
Chapter 2 55
Table 2.17: Broadband Demand Gap

Country Households passed(*) Households connected Demand Gap
Australia 89 % 69 % 20 %
Denmark 96 % 76 % 20 %
France 100 % 77 % 23 %
Germany 98 % 58 % 40 %
Israel 100 % 83 % 17 %
Italy 95 % 55 % 40 %
Republic of Korea 100 % 93 % 7%
Spain 93 % 61 % 32 %
Sweden 100 % 89 % 11 %
United Kingdom 100 % 68 % 32 %
United States 92 % 62 % 31 %
(*) Note: Household passed is defined as a residence where the broadband network is deployed; this differs from connected, which
means the residence is linked to the network for provisioning the service.
Sources: Analysis by the author, based on data from EU; FCC; BMWi; OECD; PTS – Sweden; and Israel Minister of Communication.
As Table 2.17 indicates, the broadband demand broadband service varies by country, the figure is gen-
gap in the developed world ranges from 7 per cent in erally significant. The study on Spain referenced above
the Republic of Korea to 40 per cent in Germany and estimates that in July 2007, non-users (outsiders and
Italy. While statistics for developing countries are not sporadic users) accounted for 52.9 per cent of the adult
available, the broadband demand gap is expected to be population. Research conducted by Pew Internet &
higher. In Argentina, for example, the two telecommu- American Life indicates that in June 2009, non-users
nications carriers could provide broadband to 91 per accounted for 21 per cent of the US population. In the
cent of households, while cable TV operators could of- UK, the figure was 26 per cent in March 2009. However,
fer service to 82 per cent. In this country, broadband this last figure reflects the state of adoption within the
household penetration is 29 per cent, which means population; in Spain, the equivalent is 40.2 per cent.
that the demand gap is 62 per cent.92
What are the reasons cited by non-users for not
It is evident that in all countries, a significant por- adopting the Internet? Studies in the United Sates and
tion of the population does not subscribe to broadband the United Kingdom place the reasons into four catego-
Internet for reasons beyond service availability, such as ries (see Table 2.18).
affordability, lack of digital literacy, or limited interest.
An understanding of this problem and its causes is criti- As shown below, both the order of importance and
cal in order to put in place an appropriate set of policy the percentage of responses in each category are fairly
tools for promoting broadband adoption. consistent: limited relevance is the most important fac-
tor, followed by service price, availability of service, and
In a study on ICT adoption inhibitors in Spain,93 it is comfort or knowledge required for use of the service.
argued that individuals respond to the introduction and The American and the United Kingdom cases illustrate
spread of ICT either by adopting a technology after be- the reasons for non-adoption in developed economies.
ing exposed or by not adopting it. Within those that In developing countries, however, availability and affor-
adopt the technology, another subgroup exists – the dability of serv ices are likely to be more important
“sporadic users”.94 We believe that these two groups, than, for instance, the lack of interest. While there are
the exposed non-users and the “sporadic users”, are at no studies to this author's knowledge, absence of rele-
the heart of the demand-side digital divide. vant content could also be a major constraint.
Though the percentage of people who do not use

the Internet and who consequently do not subscribe to
56 Chapter 2
Table 2.18: United States and the United Kingdom: Reasons for not accessing to the Internet (2009)
Reasons Percentage of answers
United States United Kingdom
Relevant ( lack of interest, busy doing other tasks, other reasons) 45 % 60 %

Price (the cost of broadband is too high, does not have a computer) 15 % 28 %
Service availability 16 % 14 %
Easy to use (difficulty – senior citizen – physical handicap) 22 % 16 %
Source: Horrigan, J. (2009); Ofcom (2008)
With the exception of the availability of service but should also be addressed in educational policy ob-
(discussed above in section 2.7.3), it is important to un- jectives.
derstand the reasons that inhibit broadband adoption.
Is there a socio-demographic profile that can help ex- Finally, the affordability issue, which is so important
plain the limited relevance (or lack of interest), the cost in developing countries, must be emphasized. This has
barrier, and the difficulty in usage? Studies from the been also highlighted in the context of the economic
United States, the United Kingdom, and Spain have crisis, which indicates how significant the effect of in-
found that the reasons for not adopting the Internet or come could be on the decision to adopt broadband at
broadband are remarkably consistent. Inhibitors to the household level.97
broadband adoption are clustered around: 1) level of
education (completion not above secondary school); 2) 2.7.5.2 Relevant policies aimed at addressing
age above 65 (related, in some cases to absence of the broadband demand gap:
children in the household); 3) location in rural areas; 4)
disadvantaged socio-demographic groups, which is also In addition to deploying policies to stimulate infra-
correlated with level of education and employment sta- structure development aimed at achieving wide service
tus (unskilled workers, retirees and homemakers); and coverage of key technologies, leading information so-
5) income (less than net EUR 900 per month). cieties implement several demand-side policies aimed
at promoting broadband adoption.
The effects of socio-economic status on the process
of technological adoption have already been studied Introduction of tax incentives
elsewhere95. However, education merits further analy-
sis because it can be influenced by public policy. Ac- In the first place, governments of countries with
cording to OECD statistics, at 93 per cent, South Korea high performing ICT sectors tend to introduce tax in-
is the country with the highest level of broadband pe- centives designed to encourage the purchase of
netration. While telecom regulatory factors (referred to equipment. In addition to the Swedish example de-
above) explain the absence of a supply-side digital di- scribed above, in Japan, firms investing in ICT solely for
vide in the Republic of Korea, the education level in this their own use have the option of either taking a 10 per
country is a key explanatory variable that accounts for cent credit from corporate tax or a special depreciation
the minimal demand-side divide. The Korean popula- equivalent to 50 per cent of the acquisition cost.
tion is comparatively more educated than the Japanese
or United States population. The average number of Developing e-government services
years of education completed in South Korea is 15, one
more than the Japanese average. Moreover, this figure Second, by actively developing e-government ser-
is 50 per cent higher than the average for US house- vices, governments can generate additional incentives
holds.96 The spill-over effects of education on broad- for consumers and small businesses to join the informa-
band adoption are a factor that should influence public tion society. Such e-government services could include,
policy-making both in education and in ICT. In that re- for example, the electronic submission of tax returns,
gard, it is important to emphasize that broadband pean e-procurement service for small and medium enter-
netration is not only a result of technology-based policy, prises selling goods and services to the government,
platforms for tele-commuting, and the development of
Chapter 2 57
portals that allow the interaction between the govern- Both the public and private sector must address
ment and enterprises for e-business transactions. this obstacle. The private sector must redefine product
development processes so that the services marketed
This initiative is generally complemented by the toward SMEs are not simply “impoverished” versions of
implementation of digital literacy programs that include those offered to larger companies. Products developed
subsidies for acquiring PCs and online education pro- for the SME sector must be tailored to its needs for
grams targeted at the elderly and disabled, such as the processing and transmitting information, its economic
programs implemented in the Republic of Korea. In the capacity for acquisition and operation, and the level of
case of small businesses, the Japanese government en- training it will require to operate the technology. The
courages small and medium enterprises to voluntarily specific needs of the sector will only be met if these
install new IT platforms to reform business manage- dimensions are properly understood. On the other
ment and improve productivity by providing training, hand, governments must actively contribute to the ex-
collecting and disseminating best practices, and sup- tension of technology training and education. Continu-
porting collaboration with local communities. ing education courses that focus on SME owners and
employees can vastly improve productivity.
Enabling environment for SMEs
ICT adoption by SMEs is also limited by cultural-
In the Small and Medium Enterprise (SME) sector educational factors. In emerging countries, SMEs tend
of developing countries, the implementation of busi- to restrict the use of ICT to accounting and finance,
ness processes and applications enabled by broadband while neglecting its application to production processes.
is still limited. Productivity and global competitiveness A survey by the Chilean Ministry of Economy found that
of the SME sector are affected negatively by limited only 2.6 per cent of Chilean companies used ICT to in-
broadband adoption. Conversely, broadband adoption crease the efficiency of business processes other than
by large enterprises is high due to affordability, abun- accounting and finance. Yet the most worrisome obser-
dance of training, and spill-over factors. vation in the survey was the following: 80 per cent of
companies reported that they did not implement ICT in
As discussed by the author in prior studies98, the areas other than finance and accounting because they
primary reasons for the low level of broadband uptake lacked of the technological expertise necessary to un-
among SMEs are: limited access to investment capital; derstand how it would be useful. Hence, in order to
comparatively high technology costs; and lack of train- successfully stimulate SME adoption of broadband, it is
ing. Regarding capital investment and monthly service necessary to take steps beyond offering incentives to
costs, it is important to note that a significant propor- the sector and creating the right conditions. SMEs must
tion of SMEs, particularly in the developing world, do also be informed and educated about the strategic ca-
not receive fixed monthly income because they operate pabilities of ICT.
outside of the formal economy. Their income is general-
ly daily or weekly and is dependent upon the type of Another obstacle facing SMEs is the difficulty in
labour performed; thus they cannot borrow long-term access to and retention of skilled ICT workers. Because
or purchase products that require a fixed monthly of a systemic shortage of technical personnel, large
payment such as PCs, servers or Internet access. These companies offer wages to graduates of higher educa-
enterprises are generally forced to use prepaid wireless, tion that SMEs cannot match. Even where SMEs man-
Internet booths or cybercafes, and rented PCs. age to hire graduates, retention rates are very low.
In addition, many of the entrepreneurs that run Lastly, ICT adoption by SMEs is obstructed by geo-
SMEs (which are primarily microenterprises) have a graphical asymmetry. As a result of uneven telecom-
very limited level of technological training. In develop- munications network deployment, SMEs that operate
ing countries, a large number of SME owners are sub- in urban centres tend to have better access to broad-
ject to a generational gap because they were not band infrastructure and technological capital, whereas
exposed to Internet technology as they grew up. There- those that operate outside of such areas are margina-
fore, they lack the necessary training to operate a com- lized.
puter or to use broadband to improve business
efficiency. This lack of education translates into a fear of ICT adoption is not only marred by undeveloped
using technology and ignorance of its capability to broadband networks, but also by a lack of incentives.
create economic value. For example, many governments of emerging countries
58 Chapter 2
have failed to enact laws that promote ICT adoption ommended. These packages would be financed in
such as tax incentives, subsidies for remote telecom- monthly payments, including the fee for the use of the
munications, and so forth. The lack of incentives im- services.
pacts SMEs in two ways: it affects both supply and
demand. On the demand side, high adoption costs re- Promoting deployment of basic infrastructure
strict the adoption of platforms that allow SMEs to en-
hance efficiency. While the deployment of basic broadband infra-
structure is necessary for ICT adoption, it is equally ne-
On the supply side, small retail providers of ICTs cessary to provide stimuli and incentives for the
(mainly in products and services) cannot compete with purchase and installation of products and services for
suppliers of goods or services that control a large share the residential and corporate markets. In order to
of the market. Consequently, small firms supplying ICT achieve these goals, a vast number of measures that
products and services tend to mimic the behaviour of will contribute to ICT adoption can be implemented.
market leaders. This behaviour restricts the adoption of
ICT among SMEs because it increases the costs of pro- First, in the context of promoting the adoption of
motion for suppliers. The second problem on the wireless handsets, this author has established the im-
supply side concerns the provision of telecommunica- portance of lowering taxes on purchases of hardware.
tions services. Competition must be stimulated in the (See the discussion below.) This tariff reduction on
telecommunications services industry in order to re- equipment should be extended to fiscal programs that
duce access prices. tax the usage of telecommunication services. Such ta-
riffs and taxes negatively affect the rate of ICT adoption.
The agenda promoting ICT adoption by SMEs Therefore, the income these taxes and tariffs generate
should have the following focus: economic issues (such for national treasuries should be evaluated in the con-
as cost reduction and incentivization); education; and text of the negative impact that they have on the adop-
the development of products specific to SME needs. As tion of ICT and thus on enhancements to productivity.
the economic factor represents a fundamental obstacle In the same vein, to speed the rates of acquisition and
for ICT promotion, governments must prioritize the modernization of equipment, the use of accelerated
search of solutions in this field. In this vein, the adop- depreciation accounting schedules should be consi-
tion of tax benefit programs, special financing, and sub- dered. Finally, the establishment of discounts or re-
sidies are recommended, following models of universal wards for enterprises that use ICT for their transactions
telephony service that have been adapted for the SME with the government could become an additional in-
segment. centive. This will have a positive impact on the use of e-
government and on the use of ICTs by SMEs. In order to
Second, since training is such an important factor in stimulate the use of credit for the acquisition of ICT
ICT adoption, investment in continuing education pro- equipment, SMEs should be provided with financial
grams is recommended. These programs can teach forecast tools, certified by financial institutions, which
SMEs how to take advantage of new technologies, for will help enterprises in the process of requesting a loan
example, web sites can be used to market products from a bank. Another important point is the increase in
worldwide. Another measure to be considered is the the number of telecentres. For example, even countries
development of participatory applications and social such as Brazil, which boasts 5,000 centres, should in-
networks (such as Facebook, but targeted to SMEs). crease their number. Regarding specific recommenda-
This medium would allow small businesses to share ex- tions, the extension of opening hours of telecentres in
periences and form alliances to improve market access. order to serve schools, communities, and businesses
This mechanism should promote the best practices of throughout the day and evening should be considered.
companies or government administrations.
What can we expect if a region is not successful in
The support of consultancy services regarding the promoting ICT adoption by SMEs? Given the impor-
installation and use of ICT plays a crucial role in creating tance of SMEs in the economies of developing coun-
awareness about the potential of these technologies tries, a policy failure in this domain could have a
for SMEs. Finally, in the new products segment, the de- significant negative impact. The capacity of the SME
velopment of ICT packages for SMEs that include com- sector to enter international production networks and
puters, with maintenance support and usable software, to export to other markets will be greatly reduced. Thus,
voice communication and broadband services is rec- overall economic growth will also be reduced. This task
Chapter 2 59
is extremely urgent: a failure to promote ICT adoption prises are SMEs and 86 per cent of jobs in the formal
will jeopardize competitiveness in international markets. economy are found in SMEs.
As studies by the World Economic Forum have indi-
cated, there is a strong correlation between the devel- In Asia, three important sets of public policies have
opment of ICT infrastructure (as measured by the been implemented in order to increase ICT adoption by
Network Readiness Index) of a country and its level of SMEs.
competitiveness.
First, improve SME awareness of the critical role
It is the responsibility of governments to stimulate that ICT plays in improving performance. The primary
the adoption of ICT by SMEs. The government appara- focus of this policy, which is promoted by chambers of
tus is capable of generating spillover effects similar to commerce and provincial government agencies, is
those generated by the South Korean chaebols. Chile training SME entrepreneurs.
Compras is a good example. This is a portal designed to
promote SMEs’ sales of primary inputs to the govern- Second, provide training that not only focuses on
ment. To participate in the eco-system of Chile Compras, ICT, but also focuses on changes in structure and
the SMEs must adopt Internet platforms. Thus, the processes that will help SMEs absorb the value of ICT,
program benefits SMEs, as well as the government. i.e. what we called the accumulation of intangible capi-
Companies must adopt technology, which leads to im- tal in section 2.1. These training projects must be tai-
provements in productivity and sales, and the state lored so they address the application of ICT specifically
benefits from access a greater number of suppliers of to the SME sector.
inputs.
Third, create an environment that incentivizes ICT
The resolution of the digital divide entails solving adoption by SMEs. This refers to the provision of tax
coverage problems in neglected economic corridors incentives and financial tools that allow SMEs to access
and meeting the needs of SMES. These challenges can technology. Some incentives directly stimulate ICT
be met directly by municipal and provincial govern- adoption by SMEs (through subsidies, etc.) However, an
ments. These levels of government are capable of more ICT friendly environment can also be achieved through
efficient allocation of resources than national govern- indirect incentives. For example, tax deductions can be
ments, and tend to be directly responsible for the ac- offered to large enterprises that, in the course of their
cumulation of intangible capital, (e.g., education), purchasing operations, help small companies acquire
which is one of the foremost barriers to technology ICT. Other indirect incentives include subsidies for
adoption by SMEs. broadband installation in industrial parks. This practice
is extremely common and successful in India and Ma-
It is important to analyze the experience of Asian laysia.
countries where SMEs represent the center of gravity
of the economy. In the Republic of Korea, SMEs account 2.7.6 Addressing taxation as a barrier to
for 99.8 per cent of enterprises and are responsible for broadband adoption
87 per cent of jobs. In Malaysia, they account for 96 per
cent of enterprises, and in India , 90 per cent of enter- The developing world lags significantly when it
comes to broadband penetration (see Table 2.19).
Table 2.19: Comparative Broadband Penetration (per population) (2010)

Continent/Country Population Penetration
Western Europe 19.7 %

North America 27.7 %
Asia 4.9 %
Latin America 6.5 %
Africa and Middle East 1.6 %
Sources: ITU; Euromonitor; World Bank; analysis by the author
60 Chapter 2
Cognizant of this wide disparity, many governments an incentive for operators to roll-out their broadband
in the developing world are implementing public poli- networks, the government also approved tax allow-
cies aimed at stimulating broadband deployment and ances on expenditures on last-mile broadband equip-
adoption. For example, in Malaysia, the government ment.
objective is to reach a household broadband penetra-
tion rate of 50 per cent99. Wireless broadband is the In general terms, most developing countries' policy
technology of choice to achieve this target. For this makers now envision mobile broadband as a key lever
purpose, the government has issued new spectrum li- to address the digital inclusion gap. With the exception
censes to four companies that will roll-out new wireless of countries where 3G licenses have not yet been auc-
broadband services based on Wimax platforms. tioned, all countries register a continuous increase in
wireless broadband services combined with the dep-
Furthermore, to rationalize capital investment, the loyment of 3G-enabled handsets and devices (see Fig-
government has imposed sharing requirements for ures 2.4 and 2.5).
towers among HSDPA and Wimax operators. Finally, as
Figure 2.4: Mobile data as a percentage of service revenues (2003-10)
35%
30%
25%
20%
15%
10%
5%
0%
03
04
04
05
05
06
06
07
07
08
08
09
09
10
4Q
2Q
4Q
2Q
4Q
2Q
4Q
2Q
4Q
2Q
4Q
2Q
4Q
2Q
Mexico Malaysia Brazil South Africa China
Source: Adapted from Katz et al. (2010c) from Merrill Lynch (2010)
Figure 2.5: 3G Phone subscribers as a percentage of all mobile subscribers (2007-2010)
25%
20%
15%
10%
5%
0%
07
08
09
10
20
20
20
20
Mexico Malaysia South Africa Brazil
Source: Adapted from Katz et al. (2010c)
Chapter 2 61
In this context, high taxation on mobile devices and of data services when measured by wireless data as
services could have a detrimental effect on the public percent of service revenues (see figure 2.6).
policy strategy aimed at deploying broadband. With the
few exceptions of countries like Malaysia, which has If taxes limit the adoption of wireless broadband, it
implemented a benign taxation system based on exis important to ask what the ultimate impact of re-
tremely low value-added tax, many developing coun- duced penetration might be on economic growth. Ac-
tries have introduced taxes that could negatively affect cording to a study by this author, the wealth creation
service diffusion (see Table 2.20). generated by the lowering of taxes was higher than the
accumulated loss in tax collection given the positive
The impact of these different taxation approaches spillover effects of broadband diffusion.100 To conclude,
on the total cost of ownership of mobile service varies it is safe to assume that a reduction in the adoption of
widely. For example, in Mexico, the impact of taxes on broadband services and technology as a result of in-
total cost of ownership is 18.4 per cent; in South Africa, cremental taxation could yield a negative impact on
it is 15.2 per cent; in Brazil, it reaches 29.8 per cent, GDP growth.
while in Bangladesh it is 54.8 per cent. On the other
hand, in Malaysia, the effect of taxes on mobile cost of 2.8 Conclusion
ownership amounts to only 6.1 per cent.
The objective of this study was first to provide evi-
Taxation of mobile services appears to have an im- dence on the economic impact of broadband, while re-
pact on the deployment of mobile broadband. For ex- cognizing that the discipline aimed at measuring these
ample, all things being equal, there may be some effects is still in its infancy, primarily due to the limita-
association between the very high level of taxes in Bra- tions in data, but also resulting from continued evolu-
zil and its very low penetration level of 3G handsets. On tion of analytical tools. In spite of this situation, the
the other hand, Malaysia has a low level of taxes and a research has already generated a considerable amount
high 3G penetration rate. Similarly, an inverse relation- of evidence suggesting that broadband has considera-
ship appears to exist between tax burden and adoption ble positive spill-over effects on the economy, both in
terms of fostering growth and creating employment.
Table 2.20: Mobile Taxation approaches in selected economies
Services Handset
Country
Other Customs Other Fixed
VAT Fixed Taxes VAT
Taxes Duty Taxes Taxes
Argentina 21 % 0-20 % --- ---

Burkina Faso 18 % $0.04-0.10 18 % 13.30 % 1% ---
Bangladesh 15 % 35 % $ 11.76 15 % 20 % --- $ 11.63
Brazil 18 % 3.70 % --- 18 % 16 % 9.30 % $ 13.35
Ghana 12.50 % 2.50 % 12.50 9.50 % 5.50
Iran 6% $ 4.33 60 %
Malaysia 5% --- --- 10 % --- --- ---
Mexico 16 % 3% --- 16 % 0.10 % --- ---
South Africa 14 % --- --- 14 % 7.60 % --- ---
Sri Lanka 15 % 2.50 % 33 %
Tunisia 18 % 5% 10 % 8%
Venezuela 14 % $1.56-6.25 14 % 14 %
Source: Adapted from Katz et al. (2010c)
62 Chapter 2
Figure 2.6: Taxation vs. Adoption of Data Services
60%
Wireless data as % of service

50%
40%
revenues Malaysia Mexico
30%
Brazil
20%
10%
South Africa
0%
0 5 10 15 20 25 30 35 40 45 50
Overall Taxes
Source: Adapted from Katz et al. (2010c).
This study also introduced a methodology aimed at Finally, this study focused on the policies that have
calculating the investment required to achieve full proven to be most successful in stimulating investment
broadband penetration. This methodology was demon- in broadband and also in promoting the adoption of
strated in the cases of a developed and a developing broadband by population and businesses. The toolkit is
country. The results indicate that, while the economic wide-ranging and includes not only national broadband
effects are substantial, the level of investment required plans, but also the definition of competition models
to achieve the targets outlined in national broadband and the development of demand stimulation tools,
plans is also substantial. Accordingly, the next step which should also extend to fiscal policies. The purpose
should be the development of the social and economic of this study has been to outline challenges and oppor-
"business cases" of such an investment. In other words, tunities of what we believe to be a critical task for the
what is going to be the return of a national broadband years to come.
plan and its associated price tag?
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Shideler, D., Badasyan, N., & Taylor, L. (2007, September 28-30). The economic impact of broadband deployment in
Kentucky. Telecommunication Policy Research Conference, Washington D.C.
Shiu, A. & Lam, P-L. (2008). Causal relationship between telecommunication and economic growth: a study of 105
countries. Paper presented at the 17th Biennial Conference of the International Telecommunications Society
(ITS). Montreal, 24-27 June.
Solow, R. (1987, July 12). We'd better watch out. New York Times Book Review, 36.
Thompson, H., & Garbacz, C. (2008). Broadband Impacts on State GDP: Direct and Indirect Impacts. Paper pre-
sented at the International Telecommunications Society 17th Biennial Conference, Canada.
van der Ark, B., Inklaar, R. & McGuckin, R. (2002). “Changing Gear” Productivity, ICT and Services: Europe and the
United States, GGDC Research Memorandum Nr. 60.
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the Differences Come From? CESifo Economic Studies, 49 (3), 295-318.
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net in the United States, United Kingdom, France and Germany, Available from: www.cisco.com.
Waverman, L., Meschi, M. & Fuss, M. (2005). The Impact of Telecoms on Economic Growth in Developing Countries.
Vodafone Policy Paper Series, 2, London, United Kingdom.
Waverman, L. (2009, February 29). Economic Impact of Broadband: An Empirical Study. London: LECG.
66 Chapter 2
APPENDIX A
METHODOLOGY AND DATA UTILIZED IN ECONOMETRIC CASE STUDIES
Econometric studies rely on regressions and there- years worth of data across variables is available. Given
fore necessitate historical datasets to determine the the issue of carefully estimating the direction of causali-
effect of broadband on GDP, employment and other ty (what drives what), it is advisable to lag the variables
economic indicators. In order for these studies to inves- collecting data for independent variables in year 1 and
tigate causal effects (rather than correlations), models regressing them against dependent variables in year 2
are developed that account for factors, other than just or more.
broadband, that may influence economic indicators. In
slightly more technical language, a regression is in- Panel data and simultaneous equations are two
formed by the historical levels of an economic indicator techniques that further help econometric analyses
and the factors that influence it. Then, given a certain study causation rather than correlation. They are
model, it assigns coefficients that maximize the amount among the most successful techniques that have been
of explained variance: that is to say it assigns the set of employed in the papers that analyze broadband’s eco-
relationships between factors and the indicator that will nomic effects.
cause the projected value of the indicator to most
closely mimic what happened historically. For example, Panel data is a time series for multiple geographic
level of education in a given country drives GDP growth areas, (i.e., it is both a time series and a cross-sectional
as well as broadband usage; thus it is important that dataset). This allows researchers to account for time
this variable is present in a regression model, because if fixed effects and geographical fixed effects. For example,
it does not, we may attribute the effects of education if a dataset were confined only to 2008, it would be ex-
to broadband. In that vein, economists specify models tremely difficult for researchers to separate the effects
that account for each of the factors that influence eco- of the recession from their growth models. The reliance
nomic indicators. An optimal regression breaks up the on the panel data approach is to allow unobserved dif-
variation of an indicator, such as GDP. It assigns a set of ferences in preferences and technology across regions
coefficients which measure how important each factor or countries, differences that if were not taken into ac-
is in determining the indicator, or how much a change count in a cross-sectional regression could cause biased
in each of the factors caused the economic indicator to estimators (omitted variable bias).As these differences
change. Hence, we are left with the effects of broad- are not easily measurable, they can be treated as unob-
band keeping other factors constant. This is why broad- served individual effects in the panel data regression
band effects are conceptualized in terms of, all other framework. From an econometric point of view, the
variables (education, fixed capital investment, infra- panel data model will correct the omitted variable bias,
structure) being constant, the change in broadband pe- where the omitted variable captures the differences
netration that would explain GDP growth. across countries. The panel data approach requires the
compilation of time series for multiple geographic areas,
There are three types of model estimation proce- (i.e., it is therefore, both a time series and a cross-
dures used to assess the economic impact of broad- sectional dataset).
band: cross-sectional regression; panel data and
simultaneous equations. The cross-sectional procedure The third methodology -simultaneous equations- is
relies on one observation per unit (country, county, re- used to deal with endogeneity—or a cycle where fac-
gion, etc…) and in the case of studying change in va- tors cause the indicators to change and vice versa. This
riables; at least two points in time are needed. It problem is particularly pronounced in the study of
includes independent variables such as broadband pe- broadband’s effect on GDP, GDP per capita and income.
netration, level of tertiary education, fixed capital in- Research unilaterally agrees that broadband increases
vestment (see below) and the dependent variables GDP and income. However, numerous studies on
(such as GDP growth and employment and unemploy- broadband demand have also shown that broadband is
ment growth). This methodology is the most commonly income elastic (or that an increase in income substan-
used because it is rare the case when more than two tially increases broadband demand). Therefore, when
Chapter 2 67
we model the effect of broadband on income (or GDP, it comes to regional studies, analysis has been con-
etc.) we must have a way to account this reverse effect ducted considering Gross sales (see table A.1).
(income elasticity), or our estimate will be biased. Si-
multaneous equations do just this: regressions are per- A number of observations need to be made regard-
formed that simultaneously estimate broadband ing this list:
demand, supply and impact on income, solving the
• Level of education: in countries where the mini-
problem of endogeneity. The key disadvantage of this
mum level of education is secondary school, ter-
approach, particularly for developing countries, is the
tiary education is determining variable
lack of data availability (particularly, prices and supply
side variables). • Regional investment as percent of regional GDP: It
is critical to understand if the increase in employ-
The econometric methods require the gathering of ment or GDP is driven by investment other than
data for both dependent and independent variables in broadband; this is why analyses consider several
terms of their rate of change in order to determine to control variables that measure not only the pre-
what extent changes in broadband penetration affects existing quality of infrastructure, but also the
the economy. The dependent variables that are re- change in infrastructure deployment as a proxy of
quired for this analysis are GDP per capita and em- investment
ployment or unemployment rate. In some cases, when
Table A.1. Data utilized in econometric studies

Source Rationale
• Annual or quarterly • Annual or • GDP at starting time of period

rate of change of quarterly rate
• Level of education: Percent of population with tertiary degrees;
GDP of change of
Illiteracy rate; Years of schooling; participation rate in secondary
broadband
• Annual or quarterly school
penetration
rate of change of
• Regional Investment as percentage of regional GDP
employment
• Percent of households with electricity or running water
• Annual or quarterly
rate of change of • Number of projects and added value of construction projects fi-
unemployment nanced by the state
• Annual number of • Number of hospitals per inhabitant; number of beds in hospitals
SME’s per inhabitant
• Access to financial services: Number of banking offices and bank
credit per capita
• Industry concentration: Contribution of financial services, com-
merce and manufacturing sectors to regional GDP
• Importance of tourism in the region (number of domestic tourism
trips)
• Cost index for interstate trade costs
• Cost to create new business
• Regional Gini Coefficient
• Percentage of people living in urban centers
• Total road length per hundred sq. Km by area; Road development
index
• Population growth rate
• Globalization Index; Globalization Index per region
68 Chapter 2
• Number of projects and added value of construc- growth and productivity based broadband network ex-
tion projects financed by the State: In the case of ternalities, and generates results and identifies produc-
countries where the economy is run by the gov- tivity and employment effects at the industry sector
ernment, it is imperative to introduce this variable level.
as a way for not over-estimate the effect of broad-
band On the disadvantage side, since the impact of in-
vestment on productivity is generally lagged, time se-
The primary advantage of the econometric model- ries data sets need to be somewhat long for reliability.
ing is its capacity to link projections of broadband pene- Furthermore, the analyses require data at a fairly gra-
tration, growth and productivity by relying on macro- nular level (e.g. postal code). Finally, it is more difficult
economic causal models that rely on historical time se- to identify effects at the regional level, although this
ries and cross-sectional analysis. More specifically, the can be addressed with disaggregated data.
methodology can provide estimates on employment
Chapter 2 69
APPENDIX B
LATIN AMERICA: BROADBAND CONTRIBUTION TO ECONOMIC GROWTH
Table B.1: Latin America: Variables utilized to measure broadband impact on economic growth
Type of variable Data set Source Rationale
Economic growth GDP (2004-6) and GDP World Bank and Central Banks Dependent variable
(2007-9)
Control for level of GDP per capita for 2003 and World Bank Measure for starting point
development 2006 of growth
Control for In- Average Investment / GDP World Bank Measure for differences in
vestment for (2001-3) and (2004-6) investment levels
Control for popu- Population growth for World Bank Measure for differences in
lation growth (2004-6) and (2007-9) population size
Control for Human Tertiary education (2002) Unesco, Earthtrends, University Measure for differences in
Capital of West Indies, Euromonitor, human capital
Government of the Common-
wealth of Dominica
Control for globali- Average globalization index Dreher et al. (2008) Measure for differences in
zation for (2001-3) and (2004-6) level of openness (eco-
nomic, social and political)
Broadband pene- Broadband penetration Δ ITU and National Regulatory Independent variable
tration growth (2003-4) and Agencies
(2005-6)
Table B.2: Latin America: Broadband impact on economic growth in Latin America
GDP growth Coefficient Standard T-statistic P>[t] 95% Conf. interval
error
Broadband penetration .0158715 .0080104 1.98 0.054 -.0002942 .0320372

growth
Average Investment / GDP -.0471624 .1689699 -0.28 0.782 -.3881575 .2938328
Population growth -.4469177 1.40418 -0.32 0.752 -3.280668 2.386832
Tertiary education .2139614 .1108325 1.93 0.060 -.0097076 .4376304
GDP per capita -.0006957 .0001806 -3.85 0.000 -.0010602 -.0003313
Average globalization index -.0653024 .1929498 -0.34 0.737 -.4546908 .324086
Constant 13.02883 12.04659 1.08 0.286 -11.28217 37.33982
Number of observations 49
F(6,42) 7.18
Prob>F 0.0000
2
R 0.3814
Root MSE 7.024
70 Chapter 2
APPENDIX C
BRAZIL: THE IMPACT OF BROADBAND ON ECONOMIC GROWTH AND EMPLOYMENT
Table C.1. Brazil: Variables used to measure the impact of broadband on GDP growth
Variable Series Source Observations
Economic growth Regional GDP per IBGE Dependent variable

capita (2006-7)
Control for level of GDP per capita IBGE Variable used to determine the starting
development (2002) point of development
Control for human Illiteracy rate 2002 IBGE Variable to determine differences in human
capital capital
Control Cost index for inter- Newton de Castro Variable to determine differences in cost of
state trade costs (2004) transportation of goods
Control Costs to create a Lima Chagas
new business
Control Average of Gini coef- IBGE
ficient (2004-5)
Growth of household Broadband penetra- Household Survey Independent variable
broadband penetration Δ (2005-6) (IBGE)
tion
Source: Adapted from Katz (2010b)
Table C.2: Brazil: Impact of broadband on GDP growth

GDP Growth (2006-7) Coefficient Standard error T-statistic P>[t]
GDP per capita (2002) -.0007415 0.0002883 -2.57 0.018**

Illiteracy rate 2002 -.4950848 0.2323575 -2.13 0.046**
Cost index for inter-state trade costs -.0004711 0.0009957 -0.47 0.641
Costs to create a new business -.0009246 0.0072004 -0.13 0.899
Average of Gini coefficient 2004-5 32.67246 46.25561 0.71 0.488
Growth in broadband penetration 0.0082117 0.0500811 0.16 0.871
(2005-6)
Constant 10.06483 19.50307 0.52 0.611
F(6,20) 5.84
Prob>F 0.0012
R2 0.2880
Root MSE 4.4716
Chapter 2 71
Table C.3: Brazil: Variables utilized to estimate the impact of broadband on job creation
Change of unemploy- Change in unemployment IBGE Dependent variable

ment rate rate (2006-7)
Control for level of GDP per capita (2003) IBGE Variable to determine the point of
development departure of state economic
growth
Growth in household Broadband penetration Δ Household survey Independent variable
broadband penetra- (2005-6) (IBGE)
tion
Control for human Years of schooling IBGE Variable to differentiate the level
capital of human capital by state
Control for population Population growth IBGE Variable to differentiate the level
growth (2006-7) of population growth by state
Table C.4: Brazil: Impact of Broadband on Job creation

Unemployment Rate Coefficient Standard error T-statistic P>[t]
Control for level of state eco- -.0449243 .0259892 -1.73 0.098

nomic development
Growth in household broad- -.0069189 .003575 -1.94 0.066
band penetration
Control for human capital .1095254 .0940011 1.17 0.256
Control for population .2009585 .1213108 1.66 0.112
growth
Constant -.1925308 .5035225 -0.38 0.706
F(4,22) 3.76
Prob>F 0.0178
2
R 0.4058
Root MSE 0.27016
72 Chapter 2
APPENDIX D
CHILE: THE IMPACT OF BROADBAND ON EMPLOYMENT AND ECONOMIC GROWTH
Table D.1: Chile: Variables used to estimate the broadband impact on job creation
Employment Quarterly employment rate Regional Institutes of Dependent variable

(2002-9) Statistics
Control for level of eco- Quarterly Index of economic Regional Institutes of
nomic activity by region activity (2001-9) Statistics
Growth in broadband Quarterly Δ in broadband pe- Subtel Independent variable
penetration netration (2002-9)
Human Capital Schooling Years (population Employment Survey, INE Independent variable
15 years old and older)
Dominant Sectors Contribution of the mining Central Bank of Chile Variable to control for re-
and financial sector to region- gional specialization in do-
al GDP (2002-2008) minant economic activities
Dynamic Sectors Contribution of the agricul- Central bank of Chile Variable to control for re-
tural and trade sector to regional specialization in dy-
gional GDP (2002-2008) namic economic activities
Table D.2: Chile: Broadband impact on job creation

Employment rate Model 1 Model 2
Coefficient t-statistic Coefficient t-statistic
Level of economic activity

0.000353 5.90 0.000353 5.72
by region
Growth in broadband
0.18118 3.85 0.1774 2.56
penetration
Human Capital -0.0042 -1.87
Dominant Sectors -0.00133 -1.66
Dynamic Sectors 0.001743 1.27
Constant 0.8682527 109.03 0.913817 25.95
Number of Number of
324 276
observations observations
F(2,310) 60.89 F(5,259) 20.78

Prob>F 0.0000 Prob>F 0.0000
R2 0.2820 R2 0.2863
F(11,310) 33.89 F(11,259) 24.41
Prob>F 0.0000 Prob >F 0.0000
Chapter 2 73
Table D.3: Chile: Variables used to measure the impact of broadband on GDP growth
Economic growth Average annual growth of Central Bank of Chile Dependent variable
GDP per capita (2003-4;
2005-06;2007-08)
Control for level of Regional GDP Central Bank of Chile Variable to control for point
development (2000;2001;2002) of departure in economic de-
velopment
Control for human Percentage of population Casen Survey Variable to control for the
capital with some level of tertiary level of human capital
education (2003-2006)
Control for population Region population as a National Institutes of Statis- Variable to control for level of
size percent of country popu- tics – Chile density
lation (2002)
Control for population Regional population National Institutes of Statis- Variable to control for differ-
growth growth (2002-2008) tics – Chile ences in rate of population
growth
Control for economic Contribution of the agri- Central Bank of Chile Variable to control for re-
dynamics cultural and trade sector gional specialization in dy-
to regional GDP (2002) namic economic activities
Control for Urban Percentage of people liv- National Institutes of Statis-
Centres ing in urban centres by tics – Chile
region (2002)
Growth of broadband Δ in broadband penetra- Under-Secretariat of Tele- Independent variable
penetration tion (2002-3: communications (Subtel)
2004-05; 2006-07)
Table D.4: Chile: Contribution of broadband to GDP growth

Initial Regional GDP -1.35E-06 7.67E-07 -1.76 0.088

Tertiary Education 1.62164 0.942361 1.72 0.095
Population Size 0.529056 0.292309 1.81 0.08
Population growth 2.068497 1.091899 1.89 0.068
Dynamic Sector -0.00809 0.080571 -0.1 0.921
Urban Population -0.05128 0.080926 -0.63 0.531
Broadband Growth 0.00927 0.003716 2.49 0.018
Constant -2.08091 6.80365 -0.31 0.762
F(7,31) 2.98
Prob>F 0.0165
R2 0.4021
74 Chapter 2
APPENDIX E
INDIA: THE IMPACT OF BROADBAND ON EMPLOYMENT AND ECONOMIC GROWTH
Table E.1: India: Variables used to estimate the broadband impact on job creation
Broadband pene- Broadband penetration Δ Indiastat Independent variable

tration (2007-8)
Employment Employment growth (2008-9) Indiastat Dependent variable
Control for eco- GDP per capita by region (2005) Indiastat Variable to explore the relationship of
nomic development GDP and employment
Measure of eco- Number of micro, small and medium Indiastat Variable to explore the relationship of
nomic activity enterprises (2006) employment and development of mi-
cro, small and medium enterprises
Control for financial Number of banking offices per Lakh Indiastat
development (100,000 of Population) 2002
Control for financial Bank credit per capita by region 2002 Indiastat
development
Control for infra- Total road length per hundred sq. Km Indiastat
structure develop- by area (km.) 2001
ment
Control for popula- Average population growth by prov- Indiastat
tion growth ince 2001-11
Table E.2: India: Broadband impact on job creation

Employment rate Coefficient Standard error T-statistic P>[t]
Growth in broadband penetration .0282529 .0151963 1.86 0.090

2007-2008
Number of micro, small and medium en- .0000461 .0000216 2.14 0.056
terprises 2006
GDP per capita by region 2005 -.0002114 .0001056 -2.00 0.071
Number of banking offices per Lakh .4333618 .2778866 1.56 0.147
(100,000 of Population) 2002
Bank credit per capita by region 2002 -.0003247 .0001892 -1.72 0.114
Total road length per hundred sq. Km by .0102269 .0059689 1.71 0.115
area (km.) 2001
Average population growth by province 1.73853 .7382998 2.35 0.038
2001-11
Constant -5.14944 3.834851 -1.34 0.206
Chapter 2 75
F(4,14) 1.16
Prob>F 0.3983
F(2,310) 0.4237
2
R 0.4237
2
Adjusted R 0.0570
Root MSE 1.6382
Table E.3: India: Variables used to measure the impact of broadband on GDP growth
Economic growth Per capita GDP growth by Indiastat Dependent variable

region 2007-2008
Control for Total road length per hundred Indiastat Variable to control the contribution of
infrastructure Sq. Km. of are (Km.) 2001 physical capital to economic growth
Broadband penetration Broadband penetration Δ 2007- Indiastat Independent variable
2008
Control for human capital Participation rate in secondary Indiastat Variable to control for contribution of
schooling 2001 human capital to economic growth
Control for population Average population growth by Indiastat
growth province 2001-2006
Control for point of depar- GDP per capita by region 2000 Indiastat
ture of economic growth
Table E.4: India: Contribution of broadband to GDP growth

Total road length per hundred Sq. Km. of .00300 .0006727 4.46 0.001
are (Km.) 2001
Growth of broadband penetration .031284 .0158414 1.97 0.070
2007-2008
Participation rate in secondary schooling .0133936 .0803297 0.17 0.870
2001
Average population growth by province -1.075241 1.272319 -0.85 0.413

2001-2006
GDP per capita by region 2000 .0000278 .00007 0.40 0.698

Constant 2.753619 7.668025 0.36 0.725
F(5,7) 8.02
Prob>F 0.0012
2
R 0.3241
Root MSE 2.2265
76 Chapter 2
APPENDIX F
MALAYSIA: THE CONTRIBUTION OF BROADBAND TO ECONOMIC GROWTH
Table F.1. Malaysia: Variables used to measure the impact of broadband on GDP growth
Economic growth GDP Growth 2007-2008 Department of Statistics – Dependent variable

Malaysia
Broadband Broadband household penetration Δ Under Secretariat ICT Pol- Independent variable
penetration 2006-7 icy Division
Control for Hospitals per million population 2005 Ninth Malaysia Plan Variable to control for physical
infrastructure (2006-2010) capital
Control for Beds in hospitals per million popula- Ninth Malaysia Plan Variable to control for physical
infrastructure tion 2005 (2006-2010) capital
Control for Construction projects funded by the Ninth Malaysia Plan Variable to control for physical
infrastructure government 2004 (2006-2010) capital
Economic activity Added value of construction Ninth Malaysia Plan Variable to study the relation-
sector 2004 (2006-2010) ship between government fund-
ing and economic development
Control for Literacy rate 2000 Ministry of Education Variable to control for human
Human Capital capital
Control for Road development index 2005 Ninth Malaysia Plan Variable to control for physical
Infrastructure (2006-2010) capital
Table F.2. Malaysia: Contribution of broadband to GDP growth

Growth of broadband household penetra- 0.077024 0.013247 5.81 0.001

tion 2006-2007
Hospitals per million population 2005 -0.54338 0.146033 -3.72 0.007
Beds in hospitals per million population 2005 0.007824 0.002203 3.55 0.009
Construction projects funded by the gov- -0.02375 0.0089983 -2.64 0.033

ernment 2004
Added value of construction sector 2004 0.005661 0.001693 3.34 0.012

Literacy rate 2000 0.789125 0.126412 6.24 0.000
Road development index 2005 -10.6963 2.126227 -5.03 0.002
Constant -52.836 9.339643 -5.66 0.001
F(7,7) 107.27
Prob>F 0.0000
R2 0.9010
Root MSE 1.1898
Chapter 2 77
APPENDIX G
SAUDI ARABIA: THE IMPACT OF BROADBAND ON EMPLOYMENT
Table G.1. Saudi Arabia: Variables used to estimate the broadband impact on job creation
Unemployment Change rate in unemployment Forty Fifth Annual Re- Dependent variable
rate (2007-2008) port – Saudi Arabia
Monet
Broadband penetration Broadband penetration per Communications and Independent variable
population Δ (2007-8) Information Technology
Commission
Control for infrastruc- Facilities authorized to provide Annual Report – Saudi
ture health services (2008) Arabia Monetary Agency
Incidence of tourism Change in the number of Annual Report – Saudi Independent variable
domestic tourism trips (2007- Arabia Monetary Agency
2008)
Control for Percentage of households with Annual Report – Saudi
infrastructure access to potable water Arabia Monetary Agency
Importance of Change in the number of Annual Report – Saudi Independent variable
government spending projects funded by the Arabia Monetary Agency
government (2007-2008)
Importance of Change in the value of projects Annual Report – Saudi Independent variable
government spending funded by the government Arabia Monetary Agency
(2007-8)
The model results are as follows (see Table G.2):
Table G.2. Saudi Arabia: Broadband impact on job creation

Unemployment rate Coefficient Standard error T-statistic P>[t]
Change in broadband penetration per -0.2434 0.02935 -8.29 0.000

population 2007-8
Facilities authorized to provide health 0.899473 0.170589 5.27 0.002
services (2008)
Change in the number of domestic tour- 0.337701 0.093622 3.61 0.011
ism trips (2007-8)
Percentage of households with public 0.652031 0.13798 4.73 0.003
access to potable water
Change in the number of projects funded -2.31629 0.761245 -3.04 0.023
by the government (2007-8)
Change in the value of projects funded by -0.92765 0.341837 -2.71 0.035
the government (2007-8)
Constant -16.1099 14.306 -1.13 0.303
78 Chapter 2
F(6,6) 34.84
Prob>F 0.0002
R2 0.9400
Root MSE 7.8648
1
The author would like to acknowledge the support of Javier Avila, Giacomo Meille and Julian Katz-Samuels, all researchers at the
Columbia Institute for Tele-Information.
2
Dialup technology refers to Internet access over conventional voice telephone lines at speeds that do not exceed the 56 Kbps.
3
See Atkinson and Schultz (2010). Broadband in America. New York: Columbia Institute for tele-Information.
4
See Sinopac (2009). Taiwan Research.
5
See AM Research (2010). Telecommunications: CAPEX risk from escalating competition in broadband.
6
Within 12 years, broadband has been adopted by over 60% of households in the United States, 80% in the Netherlands and 91%
in Korea (ITU, 2010; OECD, 2010).
7
According to the “critical mass theory”, the economic impact of broadband increases exponentially with penetration of the
technology as a result of network effects.
8
Or 0.36% if we make the standard assumption that 1% increase in productivity or efficiency results in 1% increase in GDP.
9
The original regression yielded a coefficient of 0.0027 for the 2/3 more developed countries in the sample and negative effect
for the lower third. A negative effect did not make sense so the authors constrained the effect for the lower third to zero. At
that point the coefficient for the full sample moved to 0.0013.
10
See Waverman, L. and Dasgupta, K. Broadband and Growth. Presentation to the Columbia Institute for Tele-Information Confe-
rence "State of Telecom: National Next-Generation Broadband Plans", October 23, 2009, Columbia University, New York.
11
See Waverman, 2009.
12
For example, Waverman (2009) estimated that in the United States broadband penetration contributed approximately to 0.26%
per annum to productivity growth, resulting in 11 additional cents per hour worked (or USD 29 billion per year).
13
Gillett et al. (2006) at 10.
14
See e.g., Gillett et. al, 2006.
15
Op. cit. above.
16
See Katz et al. (2010a).
17
See Basu & Fernald (2006).
18
For additional details, see section 1.7.5.
Chapter 2 79
19
See Atkinson et al., 2009.
20
Op. cit.
21
Op. cit.
22
Op. cit.
23
Op. cit.
24
See Varian et al, 2002; Gillett et al, 2006.
25
See Crandall et al. (2007).
26
As Crandall indicated, the overestimation of employment creation in his study is due to employment and migratory trends that
existed at the time and biased the sample data.
27
See examples in case studies of Germany and Chile included in Sections 1.3.2 and 1.3.4.
28
This effect was also mentioned by Gillett et al. (2006).
29
See Clarke (2008).
30
Ibid.
31
See Fornefeld et al. (2008).
32
The study by Fornefeld et al. (2008) is probably the first attempt to build a causality chain. It applies ratios derived from micro-
economic research to estimate the combined impact of all effects.
33
This analysis is based on prior research contained in R. Katz and S. Suter (2009a). Estimating the economic impact of the broad-
band stimulus plan. Columbia Institute for Tele-Information Working Paper presented at a conference on "Spending the Broad-
band Stimulus: Maximizing the benefits and monitoring performance" held at the National Press Club in Washington, D.C. on
19 February 2009.
34
This analysis is based on prior research contained in Katz, R. L., Vaterlaus, S., Zenhäusern, P., Suter, S. (2010a). The impact of
broadband on jobs and the German economy. Intereconomics, January-February, Volume 45, Number 1, 26-34. The results
were originally presented at the Confederation of German Industries in Berlin on 17 June 2009.
35
An estimate of funds dedicated primarily to broadband deployment, as opposed to ancillary activities such as broadband map-
ping.
36
Induced employment refers to job creation resulting from additional household consumption generated by direct and indirect
jobs created by network construction.
37
For methodology, see Katz et al (2009a).
38
See FCC Table 14 of HSPD1207. We have been informed that Table 14 actually overestimates the accessibility percent by ap-
proximately 2% because cable TV operators tend not to report accurate deployment numbers.
39
There is a large gap between households served by at least one broadband technology (average 89%) and broadband penetra-
tion (47%).If the ratio households served/adopted (1.90) remains, the capacity to serve 7,463,200 additional households should
be deployed in order to increase the subscriber base by 3,928,000. This is well within the bounds of the total grants of the pro-
gram.
40
Innovation is assumed to occur in the sectors and functions where productivity improvement takes place.
41
See methodology in appendix B.2 of Katz et al. (2009a).
42
Given the static nature of I/O-matrix it is not possible to project job creation over time. This could be done, however, if yearly in-
vestment data is available.
43
This said, the available data sets do not enable us to test this last point at this time.
80 Chapter 2
44
"White spots" are defined as areas lacking wireless service, while "grey spots" are the areas with uneven coverage.
45
A cautionary note should be made that in order to translate infrastructure deployment programs into increased broadband pe-
netration, network construction should be complemented with very targeted demand promotion programs (be they communi-
ty aggregation programs such as the ones of the Dutch government, tax deductions such as the ones implemented in Sweden,
and, potentially, subsidies) that stimulate adopters to sign up for service.
46
In contrast to the case of network construction, it is not possible to determine what type of sectors would be mostly impacted
by network externalities. However, experience indicates that higher developed areas will generate knowledge-intensive occupa-
tions such as research and development (R&D) and product development, while less developed regions will attract low-end in-
formation intensive jobs, such as virtual call centres.
47
These figures are subject to three important notes. First, it is obvious that, while total projections have been split evenly over
time, one would expect yearly projections to vary. For example, more jobs are generated in the beginning of network deploy-
ment than in the back-end. This would require further refinement of these projections that takes into account construction
plans. Second, as mentioned above, in order to avoid double counting with respect to network construction effects in the first
years and to assure a conservative calculation, some of the totals have been reduced. Third, we assume that the regression
model is capable of projecting economic impact over a three year period with effects through 2020 following suit.
48
Only effects up to t + 3 are estimated.
49
This analysis is based on prior research contained in Katz, R. L. (2010b). La banda ancha: un objetivo irrenunciable para Brasil
presented at the 54o Panel Telebrasil. Guaruja, on August 18, 2010.
50
This analysis was originally prepared for Galperin and Jordan (2010). Speeding-up the digital revolution: broadband in Latin
America and the Caribbean, published by the Economic Commission for Latin America and the Caribbean (ECLAC).
51
In this vein, it was only at the beginning of the current century, after more than forty years of intense adoption of computers,
that growth accounting economists were able to finally show the impact of ICT on US productivity. See Jorgenson et al., 2007.
52
See Katz, 2009d.
53
See Barro, 1991.
54
See Qiang & Rossotto, 2009; Crandall et al, 2007; Garbaz et al., 2008.
55
The variables used and model results are included in Appendix B.
56
Alternative specifications were used, including primary and secondary education enrollment rates, as a proxy for human capital,
but only the model including tertiary education yielded significant results.
57
This figure is indicative for a period without major economic crises, since the model was run for the period 2004-2009.
58
The data utilized and the model results are included in Appendix C.
59
According to a consensus forecast compiled by EMIS.
60
The data utilized and the model results are included in Appendix D.
61
It was significant at the 1% level on the first specification and at the 5% level on the second one.
62
While there were 20 telecom circles defined by the government for 2006, lack of information made it necessary to consolidate
two circles into one. Data and model results are included in Appendix E.
63
Though we are aware of this problem, the lack of information in this case made estimation by Instrumental Variables or Simul-
taneous Equations an impossible task.
64
Data and model results are included in Appendix F.
65
The study by McKinsey forecasts that 10 percent increase in broadband penetration per population will yield .4 contribution to
GDP growth. In order to compare this estimate to ours, penetration per population was converted to households by multiplying
0.4 by 4.45, which is the average number of persons per household in Malaysia. The same study forecasts that an increase of 10%
in broadband penetration per inhabitant would have an impact of 0.6% to 0.7% on the GDP of Asia.
Chapter 2 81
66
Data and model results are included in Appendix G.
67
Total households: 39.7 million, Federal Statistical Office Germany 2006.
68
Federal Government of Germany (2009) “Breitbandstrategie der Bundesregierung“, 3.
69
See BMWi, 2009c, 38.
70
See Katz et al. (2010a).
71
For example, in the case of FTTH the initial 10 percent of households (3,972,000) will cost EUR 1,150 per household to deploy;
the next 10 percent will require EUR 1,287; and the next 10 percent will require EUR 1,425. In the case of VDSL, providing access
to the first 10 percent of households will cost EUR 300, while deploying beyond 50 percent of households will require EUR 450.
72
The difference between the first 25% achieved in 2014 (EUR 12,236 million) and the second 25% tranche achieved in 2020
(EUR 15,690 million) is due to two factors: 1) the first tranche benefits from the 240,000 households already served by municipal
networks roll-out and, more importantly, 2) the cost per line in the second phase rises from EUR 1,150-1,425 to EUR 1,500-1,700.
73
Cisco/IDC. Barometro de Banda Larga. Sao Paulo, 2010.
74
The deployment cost is an approximate estimate that averages the deployment costs of ADSL in relatively dense areas ($300)
and the construction of broadband wireless infrastructure in rural areas. (In the US, the estimate approximates $1,800/line.)
75
See Kim et al., 2010.
76
Kim et al., 2010.
77
For example, in the last tranche of privatization of Korea Telecom, the government agreed with SK Telecom the acquisition of
11.3% of shares, while LG acquired 2.3%.
78
One should not forget stimulus plans, universal service funds and public-private partnerships being also initiatives to channel
government funding. This is particularly the case in , in many developing countries.
79
In this context, it is important to discuss whether a broadband platform-based competitive model can develop in countries that
lack a highly developed cable TV operator. In this case, wireless carriers (or Wimax-based new entrants) offering broadband
access could provide the necessary competitive stimulation for wireline carriers to invest in deploying broadband networks.
80
See Aghion et al., 2005.
81
See Katz, 2008.
82
See Yoo, 2008.
83
Prompted by competition from the cable TV operators, Bell Canada plans to have VDSL2 cards available to 100% of its network
by YE2010, while beginning in 2H10, all new neighborhoods in Quebec City will get FTTH with 100 Mbps capability.
84
We define this as the gradual transformation of the mission and operating paradigm of a municipal broadband network from a
public service not for-profit utility to that of a private commercial enterprise.
85
Backhaul service, which includes the lines required to interconnect the base station to the network, also represent a high recur-
ring expense.
86
This represented a key stimulus in a country where the average taxpayer has a marginal tax rate 20%.
87
See PTS (2008). Dark Fiber: market and state of competition. Stockholm, Report PTS-ER-2008:9, p. 23.
88
See Mitchell, Christopher (2008) "Municipal Broadband: Demystifying wireless and fiber optic options", Broadband properties,
February, p. 42, and Curri, Michael. The South-Dundas Municipally owned network: from fiber optic pioneer to cautionary
tale". Startegic Networks Group.
89
See the experience of Infacom in South Africa, as described in Gilliwald, Allyson (2009). Presentation to Alternatives for Broad-
band Infrastructure and Access Development, Brasilia, 16 November 2009.
90
See Kim et al. (2010).
82 Chapter 2
91
See Katz et al, 2009.
92
Investment prospectus of Multicanal and Telecom Argentina (2010).
93
See Red.es, 2007.
94
These individuals make use of the technology, but only on a periodic basis (such as biweekly, monthly or quarterly).
95
See, for example, Rogers, Everett. And Shoemaker, F. (1971). Communication of Innovation. New York: Free Press and, Stone-
man, P. (1976) "Technological Diffusion and the Computer Revolution, the UK experience", department of Applied Economics
Monograph 25, Cambridge University.
96
See Kalba, 2006.
97
For example, the Pew Research study indicates that during 2009, 9% of Internet users in the United States have canceled or
downgraded their Internet service due to economic pressures.
98
See Katz, 2009b.
99
See Malaysia Communications and Multimedia Commission. The National Broadband Plan, 2006.
100
See Katz et al., 2010.
Chapter 2 83
3 ICT REGULATION IN THE DIGITAL ECONOMY

Authors: Janet Hernandez, Daniel Leza and Kari Ballot-Lena, TMG
3.1 Introduction chain where competition is likely to take hold. In doing

so, governments must design ICT policies and regula-
In this second decade of the 21st century, our focus tion that accurately reflect the limits of market forces
is on the deployment of broadband and, more impor- alone to deliver efficient outcomes that benefit con-
tantly, on broadband’s transformative power as an sumers, as well as the way such limits may shift as the
enabler for economic and social growth in the digital ICT sector evolves and matures. Governments should
economy. In turn, increased adoption and use of ICTs in also take care not to impose burdensome and unneces-
the next decade and beyond will be driven by the ex- sary regulation that may actually inhibit investment in
tent to which broadband-supported services and appli- broadband, impede competition, and limit the intro-
cations are not only made available to, but are also duction of new networks, services and applications.
relevant and affordable for consumers. Many of the successful deployments of new services
and applications have been facilitated because they fall
Take-up and usage patterns will vary widely among outside the regulatory regime or because regulators
countries depending on the level of development and have opted not to regulate these services.
maturity of the market, what users—both individuals
and businesses—demand, and how ICTs are positioned Beyond such limits, however, regulators and poli-
to enable such usage experiences. Numerous countries, cymakers must strive to make the case for broadband
such as Australia, Brazil, Hong Kong (China), Singapore, and ICTs by bridging the access gap through universal
the United Kingdom and the United States, are current- access and service (UAS) initiatives and by engaging in
ly engaged in highly visible public initiatives to facilitate possible public-private initiatives, where necessary, to
the future development of broadband infrastructure finance infrastructure. Making the case for broadband
and services; laying out comprehensive national broad- and ICTs also involves stimulating demand for ICT ser-
band plans; and developing and implementing digital vices by adopting policies directed at making ICTs af-
economy initiatives. Other countries, such as the Re- fordable for large parts of the population (e.g., low-cost
public of Korea, have been involved in such initiatives terminals, and reduced taxation of ICT equipment and
for well over a decade now. services) and promoting the creation of relevant and
compelling content (e.g., developing digital literacy
In developing countries, the shift from narrowband programs, e-government, e-health, and e-learning initi-
to broadband enabled IP-based services is likely to take atives).
place incrementally over the next decade and beyond.
Factors such as technology, costs, digital literacy and, in Network and service providers, on the other hand,
particular, compelling content and applications that must also make the case for broadband by offering ser-
meet consumer preferences, will be key to this transi- vices at the prices and with the features consumers
tion. Governments will be responsible for implement- demand. As voice-centric business models reach satu-
ing adequate policies and regulations that allow and ration, migration towards broadband services and ap-
enable a broadband ecosystem to develop and take plications targeting local needs will be necessary to
root as a means to support economic growth and social maintain continued revenue generation and growth.
development. Taking into account the state of market
development, governments must balance the need for This chapter charts the possible route regulators
targeted ex ante regulation to address foreseeable in- and policymakers can take to facilitate deployment of
stances of market failure in the deployment of commu- ICTs in the digital economy based on a multi-pronged
nications networks and services, while at the same time approach. Section 3.2 describes the broadband ecosys-
relying on market forces in areas within the ICT value tem and underscores the need to adopt policies that
Chapter 3 85
address the specific reasons for non-adoption of ICTs pervasiveness of ICTs, particularly the Internet, in mul-
within this environment. Section 3.3 highlights recent tiple sectors of the economy requires that regulation be
trends in the ICT sector, particularly regarding the shifts considered in a broader context. Issues such as the en-
towards ex post, competition-based regulatory policies vironment, data privacy and security, copyright protec-
and targeted ex ante regulations. Section 3.4 examines tion, healthcare and education are all integrated within
the need for greater cross-sectoral cooperation and the broadband ecosystem. As shown in Figure 3.1, this
coordination among governments in order to achieve ecosystem involves the multiple, interconnected layers
large-scale objectives, including promoting global e- of networks, services, applications and users.1 In order
environment policies and addressing transnational cy- to expand the broadband ecosystem, policymakers
ber security concerns. Section 3.4 notes how regulators, must continue their traditional focus on the supply of
in expanding the notion of UAS policies beyond basic competitive access networks (i.e., wireline and wireless
telecommunications services, are implementing provi- broadband networks), as such networks continue to be
sions to promote both access to and adoption of the critical pipeline linking the other elements within
broadband and ICTs in order to improve outcomes in the ecosystem. However, policymakers must also focus
every area of society, including education, healthcare on facilitating the supply of, and promoting the demand
and civic participation. Section 3.5 addresses how ICT for, broadband applications and services. Connectivity
regulators are coordinating with regulatory authorities to broadband networks will increase demand for ser-
responsible for other sectors, such as banking, the envi- vices and applications such as Internet Protocol televi-
ronment and health, to ensure that the benefits of ICTs sion (IPTV) and Voice over Internet Protocol (VoIP),
reach all members of society. cloud computing and online video streaming. Govern-
ments must complement and build upon this demand
3.2 Promoting Broadband by adopting policies that promote competition and in-
Deployment and Use novation, as well as developing initiatives that encour-
age the public’s engagement in ICTs, including
3.2.1 The Broadband Ecosystem e-government and e-health initiatives.
In the digital economy, the provision of access to

networks and services remains a critical issue. But the
Figure 3.1: The Broadband Ecosystem
Investments High-speed
and demand networks Availability
Users Services
Affordability,
Applications Access
relevance
Source: Strategies and Policies for the Developing World, GICT, World Bank
86 Chapter 3
Addressing the demand components of the broad- Each country must analyze and address these fac-
band ecosystem requires new tools for policymakers, tors on a case-by-case basis since certain impediments
and should be grounded in a comprehensive diagnosis to adoption may be important in some countries, but
of the reasons for non-adoption of broadband and ICTs. less of an issue in other countries. For example, based
Understanding the reasons for lack of adoption of on consumer surveys of non-users of Internet services
broadband services will be essential for designing ade- in Brazil2 and non-users of broadband in the United
quate policies to promote the development of broad- States,3 Figure 3.2 shows how some factors weigh more
band and ICT services over the next decade. Once non- heavily than others. High costs are the main obstacle in
adopters have Internet access available through either both countries, although cost plays a larger role in Brazil
wireline or wireless networks, the cost of access and than in the United States. By contrast, lack of access is a
devices, digital literacy and relevance of services tend main factor for non-adoption for many more Brazilians
to be the main obstacles to becoming a subscriber. This than Americans.
is true in both developed and developing countries, as
shown in Box 3.1.
Box 3.1: Inhibitors to Adoption and Use of Broadband Services

The main inhibitors to adoption and use of broadband services include:
• Lack of access: Deployment of high-speed broadband networks is the first step towards increasing adoption rates.
In Ghana, for example, one-fifth of non-users cite difficulty accessing the Internet as the main obstacle to adoption.
• Costs: Although non-adopters may have broadband connectivity available, they may not be able to afford either the
cost of subscribing to broadband services or a computer, or both.
• Digital literacy: Some non-adopters can access and afford broadband service, but do not subscribe because they
are unfamiliar with or uncomfortable using a computer or are concerned with the security of data and privacy on-
line. In Kenya and Ghana, more than 50 per cent of non-adopters cite not knowing how to use the Internet as the
main reason for non-adoption. The percentage of adults who do not know what the Internet is comprises 35 per
cent of Ghanaians and 41 per cent of Kenyans.
• Relevance: Instead of, or in addition to, the above three factors, non-adopters may not be interested in the content
delivered using broadband and consider the Internet to be a waste of time. In Ghana, of those who have used the
Internet, more than half only went online for basic functions (e.g., email, news and search functions).
Source: Hannah Bowen, Africa Development Research Series: Ghana, InterMedia, (March 2010).
Figure 3.2: Reasons for Non-Adoption of Internet in Brazil and Broadband in the United States
Sources: NIC Brasil, Análise dos Resultados da TIC Domicílios and FCC, Broadband Adoption and Use in America.
Chapter 3 87
3.2.2 ICT Adoption Rates are High, but er penetration in Europe being more than six times
Significant Disparities Remain higher than in Africa (Figure 3.3).8 In developing coun-
tries, where in most cases wireline infrastructure is not
New technologies, services and applications are be- widespread, mobile networks are the only viable access
ing deployed and taken-up by consumers at unprece- option available for large parts of the population. Not
dented rates. Mobile Internet adoption in the United surprisingly, it is expected that wireless technologies
States, for instance, has grown eight times faster than will play, and in many cases are already playing, a cru-
desktop Internet adoption in the first nine quarters af- cial role in broadband diffusion in the next decade, with
ter the launch of both services.4 Mobile cellular service today’s mobile voice users slated to be tomorrow’s
take-up has been a remarkable success story, with 2010 broadband users. To ensure that mobile networks are
estimates of mobile penetration (i.e., subscribers per able to keep pace with demand from broadband users
100 inhabitants) surpassing 100 per cent in Europe and for applications and services, such as m-health and m-
the Commonwealth of Independent States (CIS) and banking, the ITU and the World Bank have acknowl-
reaching more than 40 per cent in Africa.5 Wireless edged the benefits of implementing spectrum policies
networks, particularly mobile cellular networks, are the that maximize the amount and value of spectrum avail-
most prevalent method for accessing communications able, particularly through the award of digital dividend
and ICT services and applications in the world, with spectrum and spectrum refarming, as well as flexible
smartphones now driving the adoption of mobile use spectrum policies.9
broadband. By year end 2010, worldwide mobile cellu-
lar penetration will be nearly 60 per cent, with a ratio of 3.2.3 New Applications and Services Will
3.2 mobile cellular lines for each fixed line in service.6 In Challenge Regulators and Policymakers
developing countries, however, this ratio is even more
skewed towards mobile cellular service. Already at year While ICTs are permeating the commercial and fi-
end 2008, the mobile-fixed line ratio was 66.9:1 in nancial realm, the workplace, entertainment, and social
Kenya; 105.1:1 in Tanzania; 50.8:1 in Uganda; and interaction and networking, this is just the beginning. In
39.1:1 in Zambia.7 the next decade, ICTs will pervade our day-to-day activi-
ties on a more significant level, providing an even
However, there still remain significant disparities in greater breadth of applications and services -- many of
Internet usage between regions, with the International which are not yet commercially available, or even con-
Telecommunication Union (ITU) estimating Internet us- ceived.
Figure 3.3: Estimated Internet user penetration, by region, 2010
% 70 62.7
60
48.7
50
40
30 25.7
19.1 19.6
20
7.5
10
0
a c s S s pe
ric ifi te CI ica
Af Pac S ta er uro
- E
ia ab Am
As Ar
Source: ITU, World Telecommunication/ICT Indicators Database
88 Chapter 3
IP-enabled services and applications delivered by tial new challenges for regulators and policymakers.13
broadband networks will propel the digital economy in The promotion of ICT take-up in the next decade will
the next decade. For example, in only five years You- continue to require enabling ICT regulatory environ-
Tube surpassed the two billion views a day milestone ments. Policies will have to target the root of the large
on a global basis. YouTube reports this is nearly double disparities in Internet use between developing and de-
the prime-time audience of all three major free over- veloped countries and, particularly, the deployment of
the-air television networks in the United States com- broadband, as well as dealing with the issues raised by
bined.10 Similarly, if VoIP leader Skype were classified as the new technologies and applications. As discussed
a telecommunications carrier, it would be the largest below, policymakers are presently adopting a mixed
“carrier” in the world based on registered users, con- approach that features a blend of targeted ex ante reg-
trolling 12 per cent of world-wide international long ulations aimed at fostering investment and deployment
distance traffic11 (see Figure 3.4). of networks and services and ex post rules to address
anticompetitive conduct as technology and services
At the same time, social networking sites are be- converge.
coming more and more popular in both developed and
developing countries. In fact, 15 out of the top 30 coun- 3.3 Trends in ICT Regulation
tries by number of Facebook users are developing
countries (see Figure 3.5). Chile, for example, has a As ICT markets become more competitive, regula-
comparable number of Facebook users as a percentage tors are beginning to transition from ex ante to ex post
of the population as more developed economies like regulation. This is particularly true in the case of broad-
Australia, Sweden and the United Kingdom, while Ar- band markets, where the various links in the value
gentina, Colombia, Turkey and Venezuela also have rel- chain may be subject to different degrees of competi-
atively high usage. In addition, Facebook has expanded tive pressure. In promoting access to and adoption of
its focus, offering a wider range of services -- from ICTs, policymakers must consider whether to: 1) estab-
communicating personal messages and “status updates” lish sector-specific, forward-looking regulation (ex ante
to exchanging content to gaming – which provides a regulation) to prevent or promote certain activities, or
broad user experience inside its pages. However, this 2) establish or rely on competition law to remedy spe-
expansion begins to raise a series of new regulatory is- cific instances of anti-competitive behaviour (ex post
sues (e.g., relating to data protection and privacy), and regulation). Due to the fast pace of technological ad-
may subject such social networking sites to increased vances and an increasing recognition of the value of ro-
regulatory scrutiny, as is the case in the United States, bust competition, policymakers increasingly have
Canada, and Europe.12 implemented ex post rules to foster innovative markets
while imposing targeted ex ante regulation to address
This ICT-enabled environment also features stake- specific market failures, particularly with respect to the
holders with global reach, a factor that presents poten- physical layer of the broadband ecosystem.
Figure 3.4: Top five mobile carriers by subscribers compared to Skype registered users (1Q 2010)
600
500 539 560
400
Millions
300 333
200
206 206
179
100
0
China Vodafone* Telefónica América Telenor Skype*
Mobile Móvil
Note: * Figures refer to 4Q 2009

Source: Company reports, Telegeography, Morgan Stanley
Chapter 3 89
Figure 3.5: Top 30 countries by number of Facebook users
Source: Authors based on Nick Burcher, Facebook usage statistics - March 2010; Population Division of the Department of Economic and So-
cial Affairs of the United Nations Secretariat, World Population Prospects: The 2008 Revision
3.3.1 Targeted Ex Ante Regulation for the 3.3.1.1 Access networks

Physical Network Layer
Broadband access networks refer to the links be-
Ex ante regulation is anticipatory in nature and di- tween the exchange or node and the end user, which
rected toward situations where market failures are ex- may be provided via cable, fibre, xDSL or wireless tech-
pected to occur.14 The objective of ex ante regulation in nologies(terrestrial and/or satellite). These links are
the ICT sector is to adopt measures to prevent socially generally referred to as the last-mile. The degree and
undesirable outcomes or to direct market activity to- extent of ex ante regulation of the access network, par-
wards desirable ends in light of the anticipated market ticularly on the wireline side, has varied significantly
failure.15 Accordingly, ex ante regulation should be nar- even among developed economies, ranging from a
rowly-tailored to address the specific instances of ex- light-hand approach towards more extensive restric-
pected market failure. At minimum, the following three tions and obligations.
broad guidelines should be followed when considering
the adoption of ex ante regulation: 1) regulation should Wireline networks
reflect national conditions and goals; 2) regulation
should first attempt to resolve market failure at the Many countries, particularly in Europe, have
wholesale level; and 3) regulation should be periodical- adopted ex ante regulations focused on access net-
ly reviewed and phased-out when warranted (see works to prevent large, incumbent providers from leve-
Box 3.2). raging market power in ways that harm consumers
through high prices and low quality of service. These
Over the next decade, ex ante regulation will con- regulations may include light-touch rules relating to
tinue to be targeted at the physical infrastructure un- sharing of passive infrastructure or more intensive obli-
derlying broadband networks and may begin to address gations requiring active sharing, including sharing
challenges in other areas such as services and applica- access node switches or unbundling the local loop.16
tions. Consequently, regulations will likely focus to vary- Such approaches have been implemented in both de-
ing degrees on access networks, backbone, backhaul veloping and developed countries to encourage local
and international connectivity. The following sections access and competition, including Denmark, France,
address the importance of each of these links in the Japan, Korea (Rep.), the Netherlands, Nigeria, Norway,
development of broadband networks and recent regu- Saudi Arabia, Sweden, South Africa and the United
latory trends affectingeach one. Kingdom.17 Although open access requirements began
with legacy wireline networks (i.e., copper pairs), they
are increasingly being applied to fibre broadband net-
works.
90 Chapter 3
Box 3.2: Imposing targeted ex ante regulation on the physical layer

• Regulation should reflect national conditions and goals
Different countries have different socio-economic, geographic, and political circumstances. In addition, their level of infra-
structure development can vary widely. As a result, solutions to reach national goals that were effective in one country may
not translate to another and must be tailored. Therefore, imposing ex ante regulation will require a fact-based assessment
of a country’s the market conditions and entails the collection, review and analysis of detailed information in order to at-
tempt to accurately predict future behaviour and outcomes. Ex ante regulation should be targeted to address the specific
problem(s) detected. A clear and accurate demarcation of the circumstances where market forces will not deliver desirable
outcomes will be key to implementing targeted ex ante regulation in the coming decade.
• Regulation should first attempt to resolve market failure at the wholesale level
In liberalized ICT markets, any ex ante regulation should be primarily focused on wholesale services and facilities. Where a
regulator identifies competitive concerns at the retail level, narrowly-tailored regulation of wholesale inputs identified as
bottlenecks is generally preferred, allowing other links in the value chain of end-to-end services to be more responsive to the
competitive process. This approach ensures that competitive concerns at the retail level are adequately addressed while al-
so limiting ex ante regulation to those areas where the benefits to consumers cannot be achieved using ex post regulation.
• Regulation should be periodically reviewed and phased-out when warranted
The dynamic nature of ICTs requires regulators to monitor and periodically reassess competitive conditions in the market-
place. Technological changes can quickly impact the ICT market, displacing the rationale for ex ante regulation or shifting its
focus towards other links in the ICT value chain. Periodic monitoring requires regulators to devote significant time and re-
sources to reviewing and revising targeted ex ante regulation since static regulation may stifle innovation and investment.
Given their resources, when adopting ex ante regulation, regulators should strike the right balance between safeguarding
the interests of consumers and promoting long-term development of the sector. Although ex ante regulation may be neces-
sary in the short term, the goal is to reduce ex ante rules as competition develops and, ultimately, for ICT services to be dis-
ciplined primarily by competition law.
Source: Telecommunications Management Group, Inc. (TMG)
Wireless networks specific market conditions, may allow wireless net-

works to compete against wireline technologies in the
The spectral efficiency of wireless technologies has provision of broadband services for the first time within
increased by a factor of roughly 40 since the launch of the next decade. In some countries, such as in Austria,
second-generation (2G) mobile wireless services. 18 Portugal and Finland, such competition has already
These technological advances, depending on country- emerged (see Box 3.3).
Figure 3.6: Passive and Active Infrastructure Sharing
• Access to rights-of-way, poles, ducts, trenches, sewers and towers.

• Benefits include reduced roll-out costs, deployment times and operating costs, as
well as less environmental stress due to less digging or placement of antennas on
towers, buildings or poles.
Passive
Sharing
• Parts of the network (usually of the dominant/SMP operator) must be available to

competitors at regulated or wholesale rates.
Active • May include local loop unbundling, bitstream or wholesale access and/or resale.
Sharing
Source: ITU
Chapter 3 91
Box 3.3: Transformative potential of wireless in broadband-based competition: the case of Austria
In 2009, the Austrian regulator (RTR) found that significant fixed-to-mobile substitution in the Austrian residential broad-
band market warranted withdrawal of ex ante regulation (i.e., bitstream access). In its wholesale broadband market analysis,
RTR found that DSL, cable modem and mobile broadband connections are substitutes for residential consumers at the retail
level. By including broadband connections over the three networks within the same relevant market, RTR determined that
strong infrastructure-based competition – especially from mobile broadband – created a trend towards effective competi-
tion in the retail residential market for broadband service in Austria.
RTR noted that in Q1 of 2009, the total number of mobile broadband connections represented close to 35 per cent of all
broadband connections, while DSL and cable modems represented around 40 per cent and 22 per cent respectively. For the
period of 1Q2007-1Q2009, the mobile broadband growth rate was 19.6 per cent, outpacing the growth rate for DSL (3.4 per
cent) and cable modem (0.7 per cent). RTR found that fixed and mobile broadband prices moved closely together, with fixed
broadband providers directly reacting to price reductions implemented by mobile broadband providers Further, RTR found
that pricing pressure from mobile broadband began reducing margins in 2007 for access-based competitors, leading to a
decline in bitstream connections and the stagnation in ULL connections. Not surprisingly, RTR also found that 76 per cent of
Austrian consumers (76 per cent) purchased stand-alone mobile broadband connections while only 24 per cent purchased it
bundled with a fixed connection, indicating that consumers viewed both types of connections as substitutes rather than
complements. In December 2009, the European Commission endorsed RTR's decision.
Source: RTR, Abgrenzung des Marktes für Breitbandigen zugang auf Vorleistungsebene, November 2009; EC, Letter of 7 December 2009,
Case AT/2009/0970.
Over the next decade, in countries where wireline Spectrum policies should facilitate wireless broad-
infrastructure is not widespread, wireless networks will band deployments and should take into account the
play (and in some cases are already playing) a crucial expected increases in data traffic that wireless services
role in broadband diffusion, particularly through third will generate.19 As subscribers use wireless networks for
generation (3G) and fourth generation (4G) mobile ser- broadband connectivity more intensely, throughput re-
vices. In Morocco, for example, 3G connections sur- quirements will increase significantly not only on the
passed fixed broadband connections (ADSL) in 2009, access network, but also for backhaul and backbone
and by May 2010, more than doubled them (Figure 3.7, connectivity.
left). Most interestingly, mobile broadband accounts for
almost all the growth in household penetration of
broadband connections in Morocco (Figure 3.7, right).
Figure 3.7: Mobile broadband development in Morocco
Broadband subscriptions Broadband subscriptions

per 100 inhabitants per 100 homes
5 4,7 20
3,7
4 3,2 15
3 2,4 10%
2,2 4%
1,7 10
2 1,5 1,5
1,5 1%
1 0,8 5 9% 8%
0,1 1,5 6% 6%
0 0
2007 2008 2009 mai/10 2006 2007 2008 2009
ADSL 3G Total ADSL 3G
Source: Michael Minges, Crafting a Broadband Strategy for Developing Countries an Evidence-Based, Case Study Approach, Telecommunica-
tions Management Group, Inc.20
92 Chapter 3
To support this expected increase in demand, regu- non-discriminatory basis to competitors and ultimately
lators should implement policies that promote the to end users. In some cases, regulators have required
most efficient and effective use of spectrum resources. carriers to separate their backbone operations from
Such policies include making sufficient spectrum avail- their access network (or retail) operations on either a
able for broadband by freeing up spectrum bands that functional or structural basis.
are either unused or underutilized. Policies for assign-
ing spectrum should feature mechanisms that guaran- 3.3.1.3 Backhaul networks
tee both that the resource will be held by the parties
that will use it more efficiently and that important so- Backhaul refers to the links used to transport traffic
cial objectives are achieved, such as the provision of from a geographically distant point, such as a wireless
connections to schools, hospitals and government of- base station, to a significant aggregation point in the
fices and coverage of unserved or underserved areas. network, such as a mobile telephone switching office.25
Similarly, flexible use of current and future commercial Since backhaul costs often constitute a significant por-
assignments should be considered as a means to facili- tion of a network’s operating costs, particularly for mo-
tate technological evolution. bile operators, competitive and well-functioning
wholesale markets for backhaul capacity are a critical
3.3.1.2 Backbone networks component for broadband diffusion and ICT services
deployment and take-up. Targeted ex ante regulation
Backbone networks refer to the high capacity may therefore focus on establishing a framework for
communications facilities that carry traffic between at backhaul network sharing to ensure that competitors
least two major nodes, and may consist of fibre optic, have wholesale access to backhaul capacity while
satellite or terrestrial wireless systems.21 High capacity guarding against possible anti-competitive conduct that
backbone networks are essential for broadband con- can occur when operators share facilities. Backhaul
nectivity since they link access networks and ultimately network sharing can be achieved either through fibre
end users. However, they require heavy investments. cables or microwave links.
For example, the backbone of a typical mobile voice
network represents approximately 10-15 per cent of Developing countries are beginning to focus on
the total network costs, with the costs of providing core backbone and backhaul networks as a means to
broadband substantially higher.22 Increasing the num- increase broadband deployment. South Africa, for ex-
ber of users purchasing network service is one key way ample, established a state-owned, fibre-based infra-
to defray the costs of deploying and operating a back- structure provider, Broadband Infraco, to provide
bone network. This is typically accomplished by resel- national backhaul connections on a wholesale basis.26
ling capacity on backbone networks on a wholesale, Brazil has also begun to focus on backhaul; it struck an
non-discriminatory basis to downstream providers, agreement with five fixed-line operators to build out
which helps to establish competition across multiple broadband backhaul networks to 3,439 unserved mu-
tiers of service.23 nicipalities in exchange for being relieved of existing ob-
ligations to install 8,000 dial-up equipped telecentres.27
One important issue that many regulators will have
to address is related to vertical integration, where the 3.3.1.4 International connectivity
backbone network providers are vertically integrated
with the network operators, which results in a single International bandwidth demand has increased
end-to-end provider that can wield great market power. significantly as ICTs, particularly the Internet, have been
This is the case in many developing countries.The first adopted more widely. Between 2002 and 2009, inter-
step towards facilitating competition in vertically inte- national bandwidth usage increased by 60 per cent,
grated networks is to ensure a liberalized market. In with the strongest demand growth taking place on links
some countries in Sub-Saharan Africa, for example, to Africa, Latin America and Middle Eastern countries.
mobile operators are prohibited from using the incum- Countries in these regions saw annual growth rates of
bent’s network for backbone services, resulting in slow over 74 per cent in this period.28 However, adequate
growth in broadband infrastructure.24 The second step international connectivity is limited by gateways that
towards increasing competition may entail targeted, ex can act as bottlenecks by restricting traffic flows and
ante regulations requiring the backbone network pro- artificially increasing prices.
vider to vertically disaggregate to various extents and
offer network capacity on a wholesale, open access and
Chapter 3 93
For those countries that do not have the benefit of to undersea fiber optic with onward connections to In-
competing infrastructure and well functioning interna- dia and Europe has resulted in Kenya Data Networks
tional gateway markets, ex ante regulation may be war- (KDN), a Kenyan data services provider, announcing it
ranted. Some countries, such as Singapore29, India30 and would “slash” Internet prices by 90 per cent.35 However,
Colombia, have resolved instances of market failure liberalization may be more difficult in some developing
through ex ante regulation imposing various obligations countries, particularly those that are landlocked or iso-
on the owners or operators of international gateways. lated small island developing states (SIDS)36 without
In Colombia, for example, after conducting a review of access to submarine cables since they may have to rely
wholesale inputs for broadband Internet access, the instead on alternative technologies, such as satellites,
regulator found that cable landing stations constitute which may carry a higher price premium.
essential facilities and thus required landing station op-
erators to provide access to their facilities on non- 3.3.2 Transition from Ex Ante towards an
discriminatory terms and conditions and to publish a Ex Post ICT Regulatory Environment
reference access offer.31
Recognizing that the rationales for ex ante regula-
Self-regulation can also be a tool, in which consor- tion no longer hold as markets mature and become
tium agreements contain non-discrimination and open- more competitive, gradual fine-tuning or, in some cases,
access safeguards to address potential problems even full withdrawal of targeted ex ante regulation be-
stemming from absent or ineffective competition and comes necessary to better reflect competitive condi-
regulation. Self-regulation was used in the case of the tions in the market and serve consumer interests.
Eastern African Submarine Cable System (EASSy), a When market conditions warrant the phasing out of ex
project to build a submarine fibre-optic cable that runs ante regulation, regulators should consider, on a case-
from South Africa to Sudan with connections to all of by-case basis, the need to establish sunset provisions or
the countries along its route. Launched in 2010, EASSy, transition periods to ensure a smooth shift into an ex
allows any of the consortium members to sell capacity post regulatory environment. Transition periods allow
in any market in the region to licensed operators on stakeholders, consumers and service providers to grad-
non-discriminatory terms and conditions, creating ually adapt to a new regulatory framework. Both the
competition for the remaining members of the consor- United Kingdom and Portugal, for example, adopted
tium.32 A similar approach was used in the SEACOM sys- transition periods as they moved from ex ante forms of
tem, launched in early 2009.33 regulation to ex post regulatory frameworks. In May
2008, when reviewing the wholesale broadband access
However, contractual agreements alone may not markets, Ofcom determined that British Telecom (BT)
resolve market failure where effective regulatory no longer had significant market power (SMP) in local
frameworks for competitive international connectivity exchanges where alternative services providers had
have yet to be adopted or enforced. One example is the emerged. In response, Ofcom withdrew certain regula-
South Atlantic 3/West Africa Submarine Cable (SAT- tory obligations immediately (e.g., non-discrimination
3/WASC), which runs along the West coast of Africa. and transparency requirements), but required BT to
Despite evidence of increased market concentration, provide existing customers network access for a
possible exclusionary practices and underutilization of 12-month transition period to afford BT’s wholesale
the infrastructure, the relevant national regulatory au- customers the opportunity to make alternative ar-
thorities have not addressed the contractual agree- rangements. Similarly, when reviewing the wholesale
ments that guarantee exclusive control over and use of broadband access market in 2009, ICP-ANACOM found
submarine cables and landing stations by members of that Portugal Telecom (PT) did not have SMP in certain
the owning consortium, most of which are incumbent geographic markets and accordingly decided to with-
providers.34 draw ex ante regulation in such markets. Unlike Ofcom,
the Portuguese regulator opted to maintain a
In the long-term, liberalization and promotion of 12-month phase-out period for most ex ante obliga-
competition among and within facilities that provide tions imposed on PT in these geographic areas, includ-
international connectivity, in particular submarine ing non-discrimination, transparency, access, cost
cables and landing stations, is the best way to guaran- accounting and financial reporting. The price control,
tee lower costs. For example, the 2009 landing of the however, was phased-out immediately upon the adop-
SEA Cable System (SEACOM) that interconnects Kenya, tion of the decision.37
Madagascar, Mozambique, South Africa, and Tanzania
94 Chapter 3
Finally, it is also possible that regulatory authorities 3.3.4 Addressing Vertical and Horizontal
may reinstate ex ante regulation (i.e., re-regulate). Al- Integration
though re-regulation is likely to be an exceptional
measure, changes in expected market outcomes or In the technology-converged ICT environment, in-
even regulatory errors may justify such a measure.38 formation technology firms not traditionally associated
with the provision of telecommunications services or
3.3.3 Relying on Ex Post Regulation to equipment are entering new lines of business that may
Address Anticompetitive Practices result in vertical and horizontal integration. Apple, for
example, began as a computer company and now of-
Relying on ex post regulation to address competi- fers various devices, such as the iPhone, that run a plat-
tive concerns in the ICT market requires the implemen- form (Operating System - OS) that is tightly coupled
tation of competition laws and regulations that are with its vertically integrated business of media distribu-
effective, enforced and suited to the country’s specific tion through iTunes and Apple TV, as well as applica-
conditions. This legal safety net is crucial for competitions for mobile devices through the App Store.
tive forces to take root, but implementing ex post regu- Similarly, Google began as a search engine and Internet
lation may represent a major challenge, particularly for advertising firm, but has branched into an array of roles
developing countries that lack competition laws and including mobile communications device manufacturer,
regulations or are affected by weak institutional struc- applications provider, an energy company and poten-
tures. This challenge may be compounded where eco- tially a TV white spaces database administrator (see
nomic systems have traditionally relied on strong state Box 3.4).
intervention, resulting in entire sectors and most domi-
nant firms being state owned, controlled by the gov- Although regulatory authorities have more typically
ernment or afforded special protection by government focused on the potential anticompetitive effects of ho-
policies.39 rizontal integration, vertical integration issues may be-
come more prominent as technology convergence blurs
For over a decade, a series of initiatives have been the lines between markets. In reviewing both vertical
implemented to create competition law frameworks in and horizontal integration issues in today’s converged
various countries around the world. Approximately and liberalized ICT environment, regulators will have to
100 countries have adopted competition laws, with a assess potential mergers on a case-by-case basis and
quarter of those being developing countries.40 Similarly, analyze the merger’s likely effects on the relevant mar-
a series of regional initiatives have been adopted to es- kets. Necessary scrutiny should be given to integration
tablish competition law rules and principles, including while at the same time taking into account the highly
in the Association of Southeast Asian Nations (ASEAN), competitive and fast-paced environment enabled by
in the Common Market for Eastern and Southern Africa ICTs in order to avoid decisions that may stifle competi-
(COMESA),41 in the Economic and Monetary Union of tion and innovation.47
West Africa (UEMOA),42 in the Economic and Monetary
Community of Central Africa (CEMAC), in the Caribbean 3.4 Implementation of Cross-
Community and Common Market (CARICOM),43 in the Sector Activities
Andean Community (CAN),44 and in the Common Mar-
ket of the Southern Cone (Mercosur).45 Since ICTs interact and intersect with every other
major social issue and sector of the economy, including
Countries without general competition laws, such the environment, cybercrime and security, education,
as the United Arab Emirates and the Kingdom of Ba- health and banking, governments must coordinate var-
hrain, are beginning to develop ICT-specific ex post ious interests in order to achieve large-scale objectives.
rules. In Bahrain, for example, the Telecommunications Tackling ambitious cross-sector goals requires the coor-
Regulatory Authority (TRA) plays the dual role of both dination of the government authorities responsible for
regulator and competition authority for the ICT sector; these sectors. It also requires regulatory frameworks
the TRA introduced an ICT competition framework in broad enough to allow the ICT regulator to consider the
February 2010.46 Section 3.5 further discusses the role relevant interrelated issues while remaining focused on
of and interactions between authorities responsible for promoting innovation and development in the ICT
enforcing ex ante and ex post regulation in the ICT sector.
sector.
Chapter 3 95
Box 3.4: Market shares of smartphone sales to end users by OS, 2009
In 2009, Symbian continued to lead the smartphone OS market, but its share dropped 5.4 per cent duet to competition from
companies like RIM and Apple and weakness in Nokia’s smartphone sales. The best performers in 2009 were Android
(Google) and iPhone OS (Apple). Android increased its market share by 3.5 per cent in 2009, while Apple's share grew by 6.2
per cent from 2008, which moved it to the third position, displacing Microsoft Windows Mobile.
Other Oss Android WebOS

Android
Linux 0.5% 2.9% Microsoft Linux 3.9% 0.7% Other Oss
4.7% 0.6%
7.6% Windows
Microsoft Mobile
Windows 8.7%
Mobile
11.8%
Symbian Symbian
iPhone OS 52.4% iPhone OS 47.0%
8.2% 14.4%
Research In Research In
Motion Motion
16.6% 19.9%
2008 2009
Android smartphones are expected to become the second-largest platform, after Symbian, by the end of 2010. Android’s
stellar performance, surging from 0.5 per cent market share to a projected 22.2 per cent in just two years, illustrates the
highly competitive nature of this nascent ICT market.
Source: Gartner, www.gartner.com/it/page.jsp?id=1306513 and www.gartner.com/it/page.jsp?id=1434613.
3.4.1 ICTs and the Environment new approaches to ICT policies and regulation in order
to capitalize on the ways that ICTs can facilitate better
Countries at all stages of development face envi- environmental stewardship, while minimizing the nega-
ronmental problems related to climate change, pollu- tive impact of ICTs on the environment.
tion, energy and decreases in biodiversity. ICTs can help
to address climate change issues across the economy, 3.4.1.1 ICTs and climate change51
particularly in the energy, construction and transporta-
tion sectors; ICTs can also improve water management ICTs are a necessary part of monitoring the effects
techniques, protect biodiversity and reduce pollution.48 of climate change.52 They are also essential for the
ICTs impact the environment in positive ways, such as monitoring systems of weather forecasting and climate
by allowing online delivery of information, telecommut- observation, as well as for predicting, detecting and mi-
ing and video conferencing. tigating the effects of natural disasters.53 Furthermore,
ICTs provide important remote sensing capabilities for
Despite the many ways in which ICTs can reduce climate and weather monitoring.54 The data provided
the impact of human activity on the environment, ICTs by ICTs are then used for computer modeling to show
also contribute to global greenhouse gas emissions and the effects of climate change on the environment.
the production of electronic waste (“e-waste”). For ex- These data can also be processed through grid compu-
ample, the rise of broadband-enabled devices using ting, which relies on broadband networks to connect
“always on” connections and increased processing ca- scientists and allows them to draw on data resources
pabilities will require greater amounts of energy in or- distributed around the world.55 Grid computing pro-
der to power these devices. 49 The rapid pace of vides small and remote research institutions with
innovation and technological change has resulted in access to the newest environmental data and also en-
more frequent replacement of electronic devices, courages networking and virtual collaboration. 56 As
which has created enormous amounts of e-waste as shown in Box 3.5, ICTs can also help to reduce green-
mobile phones, computers and other devices are quick- house gas (GHG) emissions and contribute to positive
ly discarded and replaced with newer devices.50 Policy- environmental change in a variety of ways.57
makers around the world are increasingly examining
96 Chapter 3
Box 3.5: Ways that ICTs can reduce GHG emissions

• ICTs increase information flow and networking and can reduce duplication of activities across and between organi-
zations;
• ICTs allow for a systematic approach on local, regional and international levels in order to deal with complex, multi-
disciplinary issues such as the environment;
• Web services can save energy and reduce GHG emissions;
• Free and low-cost web-based applications help developing countries save financial resources, which can be put to-
wards green initiatives; and
• More energy efficient devices lead to lower GHG emissions.
Source: ITU, ICTs for e-Environment: Guidelines for Developing Countries, with a Focus on Climate Change
3.4.1.2 E-waste the production of e-waste is growing by about 40 mil-

lion tons per year.60 By 2030, developing countries will
Rapid technological changes in the ICT sector, rising discard 400 million to 700 million obsolete personal
incomes and falling prices for electronic products have computers each year as compared to 200 million to 300
resulted in a seemingly endless number of new elec- million in developed countries.61
tronic products with many economic and social bene-
fits. However, the proliferation (and short product Given the growth of e-waste, it is essential that po-
cycles) of these devices also creates a problem as they licymakers implement effective legal frameworks that
are discarded; they become electronic waste control both legal and illegal trade in, as well as the
(“e-waste”). This can be a particular problem for devel- generation of, e-waste with active participation from
oping countries where recycling facilities may be less governments and the private sector. Regulatory meas-
developed.58 Although approximately 53 million tons of ures, such as stricter environmental regulations and re-
e-waste was generated worldwide in 2009; only 13 per cycling requirements, have been introduced in a
cent of it was recycled.59 To compound the problem, number of countries to prevent or minimize e-waste.
Figure 3.8: Quantities of e-waste generated from PCs in Senegal and Uganda, 2005-2020
Quantity of e-waste generated from PC
16'000
14'000
12'000
[metric tonnes]
10'000
8'000
6'000
4'000
2'000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Senegal Uganda
Source: UNEP, Recycling—From E-Waste to Resources
Chapter 3 97
For example, the European Commission passed di- and through high-efficiency cooling systems and digital
rectives in 2003 that impose stricter rules on Member displays.65
States, as well as set targets for consumer participation
in recycling programs. Directive 2002/96/EC on waste Policymakers are also adopting other comprehen-
electrical and electronic equipment (“WEEE Directive”) sive “green ICT” plans to increase green ICT skills and to
developed rules to reduce e-waste and to promote the develop public awareness about the role ICTs play with
reuse, recycling and recovery of e-wastes. In Sweden, respect to climate change. In Egypt, for example, the
e-waste laws are largely credited with making the coun- Ministry of Communications and Information Technol-
try one of the global leaders in e-waste recycling.62 ogy (MCIT) adopted the Green Information and Com-
Sweden has placed the responsibility for the collection munication Technology (ICT) Strategy in August 2010.
and disposal of e-waste on the producers of electronic The program involves several initiatives, including:
devices, known as “Extended Producer Responsibility” forming a private/public sector task force that will con-
(EPR). Sweden implemented a national e-waste regis- duct ICT-related education workshops and seminars,
tery in 2007, and requires all electronic device manu- holding training programs to build green ICT skills in
facturers to register, to report the quantities of Egypt’s workforce, and raising awareness of the roles
products sold as well as to report the percentage of de- that ICTs can play in reducing GHG emissions from all
vices that have been collected and treated. sectors of the economy and preserving natural re-
sources.66 Rather than implementing these initiatives
In April 2010, the Indian government drafted the alone, the MCIT has partnered with the Ministry of En-
E-Waste (Management and Handling) Rules, which vironmental Affairs through a Memorandum of Under-
would incorporate EPR as a basic principle (similar to standing.67 As addressed in Section 3.5.3, ICT regulators
Sweden), placing the burden on the producer to track and environmental agencies around the world are in-
the life cycle of devices.63 Additionally, India’s E-Waste creasingly working together to accomplish their goals
Rules would ban the import of used electronic devices more effectively.
for charity, a measure similar to the Ban Amendment of
the Basel Convention. 3.4.1.4 International efforts to promote ICTs and
environmental initiatives
3.4.1.3 Domestic ICT and environmental policies:
Towards green ICTs Cooperation among countries, including conduct-
ing multi-country studies, implementing regional initia-
Governments around the world have begun adopt- tives and capacity building, is important to capturing
ing various initiatives to address the environmental is- the greatest benefits from green ICT initiatives due to
sues highlighted above, including programs to increase the cross-border effects of climate change and other
environmental research and development (R&D), pro- environmental issues. For example, a recent study by
mote “green ICT” innovations and develop the Organisation for Economic Co-operation and De-
e-environment skills through consumer and business velopment (OECD) analyzed 92 green ICT programs
education. Government-sponsored programs to in- sponsored by governments and industry in 22 OECD
crease R&D activities are among the most common in- countries plus the European Commission. The report
itiatives, particularly for creating energy efficient ICTs. confirmed that both the public and private sectors have
Japan, for example, established the Green IT Project to adopted a range of ICT and e-environment policies ad-
encourage collaboration between industry and acade- dressing research and development (R&D), innovation,
mia in order to develop energy efficient ICTs.64 With an green ICT initiatives and education on ICTs and the en-
annual budget of JPY 3 billion (USD 32 million), the in- vironment.68 The OECD countries passed a recommen-
itiative has focused on reducing energy consumption by dation in April 2010 calling for member countries to
over 30 per cent in several areas, including in network establish or review their policies for ICTs and the envi-
components such as routers and data storage centres ronment.69 Details of the OECD Recommendation are
highlighted in Box 3.6.
98 Chapter 3
Box 3.6: OECD recommendation on ICTs and the environment

The key areas for member countries to address in reviewing ICTs and the environment include:
• The coordination of ICT, climate, environment and energy policies in order to assess the direct effects of ICTs on the
environment and enable ICTs to positively affect other sectors.
• Support for research and innovation in green technologies and services, particularly for “smart” applications.
• The promotion of green ICT-related education, training and skill development to meet demand for environmental
skills and expertise at all levels and in all industries.
• Methods to increase public awareness of the role of ICTs in improving environmental performance, which includes
the widespread development and adoption of clear standards and eco-labels based on life cycle approaches to pro-
duction, use and disposal of ICT goods and ICT-enabled applications.
• Approaches by which Governments can lead by example and minimize the environmental impact of ICTs in public
administration through green ICT approaches, applications and services.
• The setting of transparent policy objectives and targets to measure and improve government green ICT strategies,
including ICT-enabled applications across the economy.
• Private sector engagement to foster support for e-environmental issues since the private sector will implement
many of the green initiatives.
Source: OECD, Recommendation of the Council on Information and Communication Technologies and the Environment
3.4.2 ICTs and Cyberthreats breaches cost businesses as much as USD 1 trillion glo-
bally due to losses in intellectual property and expendi-
3.4.2.1 Growth in ICTs and cyberthreats tures for repairing the damage from breaches.73 With
revenues from cybercrimes exceeding USD 100 billion
The expansion of ICTs into every aspect of our lives, in 2007, which was more than the worldwide illegal
including shopping, banking, water and electricity sup- drug trade, the lucrative nature of cybercrime means
plies, social networking, health care, education, traffic that cybercrime will only continue to rise without con-
management and commerce, leaves us increasingly certed global action.74
vulnerable to cybercrime. Cybercrime is often de-
scribed as “any activity in which computers or networks Cyber security is important to protecting infrastruc-
are a tool, a target or a place of criminal activity.”70 In ture, as well as protecting individuals’ data privacy.
order for people to enjoy the many benefits of an inter- However, there are both technical and legal challenges
connected world, they must feel confident in the secu- to preventing technology-related cybercrime and to
rity of the networks, services and applications they use. minimizing cybercrime’s detrimental impact. Chal-
Policymakers must therefore seek to protect legitimate lenges include the growing reliance on ICTs, which
activities against four broad categories of cybercrimes: means that even short interruptions in service can re-
1) offenses against data privacy and the integrity of sult in great financial damages. Additionally, the ubiqui-
computer systems, such as illegal access and data inter- ty of Internet access increases the number of targets
ference; 2) computer-related offenses, such as cyber for cybercrime, and makes it easier for offenders to es-
theft and fraud; 3) digital piracy and copyright viola- cape identification.75 The sheer volume of information,
tions; and 4) content-related offenses, which may in- users and devices adds to the difficulty of tracking and
clude illicit content, online gambling, libel and cyber locating cyber criminals.
bullying.71
3.4.2.3 Digital piracy
3.4.2.2 Technology-related offenses
In the digital age, copyright violations have soared
The first two types of cybercrimes listed above – due to illegal downloading and file sharing, which have
data privacy and computer-related offenses – are tech- particularly affected the music and movie industry. An
nology-related offenses most often associated with cy- estimated 95 per cent of all music downloads world-
bercrimes. These offenses include hacking, remotely wide are illegal76 and revenues from global music sales
deleting information through viruses and system inter- have declined about 30 per cent between 2004 and
ference through computer worms or denial-of-service 2009, representing billions in lost sales.77 To combat
attacks.72 In 2008 alone, data theft and cyber security these problems, countries are increasingly considering
Chapter 3 99
the imposition of heavy penalties and fines against Organization (WIPO) or the United Nations. Proponents
those who download copyrighted material illegally, as argue that ACTA is necessary to curb the increase in
well as requirements that Internet service providers global illegal trade of copyright-protected works, while
(ISPs) assist in identifying illegal downloaders and in en- opponents argue that ACTA may harm consumer priva-
forcing anti-piracy laws. cy, innovation and legitimate commerce.
One measure that has gained worldwide attention 3.4.2.4 Content-related offenses
is France’s anti-piracy law, Création et Internet, which
came into effect in January 2010.78 Known as the anti- Whether content-related activity is regarded as a
piracy “three strikes” law, it requires ISPs to send sus- criminal offense or protected free speech is highly de-
pected digital pirates two warnings about their illegal pendent on each country’s cultural and legal frame-
downloading activities. After the third suspected of- works. Although child pornography is generally
fense, the downloader is required to appear before a criminalized in all countries, other content-related con-
judge who can impose a fine of up to EUR 300,000, im- duct is not. For example, the distribution of “racist and
pose jail time or suspend Internet access for up to a xenophobic material to the public through a computer
year. Infringers are also put on a “three-strike” blacklist system” is a crime in the European Union,83 but would
to prevent them from acquiring Internet service likely be protected speech in the United States.84 Reli-
through another ISP. Proponents of the law state that it gious defamation is another example of content-related
will stop or curb illegal downloading of music, movies cyber activity that is illegal in many Arabic countries,
and other copyrighted materials, and in turn promote but is not criminal in the United States or in some Eu-
artistic expression by protecting the creator’s copyright ropean countries. Given the differing legal standards for
in the work.79 Opponents state that the law will not the regulation of content, it is unlikely that international
lead to a decrease in illegal file-sharing because there frameworks will emerge. Instead, these issues will con-
are numerous ways to circumvent the limitations set tinue to be addressed on a country-by-country basis, or
out in the law, for example by streaming video rather perhaps through regional initiatives in areas with simi-
than downloading it. Instead of deterring copyright vi- lar cultural backgrounds.85
olations, they believe the law puts innocent users in
danger of being penalized due to hackers using their IP 3.4.2.5 Globalization of cybercrime
addresses to download materials illegally. Other Euro-
pean countries have also passed anti-piracy measures, Cybercrime often extends across national bounda-
including Sweden80 and the United Kingdom.81 ries, such as when illegal content is stored outside a
country or viruses are transmitted through a number of
At the international level, more than a dozen coun- countries during the transfer from sender to recipient.
tries are negotiating the Anti-Counterfeiting Trade An increase in cybercrime, including theft and fraud, is
Agreement (ACTA). The ACTA negotiations are headed a negative side-effect of connecting more than 1.8 bil-
by the United States, the European Commission, Swit- lion Internet users worldwide.86 Cybercrimes have be-
zerland and Japan, and have been joined by Australia, come highly globalized because they can be committed
Canada, Jordan, Korea (Rep.), Mexico, Morocco, New against Internet users anywhere in the world. A cyber
Zealand, Singapore and the United Arab Emirates.82 criminal can force law enforcement agencies into a vir-
ACTA would: 1) focus on cooperation among the signa- tual chase around the world by using any number of
tories to address the challenges of cross-border illegal techniques that mask the identity of the cyber criminal
trade in copyrighted materials; 2) establish a set of en- and make tracing communications difficult, particularly
forcement best practices that are used by authorities; the use of anonymous communication servers that en-
and 3) create a legal framework of enforcement meas- crypt transmissions, as shown in Figure 3.987 Since the
ures. Countries would enforce the legal framework criminal never meets the victim, the anonymity of cy-
through a new governing body existing outside of bercrime has also resulted in a new breed of tech-savvy
international institutions such as the World Trade criminal.88
Organization (WTO), the World Intellectual Property
100 Chapter 3
Figure 3.9: Hypothetical example of cybercrime involving multiple countries
5. Canadian
agents make
arrest of cyber 4. Korean
criminal investigators
discover attack
came from
Vancouver
1. Cyber criminal
breaks into the
network of a bank
in Manila
3. Namibian
investigators 2. Philippines
discover attack investigators
came from Seoul discover cyber
attack came from
Namibia
Source: Adapted from U.S. Department of Justice, International Cooperation in Cybercrime Investigations.
Cyber criminals often enjoy impunity by working include the use of multiple technologies and services to
from countries with weak or non-existent cybercrime extend the reach and expand the scope of educational
legal frameworks. Further, due to the speed with which systems, including the use of traditional media such as
electronic theft and fraud occur, law enforcement may radio and television and newer technologies such as
not be able to catch cyber criminals even in countries computers and the Internet. The use of media such as
with strong cybercrime legislation. Legal difficulties of- radio and television has been highly effective in some
ten arise due to a lack of international cooperation. settings due to their nearly ubiquitous penetration; the
Even for those countries with existing mutual legal as- use of computers and the Internet has proven to be ca-
sistance agreements, the processes for sharing infor- pable of transforming the educational experience. Such
mation are often formal and time-consuming.89 It is initiatives are often the product of collaboration be-
therefore necessary to set up procedures that facilitate tween multiple actors, including governments and the
cooperation between countries in order to be able to private sector, as well as donor agencies and non-
respond quickly to cyber threats. At present, however, governmental organizations.
cybercrime will continue to offer high rewards and low
risks to criminals until there is effective national legisla- 3.4.3.1 School connectivity
tion and international frameworks capable of effective-
ly investigating, prosecuting and punishing cybercrimes. Improving and expanding connectivity for educa-
tional institutions are often key components of national
3.4.3 ICTs and Education development plans, and are closely tied to national ICT
plans and policies. A 2007 survey carried out by infoDev
Leveraging ICTs to promote education can bring found that among 48 African countries that had or
significant benefits to multiple societal groups, includ- were developing a national ICT plan, 39 had or were
ing students, educators, and adult members of society also developing plans for ICT in their education sec-
at large. For over two decades, countries have been tors.90 A number of countries have also adopted na-
implementing a vast array of plans and policies to inte- tional strategies, policies and targets for school
grate ICTs and education, with this trend increasing in connectivity, often reflecting international and regional
many developing countries in recent years. Initiatives initiatives. For example, a 2009 survey conducted in the
Chapter 3 101
Caribbean region found that regional initiatives, such as 3.4.3.2 Dissemination of Computer Devices
the Organisation of Eastern Caribbean States (OECS)
Education Reform Unit’s (OERU) Model ICT policy for Governments around the world are contemplating
the education system, had been used or were being and implementing pilots or programs to distribute low-
used to develop national ICT policies in education in six cost computer devices (LCCDs) to schools. The term
countries in the region.91 LCCD is a relative one, given the income and develop-
ment differences around the world. Nevertheless,
School connectivity initiatives and strategies vary LCCDs are generally associated with the idea, devel-
between countries and even within countries.92 The re- oped by then-MIT Lab researcher Nicholas Negroponte,
cent toolkit launched by the ITU - Connect a School, of an inexpensive laptop for every child in the world.
Connect a Community - provides a wealth of examples
of school connectivity projects and experiences around To reduce costs, national strategies for LCCDs in
the world, including: 93 schools have taken two main approaches: (i) computer
labs, and (ii) one-to-one computing. (See Table 1 for the
• Establish special programs to implement connectiv-
advantages and disadvantages of each approach.) Tra-
ity for specific schools (e.g., Chile’s The Enlaces
ditionally, many governments have promoted “com-
(Links) program, created in 1992 and administered
puter labs” in schools as a means to extending ICTs in
by the Center for Education and Technology within
education and also to reduce expenses. Labs are shared
the Ministry of Education in Chile94);
locations or classrooms within schools where a limited
• Involve top-down and bottom-up methods (e.g., number of computers are available for use by multiple
Namibia’s SchoolNet project); students. Indonesia, for example, launched the “One
• Bring together development partners and new School One Lab” program in 2003, aimed at expanding
technologies (e.g., the Macedonia Connects project, the availability of computer labs in its educational insti-
established in 2004 as a partnership between the tutions. A recent infoDev study on ICTs and education in
Ministry of Education and Science (MoES), the India and South Asia found that most government initi-
United States Agency for International Develop- atives involve providing computer labs to schools, par-
ment (USAID) and a local ISP called on.net.); and/or ticularly secondary and higher secondary.95
• Subsidize Internet access tariffs for schools (e.g.,

the United State’s Universal Service Fund Schools
and Libraries Program, known as E-Rate).
Box 3.7: Portugal’s e-escola (e-school) and e-escolinha program96

Portugal has launched two successful LCCD dissemination projects – the e-escola (e-school) program and the e-escolinha
program.
• The e-school program, which was initiated in June 2007, distributes laptops with broadband Internet access to
teachers and secondary school students. By September 2010, the program had distributed over 450,000 laptops to
students throughout the country. The laptops are sold by telecommunications providers at EUR 150, with a EUR 5
discount over the basic monthly fee for the 3, 5 and 7.2 Mbps broadband connections. Reduced fees are available
to lower-income students, who get the laptops free of charge and obtain broadband connectivity at 3 Mbps for be-
tween EUR 5-15 per month. E-school is subsidized from the fees mobile operators paid for UMTS (3G) licenses.
• In July 2008, the Portuguese government in partnership with Intel, also launched the e-escolinha project to produce
a Portuguese version of the Intel Classmate (the “Magalhães”). The project calls for distributing this computer to
500,000 primary school students; by September 2010 over 410,000 computers were distributed. Parents pay a fee
for the computer, based on their economic situation (ranging from EUR 20 to EUR 50) with no fee imposed on low-
income households. Portuguese mobile operators offer both pre-paid and post-paid mobile broadband Internet
plans with EUR 5 per month discount as well as wireline broadband connectivity for the Magalhães at discounted
prices.
Sources: See Escalões da Acção Social Escolar (ASE) at http://eescola.pt/e-escola/oquee.aspx.
102 Chapter 3
A second, more recent strategy has been to reduce Costs include not only the price of the computer devic-
the ratio of students to computers, with the ultimate es themselves, but also transport, distribution, main-
goal being one computer per student. The LCCD tenance and training, among others.99 Given the high
movement is geared towards this objective through in- cost of providing each student with their own laptop,
itiatives such as “One Laptop per Child” (OLPC). OLPC this may not be a feasible short-term approach for
initiatives have been launched in numerous countries, many developing countries. A more practical strategy
including Afghanistan, Portugal, and Uruguay. In Uru- may be a mix of approaches. Countries like Chile, for
guay, Plan Ceibal was launched in December 2006 with example, have progressively worked to achieve one-to-
the objective of providing all primary school students one computing. The Chilean Enlances program has
with their own laptops. Its success was facilitated by been credited for dropping the ratio from 70 students
the political commitment from the President of Uru- per computer in 2000 to an expected 10 students per
guay, Tabaré Vázquez, and necessary funds, some USD computer in 2010.100
21 million in 2007, equivalent to 2.7 per cent of the to-
tal budget for education in Uruguay. By December 2009, 3.4.4 ICTs and Health
a total of 371,073 laptops had been distributed to pub-
lic primary schools and 6,000 to secondary and private ICTs are able to significantly improve the quality of
schools and the Institute for Children and Youth of life for many around the world when used in the field of
Uruguay.97 health and medicine, particularly for populations in re-
mote areas, as well as those with limited mobility. With
As computer costs decrease, it becomes more af- the advent of broadband connectivity and more sophis-
fordable for countries to distribute them widely in ticated technology, there is greater potential for ICTs to
schools.98 However, while the one-to-one approach is improve health outcomes through e-health initiatives,
attractive, and has been achieved by countries like Uru- particularly in rural communities.
guay, it is nevertheless an expensive proposition.
Table 3.1: Pros and cons of the one-to-one computing and computer lab models
Pros Cons
One computer per • Can be taken home and shared with • Relatively Expensive
student (laptops) family • Can be disruptive
• Creates sense of ownership with less
theft and damage
• Some designed for developing country
rural environment (e.g., handle ex-
treme temperatures, low battery use,
etc.)
• Some designed for children (e.g., rug-
ged, ergonomic)
• Some include educational software
and ecosystem of support
• More democratic in that all children
receive computers
Computer labs • Less disruptive than one-to-one model • Higher maintenance and support
(recycled computers, • Computer lab more economical than since likely to be different
thin clients) one-to-one • Students spend less time with
• More practical for shared settings such computer
as computer labs or community cen- • Labs may not be equitably distrib-
tres uted throughout school system or
• Generally more powerful than laptops computers can be dominated by
certain students
Source: ITU, Connect a School, Connect a Community Toolkit of Best Practices and Policy Advice for Connecting Schools, Module 2: Disse-
minating Low-Cost Computing Devices in Schools, www.itu.int/ITU-D/sis/Connect_a_school/Modules/Mod2.pdf
Chapter 3 103
Box 3.8: School connectivity checklist: Issues to consider when developing initiatives101
Due diligence related to school connectivity plans
• Ensure consistency with policies to promote overall ICT connectivity within the country.
• Coordinate plans with policies, strategies, and programs for universal service, as well as broadband and digital and
Information Society agendas.
• Set key parameters to guide and implement the connectivity goals and targets early.
• Conduct inventory of school infrastructure and existing connections to assess potential for connectivity and need
for different connectivity models.
• Identify potential funding sources, which may include governments, operators, multilateral or bilateral assistance
and private sector sources.
• Identify appropriate Internet connectivity technology or technology mix to provide an appropriate balance between
available bandwidth and lower up-front and recurring costs.
• Develop specific “ICT for education” plan with proper focus and detail devoted to school connectivity, with feasible
and fundable targets.
• Consider negotiating agreements with operators to obtain preferential prices for educational facilities.
• Consider subsidized Internet access as a tool to meet universal access goals, with broadband connected schools
serving as the enabling connection points.
• Consider connectivity needs of special populations, such as women and girls, persons with disabilities, indigenous
peoples, rural or under-served populations and others with special needs.
• Consider potential of using schools with Internet points as regional “hubs” or “anchor points,” to extend broadband
connectivity to other communities.
Key players
• Ministries/agencies responsible for education and for ICTs and ICT regulator to ensure that universal service
funds/obligations are included within the plan and roles of all are fully determined.
• Private sector and non-governmental organizations (NGOs) to help advance school connectivity.
Regulatory issues
• Consider allocating spectrum for educational broadband; reducing or waiving spectrum fees for academic institu-
tions; and/or allowing use of unlicensed spectrum for broadband connectivity.
• Consider including specific conditions or requirements for the education sector in network licences.Regulatory au-
thorities may need to modify licence conditions to include education-focused requirements.
Monitoring and Evaluation
• Include methods to evaluate the technical results of Internet connectivity, measure progress towards school con-
nectivity and analyze the impact of broadband access on learning.
• Employ monitoring and evaluation for both new deployments and upgrades from narrowband to broadband con-
nectivity.
Source: ITU, Connect a School, Connect a Community Toolkit of Best Practices and Policy Advice for Connecting Schools, Module 1,
www.itu.int/ITU-D/sis/Connect_a_school/Modules/Mod1.pdf
E-health involves a variety of services and tools, in- nologies is becoming essential for healthcare practi-
cluding electronic health records and telemedicine (see tioners to reach patients.103
Box 3.9).102 For developing countries with high mobile
penetration rates, mobile health initiatives hold particu- 3.4.4.1 Connectivity is key for e-health initiatives
lar promise for providing high quality health and medi-
cal services to unserved and underserved populations. Although basic voice and data connections are use-
Considering that there are fewer than 27 million doc- ful to improving health and medical care, broadband
tors and nurses for the more than six billion people in connectivity is necessary to realize the full potential of
the world—and only 1.2 million doctors and nurses in e-health services. For example, broadband connectivity
the lowest income countries—harnessing mobile tech- is necessary for telemedicine that enables real-time
audio and video communications between patients and
104 Chapter 3
doctors, as well as between healthcare providers. Im- further provision of Internet connectivity into commun-
provements in telemedicine and other e-health initia- ities. Policy makers should encourage arrangements
tives rely on increasing bandwidth capacity, more that allow medical facilities or their partners to resell
storage and processing capabilities and higher levels of excess capacity in order to both extend connectivity
security to protect patient information.104 Basic fixed and provide some level of financial support for the
and mobile infrastructure is insufficient to take advan- broadband link.
tage of the e-health opportunities in the digital econo-
my. Ensuring access to and adoption of fixed and 3.4.5 ICTs and Banking
mobile broadband networks is necessary to including
those who have been left out of more traditional Increased penetration and use of ICTs has great po-
healthcare models. tential to extend access to financial services to low in-
come households that are not reached by traditional
This was the case in Rwanda where a three-phase bank branch networks and also to lower the cost of de-
e-health project was delayed due to lack of high-speed livery to both banks and customers. 107 In emerging
broadband connectivity.105 During the first phase of the markets, there is on average one bank branch and one
initiative, an electronic data storage system that permit- automated teller machine for every 10,000 people, but
ted sharing of patient information among three hospit- more than 50 per cent of the population has access to a
als was established. This phase was completed without mobile phone.108 For these markets, the deployment
delay. However, the final two phases involving video and take-up of mobile banking services (m-Banking) is
conferencing and a real-time telemedicine system were of particular relevance. Connecting the “unbanked”109
put on hold for a year until a broadband Internet con- through mobile phones would introduce millions to fi-
nection could be established to connect the three hos- nancial services that will help build assets and make the
pitals with a fibre optic cable network.106 poor “less vulnerable to crises so that they can ulti-
mately plot their own paths out of poverty.”110 This po-
Examples such as Rwanda where hospitals and tential of m-Banking signals the increased convergence
medical clinics are being connected with fibre networks, of two industries: ICTs and financial services, a trend
show it is possible for these facilities to act as anchor that is expected to continue to increase in the coming
institutions that serve as “jumping-off” points for the decade.
Box 3.9: Examples of e-health tools and services

• Telehealth/telemedicine: The use of ICTs either to support the provision of health care or as an alternative to direct
professional care. This enables healthcare professionals to diagnosis and treat patients remotely, as well as allowing
for radiology and laboratory information to be sent electronically.
• m-Health: Enables the use of mobile devices to collect health data and to provide healthcare information to practi-
tioners, researchers, and patients, as well as real-time monitoring of patients and direct provision of care via mobile
telemedicine.
• Electronic health records: Allows immediate communication of patient data among different healthcare profes-
sionals and includes information such as test results, medication and general clinical history.
• Education and training for healthcare practitioners: Enables doctors and nurses to continue their training and pro-
vide the most up-to-date technologies and services to patients.
• Decision support systems: Automated or semi-automated systems that support decision-making in a clinical envi-
ronment.
• Education and awareness: Use of electronic resources by patients or healthy individuals to research various health
topics.
• Geographical information systems: Applications allow healthcare professionals to aggregate and analyze data over
local, regional, national or global areas, which can support disease surveillance, public health advisory systems and
vaccination status reporting.
Source: WHO, eHealth Tools and Services: Needs of the Member States, Report of the WHO Global Observatory for eHealth (2006).
Chapter 3 105
In countries, such as Afghanistan, Kenya, Indonesia, nonbanks) that carry out transactions on behalf of the
Pakistan, the Philippines and South Africa, various bank. In a nonbank-based model, on the other hand,
forms of m-Banking services are expanding the financial the customer does not have a direct contractual rela-
services frontier. These services allow users to make tionship with a prudentially licensed and supervised
payments and remittances, access existing bank ac- financial institution. Rather, the customer exchanges
counts, conduct financial transactions, engage in com- cash at a retail agent for electronic value (i.e., e-money)
merce and transfer balances, for example (see that is recorded in a virtual account on the server of a
Box 3.10). non-bank, such as a mobile operator or an issuer of
stored-value cards111 (see Figure 3.10). While this dis-
Two main models of m-Banking have developed tinction is useful in delineating the two different mod-
over the last few years: (i) bank-based and (ii) nonbank- els, ultimately even nonbank-based models rely on
based. In a bank-based model, customers establish a banks, as the money collected from the public must be
direct contractual relationship with a prudentially li- intermediated by a bank under the full purview of pru-
censed and supervised financial institution, even dential regulation and supervision.112
though the customer may only deal with agents (i.e.,
Box 3.10: Various types of m-Banking services

m-Banking refers to a variety of services, and we use the term in a broad sense here. Services can be broadly summarized as:
i) m-Transactions and m-Payments, which refer to financial transactions (remittances and payments) made using a
mobile phone without visiting a financial institution;
ii) m-Banking which involves financial institutions in cooperation with mobile operators offering a channel to an exist-
ing bank account. The service is both transformative in targeting the unbanked, (e.g., those who do not have bank
access or bank accounts) and additive by targeting those who already have bank accounts and providing an extra
means of accessing the bank account;
iii) m-Commerce, sometimes called u-Commerce given its ubiquitous nature, which refers to the buying and selling of
goods and services through wireless handheld devices such as mobile phones; and
iv) Airtime transfer or balance transfer, which is a person-to-person transfer of the electronic value that has been pur-
chased for purposes of making phone calls or sending text messages within one network.
Source: Johan Hellström, The Innovative Use of Mobile Applications in East Africa, Sida Review 2010:12 (May 2010) at
www.sida.se/publications.
Figure 3.10: M-Banking models
Bank / Nonbank involvement in M-Banking
Bank issues electronic Nonbank issues

Bank(s) offer Bank(s) offer individual
value which is electronic value and
individual accounts accounts accessed
purchased from bank holds matching value
that can be used through nonbank-
and redistributed by assets in pooled account
through managed agent
nonbank directly to in regulated bank
bankmanaged networks and/or
technological platforms customers
branchless channels Safaricom (M-Pesa
Orange Money in Kenya) Globe
XacBank (Mongolia) SMART (for 21 banks
(Cote D’Ivoire, (GCASH in the
in the Philippines)
Senegal and Mali) Philippines)
Bank-based model Nonbank-based model
Source: Adapted from Michael Tarazi and Paul Breloff, Nonbank E-Money Issuers: Regulatory Approaches to Protecting Customer Funds,
CGAP Focus Note No. 63 (July 2010) at www.cgap.org/gm/document-1.9.45715/FN63_Com.pdf
106 Chapter 3
For example, m-Banking services such as Zain’s two million customers, with PKR 4.8 Billion (USD 55 mil-
(now Bharti Airtel) Zap service in East Africa are already lion) having passed through the system. Perhaps more
starting to defy this classification, falling in a possible interestingly, 65 per cent of easypaisa transactions are
hybrid category where collaboration between banks from people who are neither Telenor Pakistan nor Ta-
and mobile providers is tighter.113 Similarly, in some ju- meer Microfinance Bank customers, further fostering
risdictions where regulation requires bank-based mod- financial inclusion.116
els to be implemented, mobile providers have opted or
have been required to acquire a controlling stake in fi- m-Banking presents certain regulatory challenges,
nancial institutions to launch m-Banking services. This is however, as banking laws and regulations often were
the case of Pakistan, where Telenor Pakistan acquired not designed to incorporate the possibility of such ser-
51 per cent of Tameer Microfinance Bank and together vices. Accordingly, there is often a need to adapt bank-
entered into a partnership agreement to launch the ea- ing regulations to facilitate m-Banking. This is evidenced
sypaisa service. by the case of Peru. Peruvian regulations currently
permit third parties, such as mobile operators, to deliv-
There are notable examples of success stories of m- er banking services as an agent of a licensed banking
Banking in developing countries. In Kenya, M-pesa by institution, subject to the banking regulator’s authoriza-
Safaricom, launched in March 2007, has handled over tion.117 Although some banks provide access to Internet
KES 130 billion (USD 1.7 billion).114 It has nearly seven banking through mobile phones for pre-existing cus-
million registered customers transferring an average of tomers, there is no relevant mobile banking business in
KES 150 million (USD 1.96 million) per day, mostly in Peru due to stringent regulations that include a prohibi-
small amounts of approximately KES 1,500 (USD 20) per tion on opening an account outside of a bank branch.118
transaction. M-pesa customers can visit more than Since only 26 per cent of Peruvians use banks, the
10,000 merchants who act as “agents” for account banking regulator, the Superintendence of Banks, In-
opening and handle deposits into and withdrawals surance and AFP (SBS), announced in May 2010 that it
from the customer’s virtual “wallet.” Customers can use will introduce new regulations to allow full-service mo-
their mobile phones to check bank balances, pay bills bile banking services.119 By introducing this regulation,
and purchase airtime. 115 In Pakistan, easypaisa was SBS aims to reach the 80 per cent of Peruvians who use
launched in October 2009 and supports a full portfolio mobile phones and to create “electronic money” com-
of financial services, including loans, deposits, transfers panies to promote access to financial services for the
and payments. By July 2010, it had reached more than unserved.120
Box 3.11: Relevant financial regulatory issues to be addressed to enable development of m-Banking
The following are areas where sharpened regulatory analysis would result in a better balance between maximizing the op-
portunity of m-Banking models and mitigating their risks:
• More flexible branch regulations that permit banks to manage more differentiated customer sales and service
models, based on the transaction types and volumes performed.
• Banking agent regulations that permit banks to engage third-party retail outlets as cash merchants, with minimal fi-
nancial risk for both banks and their customers.
• Consumer protection regulations that help customers understand and act upon their rights in a more complex ser-
vice delivery chain, without burdening banks with unnecessary provision.
• Tiered Know Your Customer (KYC) regulations that permit immediate account opening with minimum barriers for
poor people, with a progressive tightening of KYC as their usage of financial services grows.
• Creating regulatory space for a class of non-bank e-money issuers authorized to raise deposits and process pay-
ments, but not to intermediate funds.
Source: Claire Alexandre, Ignacio Mas and Dan Radcliffe, Regulating New Banking Models that can Bring Financial Services to All.
Chapter 3 107
3.5 Cooperation among tion Technology regulates content related to the Inter-
Regulatory Authorities in net.
Different Sectors
3.5.2 Expanding the ICT Regulator’s Mandate
Due to the influence of converged ICTs on all other to Include Competition Matters
sectors, ICT regulators are in a special position to en-
sure that the benefits of ICTs permeate throughout the If jurisdiction over competition matters is delegated
economy. This section addresses how governments to an ICT regulator, other challenges may arise depend-
have expanded the role of regulators to better address ing on whether or not the country has a set of general
the convergence of telecommunications, broadcasting competition laws and a separate regulator to handle
and information technology. In addition, it examines these issues. For countries without general competition
how most telecommunications and electronic commu- laws, the electronic communications laws or regula-
nications laws recognize the ICT regulators’ expertise by tions are likely to expand the mandate of the ICT regu-
granting them the authority to decide matters broader latory authority to guard against unfair or
than ICT-specific issues, particularly regarding competi- anticompetitive conduct. For countries with regulatory
tion. Finally, it looks at how ICT regulators must either authorities overseeing general competition laws, the
decide these broader ICT-related issues independently challenge is to establish rules clarifying how overlap-
or in cooperation with other regulatory entities, as well ping jurisdiction will be handled in order to avoid con-
as how these decisions affect regulations in other sec- flicts between agencies.
tors of the economy addressed above, such as the envi-
ronment, health, and banking. 3.5.2.1 Expanding the ICT regulator’s mandate
to address competition
3.5.1 Expanding the Regulator’s Mandate
For many countries without a long-standing com-
In most countries, the telecommunications/ICT petition law framework, liberalization of the ICT sector
regulatory authority operates separately from the is one of the first instances of the state-owned mono-
broadcasting and video content regulator. However, polies transitioning into private, competitive markets.
nearly 30 countries have chosen to establish a con- As such, the mandate of ICT regulators often has been
verged ICT regulator by expanding the role of the tele- expanded to include the regulation of competition mat-
communications regulator to include authority over ters related to the telecommunications market. Under
broadcasting, content (e.g., video programming) and this expanded mandate, regulators are tasked with re-
Internet services. The rationale for this trend is that a solving complex issues related to competition laws
converged regulator is better able to adapt and re- without reference to any legal frameworks in the coun-
spond to an environment where distinctions based on try. For example, the Kingdom of Bahrain does not have
services and networks are becoming blurred. With a any general competition laws;121 however, one of the
converged regulator, service and consumers are able to main responsibilities of the Telecommunications Regu-
look to a single agency for all matters relating to the latory Authority (TRA) under the Telecommunications
communications sector. Countries with converged regu- Law is to “promote effective and fair competition
lators include Australia, Finland, Italy, Kenya, Mali, Ma- among new and existing Licensed Operators.”122 The
laysia, South Africa, Singapore, Uganda, United States Telecommunications Law requires the TRA to investi-
and United Kingdom. gate instances where licensed operators are believed to
engage in anti-competitive conduct, which requires the
Despite this trend, most OECD countries still have skills to analyze, for example, whether there has been
separate regulators for broadcasting and for telecom- abuse of dominant position, collusion or price fixing, or
munications. Additionally, content regulation is typically whether a merger would harm competition in the mar-
addressed by a separate ministry or government au- ket.123 Despite the lack of a general competition legal
thority (e.g., in India and Saudi Arabia) or by the broad- framework, the TRA has effectively introduced compe-
casting authority (e.g., in Botswana, Chile and tition to each ICT market, including local and long dis-
Colombia). For example, in India, there are two entities tance fixed services, international gateways, mobile
responsible for content regulation. The Ministry of In- services and Internet services.124
formation and Broadcasting monitors content related
to broadcasting and film while the Ministry of Informa-
108 Chapter 3
3.5.2.2 Expanding cooperation among The next year, OFT further clarified how authority is
regulatory authorities shared between the agencies through its guidelines,
Concurrent Application to Regulated Industries.127 Un-
In countries that have general competition laws der OFT’s guidelines, Ofcom may engage in most of the
with agencies to govern these issues, the electronic decision-making processes for competition-related is-
communications or telecommunications law in many sues, including investigating complaints about possible
cases delegates to the ICT regulator the authority to infringements under its jurisdiction; imposing financial
issue rules and decisions related to competition in the penalties for violation of the competition rules in line
ICT sector. The challenge in these countries is to ensure with OFT’s guidance; and publishing opinions in cases
that concurrent jurisdiction between multiple agencies involving new or unresolved applications of the Compe-
does not result in conflicting rules. Therefore, it is ne- tition Act.128 However, as prescribed in the Competition
cessary that the country’s laws provide guidance on Act, OFT alone has the authority to issue and to make
how different regulatory authorities will cooperate in and amend procedural rules.129 Further provisions in
order to issue coherent, consistent and effective deci- the guidelines detail methods to ensure consistency in
sions. In addition, competition and ICT sector authori- decision-making processes and outcomes between
ties often issue guidelines or publish memoranda of regulators, as well as with EU Directives and UK laws.
understanding on the exercise of their concurrent au-
thority in competition related matters in the ICT sector Developing countries have also sought to establish
to give legal certainty to stakeholders and avoid dupli- guidelines for cooperation and coordination of compe-
cation and inefficient use of public resources (see tition and ICT regulatory authorities. For example, in
Box 3.12). March 2010 the Competition Commission (CCM) and
the Information and Communication Technologies Au-
In the United Kingdom, for example, the Office of thority (ICTA) of Mauritius entered into a memorandum
Fair Trading (OFT) has the general power to enforce EU of understanding (MoU) on the exercise of their con-
competition mandates and the country’s Competition current jurisdiction over the ICT sector.130 The MoU es-
Act, but shares jurisdiction over certain sectors, includ- tablishes a set of guidelines to promote cooperation
ing electronic communications, with the regulatory au- and coordination between the CCM and the ICTA when
thorities of those sectors. 125 Before the Office of dealing with cases of anti-competitive behaviour in the
Communications (Ofcom) gained its full competition ICT sector where they have overlapping powers; sets
powers under the 2003 amendment to the Communi- forth the responsibilities of both agencies in such mat-
cations Act, OFT published a letter addressing the ters; and establishes mechanisms for communication
agencies’ concurrent jurisdiction and providing an initial and sharing of information between CCM and ICTA with
overview of how they should work together to “ensure the aim of minimizing duplication of work and facilitat-
a productive working relationship, to the benefit of ing prompt and efficient resolution of cases.
consumers and other stakeholders.”126
Box 3.12: Relevant issues for coordinating competition and ICT authorities’ jurisdiction in the ICT sector
Taking into account the specific provisions of the legal framework, the following lists some issues that should be considered
when establishing guidelines on the exercise of concurrent powers over competition matters in the ICT sector:
• Exchanging information to determine which authority has jurisdiction over a specific case;
• Determining which authority is better suited to exercise the concurrent powers in relation to a specific case;
• Resolving disputes as to which authority should exercise the concurrent powers in relation to a specific case;
• Preventing the simultaneous exercise by more than one than one authority of concurrent powers in relation to a
specific case;
• Processes for transferring a case from one authority to another; and
• Sharing of staff and resources between authorities.
Source: Adapted from Office of Fair Trade (OFT) of the United Kingdom, Concurrent Application to Regulated Industries (December 2004)
Chapter 3 109
3.5.3 Sector-Specific Approaches to 2010.131 Other countries have begun cross-sector coor-
Cooperation dination efforts in order to take a more holistic ap-
proach to meeting environmental and ICT policy
Unlike mandates regarding competition, telecom- objectives.
munications and electronic communications laws do
not typically outline jurisdictional issues related to oth- In Singapore, for example, multiple agencies have
er sectors of the economy despite the influence of ICTs begun to collaborate more frequently on new cross-
on these sectors. As addressed above, the confluence sector initiatives. In November 2009, for example, the
of ICTs with other sectors requires ICT regulators to be government of Singapore announced the launch of the
aware of the impact that their decisions have on other pilot project “Intelligent Energy System” (IES) that tests
aspects of society, such as the environment, law en- a range of smart grid technologies.132 The IES project
forcement, education, health and banking. As the influ- requires the cooperation of several agencies, including
ence of ICTs continues to grow, there may also be a the ICT regulator and the various regulators in charge of
need for provisions outlining the cooperative arrange- energy, the environment, economic development,
ments between the ICT regulator and other govern- science and technology research, and housing and de-
mental agencies. velopment. More recently, the Singapore Government
established the Energy Efficiency Programme Office
3.5.3.1 Cooperation between ICT regulators and (E2PO), which is a multi-agency committee led by the
environmental agencies National Environment Agency (NEA) and the Energy
Market Authority (EMA).133 As shown in Figure 3.11,
Traditionally, there has been limited overlap be- E2PO includes Singapore’s ICT regulator, the Infocomm
tween the types of issues that the ICT regulatory au- Development Authority (IDA), as well as nine other
thority and the environmental agency oversee, except agencies in various sectors. The goals of the E2PO in-
regarding electromagnetic field (EMF) and radiofre- clude promoting the adoption of energy efficient tech-
quency field (RF) emissions from broadcasting and mo- nologies and developing local knowledge expertise in
bile communications towers or from handheld mobile energy management, as well as supporting research
devices. However, the growth of “green ICT” initiatives and development in green ICTs.
may require new levels of cooperation between the ICT
and environmental regulators in order to accomplish Since cross-sector initiatives to promote green ICTs
ambitious cross-sector goals. Egypt, as previously dis- are relatively novel, it is unclear whether they represent
cussed in Section 3.4.1.3, implemented its Green ICT a new type of policy implementation. There is great po-
Strategy jointly through a Memorandum of Under- tential to capture the high-level expertise from multiple
standing (MoU) signed by both the Ministry of Com- agencies; however, these collaborative efforts may also
munications and Information Technology (MCIT) and result in new challenges, such as jurisdictional conflicts
the Ministry of Environmental Affairs (MEA) in February or funding issues.
Figure 3.11: Ten Singapore agencies involved in the Energy Efficiency Programme Office, including ICT Regula-
tor
NEA EMA
EMA NEA HDB

EDB LTA BCA IDA A*Star
For Power For For
For Industry For Transport For Buildings For Infocomm For R & D
Generation Households Households
Source: IDA Singapore.
110 Chapter 3
3.5.3.2 Cooperation between ICT regulators and 3.5.3.3 Cooperation between ICT regulators and
law enforcement agencies education sector authorities
As previously addressed in Section 3.4.2, the num- ICT regulators and education authorities are increa-
ber of crimes committed using communications net- singly working together to facilitate deployment of e-
works, applications and services continues to grow in learning and knowledge programs. Similarly, initiatives
the digital age as more and more activities are con- to forge alliances among private actors, donor agencies
ducted via electronic communications. Lawful intercep- and non-governmental organizations have proven criti-
tion of and access to electronic communications (e.g., cal in implementing many successful initiatives to inte-
wiretapping) has been a nexus between ICT regulators grate ICT and education.
and law enforcement agencies (LEAs) for decades, first
with the Public Switched Telephone Network (PSTN) Afghanistan offers an example of how the Ministry
and more recently with packet-switched and virtual of Education (MoE) and the Ministry of Communication
networks. Although ICT regulators have begun to play a and Information Technology (MoCIT) are collaborating
stronger role with respect to consumer protection is- on a project to improve both the education and ICT sec-
sues such as spam, these laws have traditionally re- tors.139 Beginning in September 2008, the MoE and
quired LEAs, as well as defense or security agencies, to MoCIT launched a “One Laptop per Child” (OLPC)
take the lead due to public safety and national security project in a public-private partnership with the United
interests in issues including interception of communica- States Agency for International Development (USAID),
tions, data privacy, cyber theft and fraud.134 Roshan, a mobile operator in Afghanistan, and Paiwas-
toon, a local information technology company. The
However, due to its technical expertise, the ICT MoE distributes the laptops to schools, and the MoCIT
regulator’s role in supporting or advising LEAs may in- ensures the quality of the content, as well as the tech-
crease in the digital age through 1) assisting LEAs in the nology. By March 2010, more than 3,700 laptops had
coordination of various LEAs and national security been distributed in Afghanistan through the OLPC
agencies at local and national levels, and 2) assisting project.140
service providers and consumers in understanding their
rights and obligations.135 In some instances, the ICT As set out in Box 3.13, the ITU has developed a
regulator may take the lead in enforcing cybercrimes. checklist of issues that should be considered by author-
For example, in the United Kingdom, the recently ities when considering and implementing school con-
passed digital piracy law136 places most of the imple- nectivity initiatives.141 Notably, the checklist highlights
mentation and enforcement powers with the ICT regu- the need for school connectivity programs to be prop-
lator, Ofcom, rather than with an LEA (see Box 3.13).137 erly coordinated with the country’s national plans and
Where both LEAs and the ICT regulator are given au- all the relevant agencies. In particular, school connectiv-
thority over a particular area of cybercrime, the laws ity plans should be consistent with policies to promote
and enabling regulations should clearly define the roles overall ICT connectivity within the country.
of all parties, as well as provide adequate resources for
enforcement.138
Box 3.13: Ofcom’s expanded role in enforcing digital piracy law in the United Kingdom
• The Digital Economy Act of 2010 (DEA) assigned Ofcom new duties to create and to implement obligations regard-
ing online copyright infringement.
• Ofcom, rather than a law enforcement agency, will enforce these obligations through a code of practice, which de-
tails a three-stage notification process for informing subscribers of infringements and requires ISPs to provide in-
fringing subscribers’ IP addresses to the relevant copyright holders.
• Ofcom’s powers include deciding upon the appropriate enforcement action against any person found to have
breached the code, including imposition and collection of a financial penalty up to £250,000.
• The DEA further requires Ofcom to establish an independent appeals tribunal for subscribers who have had copy-
right enforcement actions taken against them.
Source: Ofcom, Consultation on Online Infringement of Copyright and the Digital Economy Act 2010: Draft Initial Obligations Code
Chapter 3 111
Within a national framework, school connectivity provisions regarding privacy of data transmitted via
plans are best coordinated with policies, plans, strate- such services. In expanding or improving access to
gies and programs for universal service, as well as health and medical services and information, ICT regu-
broadband and digital and Information Society agendas. lators may include incentives to ensure that recipients
In addition, there must be a close coordination be- use subsidies or other assistance effectively and effi-
tween the ministry responsible for education, the min- ciently and for the benefit of patients or the medical
istry responsible for ICTs, and the ICT regulator, to sector as a whole.
ensure that universal service funds and obligations are
formulated within a plan for school connectivity that 3.5.3.5 Cooperation between ICT and banking
concretely describes the roles of all parties. Further- regulators: m-Banking
more, the private sector and non-governmental organi-
zations (NGOs) can play key roles in advancing school ICT and financial sector regulators have distinct
connectivity, and they should be invited to participate roles to play in enabling the development of m-Banking
in the development of school connectivity plans. services, and coordination between them is critical. Al-
though financial services are outside the purview of
3.5.3.4 Cooperation between ICT regulators and telecommunications regulations, ICT regulatory author-
healthcare authorities ities can encourage the development of the m-Banking
market by working with their respective governments
There are many areas in the medical field in which and forging new relationships with the financial servic-
ICTs are improving health outcomes. These include sig- es authorities in order to develop a framework that is
nificantly enhancing the collection, presentation and appropriate for m-Banking services.143
exchange of health care information, as well as by giv-
ing health care workers and patients tools to transform In particular, ICT regulators should adopt policies to
care. E-health initiatives include electronic records; long facilitate private investment and entry into the mobile
distance consultations via video conference; and mo- telephony market. Development and expansion of mo-
bile patient monitoring. As the number of e-health ap- bile services leading to increased penetration are a pre-
plications grows, ICT regulators and health care condition to providing a base for successful m-Banking
authorities will gain more opportunities to collaborate services. Similarly, ICT regulators should enact and en-
on new projects. In the U.S. National Broadband Plan, force rules – directly or in cooperation with competition
for example, the Federal Communications Commission authorities – to ensure competitive mobile markets.
(FCC) dedicated a chapter to e-health care. Included in There is a risk that first mover advantages and specific
the recommendations was a suggestion by the FCC to marketing conditions of m-Banking services (e.g., lack
collaborate with the Food and Drug Administration of interconnectivity of m-Banking services144 or diffe-
(FDA), the agency that regulates medical devices, in or- rentiated fees between on-network and off-network
der to “clarify regulatory requirements and the approv- transactions) may allow dominant mobile providers to
al process for converged communications and health further entrench their market positions. This outcome
care devices.”142 may not only restrict competition in the m-Banking
market, but may also distort overall competitive condi-
The successful use of ICTs for medical applications tions for mobile telephony services. For example, in
requires coordination between multiple agencies and August 2010, the Communications Commission of
ministries, potentially including not only telecommuni- Kenya (CCK) raised a concern regarding the competitive
cations, but health, science, education and finance. ICT effects of certain conditions associated with Safaricom’s
regulators need to work closely with partner agencies successful M-Pesa service.145 It found that mobile mon-
to develop mechanisms to enable the healthcare sector, ey transfer services have a significant impact on the
including not only doctors and hospitals, but supporting competitive landscape in the telecommunications mar-
institutions, schools, and research facilities, to effective- ket in Kenya as they allowed the strengthening and sus-
ly leverage the benefits of broadband connectivity. Key taining of a “club effect” since higher rates are charged
mechanisms and activities may include: subsidies or to non-registered users versus registered users. Al-
other financial support for communications networks though the CCK did not regulate rates charged for mo-
to link key institutions; setting or identifying standards bile money transfers ex ante, it determined that it
to enable interconnection between various stakehold- would support any operators’ request to enter into an
ers; developing or updating service rules governing investigation of the interconnectivity options for mobile
electronic services used to share medical data; and
112 Chapter 3
money transfer services in line with convergence, espe- • As markets become more competitive, ICT regula-
cially with regard to charges to non-registered users. tors will need to shift to a more targeted approach
to the sector, withdrawing ex ante regulation
Banking regulators (e.g., central banks, finance where it is no longer warranted and transitioning
ministries or banking regulatory authorities) also need towards ex post rules. Development of strong com-
to adapt traditional banking regulation to enable play- petencies in the economic and legal techniques
ers involved in m-Banking (i.e., banks, mobile providers, and methodologies for competitive analysis will be
and retailers) to develop new services, while at the a critical input for regulators going forward. This
same time protecting the stability of the financial sys- will be particularly pressing in countries that have
tem as a whole, the integrity of transactions, and the traditionally lacked competition laws and authori-
safety of customers’ deposits146 (see Box 3.12). While ties or that have had a very limited scope of action.
there is some international experience suggesting the Accordingly, ICT regulators should engage in capaci-
viability of various m-Banking models, it is still too early ty building initiatives to develop the necessary in-
for financial regulators to prescribe specific regulatory stitutional know-how and make efforts to increase
models.147 For example, financial regulators in Afghanis- cooperation with competition authorities where
tan, the Philippines, West Africa and the European Un- possible.
ion, have adopted regulations that enable a leading role
• Continued convergence within the ICT sector will
for nonbanks, striking a balance between service avail-
present regulators with new challenges associated
ability and the need to mitigate the risks presented by
with vertical and horizontal integration of on-line
the involvement of a service provider that is not subject
services and applications. New players are progres-
to full prudential regulation.148 On the other hand, a
sively developing novel equipment, devices, servic-
number of countries, such as Kenya and Cambodia,
es, applications and business models that have the
have not issued e-money regulations but have never-
potential of altering the ICT competitive landscape.
theless permitted such nonbank models on an ad hoc
However, when facing the challenges posed by
basis through “no objection” letters, conditional ap-
nascent services and applications, regulators
provals or other means.149
should exercise caution to avoid stifling innovation
and investment. A light-hand approach is often-
3.6 Conclusions times the right regulatory response under these
circumstances and may contribute to creating an
The ICT sector is highly dynamic and rapidly chang-
appropriate enabling environment for innovative
ing. Therefore, making predictions about what is to
services and applications to develop.
come in the next decade is very difficult. The deploy-
ment and take-up of ICTs, however, is happening at a • Continued expansion of ICTs into our everyday ac-
faster pace than ever before, particularly with regard to tivities will require ICT regulators to increase their
the use of mobile services and applications in develop- cooperation with different regulators and policy-
ing countries. This creates further challenges for regula- makers from different sectors, including law en-
tory authorities. Nevertheless, market and regulatory forcement, education, banking, health and the
trends over the last few years demonstrate increased environment. Increased coordination of policies
competition in ICT markets and evidence a continued and initiatives in these areas, and likely many oth-
and deepening path of convergence both within ICT ers, will be critical in the coming decade to harness
sector as well as with other sectors of the economy. As the potential benefits and efficiencies that ICTs can
such, the following conclusions can be drawn: bring to consumers and the society at large.
Chapter 3 113
1
Yongsoo Kim, Tim Kelly and Siddhartha Raja, Building Broadband: Strategies and Policies for the Developing World, Global In-
formation and Communication Technologies (GICT) Department, World Bank, January 2010 at
www.infodev.org/en/Article.454.html.
2
Núcleo de Informação e Coordenação, Análise dos Resultados da TIC Domicílios, Gráfico 8, 2009, p. 14. The total percentage of
respondents is more than 100 because some respondents provided more than one reason for non-adoption.
3
FCC, Broadband Adoption and Use in America, November 2009, p. 30. The total percentage of respondents is less than 100 be-
cause, for purposes of comparison, not all factors addressed in the study are included in this figure.
4
Morgan Stanley indicates that iPhone and iPod Touch users reached nearly 57 million by the ninth quarter since launch in June
2007, while AOL subscribers were at nearly 7 million by the same time after launch in September 1994. See Morgan Stanley, The
Mobile Internet Report, 15 December 2009, p. 24.
5
ITU, World Telecommunication/ICT Indicators Database.
6
ITU World Telecommunication/ICT Indicators Database, Mobile cellular subscriptions.
7
ITU World Telecommunication/ICT Indicators Database, Mobile cellular subscriptions.
8
ITU, World Telecommunication/ICT Development Report 2010, Monitoring the WSIS Targets, A mid-term review, May 2010,
p. 202.
9
See, e.g., ITU, The digital dividend: Opportunities and challenges, ITU News (January-February 2010) at
www.itu.int/net/itunews/issues/2010/01/27.aspx and Björn Wellenius and Isabel Neto, Managing the Radio Spectrum: Frame-
work for Reform in Developing Countries, (June 2007) at
http://siteresources.worldbank.org/EXTINFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/Resources/Wellenius-
Neto.pdf.
10
YouTube reaches 2 bln views per day on 5th anniversary, 18 May 2010,
www.telecompaper.com/news/article.aspx?cid=735195. According to YouTube, the average user spends 15 minutes a day on
the website; 24 hours of video are uploaded to YouTube every minute; and 45 million daily homepage impressions.
11
Telegeography Research, January 2010.
12
EC, Europe’s Digital Competitiveness Report, Vol. I, p. 22.
13
The European Commission (EC) has called sites such as Google, Facebook, YouTube, Microsoft Live.com, Wikipedia, eBay23 and
Amazon “global internet utilities” because they are so widely used in the world. See EC, Europe’s Digital Competitiveness Report,
Vol. I, 17 May 2010, p. 22.
14
See infoDev/ITU, ICT Regulation Toolkit at www.ictregulationtoolkit.org/en/Section.1678.html.
15
Ibid.
16
See Next Generation Connectivity: A review of broadband Internet transitions and policy from around the world, The Berkman
Center for Internet and Society at Harvard University (February 2010) at
http://cyber.law.harvard.edu/publications/2010/Next_Generation_Connectivity and Dr. Tracy Cohen and Russell Southwood,
Extending Open Access to National Fibre Backbones in Developing Countries, GSR08: Six Degrees of Sharing, Discussion Paper
(November 2008) at www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR08/papers.html.
17
See ITU/infoDev, ICT Regulation Toolkit, Module 6.6.5: Competition and Sharing at
www.ictregulationtoolkit.org/en/Section.3486.html.
18
FCC, National Broadband Plan, p. 41.
19
Cisco has estimated that smartphones such as the iPhone can generate 30 times more data traffic than a basic feature phone,
and that a laptop can generate many times the traffic of a smartphone. See FCC, National Broadband Plan, p. 77.
114 Chapter 3
20
Michael Minges, Crafting a Broadband Strategy for Developing Countries an Evidence-Based, Case Study Approach, Telecom-
munications Management Group, Inc. Presentation at the World Bank Broadband Strategy Toolkit: Information Session, 1 Sep-
tember 2010, Washington D.C. at
https://docs.google.com/fileview?id=0BwCAk39OtgfRM2Q0OGViZGQtMjRkMC00YTQzLTk4MGItYzRmYjYwZWJlMzgx&hl=en&a
uthkey=CKG61YIO.
21
infoDev/ITU, ICT Regulation Toolkit, Backbone Network Enhancements at www.ictregulationtoolkit.org/en/Section.3188.html.
22
Mark Williams, Broadband for Africa: Policy for Promoting the Development of Backbone Networks, GICT, World Bank, August
2008, p. 8 at
http://siteresources.worldbank.org/EXTINFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/Resources/Broadband_for_
Africa-backbone_policy.pdf.
23
2008, p. 8.
24
2008, p. 15.
25
FCC, National Broadband Plan, Appendix C, Glossary at www.broadband.gov/plan/appendices.html#s18-3.
26
ICASA, Infraco ECNS Licence, October 2009 at www.infraco.co.za/Legal/ECNS%20License.pdf.
27
2008, p. 44.
28
TeleGeography Global Bandwidth Research Service, 2010.
29
See IDA, International Sharing: International Gateway Liberalization. Singapore’s Experience, ITU, 2008.
30
See TRAI, International Telecommunication Access to Essential Facilities at Cable Landing Stations Regulations, 7 June 2007.
31
CRC, Resolution No. 2065, 27 February 2009.
32
This member is a Special Purpose Vehicle (SPV) that is itself owned by a group of the smaller operators from the region. See
2008, p. 42.
33
See www.seacom.mu/network/open_access.html.
34
Abiodun Jagun, The Case for “Open Access” Communications Infrastructure in Africa: The SAT-3/WASC cable– A briefing, Asso-
ciation for Progressive Communications (APC) at www.apc.org/en/system/files/APC_SAT3Briefing_20080515.pdf.
35
See KDN, SEACOM is here, at www.kdn.co.ke/contentview.php?id=38.
36
For small island developing states (SIDS), obtaining submarine cable connectivity has been a mixture of geography, history and
luck. Investment in a submarine cable depends on traffic which is itself a function of the number of people and the intensity of
use. SIDS have very small populations and modest levels of teledensity and Internet usage making it challenging to obtain sub-
marine cable connectivity. See, Ewan Sutherland, “Telecommunications in Small Island Developing States”, 37th Research Con-
ference On Communication, Information And Internet Policy September 25-27, 2009, George Mason University School of Law,
p. 8.
37
Sources: Adapted from ERG, Report on Transition from sector-specific regulation to competition law, October 2009; ICP-
ANACOM, Mercados de fornecimento grossista de acesso (físico) à Infra-estrutura de rede num local fixo e de fornecimento
Grossista de acesso em banda larga, January 2009.
38
ERG, Report on Transition from sector-specific regulation to competition law, ERG (09) 40, October 2009, at 24.
39
Michael Adam and Simon Alder, Abuse of Dominance and its Effects on Economic Development, in UNCTAD, The effects of anti-
competitive business practices on developing countries and their development prospects, 2008, p. 587.
Chapter 3 115
40
Eleanor M. Fox, Antitrust, Economic Development and Poverty: The Other Path, in UNCTAD, The effects of anti-competitive
business practices on developing countries and their development prospects, 2008, p. 184.
41
See Article 55 of the COMESA Treaty (1994).
42
See Article 88 of the UEMOA Treaty (Jan. 2003 Amendment), and Directive Nº 02/2002/CM/UEMOA relative a la coopération
entre la Commission et les structures nationales de concurrence des États members pour l’application des articles 88, 89 et 90
du Traité de L’UEMOA.
43
Protocol Amending the Treaty Establishing the Caribbean Community – Protocol VIII Competition Policy, Consumer Protection,
Dumping and Subsides, Basseterre, St. Kitts and Nevis, 13-14 March 2000.
44
See Decisión 608 of the Andean Community (March 2005).
45
See Decisión nº 18/96, protocolo de defensa de la competencia and Decisión 02/97, Anexo al Protocolo de Defensa de la Com-
petencia.
46
Bahrain TRA, Competition Guidelines, MCD/02/10/019 (18 February 2010) at
www.tra.org.bh/en/pdf/CompetitionGuidelines.pdf.
47
See U.S. Federal Trade Commission, Statement of the Commission Concerning Google/AdMob, FTC File No. 101-0031, 21 May
2010. Available www.ftc.gov/os/closings/100521google-admobstmt.pdf.
48
OECD, ICTs: The Environment and Climate Change at www.oecd.org/sti/ict/green-ict.
49
ITU Background Report, ITU Symposium on ICTs and Climate Change, Quito, Ecuador (8-10 July 2009) at
www.itu.int/dms_pub/itu-t/oth/06/0F/T060F00600C0004PDFE.pdf.
50
UNEP defines this electronic waste, or e-waste, as “any electrically powered appliance that fails to satisfy the current owner for
its originally intended purpose.” UNEP, e-Waste Management: What is e-waste? at www.unep.fr/scp/waste/ewm/faq.htm.
51
For an in-depth analysis of the roles that ICTs play in reducing, as well as contributing to, climate, please reference Stephen
Young, , ICTs, Climate Change and Regulation, GSR-10 Discussion Paper (2010).
52
ICTs and Climate Change, ITU-T Technology Watch Report 3 (December 2007).
53
ITU Background Report, ITU Symposium on ICTs and Climate Change.
54
ITU Background Report, ITU Symposium on ICTs and Climate Change.
55
ITU, ICTs for e-Environment: Guidelines for Developing Countries, with a Focus on Climate Change, ICT Applications and Cyberse-
curity Division Policies and Strategies Department, Final Report (2008) at
www.itu.int/ITU-D/cyb/app/docs/itu-icts-for-e-environment.pdf.
56
ITU, ICTs for e-Environment: Guidelines for Developing Countries, with a Focus on Climate Change.
57
ITU, ICTs for e-Environment: Guidelines for Developing Countries, with a Focus on Climate Change.
58
O. Osibanjo, The Challenge of Electronic Waste (E-Waste) Management in Developing Countries, Waste Management & Re-
search, Vol. 25, No. 6, 489-501 (2007).
59
Tom Zeller, A Program to Certify Electronic Waste Recycling Rivals an Industry-U.S. Plan, N.Y. Times (14 April 2010) at
www.nytimes.com/2010/04/15/business/energy-environment/15ewaste.htm.
60
UNEP, Recycling—From E-Waste to Resources (July 2009) at
http://isp.unu.edu/news_events/news/2010/files/UNEP_eW2R_publication.pdf.
61
Id. See also Hazardous E-Waste Surging in Developing Countries, Science Daily (23 February 2010) at
www.sciencedaily.com/releases/2010/02/100222081911.htm.
62
Sweden, Ministry of Sustainable Development, Ordinance on producer responsibility for electrical and electronic products
(14 April 2005) at www.regeringen.se/content/1/c6/04/70/12/c88be157.pdf.
116 Chapter 3
63
India, Ministry of Environment and Forests, Draft E-Waste (Management and Handling) Rules (2010) at
www.indiaenvironmentportal.org.in/files/DraftE-waste-Rules30.3.10.pdf.
64
Ministry of Economics, Trade and Industry, Green IT Initiative in Japan (October 2008) at
www.meti.go.jp/english/policy/GreenITInitiativeInJapan.pdf.
65
Ministry of Economics, Trade and Industry, Green IT Initiative in Japan.
66
Ministry of Communications and Information Technology, Green ICTs, Press Release (10 August 2010) at
www.mcit.gov.eg/pressKitsDetails.aspx?id=Az+07MRdz8k=.
67
Ministry of Communications and Information Technology, Dr. Kamel and Eng. George Sign Memorandum of Understanding on
Green ICT Strategy, Press Release (9 February 2010) at www.mcit.gov.eg/PressreleaseDetailes.aspx?id=soldypBGlXo=.
68
OECD, Towards Green ICT Strategies: Assessing Policies and Programmes on ICT and the Environment (June 2009) at
www.oecd.org/dataoecd/3/7/44001912.pdf.
69
OECD, Recommendation of the Council on Information and Communication Technologies and the Environment, C(2010)61
(8 April 2010) at
http://webnet.oecd.org/oecdacts/Instruments/ShowInstrumentView.aspx?InstrumentID=259&InstrumentPID=259&Lang=en.
70
ITU-D, ICT Applications and Cybersecurity Division, Understanding Cybercrime: A Guide for Developing Countries, Draft (April
2009) at www.itu.int/ITU-D/cyb/cybersecurity/docs/itu-understanding-cybercrime-guide.pdf.
71
The ITU Global Cybersecurity Agenda/High-Level Experts Group uses the same categorization.
See www.itu.int/osg/csd/cybersecurity/gca/global_strategic_report/index.html.
72
ITU-D, ICT Applications and Cybersecurity Division, Understanding Cybercrime: A Guide for Developing Countries.
73
McAfee, Unsecured Economies: Protecting Vital Information, Report (2009) at
http://resources.mcafee.com/content/NAUnsecuredEconomiesReport.
74
75
76
International Federation of the Phonographic Industry (IPFI), Digital Music Report (2009) at
www.ifpi.org/content/library/DMR2009.pdf.
77
IPFI, Digital Music Report (2010) at www.ifpi.org/content/library/DMR2010.pdf.
78
LOI n° 2009-669 favorisant la diffusion et la protection de la création sur internet at
www.culture.gouv.fr/culture/actualites/conferen/albanel/creainterenglish.pdf.
79
Eric Pfanner, France Approves Wide Crackdown on Net Piracy, The N.Y. Times (22 October 2009) at
www.nytimes.com/2009/10/23/technology/23net.html.
80
David Landes, Swedish Parliament Passes Copyright Bill, The Local (25 February 2009) at www.thelocal.se/17832/20090225/.
81
U.K., Digital Economy Act (2010) at www.opsi.gov.uk/acts/acts2010/ukpga_20100024_en_1.
82
See European Commission, Anti-Counterfeiting at http://ec.europa.eu/trade/creating-opportunities/trade-topics/intellectual-
property/anti-counterfeiting/. Also see U.S. Trade Representative, ACTA: Summary of Key Elements (April 2010) at
www.ustr.gov/sites/default/files/uploads/factsheets/2009/asset_upload_file917_15546.pdf.
83
Council of Europe, Additional Protocol to the Convention on cybercrime, concerning the criminalisation of acts of a racist and
xenophobic nature committed through computer systems, Strasbourg (28 January 2003) at
http://conventions.coe.int/Treaty/en/Treaties/Html/189.htm.
84
See the First Amendment of the U.S. Constitution.
85
Chapter 3 117
86
ITU, Enlightened ICT regulation Can Play the Role of ‘Stimulus Plan’, Press Release (March 2010) at
www.itu.int/net/pressoffice/press_releases/2010/12.aspx.
87
Joel Schwartz, International Cooperation in Cybercrime Investigations, Computer Crime and Intellectual Property Section, U.S.
Department of Justice (November 2007) at
www.itu.int/ITU-D/cyb/events/2007/praia/docs/schwarz-international-cooperation-praia-nov-07.pdf.
88
Howard Rush, Chris Smith, Erika Kraemer-Mbula and Puay Tang, Crime Online: Cybercrime and Illegal Innovation, Research Re-
port, University of Brighton, U.K. (July 2009) at http://eprints.brighton.ac.uk/5800/01/Crime_Online.pdf.
89
90
infoDev, Survey of ICT and Education in Africa: A Summary Report Based on 53 Country Surveys, p. 6,
www.infodev.org/en/Document.353.pdf.
91
These countries are: Anguilla, British Virgin Islands, Dominica, Grenada, St. Lucia, and St. Vincent and the Grenadines. See Ed-
mond Gaible, Survey of ICT and Education in the Caribbean: A summary report, Based on 16 Country Surveys, infoDev / World
Bank (2009), p. 29 at www.infodev.org/en/Publication.441.html.
92
Some countries, like Uruguay, have developed centralized policies to promote school connectivity. Others, such as India, have
adopted a more decentralized approach toward achieving this goal –with both national and state initiatives being implemented.
For a review of the major national and regional initiatives for ICT in education in India, see infoDev, Information and Communi-
cation Technology for Education in India and South Asia, Volumes II and III, Country Case Studies (2010), at
www.infodev.org/en/Project.103.html.
93
In October 2009, the ITU launched Connect a School, Connect a Community, a public-private partnership promote broadband In-
ternet connectivity for schools in developing countries around the world.93 The objective of this initiative is that children and
youth attending connected schools will have improved access to the latest ICTs. In addition, connected schools are expected to
leverage ICTs to improve the economic and social development of their communities, serving as hubs to provide ICT-based
training on basic life skills (e.g., language literacy, numeracy and basic ICT literacy) and tools to develop business and ICT-
specialized skills.
94
See Centro de Educación y Tecnología (Enlaces), Ministerio de Educación, at
www.enlaces.cl/index.php?t=44&i=2&cc=1273&tm=2.
95
infoDev, Information and Communication Technology for Education in India and South Asia, Volume I, Extended Summary.
96
See Jorge M. Pedreira. “Technological plan for education: The Portuguese framework for ICT in education and the Magellan in-
itiative for primary school children.” Presented at Inter-American Development Bank Seminar on “Reinventing the Classroom”,
15 September 2009. Washington D.C. http://events.iadb.org/calendar/eventDetail.aspx?lang=En&id=1444; and
www.tmn.pt/kids/#/e-escolinhas/magalhaes/.
97
Ana Laura Martínez, Serrana Alonso and Diego Díaz, Monitoreo y evaluación de impacto social del Plan CEIBAL. Metodología y
primeros resultados a nivel nacional (Dec. 2009) at www.ceibal.org.uy/docs/presentacion_impacto_social221209.pdf.
98
Different strategies such as refurbishing computers (i.e., recycling computers generally donated to the school connectivity pro-
grams) or using a “thin-client” approach (i.e., in which a simple computer (the “client”) is connected to a server that carries out
most of the processing).
99
See Toolkit for breakdown of costs.
100
See Tasa de alumnos por PC, at www.enlaces.cl/index.php?t=44&i=2&cc=800&tm=2.
101
See ITU, Connect a School, Connect a Community, Module 1: Policies and Regulation to Promote School Connectivity (2009).
LCCD projects, on the other hand, are usually a collaboration between the ministry of education and other partners such as
NGOs, international donors and the private sector. As such, the role of ICT regulators in LCCD projects is usually more limited.
102
WHO, Global Survey for eHealth (2005) at www.who.int/goe/data/en/.
103
WHO, World Health Statistics 2010 at www.who.int/whosis/whostat/2010/en/index.html.
118 Chapter 3
104
ITU, Implementing e-Health in Developing Countries: Guidance and Principles (Draft), p. 11 (2008) at
www.itu.int/ITU-D/cyb/app/docs/e-Health_prefinal_15092008.PDF.
105
See Rodrigue Rwirahira, Rwanda: Better Health Care By Using ICT in Medicine, All Africa (28 August 2009) at
http://allafrica.com/stories/200908280497.html.
106
Moses Ndahiro, RDB Forging Ahead with E-Health Development, The New Times (20 September 2010) at
www.newtimes.co.rw/index.php?issue=13963&article=17756.
107
Gautam Ivatury and Ignacio Mas, The Early Experience with Branchless Banking, Consultative Group to Assist the Poor (CGAP)
(April 2008) at www.cgap.org/gm/document-1.9.2640/FN46.pdf.
108
Christopher P. Beshouri and Jon Gravråk, Capturing the Promise of Mobile Banking in Emerging Markets, McKinsey Quarterly
(February 2010) at www.mckinseyquarterly.com/Capturing_the_promise_of_mobile_banking_in_emerging_markets_2539.
109
The unbanked are “customers, usually the very poor, who do not have a bank account or a transaction account at a formal fi-
nancial institution.” See GSMA, Mobile Money Definitions (July 2010) at
http://mmublog.org/uncategorized/mobile-money-terminology/.
110
Mobiles for Development: The Case for M-Banking , CGAP (November 2006) at
www.cgap.org/publications/mobilephonebanking.pdf.
111
Timothy R. Lyman, Mark Pickens, and David Porteous, Regulating Transformational Branchless Banking: Mobile Phones and
Other Technology to Increase Access to Finance, CGAP Focus Note No. 43 (January 2008) at
www.cgap.org/gm/document-1.9.2583/FN43.pdf.
112
Claire Alexandre, Ignacio Mas and Dan Radcliffe, Regulating New Banking Models that can Bring Financial Services to All, Bill &
Melinda Gates Foundation (August 2010) at
www.microfinancegateway.org/gm/document-1.9.46229/Regulating%20New%20Banking%20Models82010.pdf.
113
Paul Leishman, A Closer look at 'ZAP' in East Africa.
114
Consultative Group to Assist the Poor (CGAP), Poor People Using Mobile Financial Services: Observations on Customer Usage
and Impact from M-PESA, Report (August 2009) at www.cgap.org/gm/document-1.9.40599/FN57.pdf.
115
CGAP, Poor People Using Mobile Financial Services: Observations on Customer Usage and Impact from M-PESA, Brief (August
2009) at www.cgap.org/gm/document-1.9.36723/BR_Poor_People_Using_Mobile_Financial_Services.pdf.
116
Telenor, Telenor Pakistan’s easypaisa – The mobile banking solution, July 2010. Document on file with author.
117
See Resolution SBS N° 775-2008.
118
SBS and CAGP, Financial Inclusion and Consumer Protection in Peru: The Branchless Banking Business, Joint Assessment Report
(February 2010) at
www.cgap.org/gm/document-
1.9.41601/Financial%20Inclusion%20and%20Consumer%20Protection%20in%20Peru%20The%20Branchless%20Banking%20Bu
siness.pdf.
119
SBS to Introduce New Regulation to Allow M-Banking Services, BN Americas (10 May 2010) at
www.bnamericas.com/story.xsql?id_sector=2&id_noticia=517262&Tx_idioma=I&source=.
120
SBS to Issue New Regulations to Allow Mobile Banking, BN Americas (7 May 2010).
121
See World Bank, Competition Law Database at http://go.worldbank.org/40X7UQLL90.
122
Telecommunications Law of the Kingdom of Bahrain, Legislative Decree No. 48 of 2002 at
www.tra.org.bh/en/pdf/TelecommunicationsLaw-secondedition-English.pdf.
123
Telecommunications Law of the Kingdom of Bahrain, Legislative Decree No. 48 of 2002 at
www.tra.org.bh/en/pdf/TelecommunicationsLaw-secondedition-English.pdf.
Chapter 3 119
124
See ITU, ICT EYE Database, Regional Reports, Level of Competition (2009) at
www.itu.int/ITU-D/ICTEYE/Regulators/Regulators.aspx#.
125
United Kingdom, Competition Act of 1998, Schedule 10 at www.opsi.gov.uk/acts/acts1998/plain/ukpga_19980041_en.
126
OFT, Letter from the Office of Fair Trading (OFT) Setting Out OFT/Ofcom Concurrency Arrangements (December 2003) at
www.ofcom.org.uk/about/accoun/oft/#content.
127
OFT, Concurrent Application to Regulated Industries (December 2004) at
www.oft.gov.uk/shared_oft/business_leaflets/ca98_guidelines/oft405.pdf.
128
OFT, Concurrent Application to Regulated Industries, Sec. 2.4 (December 2004).
129
OFT, Concurrent Application to Regulated Industries, Sec. 2.5 (December 2004).
130
Memorandum of Understanding between the Competition Commission of Mauritius (CCM) and the Information and Communi-
cation Technologies Authority (ICTA), (March 2010) at www.ccm.mu/mouICTA.pdf
131
Ministry of Communications and Information Technology, Dr. Kamel and Eng. George Sign Memorandum of Understanding on
Green ICT Strategy, Press Release (9 February 2010) at www.mcit.gov.eg/PressreleaseDetailes.aspx?id=soldypBGlXo.
132
Energy Market Authority, Singapore’s Intelligent Energy System Pilot Project: First Step towards a Smarter Grid (November 2009)
at www.ema.gov.sg/ema_cms/media/news_pdfs/1260266179IES%20Press%20Release%20_Final_%20web.pdf.
133
E2Singapore, Energy Efficient Program Office at www.e2singapore.gov.sg/energy-efficiency-programme-office.html#.
134
Eric Lie, Rory Macmillan & Richard Keck, Draft Background Paper on Cybersecurity: The Role and Responsibilities of an Effective
Regulator, GSR-09 (October 2009) at
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR09/doc/GSR-background-paper-on-cybersecurity-2009.pdf.
135
Eric Lie, Rory Macmillan & Richard Keck, Draft Background Paper on Cybersecurity: The Role and Responsibilities of an Effective
Regulator, GSR-09 (October 2009) at
136
Digital Economy Act 2010 (c. 24) at www.legislation.gov.uk/ukpga/2010/24/contents.
137
Ofcom, Consultation on Online Infringement of Copyright and the Digital Economy Act 2010: Draft Initial Obligations Code (May
2010) at http://stakeholders.ofcom.org.uk/binaries/consultations/copyright-infringement/summary/condoc.pdf.
138
An in-depth analysis on this topic has been developed in the GSR10 Discussion Paper “The role of ICT regulation in addressing
cyberthreats”, at: www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/documents/documents.html.
139
OPLC, One Laptop per Child in Afghanistan (April 2009) at
http://olpc.af/index.php/component/content/article/35-olpc-in-afghanistan-/8-olpc-in-afghanistan-.html.
140
OLPC, OLPC Breaks New Ground in Kandahar (March 2010) at
http://blog.laptop.org/2010/03/09/olpc-provides-children-of-afghanistan-access-to-a-modern-education/.
141
See ITU, Connect a School, Connect a Community, Module 1: Policies and Regulation to Promote School Connectivity (2009).
LCCD projects, on the other hand, are usually a collaboration between the ministry of education and other partners such as
NGOs, international donors and the private sector. As such, the role of ICT regulators in LCCD projects is usually more limited.
142
FCC, National Broadband Plan, Ch. 10 Health Care at www.broadband.gov/plan/10-healthcare/#r10-1.
143
Christopher P. Beshouri and Jon Gravråk, Capturing the Promise of Mobile Banking in Emerging Markets.
144
See James Bellis and Lasse Nagel, Interoperability of Mobile Money Services, GSMA Mobile Money for the Unbanked Annual Re-
port 2009, at www.gsmworld.com/documents/mmu_2009_annual_report.pdf.
120 Chapter 3
145
Sources: CCK, Interconnection Determination No.2 of 2010, Determination on interconnections rates for fixed and mobile tele-
communications networks, infrastructure sharing and co-location; and broadband interconnection services in Kenya; Gunnar
Camner, Caroline Pulver and Emil Sjöblom, What Makes a Successful Mobile Money Implementation? Learnings from M-PESA in
Kenya and Tanzania, GSMA. Olga Morawczynski and Mark Pickens, Poor People Using Mobile Financial Services: Observations
on Customer Usage and Impact from M-PESA, CGAP Brief (August 2009) at
www.cgap.org/gm/document-1.9.36723/BR_Poor_People_Using_Mobile_Financial_Services.pdf.
146
Claire Alexandre, Ignacio Mas and Dan Radcliffe, Regulating New Banking Models that can Bring Financial Services to All, Bill &
Melinda Gates Foundation (August 2010) at
www.microfinancegateway.org/gm/document-1.9.46229/Regulating%20New%20Banking%20Models82010.pdf.
147
Ibid.
148
Michael Tarazi and Paul Breloff, Nonbank E-Money Issuers: Regulatory Approaches to Protecting Customer Funds, CGAP Focus
Note No. 63 (July 2010) at www.cgap.org/gm/document-1.9.45715/FN63_Com.pdf.
149
Ibid.
Chapter 3 121
4 THE LIBERALIZATION OF ICT DISPUTE RESOLUTION

Author: Rory Macmillan, Partner, Macmillan Keck
4.1 Introduction: fault lines is developing between these sectors over justifications
for widely varying termination charges.
Readers of this chapter will be well aware that the
ICT sector worldwide has been undergoing major liber- The ICT sector is rife with deep tensions due to the
alization and unbundling over the last quarter of a cen- driving force of innovation and creative destruction.
tury. They may be less aware that the field of dispute The economics of the Internet remain very uncertain,
resolution has undergone a similar transformation, and some basic fault lines are visible between different
though in certain respects over a longer period. Where groups, such as infrastructure providers and network
these two trends meet, numerous opportunities open operators on the one hand and applications and service
up. The ICT sector is increasingly exploiting skills and providers on the other. The world of “ICT” is not a hap-
experience in, and methods of, liberalized and unbun- pily united one. Gains in market value have been pre-
dled dispute resolution and in doing so, improving the dominantly enjoyed in those parts of the value chain
way disputes are resolved. Some of the most proactive that have benefited particularly from “network effects”
in seizing these opportunities are developing countries, and that require comparatively low capital expendi-
often due to pressure on officials to resolve disputes tures; examples include search services, social net-
expeditiously with inadequate resources. works and operating systems. On the other hand,
infrastructure provision and content production and
Disputes are inevitable in a sector where a unique distribution have not enjoyed the same growth in mar-
tension between the need to collaborate and the im- ket value. Core and access network operators make the
perative to compete is set against the background of large majority of capital expenditures in the Internet,
extensive official intervention through regulation. In and argue that they earn a much smaller proportion of
each dispute, one party stands to gain, another stands revenues generated by it.2 In traditional media such as
to lose, and the stakes are often very large; the official music distribution and newspapers, Internet activity
sector (government authorities, regulators and courts) shifts economic output from the offline world to the
is deeply involved in framing which party will gain and online world – without always creating new economic
how. Disputes are in many cases merely another aspect output.3
of the strategic effort to win the market. If, as von
Clausewitz famously observed, war is “the continuation Pricing models exhibit various anomalies. Usage of-
of politics by other means,”1 disputes are, in a sense, ten bears little relation to costs and revenues. Over
the continuation of competition by other means. They three quarters of Internet traffic generated by consum-
involve seeking to influence the structure of the market ers is video streaming and file sharing, but these ser-
in the future by drawing on the past and its lessons or vices account for only a small portion of revenues.4 For
by framing analyses of how problems should be ad- the first time in years, demand is putting pressure on
dressed in the future. network capacity, raising the need for greater invest-
ment in high speed networks to reach buildings and
The types of ICT disputes are wide ranging. Tradi- base stations. So long as capacity is constrained, net-
tional telecommunication disputes over interconnec- work management is increasingly regarded as the nec-
tion and access to wholesale services and essential essary solution. Thus emphasis is placed on network
facilities remain very much the order of the day, though management techniques such as the prioritization of
with new dimensions. The fixed and mobile sectors re- certain applications with low tolerance for latency, such
main relatively segregated from one another in terms as high definition video, rich voice and medical services.
of network technologies, ownership, business cultures The terms of such management are controversial. As
and historic regulatory models. Not surprisingly, debate usage of network capacity rapidly becomes dominated
Chapter 4 123
by data on both fixed and mobile networks, inter- privacy continue to find their way into dispute process-
operator transfers in this area are also increasingly im- es. To pick a recent example for illustrative purposes,
portant. Some network operators are beginning to pro- the Supreme Court of the State of New York recently
pose rethinking pricing models from peering to found that information placed on Facebook and
charging for data transport. Disputes over voice traffic MySpace, but hidden from view because of a user’s pri-
may find their equivalent in data traffic. vacy settings, was not necessarily protected from a liti-
gant wanting access to the information. In the case, a
Convergence has led to new tensions between in- plaintiff claimed to have suffered permanent injuries
frastructure and content providers. For example, and loss of quality of life, but the defendant had reason
broadband providers complain about satellite TV pro- to believe that the plaintiff’s online social networking
viders whose control over premium video content pages included evidence that was inconsistent with
(generally high profile sporting events and major mov- these claims. The court allowed the defendant access
ies) permits them to distribute it exclusively over their to the protected information.7
own network platforms. Converged regulators that can
deal with the combination of telecommunications, me- The scope for disputes in ICT also extends to intel-
dia and competition issues are beginning to tackle such lectual property. Many telecommunication regulators
matters. Some have found that premium content is a do not have extensive familiarity with the development
wholesale market in itself and have designated some of standards and the role of patents in technology de-
distributors as dominant; these regulators have then velopment, and cases where exclusive intellectual
intervened to prevent abuse of this upstream market property rights may be abused to hinder the develop-
dominance to favour the distributor’s own downstream ment of standards. Standard setting bodies are not
distribution platforms over cable, digital terrestrial tele- necessarily equipped to deal effectively with disputes
vision (DTT) and IPTV competitors. 5 The terrestrial among members. Nor are regulators. These matters are
broadcasters and wireless telecommunication compa- typically left to competition authorities and the courts,
nies also wrestle over radio spectrum refarming, the including, for example, in such key jurisdictions as
digital dividend and white space frequencies. France (which is home to the European Telecommuni-
cations Standards Institute, ETSI) and the United States.
Shifting regulatory paradigms, emphasizing the These may require patent holders to license essential
horizontal layering of networks6, focus increasingly on patents to their competitors in downstream markets,8
layers where capital investment levels may merit great- for example, or control failures to disclose essential pa-
er aggregation, such as passive network infrastructure tents during standardization processes while demand-
and wireline access networks. These paradigms, to- ing royalties for them.9
gether with renewed interest in government involve-
ment in public-private partnerships and other public There are, then, numerous fault lines in the ICT sec-
investment projects to develop high speed connectivity, tor that, if not anticipated and resolved by the foresight
can be expected to bring new disputes over the terms of legislators and regulators, may and often do spill into
of open access to infrastructure platforms. disputes. These disputes, in turn, must be resolved in
the courts, in regulatory proceedings and in arbitrations.
Most telecommunication regulators are more fa- This chapter does not seek to bridge or repair these
miliar with the deeper network and infrastructure lay- fault lines, but rather explores how dispute resolution
ers of the ICT sector than the upper network layers of processes are being transformed in response to the
operating systems, applications, content and Internet traditional and new disputes facing the sector. This
services. Their mandates have evolved with the historic transformation in dispute resolution processes in some
process of privatization and liberalization of telecom- ways mirrors the transformation of the ICT sector itself.
munication networks. They are less familiar with the
“network effects” of services such as social networking In exploring the transformation of dispute resolu-
and search engines, and how these services affect tion processes, this chapter builds upon the work of the
competition in these markets. Fully “converged” regula- ITU and the World Bank in a joint study on dispute reso-
tors equipped to deal with the full ecosystem of infor- lution in 2004.10 That study, to which this author con-
mation technologies are still the exception. tributed, found that the telecommunication sector
could benefit from numerous innovations in dispute
The wide range of unresolved legal and regulatory resolution processes. This chapter builds on that obser-
questions around data protection, cybersecurity and vation, which has proven correct, and explores in par-
124 Chapter 4
ticular the interaction between public actors and pri- For this reason, over the last quarter century a
vate actors in ICT dispute resolution. This chapter’s large number of countries have moved from providing
main theme revolves around the degree and style of services directly through government departments and
intervention in a liberalized market by the official sector agencies to providing services through incorporated
through dispute resolution. entities. These entities have distinct corporate and fi-
nancial governance, and many have been partially or
This chapter does not attempt to cover all of the entirely privatized. By issuing licences to new providers,
important areas of dispute resolution, such as interim countries have also introduced private operators and
remedies, increasing use by regulators of timelines to investors to take substantial control over new tele-
ensure rapid resolution of disputes, the treatment of communication operations. As a result, the power to
confidential submissions, allocation of parties’ costs, make investment and operating decisions is better
enforcement and many other subjects. Readers may aligned with the responsibility for their consequenc-
wish to refer back to the previous study for discussion es.11
of these issues in the context of the ICT sector.
Competition among service providers is widely rec-
Section 4.2 of the chapter explores how ICT and ognized as a valuable and necessary driver of improve-
dispute resolution have each been undergoing a pro- ment in the availability, variety, quality and price of
cess of liberalization and unbundling, creating multiple telecommunication services. As is evident from reforms
roles and opportunities for private actors in each. Sec- undertaken in markets on every continent and as is re-
tion 4.3 discusses dispute resolution in the regulatory flected in the General Agreement on Trade in Services
context, including the continuum between regulation (GATS) of the World Trade Organisation (WTO), interna-
and dispute resolution, questions of party autonomy in tional best practice clearly favours the removal of exclu-
a regulated environment and the appropriate processes sive arrangements protecting incumbent operators and
for different regulatory purposes. Section 4.4 explores the introduction of fair competition from privately-
various specific examples of the liberalization of dispute owned providers.12
resolution in the telecommunication sector, including
adjudicatory processes, appeals and other control sys- Competition provides a strong and direct incentive
tems and enforcement. It also discusses the increasing to optimise the use of resources. It thus improves in-
use of mediation processes to solve regulatory objec- vestment and operational decision-making because
tives, and highlights examples of how mediation can be providers of capital hold decision-makers accountable
particularly successful in resolving major complex mul- for maximising returns on investment under competi-
ti-party problems. Section 4.5 concludes the chapter tive pressure.
with some speculation about how the ICT dispute reso-
lution market may develop. These policy considerations of separation (and of-
ten some level of privatization13) of state-owned pro-
4.2 The liberalization and viders from the organs of the State and the promotion
unbundling of ICT and dispute of competition have been the foundation of sector re-
resolution form. Operational control of and financial risk in the
telecommunication sector is to a large extent now in
4.2.1 ICT the hands of multiple operators, many funded by pri-
vate capital. In short, the official sector has retreated,
Separating the government from the operation of allowing private actors to emerge to play leading roles
telecommunication networks and service provision has in meeting demand for telecommunication services.
become a pillar of international best practice in tele-
communication policy (notwithstanding large public Still, telecommunications is universally considered
private partnerships underway in Australia and else- to be a critical public service with extensive economic
where). It is widely recognised that the large scale in- and social benefits. To ensure the successful function-
vestment required in telecommunications is less ing of the market, the official sector has redefined its
efficient, and service quality and prices are poorer, role, focusing on regulatory oversight, in large part to
where investment decisions are subject to excessive ensure fair competition, to provide protocols for han-
political control. dling scarce resources, and to address other aspects of
market failure.
Chapter 4 125
The liberalization of telecommunications – the re- opment of wholesale markets and the horizontal layer-
treat of the official sector and introduction of competi- ing of the networks, numerous roles in the ICT sector
tion – has brought about a very extensive unbundling are now unbundled and handled by private actors serv-
of infrastructures, network elements, service provision ing customers for commercial gain.
and functionalities. Liberalization began with intercon-
nection, enabling the network effects of combined 4.2.2 Dispute resolution
networks to result in the whole being greater than the
sum of its parts. The trends in the ICT sector described above are
paralleled by similar developments in the field of dis-
Regulatory intervention to ensure that providers pute resolution.
have access to the network assets and services of other
providers has led to many countries requiring further Until relatively recently, in most countries, the offi-
unbundling of wholesale services and passive infra- cial sector retained sovereign control – a sort of near
structure to permit competitors to develop in particular monopoly – over the resolution of disputes. The court
market segments. The unbundling ranges from trunk house was the legitimate forum to which parties would
services through to carrier selection, leased lines and resort to resolve differences that they could not other-
other capacity services, the local loop, dark fibre and wise negotiate. Over the last several decades, however,
ducts, to provide but a few examples. numerous countries have recognized that the public
judicial system is inadequate to the task of resolving the
Sometimes the unbundling arises from market-led cases brought before them. Some cases were volumi-
initiatives, such as tower leasing companies that pro- nous and involved simple matters, while others in-
vide passive infrastructure in India, the United States volved highly complex disputes that required significant
and now Africa, and a wide variety of wholesale ser- time and resources to resolve. The official sector’s mo-
vices in most developed markets. Market-led unbun- nopoly over the operations of dispute resolution – i.e.,
dling also increasingly extends to the provision of the process of setting procedure, hearing the parties
managed network services, often by manufacturers, and deciding cases – did not adequately serve society’s
running licensees’ network operations and sometimes needs. Thus, through various developments, a shift oc-
service provision.14 curred in the realm of dispute resolution that saw pri-
vate actors take a greater role in the dispute resolution
A significant aspect of unbundling arises from the process.
“end-to-end” architecture of Internet Protocol (IP)
based networks. Under the end-to-end principle, the The evolution of the role of the official sector in
“intelligence,” or computing, in the network occurs to dispute resolution and the increased role of private ac-
the greatest extent possible at the edge of the network tors over the last several decades are directly tied to a
on computers, business servers, corporate mainframes, number of key events and initiatives. Initially and most
datacentres and customer mobile handsets. Simplisti- prominently, these include international initiatives to
cally described, data is disaggregated and broken into encourage commercial arbitration whereby parties
addressed IP packets on the sender’s computing device would agree to appoint their own arbitrators who in
or system and transmitted efficiently across the net- turn would set procedure, hear the parties and decide
work to the destination where it is reassembled by the their cases. The evolution occurring in field of the dis-
recipient’s computing device or system. The common pute resolution also involve the development of a vari-
use of the IP/TCP protocol unbundles the network into ety of expert determination and mediation processes.
those passive and active network elements required to
support carriage of IP packets, the transmission of bits, Such initiatives included, most importantly, the
and the services and content that can be provided and New York Convention on the Recognition and Enforce-
transactions exchanged using them. This permits mar- ment of Arbitral Awards of 1958. The State parties
ket entry in segments not weighed down by huge capi- agreed in that treaty to ensure that their judicial sys-
tal costs, freeing innovation in applications and services tems would respect parties’ agreements to resolve a
that run across the IP platform. dispute by arbitration rather than in the courts, and to
enforce arbitral awards rendered in such arbitrations.
As illustrated in Figure 4.1, a result of the combina-
tion of liberalization, commercial and regulatory devel-
126 Chapter 4
Figure 4.1: Liberalization and unbundling of ICT
Liberalization and unbundling of ICT Official sector

Private sector
Policy maker
Regulator
Applications
Applications Applications Applications

Applications MVNO
Policy making and LLU
Roaming
services Retail
Regulating CPS
Bitstream
Service provision Integrated Integrated Backhaul
service service Leased lines
Network operation Wholesale Wholesale
network Network
providers providers
Active network services and managed services
and and operations International
Network
Passive network network network operations gateway
Dark fibre
operators operators leasing
Tower
Passive infrastructure leasing
providers Netcos
Source: Author.
By law, private individuals appointed by private ac- In parallel, numerous international, regional and
tors would decide their disputes, and their decisions national institutions developed to provide various
would be enforceable by law.15 managed services that previously would have been
viewed as coming under the official sector’s monopoly
This approach was further affirmed in national laws, over dispute resolution. These institutions registered
often drafted on the basis of the UNCITRAL Model arbitrators on their rosters, appointed arbitrators to de-
Law.16 Numerous countries enacted new laws to bolster cide cases, provided rules of procedure to govern arbi-
arbitration’s effectiveness as a means of dispute resolu- trations, and in some cases even reviewed arbitrators’
tion. These laws permitted private parties to determine decisions before they are issued, or effectively provided
where the arbitration would be held, its language, the an appeal service after they are made.17 Different insti-
law governing the procedure of the arbitration as well tutions provided different combinations of these ser-
as the substantive law of the dispute, and the proce- vices. Dispute resolution was undergoing its own
dure of the arbitration itself. The role of the official sec- unbundling.
tor primarily became the enforcement of arbitral
awards and the verification that the parties had legal Governments pushed this liberalization as a matter
capacity to agree to arbitration in the first place – and of international trade policy and then domestic reform
verification that the arbitration had been carried out of their judicial systems. At the same time, the official
properly. This last responsibility involved ensuring that sector’s courts controlled the pace of liberalization of
the parties had had an opportunity to present their dispute resolution through the care they took over en-
cases in the arbitration (often called “the right to be forcement of agreements to arbitrate and arbitral
heard”) and that the arbitration was carried out in ac- awards. Parties still depended upon the courts to make
cordance with the parties’ agreement to arbitrate. orders for enforcement against a losing party and its
Chapter 4 127
assets. The courts often took an initial view that certain lution processionals increasingly compete with one an-
subject areas in disputes were too important as a mat- other as they vie to be selected as arbitrators, adjudica-
ter of public policy to be permitted to be decided by tors and mediators. The liberalization and unbundling
arbitrators. These included competition law and securi- of dispute resolution have evolved further to include
ties law for example. the emergence of a variety of dispute resolution sub-
fields. These include adjudication, binding expert de-
Just as it was clear that private service providers termination, non-binding expert determination,
could do the job previously entrusted only to national mediation, ombudsman schemes, dispute boards and
public telecommunication monopolies, it became in- hybrids between these. The most basic roles are illus-
creasingly clear that a reliable and professional arbitra- trated in Figure 4.2.
tion community had emerged. This community came
complete with institutions, leaders and protocols, and These processes even compete with one another,
the courts increasingly accepted the validity of arbitra- with proponents of one or another lauding its advan-
tion and stepped back. The courts redefined their role tages for particular purposes. Essentially the market in
as that of regulator – focused on ensuring procedural dispute resolution services is following the classic
fairness and due process between parties. Courts have model of liberalization and competition: seeking to
progressively permitted arbitration in areas of public meet customer needs by innovating and forming niche
policy that were previously considered too important to markets.
be decided by arbitration tribunals.
The variety of methods of dispute resolution that
The public policy benefits of unbundling elements have taken their place in the rostrum of commonly ac-
of dispute resolution process and redefining the role of ceptable ways to resolve disputes illustrates how the
the official sector to remove its direct control over each component parts of dispute resolution can be unbun-
element have become widely recognized. Dispute reso- dled in different combinations.
Figure 4.2: Basic role types in dispute resolution

Gives binding decisions on
jurisdiction, procedure,
facts, law and overall dispute
Arbitrator/ judge/
adjudicator
Determines a specific
issue (e.g., technical or
economic) defined by
Supports
agreement to establish
Expert party’s
a binding or non-
adjudicator assertions
binding finding of fact
of fact and
analyses
Party A Party B
Party
expert
Assists parties to explore

Mediator interests, ‘‘SWOT’’ and options,
and to communicate to find zone
of possible agreement (ZOPA)
Note: SWOT refers to Strengths, Weaknesses, Opportunities and Threats analysis.
Source: Author.
128 Chapter 4
In simple terms, the component parts of dispute combined in different ways, creating dispute resolution
resolution include: processes tailored as needed to specific situations, as
discussed further in section 4.4.5 in the context of the
• identifying and framing the issue to be resolved;
ICT sector.
• selecting the 3rd party neutral who will intervene;
• selecting and controlling the process by which the Many of the types of dispute resolution processes
dispute will be resolved; mentioned above are rooted in the agreement of the
parties to resolve their dispute by the chosen method.
• making findings of fact; The parties may agree, for example, that a particular
• deciding the substantive result of the disputed mat- issue of fact or law, or both, will be determined by an
ter; expert, and may agree on the expert or on someone
who will appoint the expert. The parties may agree on
• reviewing the process/result; and whether the determination is to be binding or not. Or
• enforcing the result. they may agree on submitting the broader dispute to
an arbitral tribunal. To the extent that these agree-
Each dispute resolution method involves a different ments of the parties are respected by the official sector,
role for private actors and the official sector in the reso- the parties bear more responsibility for various ele-
lution of the dispute, as illustrated in Figure 4.3. The ments of the resolution of their own disputes.
unbundling of these functionalities allows them to be
Figure 4.3: Liberalization and unbundling of ICT
Liberalization and unbundling of dispute resolution Official sector

Private sector
Courts/ Binding expert Non-binding Mediation/
regulatory Arbitration
determination determination conciliation
adjudication
Determines issue Official Arbitrator

Parties Parties Parties
for resolution & Parties
Parties Parties
Selects 3rd Parties / Parties /
Official (sometimes (sometimes
party neutral Official Official
Official) Official)
Controls Arbitrator Expert & Expert & Mediator &

Official
process & Parties Parties Parties Parties
Makes finding Arbitrator None

Official Expert Expert
of fact
Decides result Official Arbitrator Expert Parties Parties
Reviews Probably
Official Official Official Unusual
process/result none
Enforces Official Official

Official Official Official
(if agreement) (if agreement)
Source: Author.
Chapter 4 129
Not only is the agreement of parties over elements remains subject to extensive regulation. As discussed in
of the process an increasingly important aspect of dis- the remainder of this chapter, a fundamental issue is
pute resolution, but dispute resolution processes in- how the official sector interacts with and intervenes in
creasingly provide for fostering such consensus. The relationships between private actors acting on the basis
last decade has seen a wave of changes in numerous of party autonomy.
countries aimed at introducing and increasing the use
of mediation to resolve disputes or at facilitating con- 4.3 Dispute resolution and
sensus over key aspects of dispute processes. A num- regulation
ber of hybrid alternative dispute resolution approaches
have emerged involving mediation followed by arbitra- 4.3.1 Party autonomy and economic
tion (known as “Med-Arb”) and the inverse (known as regulation
“Arb-Med”).
As a result of the liberalization and unbundling of
All of these various types of dispute resolution the ICT sector, business relationships among telecom-
processes involve greater or less reliance on, and en- munications providers (such as interconnection, access
couragement of, consensus of the parties. To the extent to facilities and other wholesale services) involve coop-
that a particular process relies less on consensus, it is eration between private companies. As a result, these
more adjudicatory, or determinative. The dispute reso- relations are, in almost all countries worldwide, a con-
lution processes also involve greater or less involve- tractual matter. Put very simply, they comprise the
ment of the official sector. The relationship between commercial bargain between parties according to
these two dimensions (adjudicatory/consensual and which they will cooperate to use their respective net-
official/unofficial) in different types of dispute resolu- work assets and services which have been funded by
tion processes is illustrated in Figure 4.4. their capital investment. Law and regulations may
frame what is permissible or required in their contracts
This interplay between the official and private sec- or may establish other rights and obligations between
tors and the boundary between consensual and man- them, but the deal they agree upon within those pa-
datory elements of dispute resolution are particularly rameters is a shared act and is essentially contractual.
complex in a liberalized environment that nevertheless
Figure 4.4: Styles of intervention
Styles of intervention
Mediation &
conciliation
Unofficial Non-binding expert

determination
Binding expert
determination
Arbitration
Consensus building/
Ombudsman consultations
schemes
Regulatory
adjudication
Official
Determinative/ Consensual/
adjudicatory negotiated
Source: Author.
130 Chapter 4
Since the commercial exchange between any two policy reasons, such as contracts for illegal purposes or
operators in almost every country is based on contract, for the provision of morally unacceptable services.
party autonomy is a key dimension of how disputes
over such agreements are resolved and is only modified In the case of economic activity, freedom to con-
to the extent provided by law and regulation. “Party tract is in some cases curtailed by law and regulation.
autonomy” refers to the ability of potential or actual Law and regulation may prohibit certain activities that
disputing parties to choose the forum in which their are the subject of a contract and prescribe how others
dispute will be resolved, the procedures and substan- must be conducted. The degree to which and manner
tive law that will apply to the dispute resolution process, in which such regulation respects or curtails the free-
and the individuals who will resolve their dispute. De- dom to contract differs in each country according to its
scribed simply, party autonomy means that where par- economic and other policies as reflected in its laws.
ties agree on an aspect of how their dispute should be Many countries’ economic regulations prohibit con-
resolved, this agreement should generally be respected. tracts having or intended to have an anticompetitive
Thus, for example, except where ethical or public policy effect, such as contracts that fix market prices.
concerns are present, arbitral tribunals tend to follow
the parties’ lead regarding the scope of a dispute and In significant measure, however, economic regula-
matters of procedure. Numerous initiatives worldwide tion aims to support an environment in which freedom
in recent years to allow parties greater control over of contract can flourish. For example, a large part of
their own disputes evidence an expansion in party competition law seeks to prevent providers with signifi-
autonomy in disputes.18 cant market power from abusing such power to curtail
the freedom of contract of others. It does so specifically
Where a contract stipulates the manner by which by outlawing restrictive agreements, for example, and
disputes arising from it will be resolved, the parties’ generally by protecting non-dominant undertakings
discretion to determine how the contractual dispute from being excluded from the market by dominant par-
process will be managed is essentially an application of ties.
the original freedom to contract. The dispute resolution
process set out in the contractual terms represents an In turn, some countries consider some economic
agreed arrangement for the allocation of contractual policies to relate so profoundly to the country’s public
risks related to potential disputes. The parties may policy that disputes over them must be decided by the
choose arbitration, for example, for a number of rea- public adjudication system, for example in the applica-
sons, including preference for a particular forum, the ble courts or by other public bodies.20 For this reason,
flexibility and confidentiality of the process, and the countries make some matters non-arbitrable.21 Exam-
wish to choose the individuals they will trust to decide ples of matters that are commonly not arbitrable in-
the dispute. clude criminal, (legal) status and family law.22
Whatever their reasons, and whether the agree- After some initial distrust of arbitration as a
ment is an international one or a domestic one, the method of resolving disputes with an economic regula-
choice of arbitration typically stems from the parties’ tory bearing, international practice evidences a trend
desire to control the risk inherent in litigation or other towards reducing the scope of disputes that are non-
official adjudicatory processes. Arbitration is a funda- arbitrable. For example, in Europe, since the European
mentally private affair.19 Court of Justice decision in Eco Swiss China Time Ltd. v.
Benetton International NV,23 the arbitrability of dis-
A question arises in relation to private actors’ free- putes involving EU competition law is no longer
dom to pursue their activities according to their own doubted. Similarly, in the United States, the Supreme
interests and judgment – i.e., where regulation has not Court decided in Mitsubishi Motors Corp. v. Soler Chrys-
intervened – where they exercise this freedom not only ler Plymouth, Inc.24 that antitrust claims are arbitrable.
for the commercial terms governing their business rela-
tions but for the resolution of their disputes. No coun- While the examples from Europe and the United
try allows absolute freedom of contract, nor does any States mentioned above initially related to international
allow completely untrammelled party autonomy in the arbitration, the difference, if any remains at all, be-
resolution of disputes arising from their contracts. For tween international and domestic arbitration bears di-
example, certain types of contracts are void for public minishing importance to arbitrability in many
countries.25 Indeed, many countries’ arbitration laws
Chapter 4 131
make little or no distinction for these purposes be- vate parties have failed to agree on a matter where
tween international and domestic arbitration. regulatory policy has a strategic interest in parties’ obli-
gations. This strategic interest may relate to ensuring
In numerous areas of law, disputes that were pre- compliance with the obligations that private parties
viously viewed as non-arbitrable have been permitted have voluntarily assumed by contract or to impose obli-
to be arbitrated. Indeed, in Europe, arbitration has gations on the parties by authority. A failure of agree-
been embraced not only as an appropriate forum for ment may be a failure of an existing agreement or a
hearing antitrust disputes but also as an appropriate failure of parties to reach agreement in the first place.
process for enforcing antitrust remedies.26 The Euro- The nature of the failure affects the boundaries be-
pean Commission’s embrace of arbitration in this re- tween various types of official intervention, as dis-
gard is discussed in section 4.4.3. cussed below.
As a result of developments in Europe and the In many respects, most regulation is in one way or
United States, arbitration is increasingly accepted inter- another contentious. It will be favoured by some and
nationally as a means by which matters of both “correc- not by others, chiefly because it will typically serve to
tive justice” (e.g., contract law claims and remedies) protect the former from the adverse effects of the lat-
and “distributive justice” (e.g., welfare-oriented eco- ter’s behaviour. For example, regulation may protect
nomic regulation)27 may be properly heard and de- consumers from inadequate or overpriced service pro-
cided.28 Party autonomy, then, in the application of vision by an operator, or one operator from abuse of
arbitration even in areas of economic regulation is market power by another. A regulation requiring an op-
firmer than ever – notwithstanding that the full set of erator with significant market power to publish a refer-
mandatory rules such as competition laws will apply. ence offer seeks to procure, often for the operator’s
competitors, the offered service or facility on terms to
4.3.2 The continuum between regulation and which the operator would not otherwise have agreed.
dispute resolution
Because most regulation is contentious, there is
In the liberalized ICT sector, the official sector has something of a continuum between official interven-
taken a step back to redefine its role primarily as policy tion to introduce laws and regulations on the one hand
maker and regulator, even in countries where the State and to resolve disputes on the other. Indeed, in some
continues to have a substantial interest in one or more markets, service providers will seek to influence the in-
operators. Simply described, regulation is planned offi- troduction of new laws or regulations with the same
cial intervention through rules intended to address ex- vigour as they might pursue or defend a dispute, as
isting or anticipated problems of market failure with seen recently for example in the North American net
the purpose of protecting and advancing sector policy neutrality debate.
objectives. In the liberalized environment, a key skill
and task of the official sector – particularly the regula- To some degree, the introduction of laws and regu-
tor – is to strike the optimal balance between the policy lation differs from dispute resolution in that the former
benefits of: is general, requiring compliance by all parties to which
they apply by their terms, whereas disputes are specific
• allowing and encouraging private actors to behave
to the disputing parties and not to others. Still, this dif-
according to their own judgment and interests, in-
ference is limited. In many cases, regulation is suffi-
cluding in the resolution of their own disputes, and
ciently specific and targeted that it will only apply to a
• constraining their freedom to do so by official in- very limited number of persons and often only one. For
tervention, including the prescription of particular example, mobile termination rates will usually only ap-
dispute resolution processes and the definition of ply to the few mobile service providers in a market. An
how adjudicatory versus consensual the process is obligation requiring a reference interconnection offer,
and how much responsibility private parties have or a reference access offer, will – when applied – very
over the process. often apply to only one operator in such market. The
reason is simple: since much regulation is intended to
Countries have different approaches to regulatory address problems of significant market power, there
intervention in the interaction between private actors can be only a small number of entities, and sometimes
through dispute resolution processes. Ultimately all only one, to which it will apply.29
these approaches revolve around the fact that the pri-
132 Chapter 4
The line between regulating and resolving disputes take measured, proportionate action directed at the
can be a thin one in practice, and it affects the re- issues at hand.
sources required. The United States has perhaps the
longest experience with the interaction between regu- In contrast, when a dispute arises, official interven-
latory compliance and dispute resolution. Competition tion that was not necessarily planned in advance takes
policy is enforced more through the so called “private place. The official sector does not typically solicit dis-
attorney general,” by which an aggrieved party may putes (although it does occasionally – see section 4.3.3
pursue a respondent for violations of the U.S. antitrust and Box 4.1) but rather disputes are brought to it for
laws, than by the US Department of Justice and Federal resolution by one of the private actors claiming that it
Trade Commission. The claimant does not merely seek has a right to official intervention. Until the dispute
compensation for harm caused by the alleged wrongful arises and the official sector intervenes, the private par-
conduct, but in doing so upholds important public ties act according to their own judgment and interests.
norms and interests. The claimant’s private cause of The intervention of a regulator or court may determine
action is bolstered by the award of punitive damages that one or both parties may no longer act freely, and
and the requirement that the successful claimant’s identify or impose an obligation on one or both parties
costs be borne by the respondent. To deal with the to act in a particular way. The claimant will of course
challenge of monitoring compliance with and enforcing hope that the determination requires the respondent
competition law, the European Commission now also to do what the claimant is asking for, and the respon-
promotes private litigation as a remedy. dent will of course hope that the determination leaves
it to carry on as before.
The importance of the relationship between regu-
lation and dispute resolution relates less to the nature The unplanned nature of dispute resolution has
of the underlying problem, and more to the process various implications.
designed to address it. Regulatory process is, conceptu-
ally at least, regulator-driven. The regulator pursues its First, the nature of the legal relationship between
mandate under the law, gathers information and exer- the disputing parties may be not established in advance
cises its powers. In disputes, the parties bring the mat- by law or regulation, and thus it may be the subject of
ter to the regulator, and because the situation is disagreement. Since the nature of the legal relationship
contentious, it is all the more important that each has a itself is submitted for determination by the regulator or
full opportunity to be heard. A key difference between court, the process for reaching a result comes under
regulation and dispute resolution, then, is in the considerable pressure, such as the risk of further litiga-
planned nature of regulation compared to the relatively tion in the form of appeals, adverse media coverage
unplanned nature of disputes. and political attention. A determination may require a
party to change its behaviour, for example, to provide a
Regulation is authorized in advance by law, and the certain service or standard of service, to charge certain
regulator has the benefit of time to gather information, prices or to pay damages for breach of contract. The
analyse the functioning of the market and take sound- determination must be reached without necessarily
ings from stakeholders through formal consultations having the luxury to pursue all of the steps and take all
and informal meetings. The regulator can identify exist- of the time available in developing new laws and regu-
ing and anticipated problems in the market, assess the lations. Because the dispute is specific to the parties in
incentives of those involved and analyse its information question, each of whom has something immediate and
according to the policy objectives established by law or identifiable to gain or lose, it is typically particularly
otherwise. The regulator can then consider what kinds contentious. As a result, each party is all the more con-
of regulatory remedies, if any, might best address the cerned that it should have every opportunity possible
problems and determine how best to use its legal pow- to influence the outcome, and be satisfied that the
ers to implement such remedies. It may then consult regulator has duly heard and considered its arguments.
again on its proposals and make adjustments in light of Due process in disputes is, then, particularly important.
such consultations before issuing the applicable regula-
tory instrument introducing new legal obligations. This Secondly, the aggravated contentiousness of dis-
on-going process of regulating ensures a healthy flow putes is coupled with the difficulty of planning for them.
of information to the regulator in a manner and on a As a financial matter, while a regulator may budget for
timeframe that enables it to use its statutory powers to various planned regulatory initiatives over the course of
its financial year, it is difficult to know what disputes
Chapter 4 133
will arise. A regulator may seek to establish a contin- sector were to determine everything in advance by
gency budget in advance, but contingencies are often regulation. In some instances, disputes are a positive
the worst funded. Similarly, readiness to handle a dis- sign that parties are competing, albeit competing in a
pute procedure and adequacy of human resources is dispute resolution forum for a particular view of the
frequently a challenge. Disputes often require legal, law and the facts. And in many cases, it is next to im-
technical and economic expertise deployed intensely possible to prevent disputes from occurring, particu-
under considerable pressure. One thing is certain: in a larly as rapidly shifting service markets and
dispute resolved by adjudication, at least one party will technological innovation change parties’ incentives,
be unhappy at the end, and may wrap the regulator transform previously valuable rights into stranded as-
into the dispute in further appeals or judicial review sets and require reinvention of business models.
proceedings.
Together, these factors make the question of when
Thirdly, dispute resolution is often at the sharp and how the official sector intervenes to resolve dis-
edge of the regulatory process. It is where the judg- putes particularly important.
ment of the official sector about what to preordain by
regulation and what to leave to private actors has not 4.3.3 Pick your process
framed behaviour to control optimal business relation-
ships among them. Indeed, the very decision to liberal- The relationship between resolving disputes and
ize a market involves an acceptance that there will be regulating typically depends on a given country’s legal
disputes; disputes could only be prevented if the official and regulatory philosophy.
Box 4.1: Vodafone Qatar v Qatar Telecom30

The State of Qatar recently initiated a process of sector liberalization, establishing a sector regulator, ictQATAR in 2004 and
enacting a Telecommunications Law in 2006. It licensed Vodafone Qatar to provide competitive services in 2008.
In 2010, the incumbent licensed provider, Qatar Telecom (Qtel), entered into an agreement with Virgin Mobile and began to
brand certain of its services under the Virgin Mobile Qatar brand. By prompt public announcement, the regulator ictQATAR
quelled confusion as to whether a third licence had been granted and began investigating the arrangement. Concerned that
consumers might perceive Virgin Mobile Qatar as a third competitive service provider, ictQATAR ordered Qtel to change its
marketing and promotional materials to ensure that it did not represent or advertise Virgin Mobile Qatar as being a service
provider, including by using dedicated number range or SIM cards for its Virgin Mobile Qatar branded service. Qtel was re-
quired to display its own Qtel logo prominently with its Virgin Mobile branded service.
Still, a two-player market is often particularly contentious, and Vodafone Qatar was not satisfied that this result was suffi-
cient. Seeking to resolve the matter, ictQATAR introduced new dispute resolution procedures31 and sent them to Vodafone
Qatar, inviting it to file a complaint if it believed Qtel was violating the Telecomunications Law. Vodafone Qatar did so, alleg-
ing that QTel’s launch of Virgin Mobile services had effectively introduced a third mobile telecommunication provider with-
out a licence. A customary exchange of pleadings occurred between Vodafone Qatar and Qtel. Vodafone Qatar also
complained that ictQATAR had let this happen during a strategic review of its liberalization plan, and that it should only per-
mit a third entrant when this was completed.
For the reasons cursorily summarized below, ictQATAR found that Virgin Mobile Qatar was not acting as a service provider,
and indeed it did not hold a licence to do so. Qtel entered into the contracts with customers and Qtel operated the network
and provided the service. Virgin Mobile did not operate facilities, nor did it sell or resell services. Qtel did not even sell
wholesale minutes to Virgin Mobile for it to sell onwards to customers, as might occur with a mobile virtual network opera-
tor (MVNO) arrangement. Virgin Mobile simply lent its brand to Qtel and provided consulting services in return for valuable
consideration. (By coincidence, the transaction bore some resemblance to an earlier arrangement between Vodafone and
Gulf operator MTC by which MTC (now Zain) marketed itself as MTC Vodafone.) ictQATAR accordingly dismissed Vodafone
Qatar’s complaints, although it did require Qtel to implement additional remedial measures to prevent further confusion
among consumers.
Source: The Supreme Council for Information and Communications Technology (ICTQATAR), www.ictqatar.qa
134 Chapter 4
In the UK, for example, complaints over compliance matter that might otherwise continue to simmer or boil
with ICT regulation are treated separately from dis- over. A dispute process allows the regulator the benefit
putes. The former is a matter of investigation and regu- of hearing arguments and factual submissions from the
latory remedies (possibly including penalties) while the licensee whose compliance is questioned and other af-
latter concerns the failure of a commercial negotiation fected parties in a manner designed to test the verity of
over network access or other regulatory conditions.32 facts and the strength of their respective arguments. It
The UK’s Ofcom thus tends to keep exercise of its regu- enables the regulator to shift some of the burden of
latory powers for addressing significant market power analysis and fact finding to the parties in the sector. This
(SMP) separate from its dispute resolution powers, and can effect a subtle shift of the regulator’s primary role
indeed its dispute resolution powers are limited with as well, from policeman and enforcer to arbitrator be-
respect to SMP matters.33 So, for example, in a string of tween parties and their differing views.
British Telecom (BT) dispute determinations over
wholesale rates of the mobile operators, Ofcom de- The Virgin Mobile case in Qatar, described in
clined to carry out a cost-based assessment of the pro- Box 4.1, is an example of this. The matter was funda-
posed charges. In Ofcom’s view, charges should be set mentally one of compliance by Qtel with its licence
according to the regulatory process for dealing with terms. ictQATAR used a dispute resolution procedure to
terminating operators having SMP, not in resolving a deal with Vodafone Qatar’s dissatisfaction over Qtel’s
dispute over BT’s end-to-end obligations. In considering introduction of a Virgin Mobile branded service. Indeed,
an appeal from Ofcom’s decisions, the UK Competition it apparently issued dispute resolution procedures for
Appeal Tribunal (CAT) took the view that Ofcom “erred the very purpose of addressing the matter, inviting Vo-
in drawing too rigid a boundary between the exercise dafone Qatar to initiate proceedings if it was not satis-
of its dispute resolution powers and its SMP-related fied with ictQATAR’s compliance measures. The dispute
powers.”34 The case illustrated the risk that while “the resolution procedures were by their terms not so much
dispute resolution procedure is meant to provide a concerned, as might be more common, with resolving a
quick answer to the dispute, the parties may be failure of agreement between parties (pre- or post-
tempted to swamp the regulator with the same level of contract) but with compliance with the Qatari Tele-
economic and accountancy information that they gen- communications Law. Essentially, dispute procedures
erally provide in market reviews.”35 The CAT took the served the purpose of a transparent complaint and
view that Ofcom should have carried out some review compliance process.
of the relationship between costs and charges in resolv-
ing the dispute. In some cases, a regulator will conclude that a mat-
ter is not appropriate for the to-and-fro of dispute reso-
On the other hand, in Trinidad & Tobago, the failure lution procedures and will intervene with regulation to
of the incumbent operator Telecommunications Sys- determine a matter that might otherwise have been
tems of Trinidad & Tobago (TSTT) and new entrant negotiated. In many areas where regulators are con-
Digicel to reach agreement on interconnection rates led cerned that significant market power will produce
to disputes being heard before specially constituted ar- wholesale conditions that will adversely affect the retail
bitration panels. In the first, the arbitration panel con- market regardless of whether such power prevents a
sidered cost information submitted by each party, and commercially negotiated agreement, they will simply
engaged an expert to report on such information in de- regulate the result. Interconnection is the most com-
ciding on whether TSTT could insist on symmetric inter- mon example of this. However, in some cases, even
connection rates (i.e., each licensee charging the other without this rationale, some regulators will intervene
the same rate per minute of terminated voice traffic). when they conclude that negotiations will not produce
The panel found that TSTT was not prevented from so agreement, and do so by exercising regulatory power
doing. Subsequently, another arbitration panel actually directly rather than the power to resolve the failure of
determined the rates.36 agreement.
Regulators may use a dispute process to bring a The decision of the UAE Telecommunications Regu-
fermenting contentious compliance problem to a head. latory Authority (TRA) decision in 2010 on mobile site
This can allow them to ensure that the facts are trans- sharing exemplifies this type of intervention (see
parently understood, the interested parties are heard, Box 4.2). The TRA sought to nudge the parties towards
the issues are squarely addressed, and proper regula- an agreement by providing them with international
tory authority is asserted. Doing so can help settle a pricing benchmark information. After many months of
Chapter 4 135
negotiations and observing that their positions were far Official sector interventions where the economic
from one another and the TRA’s benchmark study, the rationale is unclear and where the parties have not filed
TRA concluded that the parties were failing to reach formal dispute proceedings raise a number of questions
agreement. about parties’ expectations of the bounds of freedom
of contract and party autonomy. Establishing a clear
Without either party initiating a dispute proceeding understanding of when a regulator will intervene in
and without conducting a full dispute process to hear commercial negotiations and the basis on which it will
their pleadings, the TRA issued a determination setting do so is a valuable component in securing investor con-
mobile site sharing charges. fidence and certainty about their regulatory environ-
ment.
Box 4.2: Evolution of telecommunication dispute resolution in the UAE

Since the introduction of competition in the United Arab Emirates, numerous disputes have arisen between incumbent op-
erator Etisalat and new entrant Emirates Integrated Telecommunications Company (known as du) as they negotiated and
then implemented interconnection. In April 2006, du submitted requests to the Telecommunications Regulatory Authority
(TRA) that the TRA issue decisions regarding the parties’ failures to agree on pricing of inbound international traffic carried
by du and requiring termination by Etisalat37 as well as carrier selection and pre-selection.38
The TRA initiated proceedings to hear the disputes, and meanwhile ordered the parties to continue to negotiate in good
faith and to conclude an interconnection agreement. It issued its decision on carrier selection and pre-selection in Septem-
ber 2006, requiring Etisalat to provide such services and specifying certain information that it was required to provide to du
for such purposes.
With still no interconnection agreement concluded by February 2007, Etisalat requested the TRA’s intervention to resolve a
dispute about the pricing of carrier selection and carrier pre-selection.39 The TRA, acting under its powers relating to inter-
connection rather than dispute resolution,40 promptly issued a directive ordering du and Etisalat to implement an Intercon-
nection Agreement attached to the directive immediately.41 In June 2007, the TRA issued its decision on the carrier selection
and pre-selection pricing dispute.
In December 2007, after having ordering Etisalat to provide a LRIC cost model by June 2006 and subsequently exchanging
cost model information with Etisalat, the TRA remained dissatisfied and issued a directive setting Etisalat’s interconnection
termination rates.42 It also issued its decision on termination of inbound international traffic, requiring Etisalat to treat such
traffic received from du the same way as other traffic received from du.
In March 2008, du declared that it had fulfilled its network coverage obligations in its licence and sought the TRA’s interven-
tion in a failure to agree on the provision of roaming services by Etisalat in the Western Region of the UAE.43 Etisalat argued
that the previous national roaming negotiations had occurred before the TRA had ordered the parties to implement the In-
terconnection Agreement in February 2007, and that these could not be the basis for a dispute filing. Furthermore, Etisalat
contested that there was a dispute over an existing agreement. The obligations in the Interconnection Agreement requiring
Etisalat to negotiate national roaming with du had not been entered into by agreement. Rather, they had been imposed by
the TRA. As such, the matter of national roaming was not really a dispute over an agreement between Etisalat and du that
should be addressed in dispute resolution procedure. Instead, it was a direct matter between the TRA and Etisalat under the
TRA’s regulatory compliance-related enforcement powers. The TRA issued its decision in October 2008, concluding prag-
matically that there was a failure to agree on national roaming after an attempt to negotiate, and ordering Etisalat to pro-
vide national roaming in the Western Region.
Some of these cases involved interim decisions in which the TRA granted the initial petition on an interim basis on the basis
that it considered that the matter was urgent and that the harm threatened to the claimant could not be redressed and was
more serious than the harm that respondent was expected to suffer. In addition, almost every decision of the TRA was the
subject of a Petition for Reconsideration, and in each of these the TRA reaffirmed the original decision.
The most recent stage in the contentious relationship has involved pricing of the sharing of Etisalat’s mobile sites by du. The
TRA sought to encourage the parties to agree on pricing for mobile site sharing. In July 2008, seeking to draw the parties to-
wards agreement by reference to international prices, it provided them with a benchmark study of mobile site sharing in
various international markets. By July 2010, no agreement was forthcoming. Each party wrote to the TRA indicating the
charges it thought appropriate. Neither was aligned with the benchmarks, and in August 2010 the TRA intervened without
requiring further negotiations or conducting a formal dispute proceeding, issuing a determination setting prices.44
Source: Telecommunications Regulatory Authority of the United Arab Emirates, www.tra.gov.ae
136 Chapter 4
4.4 Liberalization and unbundling The regulator in the Dominican Republic involves
of ICT dispute resolution arbitrators under the country’s Centre of Arbitration in
telecommunication disputes. This allows the regulator
4.4.1 Adjudicatory processes to benefit from the individuals in the Centre, as well as
its existing procedures and staff experience in manag-
As illustrated in Figure 4.3, there are numerous ing disputes.
elements within adjudicatory processes that may be
unbundled from control of the official sector. One is Entrusting dispute resolution to arbitrators is also
through appointment of decision-makers who are at particularly useful for relatively recently established
arms’ length from the traditional official decision- regulators which are still finding their way and building
makers, such as courts and regulators. In Trinidad & To- up resources. Small developing countries commonly
bago, for instance, the dispute resolution procedures face significant limitations on capacity. This can mean
established by the Telecommunications Authority of that a regulator may not be able to develop extensive
Trinidad & Tobago (TATT) use arbitrators to decide dis- regulation to deal in advance with problems typically
putes, as described in Box 4.3. TATT thus ensures that it addressed by regulation in other countries. Where a
can draw on external talent and a process separate regulator does develop regulation, it may still face ma-
from its day to day activities as a regulator. jor challenges in monitoring compliance and enforcing
it. As a result, a dispute resolution process may become
This can prove particularly useful, for instance, the forum in which important regulatory issues are ad-
where the regulator itself has become embroiled in dressed. For example, as described in Box 4.4, Solomon
earlier phases of a disputed matter and one or both Islands recently introduced new telecommunications
parties doubt its independence and possibly its capabil- legislation. Its Telecommunications Act 2009 places sig-
ity. There have been instances where a regulator wisely nificant emphasis on putting a robust dispute resolu-
established an arbitration scheme that enabled the dis- tion scheme in place. The Solomon Islands dispute
pute to be heard steadily by an arbitration panel de- resolution regime provides for a List of Experts to be
spite the loss of confidence of a party in the impartiality available for ad hoc Disputes and Appeals Panels, free-
of the regulator’s staff. ing the Telecommunications Commission of Solomon
Islands (TCSI) to focus on other on-going regulatory
functions.
Box 4.3: Arbitration in Trinidad & Tobago

In Trinidad & Tobago, Digicel won a concession to provide mobile telecommunication services. In 2006, when negotiations
with Telecommunication Systems of Trinidad & Tobago (TSTT) over the terms of Digicel’s market entry stalled, the Tele-
communications Authority of Trinidad & Tobago (TATT) introduced a dispute scheme providing for arbitration and media-
tion between service providers. It revised the scheme in 2010.
Under its procedures, the Authority handles the exchange of pleadings between the parties all the way through complaint,
response and reply before handing the matter over to a panel to make a decision within three months. After the due date
for the last submission, the Authority notifies the parties of its choice of persons to be appointed to a dispute resolution
panel and provides directions for the conduct of the proceedings. The parties are given an opportunity to object to the
choice of panel members and directions.
The Authority has significant discretion as to its choice of panel members. The panel in the first dispute that arose under the
procedures was composed of a Canadian professor of technology, a highly respected local economist (each of whom was a
board member of the Authority) and a chairman based in Switzerland. The next arbitration panel on a regulatory matter was
chaired by a prominent lawyer from Trinidad & Tobago and included a communications sector professor from the United
States and a technical telecommunication expert from Canada.
The panel appointed by the Authority hears the dispute in much the same manner as an arbitration panel, except that the
terms of reference and procedural directions have been set by the Authority. The panel is required to deliver a decision
within three months.
In shepherding the submissions until complete, the Authority handles a substantial part of the process. This may include ob-
jections to jurisdiction and various other preliminary, procedural, evidentiary and other matters. In addition to playing a role
in setting up the arbitration and framing the decision that is required, the Authority’s procedural role also saves considerable
costs, particularly fees of panel members for their time dealing with such matters.
Source: Telecommunications Authority of Trinidad & Tobago, www.tatt.org.tt; Author
Chapter 4 137
Box 4.4: The Solomon Islands arbitration and mediation scheme

The Solomon Islands Telecommunications Act of 2009 seeks to ensure that qualified and experienced persons will be ready
and available to deal with disputes. It provides for a List of Experts headed by a President, who must be a lawyer with 10
years’ experience in telecommunication regulation and dispute resolution. All members of the List, who will be appointed by
an independent evaluation committee or the President of the List, must be independent of the service providers. The Act
also provides for a Secretary to assist with administration.
The Act provides that disputes between service providers will be:
• adjudicated by a Dispute and Appeal Panel drawn from the List of Experts;
• adjudicated by the Telecommunications Commission of Solomon Islands (TCSI); or
• handled in mediation by an official from the TCSI or a member of the List of Experts (and, if necessary, subsequently
by adjudication).
The TCSI is generally required to defer to the disputing parties regarding the choice of dispute resolution method. If the mat-
ter concerns a contravention of the Act or is expected to set an important precedent, the TCSI may insist on adjudicating the
matter. If mediation or adjudication by a panel from the List of Experts is selected, the parties have extensive influence over
the selection of the mediator or Panel members, the number of members on a Panel, and the conduct of the proceedings.
The President may with good reason justified under the Act reject a Panel member selected by the parties. These provisions
strike a balance enabling disputing parties to ensure that they can have confidence in the persons deciding their disputes.
Panels have broad powers to obtain and consider evidence. Their determinations, orders and directions have the force of
those of the TCSI, and Panels may act on an interim basis. They must notify the President and the parties of reasons for any
delays.
Panels drawn from the List of Experts serve an additional function: to hear service provider appeals of key determinations
and orders of the TCSI. To avoid such appeals becoming an inevitable additional step before judicial review for every matter,
the scope of matters that may be appealed is limited. Appeals may only be made in respect of revocations, suspensions or
amendments of licences; dominance designations; anticompetitive violation determinations; terms and conditions for inter-
connection and access; and price regulation. Appeals may only be heard on the record of the original proceeding with no
new evidence save in exceptional circumstances, thus confining the appeals to a review of what was before the TCSI rather
than carrying out a new assessment. Thereafter, appeals from Panel decisions may only be made to the High Court on a
question of law or jurisdiction unless the High Court grants special leave.
The Act establishes funding for the scheme, including bank account arrangements, to ensure that the lack of or delay in
funding does not prevent or delay the availability of experts and resolution of the dispute. Disputing parties bear all of the
costs of a Panel, as ordered by the Panel. The Panel may make cost orders at any time regarding the costs of the parties and
its own costs (including fees of Panel members), requiring advances from the parties.
Source: Solomon Islands Telecommunications Act 2009, Chapter 17
Disputes can have a very substantial financial im- The liberalization of adjudicator selection permits
pact on service providers’ financial conditions. As a re- the parties to influence the choice of adjudicator. This
sult, investor confidence in dispute resolution is liberalization may be carried out to different levels.
particularly important – especially as matters that were While in the Solomon Islands, the parties will choose
not set at the time of investment may subsequently ad- the arbitrator from the List of Experts, in Trinidad & To-
versely affect such investments. The Solomon Islands bago, arbitrators are appointed by the regulator to hear
legislation addresses this by ensuring that, to a large disputes on an ad hoc basis after consulting with the
extent, the service providers may themselves deter- disputants, although a reasonable objection from a dis-
mine who from the List of Experts will deal with their puting party is unlikely to be ignored.
dispute, whether it is by adjudication or mediation, and
the procedures that will apply. The legislation provides Final offer arbitration, also known as “baseball arbi-
for defaults for each of these in case the service provid- tration” (because of its historic use to resolve salary
ers do not agree, but to a large extent disputes are ex- disagreements in baseball player contracts), is another
pected to be handled in a similar manner to arbitration, means of providing ownership of key aspects of the
with substantial party ownership of the process. dispute process to private actors rather than retaining
complete official control. The Canadian Radio-television
138 Chapter 4
and Telecommunications Commission (CRTC) for exam- Importantly, the law states that the scheme may
ple uses the methodology.45 In a regular adjudicatory provide for binding decisions and interim and conserva-
process, such as a court litigation, arbitration or regulatory measures. Thus telecommunications providers are
tory adjudication, the official decision-maker has con- given a significant opportunity to agree on how they
siderable flexibility in the terms of the decision he or shape the resolution of their disputes. This is particu-
she makes. The decision may fully adopt the position of larly valuable where investors’ confidence depends on
one or other party, but it may also effect a compromise their ability to ensure that the design of the process
or even another result not specifically expected and and selection of third party neutrals (mediators, adjudi-
demanded by either. This leaves considerable power in cators or arbitrators) is satisfactory.
the hands of the official sector. On the other hand, in
final offer arbitration, the official decision maker must The increasing provision for ADR, the uses of spe-
choose between the final offers put forward by the par- cial tribunals, as well as on-going regulatory adjudica-
ties when making its binding determination. The prag- tion, introduces a competitive dynamic among dispute
matic rationale of the mechanism is that it drives the processes. The relative successes of the various ap-
parties towards offering more reasonable offers be- proaches are increasingly visible. Indeed, in some coun-
cause the more unreasonable a party’s offer is, the tries, the competition is direct because parties may
higher the chance that the decision-maker will adopt choose. So, for example, under the new Solomon Is-
the other party’s offer. In addition, in final offer arbitra- lands Telecommunications Act, when providers refer a
tion, the parties have a large amount of control over dispute to the TCSI, it must decide whether it will adju-
the result. It is the parties that frame the decision for dicate the dispute or refer it to a Disputes and Appeals
the decision-maker, who has merely a binary discretion Panel (described above).48 In making its choice, the TCSI
to exercise. It effects a form of neo-Solomonic justice, in must defer to the parties if they are agreed. This pro-
which the party wishing most to have its way gravitates vides some assurance to licensees that if the regulator
towards reasonable compromise.46 is for some reason not ready for a major dispute, they
can use an alternative.
The movement towards using ADR schemes was
given a significant boost in Europe with the 2003 Tele- Just as liberalization of the ICT sector has provoked
coms Framework Directives, which encouraged regula- many complexities in law and regulation, the liberaliza-
tors to employ ADR to speed up case management. The tion of adjudication is not without its complications. For
use of ADR schemes has gained greater momentum example, there are many instances where jurisdiction
particularly in developing countries and smaller coun- to decide disputes appears to overlap between differ-
tries whose official sectors do not always have the re- ent dispute forums, as illustrated in Figure 4.5. In some
sources to handle telecommunication disputes. For cases, a regulatory authority may have statutory power
example, the Fijian Telecommunications Promulgation to resolve disputes between service providers, while at
requires the Telecommunications Authority of Fiji (TAF) the same time the service providers may have entered
to establish an alternative dispute resolution scheme, into an agreement including provision for arbitration of
and it to approve an ADR scheme proposed by licen- disputes by an arbitration panel.
sees if it satisfies certain minimum criteria. To qualify,
such a scheme must be: These sorts of potential complexities are not un-
common. New telecommunication licences have often
• fair, transparent and non-discriminatory;
been issued to foreign investors along with intercon-
• administered by persons who are for practical pur- nection being arranged as part of market entry. Inves-
poses independent of the licensees to whom they tors’ uncertainty over the reliability of the law and
apply; courts, as well as the regulator’s independence from
• designed to ensure that individuals to be employed the incumbent operator, has led to requests for dispute
under the scheme as mediators, adjudicators, arbi- resolution by arbitration. As the legal and regulatory
trators or such other roles as may be contemplated system developed, countries have strengthened the
have qualifications and experience to carry out powers of regulators to build up jurisdiction over dis-
such powers and functions; and putes, but the earlier arbitration provisions in the li-
cences and interconnection agreements remain.
• designed to further the objectives of the legisla-
tion.47
Chapter 4 139
Figure 4.5: Regulatory adjudication, arbitration and special tribunals
Courts
Appeals and judicial review
Special appeal Arbitration by

Special tribunal mechanisms (e.g., law or licence Arbitration panel
India, PNG, Solomon (e.g., Bahrain,
Islands) Egypte, Sudan)
Law remits disputes to Agreement provides

Regulatory authority for arbitration (e.g.,
special tribunal (e.g.,
India, Solomon Islands, Egypt, Sudan)
Fiji, Bahamas)
Law authorises
regulator to
resolve disputes
Service Service
provider A provider B
Wholesafe
agreement
Source: Author.
For example, in 1998, the Egyptian Government agreement. The NTRA proceeded to hear the matter
committed in a licence granted to a new entrant mobile submitted to it and gave a ruling (though its ruling has
operator that disputes over the licence would be re- been suspended by the Administrative Court pending
solved by arbitration under the rules of the Cairo Re- judicial review). Meanwhile, a CRCICA arbitration tribu-
gional Centre for International Commercial Arbitration nal has also been constituted to hear the case. The
(CRCICA). The interconnection agreement between the Egyptian courts may yet be requested to deal with any
new entrant mobile operator and the incumbent Gov- inconsistency that may arise between decisions of the
ernment-owned Telecom Egypt also provided for dis- NTRA and the arbitration tribunal. Other countries may
putes over the interconnection agreement to be have to deal with similarly complex questions. Bahrain’s
resolved by CRCICA arbitration. In 2003, the Egyptian 2002 Telecommunications Law provides for the Tele-
Telecommunication Regulation Law No. 10/2003 was communications Regulatory Authority (TRA) to resolve
promulgated, establishing the National Telecommuni- disputes between service providers. 49 On the other
cations Regulatory Authority (NTRA) and conferring on hand, the licences granted to service providers provide
it certain dispute resolution powers. Regulatory ap- that disputes between the licensee and other licensees
provals of interconnection agreements after the 2003 will be subject to jurisdiction of courts or arbitration.50
law and establishment of the NTRA thereafter reaf- Furthermore, the Supply Terms in Batelco’s reference
firmed the use of arbitration. wholesale offer provides that if the regulator does not
decide a dispute between Batelco and the intercon-
Subsequently, in a disagreement over interconnec- necting party, it will be referred to arbitration under the
tion, Telecom Egypt initiated a dispute proceeding with rules of the International Chamber of Commerce
a mobile operator before the NTRA under the 2003 law. (ICC).51
Meanwhile, the mobile operator initiated arbitration
with Telecom Egypt under CRCICA rules pursuant to the Notwithstanding the considerable benefits on offer
parties’ arbitration clause in their interconnection from the liberalization of adjudicative processes, chal-
140 Chapter 4
lenges abound and the devil is in the detail. The range i.e., to set a precedent. Some policy matters may need
of remedies available to arbitrators may not be the to be reserved to regulators rather than entrusted to
same as those available to court judges and regulators, arbitrators, as the UK’s Ofcom provided in the OTA
for example. The power to impose interim measures scheme when it restricted the Telecommunications Ad-
may be wanting unless clearly agreed in the parties’ judicator from making decisions that would set new
consent to arbitration. policy or set prices of local loop unbundling (see
Box 4.5). The need for on-going monitoring and en-
There may also be situations where the official sec- forcement may also justify a regulator not permitting
tor prefers to retain control over an adjudicatory proc- disputes to be resolved by private means, although as
ess. These situations tend to arise where a type of discussed in section 4.4.3 there is also increasing liber-
dispute is being resolved for the first time and so has alization even of enforcement, including through use of
significance for how similar disputes will be addressed – arbitration mechanisms.
Box 4.5: The UK’s Office of the Telecommunications Adjudicator (OTA) and OTA2
The UK’s regulator, Ofcom, created a telecommunication adjudication scheme in 2004 to improve and accelerate the im-
plementation of local loop unbundling (LLU) by British Telecom (BT). It involved the appointment by Ofcom of a Telecom-
munications Adjudicator after consultation with BT and other communications providers. The Adjudicator had two roles:
• he or she would facilitate negotiations between BT and communications providers seeking access to BT’s unbun-
dled local loops, assisting them to reach agreement, and
• if necessary, he or she would provide a binding expert adjudication ruling on the matter.
The issues subject to the scheme were intended to ensure practical implementation of LLU. They included appropriate
product functionality, process specifications, change management, implementation plans and monitoring activities for LLU
to rapidly deliver fit for purpose and appropriately industrialised products and processes.
Although initiated by Ofcom, the official, legal basis of the scheme was an agreement which was entered into by BT and
each provider seeking LLU from BT. The Telecommunications Adjudicator was intended to be independent of Ofcom, BT and
the providers. Ofcom would bear the OTA’s costs but would recoup 50% from BT.
In his facilitation role, the Adjudicator’s job was to “create and maintain an environment in which the parties may quickly
reach substantial agreement …, thereby accelerating implementation and reducing the occurrence of disputes.” He would
facilitate working groups of BT and the providers, facilitate information sharing, maintain close dialogue with scheme mem-
bers to understand their individual concerns, constraints, capabilities and issues. He would help scheme members to agree
on product and process definitions and specifications. He could also make non-binding recommendations.
The adjudication role of the Adjudicator was intended to bring about “rapid, fair and authoritative resolution of the dispute
without necessarily having to bring it to Ofcom” for resolution. Because adjudication rulings were to be binding, the Adjudi-
cator was not permitted to deal with a dispute if its resolution was likely to conflict with existing Ofcom regulatory policy;
establish new regulatory policy; set LLU charges (i.e. the Adjudicator was not to venture into price regulation, which re-
mained the domain of Ofcom); result in excessive additional expenditure by operators and/or BT in relation to the benefits;
result in a significant detrimental impact on network security or network integrity; or result in significant detrimental opera-
tional disruption, dislocation or re-engineering of operational systems or processes.
Ofcom found that the scheme succeeded in coordinating a set of diverse and disparate demands from individual LLU opera-
tors into a single roadmap for the industry. The introduction of an agreed set of key performance indicators (KPIs) also pro-
vided a “common language” for the discussion of performance and issues experienced. However, a failing was the omission
of backhaul from its scope. In addition, the adjudication part of the OTA scheme was almost never used.
These factors and the introduction of functional separation with BT Openreach in the UK led Ofcom to revise the scheme in
2007, renaming it OTA2. It broadened the scope to include a number of “inscope products,” adding to local loop unbundling
new products including wholesale line rental/carrier pre-selection; geographic number portability; and broadband of both
BT and other communications providers where migration impacts may occur. At the same time, it removed the adjudication
role, which had been largely unused, leaving the scheme focused on facilitation, which could include non-binding recom-
mendations.
OTA2’s members currently include BT Group, BSkyB, Cable & Wireless, Everything Everywhere. O2, Scottish & Southern,
TalkTalk Group and Virgin.
Source: Ofcom and Office of the Telecommunications Adjudicator, www.ofcom.org.uk and www.otta.org.uk
Chapter 4 141
4.4.2 Control systems vate individuals drawn from a variety of backgrounds.

This variety is tempered by provisions in the law ensur-
Almost all countries have a system of judicial re- ing that a given panel is always chaired by a suitably
view over administrative agency decisions. In only a few qualified lawyer, often in fact a judge.57 Fiji’s Telecom-
countries, for example where the executive branch of munications Promulgation 2008 provides for a Tele-
government is an extension of royal authority, are ad- communications Appeal Tribunal. Appeals from the TAF
ministrative actions beyond judicial controls. Judicial on the basis of law or fact may be brought to the Tribu-
review in most countries focuses on procedural and ju- nal58 (although it does not have jurisdiction over dis-
risdictional matters, such as whether the regulator has putes concerning interconnection and access which are
given each party a fair opportunity to be heard, has heard by the country’s Commerce Commission).
considered relevant factors, and has acted within its
powers. But even such matters can require significant Such tribunals can assemble well qualified indi-
technical and economic understanding. In addition, the viduals with a blend of experience. The chairperson of
rapid development of the market and the large Fiji’s Tribunal must be a lawyer who is at least seven
amounts of investment at stake require regulators’ de- years qualified, but the other members, who are ap-
cisions to be affirmed or overturned relatively quickly. pointed by the Judicial Services Commission, must have
Investor confidence depends on the experience and qualifications and experience in any of the legal, finan-
expertise of those who have the power to annul or cial, economic, public administration, engineering or
change regulators’ decisions. telecommunication fields. The new Bahamas Utilities
Appeal Tribunal Act 2009 similarly provides for a Utili-
Many countries’ judicial systems struggle with the ties Appeal Tribunal (UAT) comprising members ap-
complex and urgent task of telecommunications dis- pointed by the Governor General acting on the advice
pute resolution. Some countries have taken the step of of the Judicial Services Commission.59 By providing for
obtaining training from institutions such as the ITU in standing lists of available persons to sit on panels, these
telecommunication regulation and dispute resolution tribunals begin to resemble arbitration institutions, par-
for key members of the judiciary who are expected to ticularly where the parties can influence the selection
hear disputes. of individuals to sit on a given dispute.
Many countries have bolstered the quality, and Some countries have taken such liberalization and
sometimes the speed, of controls over administrative unbundling of control systems a step further. For exam-
agency decision-making through various innovations. ple, Bahrain provides an innovative arbitration ar-
These include the referral of appeals to special tribunals. rangement for appeals from decisions of the TRA. The
For example, in the UK, Ofcom’s decisions may be ap- Telecommunications Law provides that disputes be-
pealed to the CAT,52 which hears appeals of various tween the TRA and a licensed operator shall be arbi-
other matters as well (including decisions of the Com- trated. These do not include all regulatory decisions of
petition Commission).53 Thereafter, countries often re- the TRA that apply sector-wide, but must be specific to
strict the scope of further appeals. For example, in the the relevant licensee. Under the law, the TRA and the
UK, appeals from the CAT can only be on points of licensee each appoint an arbitrator, and the two arbi-
law.54 trators together select a chairman and the panel de-
cides on the dispute.60
Some countries have innovated by combining in a
single tribunal mechanism both appeals from regula- In many countries, licences remain the main in-
tors’ decisions and original disputes between service strument for regulating telecommunication service
providers. India’s Telecommunications Disputes Settle- providers. Licences serve both to impose regulatory ob-
ments and Appeals Tribunal (TDSAT) is an oft men- ligations on the service providers, such as obligations to
tioned example. 55 Similarly, Solomon Islands’ new interconnect and resolve disputes with other service
Telecommunications Act provides that a Dispute and providers, as well as grant them rights, protections and
Appeals Panel may hear disputes between providers as guarantees about what a regulator will or will not do.
well as appeals from the TCSI.56 For example, some licences provide protections as to
the pace at which further licences will be granted or set
There has been significant liberalization even in the the terms on which the regulator will regulate the li-
important area of controls over regulatory decisions. censee, for example setting out the regulatory parame-
The UK’s CAT is composed of a number of different pri- ters for interconnection and access. In such cases, the
142 Chapter 4
licence itself may become the basis of a dispute be- significant market power. Where property rights over
tween the regulated entity and the regulator’s deci- intellectual or physical assets which are essential to the
sions. A dispute under the licence may then resemble businesses of different entities are combined, they may
an appeal of a regulatory decision. However, where the create a bottleneck in the sector. Thus the European
licence provides that disputes between the regulator Commission has, in approving mergers and acquisitions,
and the licensee under the licence will be resolved by required the parties to make these assets available to
arbitration, the appeal is to an arbitral panel rather third party beneficiaries – basically a sort of reference
than a court (although it may also be made to a court, offer. In doing so, it has often required disputes over
or the panels’ award may also subsequently be en- negotiations and agreements with the third party bene-
forced or challenged in court). ficiaries to be resolved by arbitration rather than direct
on-going supervision by the Commission.
4.4.3 Enforcement
So, for example, when the Commission approved
Section 4.4.1 mentions provision for arbitration in the merger of telecommunication providers Telia and
the reference wholesale offer of Batelco in Bahrain. Sonera, they were required to offer competitors whole-
Similarly, Jordan Telecom’s reference interconnection sale fixed and mobile network services and interna-
offer provides for resolution of disputes between Jor- tional wholesale roaming on the mobile networks in
dan Telecom and the interconnecting party by arbitra- Sweden and Finland. A fast track arbitration procedure
tion or the Jordanian Telecommunications Regulatory was agreed to apply to disputes relating to the merged
Commission (TRC). The provision for arbitration in regu- entity’s offer.61 Similarly, in connection with the merger
lated instruments such as reference offers reflects part of Vodafone Airtouch and Mannesmann,62 the merged
of a broader innovative trend in regulatory practice to entity undertook to provide roaming on services and to
use private arbitration agreements and proceedings to make certain standards and SIM cards available to its
achieve regulatory policy goals. This is evident in three competitors. A fast track arbitration procedure was ap-
areas. proved for resolution of disputes between the merged
entity and such competitors.
First, as mentioned above in section 4.3.1, compe-
tition policy matters are increasingly expected to be The European Commission’s view of arbitration as a
considered by arbitrators in disputes between com- mechanism for resolving disputes in the context of
mercial undertakings. Arbitrators are expected to give competition law exemptions has gone “from distrust to
effect to competition law notwithstanding complex embrace.”63 Arbitration as part of a competition rem-
questions of which countries’ competition laws apply to edy is being employed across multiple platforms in the
parties in international settings. Arbitrators are ex- ICT sector for intellectual property licensing arrange-
pected not only to act pursuant to the parties’ contrac- ments, access to technical interfaces, access to infra-
tual intentions but in a sense to serve as an structure, supply and purchasing relationships and
enforcement arm of the official sector. Of course, it is termination of exclusive or long-term contractual ar-
presumed that parties intend their contractual relation- rangements and anti-competitive distribution arrange-
ship to comply with the law, including competition laws. ments. 64 For example, in the BskyB/Kirch Pay TV
The arbitrator’s role is thus in theory still consistent merger,65 the European Commission addressed its con-
with the underlying notion of party autonomy, i.e., par- cerns over dominance in the German pay-TV market
ties’ rights to determine how, by whom and in accor- and digital interactive TV services by requiring the
dance with which laws their dispute will be resolved. merged entity to provide interoperability to competing
Nevertheless, the private arbitrator begins to have a technical platforms with its own set top boxes and to
quasi-public enforcement function. grant non-discriminatory licences for set top box hard-
ware manufacturers. Disputes with the third parties
Secondly, regulators often impose or approve arbi- over such arrangements were required to be resolved
tration provisions in regulated instruments. For exam- by arbitration.
ple, in granting its approval to mergers and acquisitions,
the European Commission has often used arbitration The benefits of arbitration in such circumstances
clauses to guarantee implementation of a regulatory are a combination of speedy resolution and access to
remedy, particularly in the ICT sector. Merger and ac- expert decision-makers without requiring the European
quisition controls raise questions of competition policy Commission itself to be closely at hand monitoring
where market consolidation results, or risks resulting, in every detail of every interaction with a company’s
Chapter 4 143
competitors. It decentralizes the monitoring and en- their own judgment and interests. Ofcom created the
forcement from the Commission to the parties and ar- dispute scheme but parties sign up to participate volun-
bitrators. It reflects a broader trend in the Commission’s tarily (or as voluntarily as is possible with a scheme
approach to incentivizing private actors to have a sig- proposed by a regulatory authority). Ofcom appoints
nificant role in enforcement of competition law, as evi- the Telecommunications Adjudicator but he is intended
denced in its promotion of private enforcement actions to act independently. Under the initial OTA, the Adjudi-
in the area of competition law.66 These examples sug- cator could make binding decisions (i.e., adjudicate),
gest that there is considerable opportunity for increas- but these decisions would have the status only of ex-
ing use of arbitration in ICT regulatory remedies at pert determinations, i.e., of discrete issues generally of
national levels as well, regardless of the degree of eco- a technical or procedural nature rather than a basis in
nomic development of the country. full statutory dispute resolution powers to end the
broader dispute. However, due to their importance, Of-
Thirdly, there are even examples in the communi- com reserved control over regulatory policy and pricing
cations sector of arbitration being used not only be- matters; these were explicitly excluded from the Tele-
tween service providers for enforcement of regulatory communications Adjudicator’s remit.
remedies but to deal with questions of compliance dis-
puted between regulators and regulated entities. For As described in Box 4.6, Japan has had considerable
instance, in the United Arab Emirates, the Dubai Tech- success in using mediation by a special dispute resolu-
nology and Media Free Zone Authority has established tion commission. To address an increase in number and
an arbitration scheme to deal with questions of compli- complexity of disputes, Japan established the Japanese
ance with applicable media standards.67 These provide Telecommunications Business Dispute Settlement
for the constitution of a tribunal to consider whether a Commission (TBDSC) in 2001 as a special agency for
transmission has complied or will comply with the prompt and fair settlement of interconnection and
standards. So, when the magazine Time Out Dubai other disputes between telecommunication providers.
showed a cover page with pictures of bars in Dubai and Since its establishment, it has dealt with three arbitra-
included information for how to find them, the questions and 48 mediations, showing a substantial prefer-
tion as to whether this violated a prohibition of glorify- ence for mediation over arbitration. This may relate to
ing alcohol was brought before a tribunal and heard by the success of mediation in resolving disputes. As
a third party, an English lawyer in London. shown in Figure 4.6, approximately two-thirds of the
TBDSC’s mediations succeeded in finding resolution.
4.4.4 Mediation processes
The OTA scheme seeks to introduce facilitation
Recent years have seen greater use of mediation in skills and methods into longer term sector relationships.
telecommunication dispute resolution. Increasingly, It has witnessed a marked increase in uptake of local
mediation is provided as a component of regulators’ loop unbundling in the UK, recently exceeding 7 million
dispute resolution portfolio of procedures, and some- lines in October 2010. The success of the facilitation
times is a condition precedent to formal adjudication function led to the broadening of the scope of the
proceedings.The UK’s Office of the Telecommunications scheme under OTA2 to other core regulatory areas, in-
Adjudicator scheme (OTA, now revised and renamed as cluding wholesale line rental, carrier pre-selection, geo-
OTA2), described in Box 4.5, illustrates innovative use of graphic number portability and migration aspects of
dispute resolution methods in core regulatory areas. broadband. Parties’ tendency to resolve minor matters
After slow development of local loop unbundling in the through facilitation (including non-binding recommen-
UK, the OTA scheme was established to improve coop- dations in the case of the OTA) meant that they pre-
eration between British Telecom and communications ferred to take unresolved significant matters to the full
providers seeking access to its unbundled local loops. Ofcom dispute resolution process rather than adjudica-
tion under the OTA scheme. This led Ofcom to drop the
The scheme illustrates carefully set arrangements adjudication function from the OTA2 scheme, leaving it
for the interplay between official intervention and the focused on facilitation.
freedom of private actors to behave in accordance with
144 Chapter 4
Box 4.6: Telecommunications mediation and arbitration in Japan

Japan’s Telecommunications Business Dispute Settlement Commission (TBDSC) is independent of the Telecommunications
Bureau, which develops competition rules for the sector, although the TBDSC may make recommendations to the Tele-
communications Bureau. Both bodies exist under the auspices of the Minister for Internal Affairs and Communications.
The TBDSC comprises five part-time Commissioners with 3-year terms, appointed by the Minister with parliamentary con-
sent, as well as eight special Commissioners with 2-year terms appointed by the Minister. The Commissioners are generally
professors of law, economics and engineering and practising lawyers. The TBDSC has a secretariat, including a Director-
General and other staff.
• In mediations, mediation Commissioners are appointed (usually three) and assist the parties to reach agreement.
The mediation process resembles what other countries might call conciliation: the mediators may offer a proposal
of a solution rather than merely help the parties in their discussions.
• In arbitrations, the disputing parties agree on three Commissioners to act as arbitrators. An award has the effect of
a final court decision. The country’s Arbitration Law applies, adjusted to fit the situation.
The number of mediations has typically greatly exceeded the number of arbitrations (by 2009, the TBDSC had handled 48
mediations compared with three arbitrations). The average time to reach settlement through mediation is an impressive 1½
months. The TBDSC introduced a consultation process in 2006 to avoid escalation of a difference into a dispute. The process
has become extensively used.
In 2008, pursuant to amendments to the Radio Law and Telecommunications Business Law, the TBDSC began offering me-
diation and arbitration in connection with radio station interference, enabling new wireless providers to be licensed. Allow-
able interference levels, interference avoidance measures and costs can be agreed on.
Source: Ministry of Internal Affairs and Communications, Telecommunications Business Dispute Settlement Commission
Figure 4.6: Mediation in Japanese telecommunications
Details of disputes Mediation results

Others - 4 cases
(8.5%) Dismissed
Use/operation terminated
of facilities - 3 - 3 cases
cases (6%) (3%)
Resolved
Consent for or refusal Sharing of by
of interconnection Withdrawn agreement
interconnection without
- 3 cases (6%) costs - 34 cases - 29 cases
agreement (63%)
(71%) - 16 cases
Use of structures (34%)
required for
interconnection
(e.g., collocation) - 4
cases (8.5%)
Source: TBDSC
Mediation and facilitation involve exploring a career break of 12 months to sail a yacht across the At-
party’s positions and interests openly with the media- lantic and compete in a number of offshore races.68
tor or facilitator with a view to seeking a mutually ac- This is not immaterial information randomly dropped in.
ceptable outcome with another party. They are only It conveys a message that he takes a broader perspec-
effective if the parties have some measure of trust in tive of what really matters, that he is courageous, ad-
and respect for the mediator or facilitator. As a result, venturous and is goal oriented, that he seeks fun but
the personality and style of the mediator is important – with discipline, and that he is willing to think unconven-
probably more important than anything else. The web- tionally (as sometimes described, “out of the box”).69
site of the UK’s Office of the Telecommunications Adju- Particularly in the UK with its Edwardian heroic explorer
dicator provides a brief biography of the Adjudicator, tradition, these present an ideal combination of per-
Rod Smith. Nearly a third of it describes how he took a sonality traits for a mediator in that market.
Chapter 4 145
More than personality matters in developing trust, tinue. Some countries, such as the UK, impose cost in-
however. Trust that the communications with the me- centives on parties to try to settle through mediation
diator will not find their way into the record of an adju- before litigation – so that even if a party wins the ulti-
dicative dispute proceeding is also important, i.e., some mate case, it may bear some of the costs of the losing
measure of confidentiality. Thus the Canadian CRTC party if the winning party had refused to participate in
provides for an “ethical wall” (sometimes referred to in mediation.
other circles as a “Chinese wall”) between staff con-
ducting mediation and those conducting the CRTC’s ad- In highly contentious matters where a third party
judicatory proceedings of final arbitration and adjudicator can be depended on to give a reasonable
expedited hearings.70 Similarly, Japan’s TBDSC is estab- and relatively predictable decision, mediation may do
lished at arms’ length from the competition regulatory little more than assist the parties to establish agreed
functions of the Ministry. The Canadian CRTC safe- facts, eliminate non-disputed issues and define more
guards confidentiality to the point that a report of the precisely the disputed issues. But this can still be im-
mediation prepared by the CRTC staff identifying out- mensely helpful. Thus, in the Canadian CRTC’s staff-
standing issues may be prepared and form part of the assisted mediation process, “Where full resolution can-
record for consideration in final offer arbitration, an ex- not be achieved, the objective of the Commission staff
pedited hearing or another Commission proceeding – will be to reduce the number of contentious issues in
but only with the consent of all parties. order to clearly identify those that may require further
Commission intervention.”71
Mediation is often misunderstood. Parties typically
seek finality, and claimants typically seek it quickly. Me- In situations where the decision of a judge, arbitra-
diation depends on consensus and so is often distor or regulator may not be anticipated to be as rea-
trusted as an inadequate method of dispute resolution. sonable and predictable as might be desired, mediation
After all, a dispute arises where parties disagree, so offers the parties greater opportunity to control the re-
how can a process that depends on the parties’ agree- sult. The benefits of mediation, then, depend exten-
ment on the process and the result be helpful? Thus sively on the opportunity cost of the available
mediation is often adversely perceived in comparison adjudicatory process. Where the uncertainty, cost and
with adjudicatory processes which produce a binding other adverse factors of an adjudicatory process are
decision. unattractive, parties may find mediation useful. Media-
tion, then, can be employed in almost any circumstance,
However, mediation is not really an alternative to and beneficially for all of the parties if it is handled re-
an adjudicatory process if the parties insist on requiring sponsibly. In theory, almost any dispute could be better
a third party (whether a judge, arbitrator or regulator) run if a parallel mediation support were provided
to render a decision for them. In such circumstances, throughout it. However, effective mediation in tele-
the adjudicatory process is necessary. The purpose of communications requires skilled mediators who under-
mediation is really to maximise the benefits that can be stand the technical, economic and legal aspects of the
obtained (at any stage of a dispute) from improving contentious matters. Effective mediation must also be
communication, ensuring full understanding and estab- kept somewhat separate from adjudicatory and regula-
lishing common ground to the extent possible between tory processes. The need for dedicated, skilled media-
parties. Appreciating its benefits, the CRTC will typically tors may make it expensive to provide for mediation to
require the parties to engage in mediation before seek- accompany an adjudicatory process from start to finish.
ing final offer arbitration or expedited proceedings save It is likely, however, that investment in mediation to en-
in exceptional circumstances where there is an urgent sure constructive communication between disputing
need to resolve a particular dispute. parties will often shorten dispute proceedings.
Mediation has strong potential ultimately to be a
This reflects a wider trend in civil court litigation in net cost saver in most circumstances. But, like carbon
many countries. Mandatory mediation before advanc- emissions, the difficulty of measuring and accounting
ing with adjudicatory proceedings is becoming increas- for the impact may restrain rational use of mediation
ingly common. Some States require the parties to try for some time to come.
mediation as a required condition to proceeding with
an action. Others only require mediation where the
judge has concluded that the case is appropriate for
mediation before the adjudicatory proceedings con-
146 Chapter 4
4.4.5 Mediation of fundamental policy They have the advantage over parliamentary processes
change and complex cases of having a limited number of decision makers, which
may be a single individual or commission. However,
The introduction to this chapter outlined various consultation processes are not always sufficient to rec-
fault lines in the ICT sector. Some of these may require oncile conflicting interests, and may result in an im-
important reforms of law and business models, and in- posed solution rather than one which interested parties
volve numerous parties. Various official processes exist have negotiated with each other. The regulatory au-
to deal with such problems, and each has strengths and thority is also often not viewed as an impartial player,
weaknesses. but rather is seen as advancing its own agenda, and
may provoke resistance from, and polarize, some key
Adjudicatory dispute resolution processes (court constituencies.
litigation, arbitration and expert adjudication) are typi-
cally built for small numbers of parties – often only two. In the telecommunication sector, some dispute
A dispute typically involves aggravated tension. The resolution processes have been found particularly use-
submissions made to the decision-maker are framed in ful in coping with complex situations. For example, as
binary terms. Each claims that its version of events, illustrated in Figure 4.7, a mediation process was em-
analysis and legal position is right and that the other’s is ployed in the Republic of Fiji Islands to reconcile several
wrong. This tension and the structure of the communi- competing interests. The primary problem lay between
cation have shaped the development of dispute resolu- the Government and the telecommunication operators.
tion processes. Such processes focus on the impartiality The former sought to liberalize the sector and the latter
and independence of the third party neutral, and on were concerned about the approach taken. In addition,
permitting each party to submit its arguments and evi- however, the operators faced various tensions among
dence, and allowing each party to respond to the other themselves and their respective interests and positions.
party’s submissions. Although class action and con- These had to be resolved in order to reach agreement
sumer dispute processes have developed greatly in re- with the Government. A focused process involving
cent years to handle large scale disputes, dispute Cabinet Ministers, the CEOs of the telecommunication
processes are therefore typically not the strongest companies and third party mediators brought about
method for dealing with multiple interests and multiple agreement on the basic terms of liberalization in a rela-
inter-related issues. tively short period of time. The example illustrates the
powerful potential of mediation processes to bring par-
Parliaments, which bring together numerous politi- ties together around common interests and to find
cians, and behind them parties, lobbyists and funders, ways to address those that diverge. Such processes
tend to be the institution of last resort for resolving have been used in numerous other areas of public pol-
complex matters. Parliamentary processes for law mak- icy.72
ing, including committees and consultations and ex-
changes with the executive branch, seek to ensure that The multiple interwoven relationships in the tele-
interests are represented. However, voting systems are communication sector make mediation and similar dis-
somewhat crude and too easily diverted by influence pute resolution processes particularly useful. Box 4.7
for unrelated reasons (for example, what is sometimes describes, and Figure 4.8 illustrates, the kinds of com-
referred to in the United States as “pork barrel” politics, plex relationships that can arise in telecommunications,
where individual representatives’ votes are secured for and the considerable possibilities for tailor making hy-
legislation on one matter by laws on another, typically brid dispute resolution techniques. In the case dis-
spending). cussed in Box 4.7, private sector companies and a
European government established an innovative dis-
In a given economic sector, such as ICT, regulatory pute process with a unique combination of mediation,
bodies with sufficiently broad mandates often use con- adjudication and negotiation roles. The process suc-
sultation processes to gather information and views cessfully resolved claims exceeding multiple parties and
from various interested parties on inter-related matters. international telecommunication traffic exceeding
Such consultations can be important for the effective EUR 100 million in aggregate value. There is, then, de-
airing of issues and for providing interested parties the mand for using these methods in the ICT sector, and a
opportunity (if not technically the right) to be heard. proven record of success.
Chapter 4 147
Figure 4.7: Mediation of sector reform in Fiji
FNPF
ATH C&W
Government Fintel
Telecom Fiji
of Fiji
High Court injunction

Vodafone
Vodafone
Fiji
Source: Author
Box 4.7: Multi-party hybrid dispute process for international telecommunication traffic dispute
As illustrated in Figure 4.8, a European telecommunication operator faced claims from 10 major international transit opera-
tors and indirectly from over 100 destination carriers over international telecommunication traffic exceeding EUR 100 mil-
lion in aggregate value. Large amounts of money were being withheld from the telecom operator by the transit operators
until the disputes were resolved. At the same time, the telecom operator was being sold by one shareholder to another. The
old shareholder thought the claims were unlikely to materialize into significant liabilities. The new shareholder assessed the
potential liability above EUR 100 million. The telecom operator did not accept that it really faced potential large scale liabili-
ties. The sale of the company was blocked because the seller and buyer could not agree on terms for the indemnity regard-
ing the claims.
Negotiations between the old shareholder and the new shareholder of the share price became completely blocked due to
the difference in perception, and the transaction became increasingly bitter. Relations with the Government minority share-
holder became strained. A classic French-English cultural clash entrenched the problem further.
The parties succeeded in reaching a deal by creating a unique dispute resolution process. The old shareholder agreed to in-
demnify the new shareholder for the settlements of the telecommunication operator if they were resolved under the dis-
pute process. Under the process, the new and old shareholders agreed to appoint an expert from a list proposed by a
dispute resolution centre to act as a mediator-adjudicator-negotiator. The expert would have key roles:
• Mediator/facilitator: The expert would chair a Settlement Committee comprised of representatives from the tele-
com operator, the new shareholder, the old shareholder and a Government minority shareholder. The committee’s
purpose was to oversee the settlement of the claims against the telecom operator. Given the fundamental differ-
ence of perspectives between the old and new shareholders and the indemnity at stake, this role was fundamen-
tally one of mediation.
• Adjudicator: If the old and new shareholders failed to agree on whether the telecom operator should enter into a
settlement with a transit operator or destination carrier, the expert had the power of decision that would bind
them – a sort of adjudicatory role.
• Negotiator: The expert also had the job of actually negotiating the settlements with the transit operators and desti-
nation carriers on behalf of the telecom operator.
The combination of these three roles was fraught with numerous potential pitfalls. Combining the mediator/facilitator and
adjudicator functions provokes legendary challenges regarding how to build the trust necessary to act as a mediator when
one may need to become an adjudicator. And adjudicating between the new and old shareholders regarding the reason-
ableness of settlements of the telecom operator negotiated by the expert with the transit operators and destination carriers
could be viewed as judging one’s own work. However, by building relationships and trust with all parties and working hard
to negotiate the settlements, the settlements were successfully concluded.
Source: Author
148 Chapter 4
Figure 4.8: Multi-party hybrid dispute process for international telecommunication traffic dispute
Indemnity
New shareholder Old shareholder
Minority
Government
shareholder x100
Destination
tes
pu carrier
Expert: dis
e
lt ipl Destination
chairman, Telecom Mu x10 carrier
negotiator operator
mediator Transit Destination
ffic carrier
adjudicator tra operator
m s
00 ute
€1 isp
Destination
d Transit carrier
e
l tipl operator
Settlement Mu Destination
committee Transit carrier
operator
Destination
Transit carrier
operator Destination
carrier
Source: Author
4.5 Conclusion: where next? exist in the form of the world’s arbitration and media-
tion institutions. These compete with each other for
A wide range of dispute processes are being used the dispute resolution business. The International
in ICT disputes today as a result of the liberalization and Chamber of Commerce in Paris competes with the
unbundling of dispute resolution. This can be expected London Centre for International Arbitration and the
to continue, with more reliance on private actors to as- Singapore International Arbitration Centre. The UK’s
sist with the resolution of disputes with a public policy Centre for Effective Dispute Resolution competes with
dimensions. In some cases, only dispute resolution the ADR Group. Each of these institutions, bringing dif-
processes such as mediation will be able to help bridge ferent types of processes and networks of resources, is
the fault lines in the sector. constantly innovating to meet evolving demand. Tailor
made dispute resolution procedures, managed by such
Perhaps the most interesting thought about ICT institutions, are increasingly common, whether for
dispute resolution arises from the experiences of un- large corporate multinationals or complex industries
bundling in the ICT industry. For example, in some such as dealing with media copyright.
places, commercial pressures have led to the introduc-
tion of managed services, with contractors taking Some of these institutions have significant experi-
wholesale responsibility for network operations of tele- ence in areas related to the ICT sector, such as the Arbi-
communication providers. tration and Mediation Center of the World Intellectual
Property Organization (WIPO), which handles numer-
In the same vein, it is entirely possible that officials ous technology disputes as well as Internet domain
responsible for ICT dispute resolution could begin to name disputes and even regular commercial disputes
take advantage of the equivalent in the dispute resolu- over telecommunication infrastructure.73 This and sev-
tion field – i.e., “managed services” in dispute resolu- eral generalist dispute resolution institutions are capa-
tion. Having witnessed the unbundling of dispute ble of providing dispute resolution services to
resolution, the repackaging of resources under institu- regulatory authorities, whether administering disputes
tions becomes possible. Such managed services already pursuant to agreed rules, assembling panels of arbitra-
Chapter 4 149
tors and mediators, training regulators in the art of dis- to handle difficult situations, as in the example de-
pute resolution. scribed in Box 4.7. The official sector will continue to
develop if it engages with private participants in the ICT
However, the primary source for innovation lies sector and seeks to collaborate on developing suitable
with private actors who can devise ingenious processes dispute resolution methods.
1
Karl von Clausewitz, On War, translation by Colonel J.J. Graham published by N. Trübner, London, 1873.
2
Global capital expenditure on network infrastructure has been estimated at about USD 215 billion, representing 75% of global
Internet capex, and revenues. Infrastructure and access providers have been estimated, on the other hand, to earn about 15%
of revenues generated by the Internet. See A.T. Kearney, Internet Value Chain Economics, in The Economics of the Internet,
available at www.vodafone.com/etc/medialib/public_policy_series.Par.21246.File.dat/public_policy_series_11.pdf.
3
See Scott Wallsten, The Future of Digital Communications Research and Policy, June 2010 Technology Policy Institute, available
at www.techpolicyinstitute.org/files/the%20future%20of%20digital%20communications%20research%20and%20policy.pdf.
4
See Internet Value Chain Economics, footnote 2.
5
See for example UK Ofcom’s Pay TV consultation, available at www.ofcom.org.uk/tv/paytv/.
6
See Richard S. Whitt, “A Horizontal Leap Forward: Formulating a New Communications Public Policy Framework Based on the
Network Layers Model”, Federal Communications Law Journal 2004, 587 [Vol. 56]; Lawrence B. Solum and Minn Chung, “The
Layers Principle: Internet Archicture and the Law,” Research Paper 55, June 2003, University of San Diego Law School, at page 42;
available at http://ssrn.com/abstract=416263; and Rob Frieden, “Adjusting the Horizontal and Vertical in Telecommunications
Regulation: A Comparison of the Traditional and a New Layered Approach”, Federal Communications Law Journal 2003, 207
[Vol. 56].
7
See Romano v Steelcase Inc. 2010 NY Slip Op 20388, 21 September 2010,
www.courts.state.ny.us/Reporter/3dseries/2010/2010_20388.htm .
8
See FTC Challenges Patent Holder’s Refusal to Meet Commitment to License Patents Covering 'Ethernet' Standard Used in Vir-
tually All Personal Computers in U.S. Available at www.ftc.gov/opa/2008/01/ethernet.shtm.
9
See Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007).
10
International Telecommunication Union (ITU) – World Bank, Dispute Resolution in the Telecommunications Sector, available
from the ITU at: www.itu.int/ITU-D/treg/publications/ITU_WB_Dispute_Res-E.pdf.
11
See generally OECD, Regulatory Reform as a Tool for Bridging the Digital Divide, pp 12 et seq. Available from the ITU-Infodev ICT
Regulation Toolkit at www.ictregulationtoolkit.org/en/Publication.2360.html.
12
See, for example, Boutheina Guermazi and David Satola, Creating the “Right” Enabling Environment for ICT, citing to Harris Wilt-
shire & Grannis LLP, Telecommunications Trade Liberalization and the WTO , Final Report for the GICT Department, World Bank,
2004.
13
For example, the French Government continues to own about 27% of France Telecom. See
www.francetelecom.com/fr_FR/finance/action-capital/repartition/index.jsp In Egypt, the state continues to own 80% of Tele-
com Egypt.
14
In 2009, Sprint Nextel in the United States and Vodafone in the UK unbundled their network operations outsourcing them to
Ericsson. Orange outsourced its network operations to Nokia in Spain. Such levels of outsourcing had hitherto been seen only in
less developed markets such as Brazil, China, India, Hong Kong and Saudi Arabia where Ericsson provided outsourcing services.
150 Chapter 4
See, e.g., Richard Martin, “Outsourcing Operations, Telcos Remake Business Models: Sprint-Ericsson Managed Services Deal a
Watershed for U.S. Carriers,” Von Magazine, 13 July 2009.
See www.von.com/articles/outsourcing-telcos-remake-business-models.html.
15
In 1966, the Washington Convention on International Centre for Settlement of Investment Disputes (ICSID) entered into force,
which provided an even more robust regime for arbitration of investment disputes between foreign investors and host States
where the investments were made.
16
The New York Convention led to many countries adopting national laws supporting the resolution of disputes by arbitration. The
development under the auspices of the United National Commission for International Trade Law of a model arbitration law (the
UNCITRAL Model Law) in 1985 accelerated countries’ adoption of domestic pro-arbitration legislation.
17
The International Centre for the Settlement of Investment Disputes provides for an [appeal] of a tribunal’s award to an ad hoc
committee of the Centre.
18
See, for example, Lord Woolf, Access to Justice: Final Report to the Lord Chancellor in Civil Justice Systems in England and Wales,
London, July 1996. See also, for example, DIRECTIVE 2008/52/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of
21 May 2008 on certain aspects of mediation in civil and commercial matters. Available from the Europa website at
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:136:0003:0008:EN:PDF.
19
It has been expressed thus : “Cette justice, née des marchands, qui allie droit et respect des usages, sait concilier l'approche
d'Antigone et celle de Créon. Elle a, au cours des siècles, acquis sa noblesse et sa sérénité car elle était une procédure par laquel-
le gentlemen were settling a dispute between gentlemen in a gentlemanly way. ” Lazareff, ‘L’arbitre singe ou comment assassi-
ner l’arbitrage’, in Global Reflections in International Law, Commerce and Dispute Resolution (ICC Publishing, 2005) 477, at 478.
20
This possibility of countries limiting the arbitrability of disputes is reflected in the 1958 New York Convention on the Recognition
and Enforcement of Arbitral Awards. Article V(2) of the New York Convention provides that recognition and enforcement of an
arbitral award may be refused if “(a) the subject matter of the difference is not capable of settlement by arbitration under the
laws of that country, or (b) the recognition or enforcement of the award would be contrary to the public policy of the country.”
21
For a general discussion of “arbitrability”, see Sanders, “The Domain of Arbitration”, pp.113 et seq. in the Arbitration section of
the Encyclopaedia of International and Comparative Law Vol. XVI, Ch.12 (published by Martinus Nijhoff).
22
In Egypt, for example, enforcement of an arbitral award may not be ordered until verifying that it does not contradict “public
policy.” (Arbitration Law, section 55(2)(b)).
23
[1999] ECR I-3055
24
473 U.S. 614, 655 (1985)
25
For example, the Supreme Court in the United States in Shearson/American Express Inc. v. McMahon, 482 U.S. 220 (1987) ex-
tended to domestic arbitration the arguments justifying arbitrability of antitrust matters in international arbitration. In Matsu-
shita Elec. Indus. Co. v. Epstein, 116 S. Ct. 873, 883 (1996), the Supreme Court stated: “As [McMahon] demonstrates, a statute
conferring exclusive federal jurisdiction for a certain class of claims does not necessarily require resolution of those claims in
federal court.”
26
See G. Blanke, The Use and Utility of International Arbitration in EC Commission Merger Remedies (1st ed. 2006).
27
J. Rawls, A Theory of Justice (1st ed. 1971).
28
See M. Bagheri, International Contracts and National Economic Regulation (1st ed. 2000).
29
For this reason, the difference between including obligations in licences, in specific undertakings negotiated between operators
and regulators, or in generally applicable regulations is not as clear as might be expected. In many cases, the obligations apply to
one target entity regardless of form.
30
ictQATAR, Decision, 22 July 2010, available at www.ictqatar.qa.
31
ictQATAR, Dispute Resolution Rules, 7 June 2010, available at www.ictqatar.qa.
Chapter 4 151
32
See Ofcom, Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions
imposed under the EU Directives (July 2004), available at
http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/complaints-disputes/.
33
UK Communications Act 2003, section 185.
34
T-Mobile (UK) Limited, British Telecommunications PLC, Hutchison 3G UK Limited, Cable & Wireless UK & Ors, Vodafone Limited,
Orange Personal Communications Services Limited v Office of Communications, Judgment on the Core Issues, 20 May 2008, at
paragraph 103.
35
Ibid, at paragraph 105.
36
See www.tatt.org.tt/RegulatoryFramework/RegulatoryDecisions.aspx.
37
Case IT/D/22Apr06/02, available at www.tra.gov.ae.
38
Case CS/D/22Apr06/04, available at www.tra.gov.ae.
39
Case CS/E/07Feb07/05, available at www.tra.gov.ae.
40
The TRA cited Article 14 of the Federal Law by Decree No. (3) of 2003 regarding the Organisation of the Telecommunications
Sector, which concerned regulation of interconnection, rather than Articles 39 and 40 which empowered it to resolve disputes.
41
Directive No. (1) of 2007, Interconnection Agreement, 8 February 2007, available at www.tra.gov.ae.
42
Directive No. (4) of 2007, Interconnection Prices, 30 December 2007, available at www.tra.gov.ae.
43
Case NR/D/19Mar08, available at www.tra.gov.ae.
44
Determination No.(3) of 2010, Mobile Site Sharing Charges, 29 August 2010, available at www.tra.gov.ae.
45
See the CRTC Bulletin referred to in footnote 70.
46
In the case of Solomon, the King was asked to arbitrate between two women each claiming to be the mother of a baby. When
the King suggested cutting the baby in two, the true mother immediately yielded her claim to ensure the baby would live. By
showing her best offer, in effect, she won the dispute and was awarded the baby.
47
Fiji Telecommunications Promulgation, section 16.
48
Solomon Islands Telecommunications Act 2009, section 100.
49
Legislative Decree No. 48 Of 2002 Promulgating the Telecommunications Law, section 57.
50
The licences are available at www.tra.org.bh.
51
The reference offer and supply terms are available at www.batelco.com/portal/Wholesale/wholesale_reference_offer.asp.
52
UK Communications Act, section 192.
53
See www.catribunal.org.uk
54
UK Communications Act, section 196.
55
See Dispute Resolution in the Telecommunications Sector: Current Practices and Future Directions, Bruce, Macmillan et. al, ITU-
World Bank, October 2004; and Reflections on Regulation and Dispute Resolution in India’s Telecommunications Sector, Rory
Macmillan, Journal of the Indian Law Institute, Vol 47:1 (2005).
56
Solomon Islands Telecommunications Act 2009, section 103.
57
UK Enterprise Act 2002, Schedule 2.
58
Fiji Telecommunications Promulgation, section 62.
59
Panels are to be formed on an ad hoc basis for appeals from the Utilities Regulatory and Competition Authority (URCA). Tribunal
members must be “persons with experience, expertise or professional qualifications that the Governor General considers rele-
152 Chapter 4
vant to exercising the jurisdiction of the Tribunal and may include economists, lawyers, surveyors, accountants or persons with
substantial and relevant experience in business or public service.”Utilities Appeal Tribunal Act 2009, Schedule 1, section 2.
60
Bahrain Telecommunications Act, section 68.
61
Commission decision of 10 July 2002, OJ C201, 24.8.2002, at p.19.
62
Commission decision of 12 April 2000, OJ C141, 19.5.2000, at p.19.
63
See A.P. Komninos, “Arbitration and the Modernisation of European Competition Law Enforcement,” 24(2) World Competition
(2001).
64
See G.Blanke, The Use and Utility of International Arbitration in EC Commission Merger Remedies (Europa 2006).
65
Commission decision of 21 March 2000, OJ C110, 14.4.2000, at p.45.
66
See Johan Ysewyn, Private Enforcement of Competition Law in the EU: Trials and Tribulations, 19 SPG INTL L. PRACTICUM 14
(2006).
67
Dubai Technology and Media Free Zone Broadcasting and Publication Standards Tribunal Regulations 2003
68
See www.offta.org.uk/about.htm.
69
The author does not know Mr. Smith – these characteristics are the conclusions about him intended by the information pro-
vided on the website.
70
See the CRTC’s Broadcasting and Telecom Information Bulletin CRTC 2009-38, 29 January 2009, Practices and procedures for
staff-assisted mediation, final offer arbitration, and expedited proceedings, available at www.crtc.gc.ca.
71
Ibid.
72
For example, in the UK, the approach to the controversial decommissioning by oil company Shell Expro of its Brent Spar floating
storage buoy was worked out, after much public outcry led by Greenpeace over deep sea disposal plans, through multiple me-
diation groups.
73
See www.wipo.int/amc/en/
Chapter 4 153
5 SPECTRUM IN TRANSITION: THE DIGITAL DIVIDEND

Author: Adrian M. Foster, Founding Partner,
McLean Foster & Co.
5.1 Introduction1 the issues involved, and estimates of the size and value
the Digital Dividend are explored. Section 5.3 provides
5.1.1 Purpose of This Chapter an overview of the policy options. Section 5.4 reviews
international best practices; Section 5.5 further illus-
This chapter aims to inform policy makers and trates these international best practices by discussing
regulators about spectrum management issues related regional examples. This chapter concludes with a brief
to the digital switchover and the Digital Dividend. The discussion of remaining issues and reflection on lessons
chapter includes a summary of policies, best practices learned in completing digital switchover and allocate
and progress being made in implementing change in the Digital Dividend spectrum.
regions around the globe. Among other things, the
chapter serves to demonstrate and recommend current 5.2 Digital Switchover (DSO) and
and possibly new pathways for resolving outstanding the Digital Dividend
issues related to the Digital Dividend.
Digital Switchover and Digital Dividend are two re-
The fundamental reason why the Digital Dividend lated concepts. The Digital Dividend is a consequence
spectrum is so important is its physical characteristics: of the Digital Switchover having taken place. This sec-
an exceptionally attractive combination of capacity tion begins with an interpretation and commentary on
(bandwidth) and coverage. The Digital Dividend can be these two concepts and provides policy makers and
used for a very wide range of potential new services. regulators (including spectrum, broadcast and tele-
These include additional television services delivered com/ICT regulators) with an overview of the Digital Div-
through Digital Terrestrial Television (DTT) (whether in idend (in terms of freed up spectrum).
standard definition (SD) or high definition (HD)), local
television, new types of mobile broadband, mobile tel- 5.2.1 Defining the concepts: Digital
evision, wireless home networks, to name just a few. Switchover and the Digital Dividend
There are many new technologies exploiting the capa-
bilities of the Internet: ranging from fixed to mobile de- 5.2.1.1 Digital Switchover
vices that are capable of receiving audiovisual content
such as movies, TV, and games. Technology is not the Digital Switchover occurs when analogue television
only thing changing, however. Viewing behaviour of in- broadcasting signals are converted to and replaced by
dividuals and whole segments of society are changing, digital television services. Sometimes this occurs ab-
and the lines between television viewing, radio listen- ruptly and is referred to as Analogue Shut-off whereas
ing, and media access (with mobile device options) are in other circumstances, analogue and digital signals co-
becoming increasingly blurred. exist for a period of time during the transition.
5.1.2 Outline of The Chapter While digital signals are not necessarily better than
analogue signals for recording or broadcasting in terms
The chapter begins in Section 5.2 with an explana- of frequency response, signal-to-noise ratio, or dynamic
tion and description of Digital Switchover and the Digi- range, the transmission of digital signals is much more
tal Dividend, and provides a perspective on important efficient. Moreover, new broadcast services such as dis-
historical developments and circumstances leading up tinct simulcast programming can be offered using digi-
to the Digital Switchover. The frequency bands affected, tal multiplexing. Typically, there is a trade-off between
Chapter 5 155
energy and bandwidth when using spectrum. To move switchover from analogue to digital television. Spec-
more data further, transmitters must either increase trum is freed-up since digitally transmitted broadcast
bandwidth or energy, or both. Thus, much of the early services require less spectrum than the amount needed
effort in developing broadcast and wireless communi- to accommodate existing analogue transmissions (prin-
cations was dedicated to studying and improving ways cipally, television).
to combine efficient energy transmission and spectrum
use. The advent of digital transmission technologies Another interpretation suggests that additional
made a third solution available: the use of standard services can be packed into the same spectrum, hence
processor chips loaded with various functional algo- resulting in possibly an even larger digital dividend:
rithms. Dramatic and exponential improvements in
processing complexity drove down costs while signifi- More digital programmes and associated
cantly reducing transmission error. With modern coded services (including interactive multimedia
modulation, processing complexity is now the cheapest ones) than the existing number of analogue
way to improve transmission as compared to increasing programmes can likely be carried in the spec-
energy or bandwidth. 2 Given that the technological trum that is presently occupied by analogue
challenge of making transmission more efficient has programme services (although this may not
been largely resolved, the most important questions be the case for High Definition Services)3.
concerning the Digital Switchover are when and how it
will occur. These questions will be further explored In either case, broadcast services are transitioning
when examining the best practices and regional trends to digital transmission techniques resulting in several
(see Sections 5.4 and 5.5 below). options for ICT and broadcast regulators to consider.
How and when Digital Switchover occurs can vary 5.2.2 Spectrum in Transition
and depends very much on how local broadcast mar-
kets evolve and how broadcast services are delivered to This section highlights major evolutionary steps in
consumers. For example, in the US, one of several early the use of broadcast spectrum, the size of the Digital
large-scale markets to have already switched-off, con- Dividend, the bands affected, and important interna-
sumers were provided with incentives in the form of a tional decisions affecting the timing and implementa-
coupon (subsidy) or reduced-cost set-top boxes. In tion of the Digital Switchover. Recent trends relating to
Germany, another early adopter, most consumers were the transition model are illustrated using country expe-
already using cable television subscriptions and so only riences from all regions.
a small number of households needed new equipment
to access multi-channel digital services. In a number of 5.2.2.1 Major Trends in the use of VHF and UHF
other countries in all regions, however, the transition is Spectrum
likely to take much longer.
The early developments in wireless communica-
How to use the Digital Dividend and how to reallo- tions began in the mid-nineteenth century with key dis-
cate the released spectrum are the subjects of ongoing coveries and innovation occurring around the globe
intense debate involving consumers, legislators, regula- and involving individuals such as Maxwell, Edison, Hertz,
tors, and operators involved in broadcast, telecommu- Tesla, Popov, Rutherford, Marconi and Baviera. Early
nications, and ICTs (in particular broadband). The radio manufacturing pioneers included the British Mar-
modality of new services is discussed in Section 5.2.3. coni, the German Telefunken and the American West-
inghouse companies. The first AM broadcast took place
5.2.1.2 Defining the Digital Dividend on Christmas Eve, 1906 from Brant Rock, Massachu-
setts. FM broadcasting did not occur until much later in
Generally speaking, the Digital Dividend resides in 1933, and was first piloted in several US east coast sta-
the range of broadcast spectrum – VHF (30 MHz – tions throughout 1939.
300 MHz) and UHF (300 MHz – 3.0 GHz). There are sev-
eral definitions of the Digital Dividend. The most com- Commercial broadcast radio grew in popularity up
mon definition is the amount of spectrum in the VHF to the late 1940s, when television first appeared and
and UHF bands that is above that amount nominally soon overtook radio as the main source of in-home en-
required to accommodate existing analogue TV pro- tertainment. Radio took 38 years to reach an audience
grammes and that might be potentially freed up in the of 50 million compared to 13 years for television and
156 Chapter 5
4 years for the Internet.4 Meanwhile, radio and televi- • Instead, the Internet plays a central role in daily life;
sion continue to be amongst the most popular ICT de- more than 70 per cent of 16-24 year old Internet
vices in the home with worldwide penetration rates still users use social networking websites (compared to
on the increase. In OECD households, with the excep- 41 per cent of all UK Internet users).
tion of four countries, television penetration rates ex-
• DAB9 digital radio continues to grow in importance.
ceed 90 per cent (see Figure 5.1). This is quite high
In 2005, sales of Digital Audio Broadcast portable
compared to the Internet which had a global penetra-
radios outstripped sales of analogue portable ra-
tion rate of 28.7 per cent in 2009.5 The Internet is,
dios for the first time, accounting for 54 per cent of
however, growing very rapidly, having grown by
sales, up from 45 per cent in 2004. Overall digital
44.8 per cent since 2000.6 In 2010, the three most
listening (including radio channels via digital televi-
popular media channels are television, Internet and ra-
sion) accounted for 11 per cent of all listening
dio. Internet surpassed radio in 2004.7
hours in 2005, compared to only 6 per cent in 2004.
5.2.2.2 Trends in Media Usage • However, TV and radio continue to be the main
source of news and entertainment for the elderly
Viewing behaviour is changing with an increasing and underprivileged.
use of the Internet, especially amongst younger audi-
ences. Viewers now use a range of devices capable of In 2010, Ofcom reported an important reversal in
receiving audio-visual content such as movies, TV, trends in TV viewing for British audiences10:
games, and so forth. The lines between television view- • Despite the growing choice in technology and ser-
ing and radio listening and between PC and mobile devices available, watching TV is claimed to be the ac-
vice options are now blurred. These trends have been tivity that most adults would miss the most.
reported in several instances, particularly in developed Compared to 2007, a growing number of 16-24s
countries such as in the Republic of Korea and in the UK, (8 percentage points) and over 55s (7 percentage
but also increasingly in developing countries. In 2008, points) say that watching TV is an important activity.
Ofcom's Communications Market Study8 revealed that:
• It is noteworthy that from 2003 to 2008, UK TV
• Television is of declining interest to many revenue as a whole contracted for the first time
16-24 year olds; on average they watch television since 2003, down by 0.4 per cent in 2008 to
for one hour less per day than the average televi- £11.1bn. Net TV advertising revenue also declined
sion viewer. by 9.6 per cent to £3.1 billion, which was the big-
gest fall since 2003.
Figure 5.1: Percentage of households with a television, 2007
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
bo a
ite nga a
er CD
w nm ia
Ge inla a
Tu urg
Ita e
Au rw l
Gr nce
Swgium
d om
Ja en
Po Spa n
s
th OE o
r in
ite ngd nd
Ne De str s
n d
nd
a k
ec I mand
Slo Sw epuand
k R rl ic
ep and
Po blic
xe Ko ly
l y
st ay
Un Ki ela y
h e y
Notuga
M ate
Au nd
Be rke
d Ir r
Ze ar
Un Hu rali
m re
c
F ad
Ne exic
Ca lan
r n
pa
va tze bl
ee
ed
la
u
a
la
R l
St
Fr
c
i
Lu
Cz
Source: OECD, ITU, EAO
Chapter 5 157
In 2009, the Korean Communications Commission 5.2.2.3 Trends in Media Delivery

(KCC) reported observing significant new trends. The
number of IPTV subscribers in Korea is rising sharply As viewing behaviour changes, businesses that
while other forms of subscription television access are provide services are changing the way services are
declining (see figure 5.2). organized and delivered to consumers. These changes
are shifting market power and altering old alliances
Services like Terrestrial Digital Multimedia between networks and advertisers. In the Republic of
Broadcasting (T-DMB) are also making viewers move Korea, for the IPTV example illustrated (see Figure 5.2),
away from traditional television services. T-DMB first there are now more companies providing IPTV services
came on the air in 2005 in Korea and is a free service than television and newspaper companies combined
supported by advertisers. T-DMB had nealry 22 million (see figure 5.3).
subscriber in 2009. Today T-DMB is in operation or in
trials in a number of countries including Mexico,
Germany, Norway, Indonesia, and Malaysia.
Figure 5.2: Republic of Korea, IPTV Subscribers
Number of IPTV Subscribers

(Unit: 1,000 subscribers)
2,373
1,553
1,741
1,405
148 632
Feb. 2009 Dec. 2009

Total Pre-IPTV IPTV
Source: KCC Annual Report, 2009.
Figure 5.3: Growth in IPTV Companies in the Republic of Korea, 2009
(Large companies with total assets

of 10 trillion won or more)
49
30
10
Terrestrial general PP/ IPTV content

broadcasters News PP providers
Source: KCC Annual Report, 2009.
158 Chapter 5
Box 5.1: Global media trends

Overall global trends in media are clearly evident with some different regional tendencies:
• The global media market, valued at USD 1.3 trillion in 2009, is forecast to grow at an annual average rate of
2.7 per cent to reach USD 1.6 trillion by 2013.
• Terrestrial TV advertising is expected to decline while global multichannel TV will grow and increase according to
industry reports, with advertising expenditures growing 1.4 per cent in 2009 to hit USD 19.2 billion in spite of a
slowing economy.
• The global trend in growth masks some sharp regional contrasts. The multichannel TV advertising market is ex-
pected to shrink 0.9 per cent in North America, but is forecast to grow 0.6 per cent in Western Europe and
15.3 per cent in Eastern Europe and the Middle East.
• A milestone was reached in the UK in 2009. For the first time, advertisers spent more on Internet advertising than
on television advertising, with a record £1.75bn online spending recorded in the first six months of that year.
Source: Informa Telecoms & Media (2009).
Viewing behaviours and attendant revenues are tries but less so in developing countries. In developed
not the only things changing. Methods for accessing economies, new services such as Digital Mobile TV ac-
television are changing as well. Generally, fewer people cess represent an emerging market with possibly as
are accessing television broadcast through over-the-air great a potential as Internet Radio. The projections
means.11 Triple play take-up is on the rise with more shown in Figure 5.5 illustrate the trend in the US. Ac-
consumers moving toward converged service packages cording to these projections, terrestrial radio will re-
offered by telecom companies. In several OECD coun- main an important means of media access, showing
tries (Belgium, Luxembourg, Netherlands, and Switzer- some decline in total listening while substantial growth
land), traditional over-the-air analogue broadcast occurs in two services, namely Internet Radio and po-
transmission, for the most part, has been already elimi- tentially radio over mobile phone (similar to T-DMB in
nated by 2007. the Republic of Korea). In developing countries, sales of
traditional terrestrial radio receivers can be expected to
The trend away from accessing television through show continued robust growth.
terrestrial means will likely continue in developed coun-
Figure 5.4: Breakdown of television access by distribution type in the OECD – 2007
DBS Cable Terrestrial
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Ja g
ec Fr al
ite ep e
va Fin m
Ca es
th ium
m ds
Po in
Ki lic
ep d
Hu blic
Ire en
De land
Sw rm d
Be and
n
Un K ark
Sp y
Sw ary
Au ay
itz any
d ea
No da
Po ia
l
ur
Un R nc
k R lan
Ge n
pa
Ita
r
a
do
at
d ub
rw
xe n
ite or
na
ed
a
st
rtu
ng
nm
bo
u
a
Lu erla
l
l
Ne lg
St
er
ng
h
S lo
Cz
Source: OECD Communications Outlook, 2008.
Chapter 5 159
Figure 5.5: Growth in Internet Radio
Weekly Persons Using Medium (Millions)
300
250 Podcasting
200 HD Radio (Terrestrial)
150 Satellite Radio
Internet Radio
100
Terrestrial Radio
50
0
2005 2006 2007 2008 2009 2010 2015 2020
Source: Bridge Ratings LLC, 2010.
Figure 5.6 illustrates for the United States several the period, with Internet Radio showing a dramatic rise
trends in digital media growth for the period 2005 to from its inception in the early 2000's. Internet Radio
2010 with projections to 2020. Several trends are worth appears to be on track to overtake terrestrial radio
noting. Terrestrial radio is expected to continue as the sometime in the future.
leading means of accessing digital content throughout
Figure 5.6: Digital Media Growth
© Copyright 2010 Digital Media Growth Projections 2005-2020

Bridge Ratings LLC Updated 3.10
300.00
250.00
Millions of Users
200.00
150.00
100.00
50.00
0
2005 2006 2007 2008 2009 2010 2015 2020
Sirius XM Merged 6.30 9.10 13.61 18.88 18.51 19.27 24.75 28.80
Internet Radio 10.15 22.60 34.00 51.80 62.90 77.20 115.80 185.28
Wireless Internet Penetration 5.67 10.10 19.19 28.79 51.81 93.26 104.46 120.12
Mobile phone Audio Listeners 0.00 1.475 4.14 8.69 19.13 40.17 70.29 108.95
HD Radio 0.100 0.27 0.38 0.50 0.90 2.34 4.67 7.57
Terrestrial Radio Wkly Cume 283.10 279.65 282.84 283.02 283.49 284.19 274.13 258.57
Podcasting/Netcasting** 1.01 1.49 2.94 3.68 5.07 6.34 8.43 10.54
Sources: Bridge Ratings LLC, 2010.
160 Chapter 5
5.2.2.4 Digital Dividend Spectrum Bands and introducing new services for end users. In this sec-
tion, the different bands affected by the Digital Divi-
The previous section demonstrates clearly that dig- dend and their potential new uses are described.
ital technology is transforming markets. Services have
evolved and new demands have emerged while digital The International Telecommunication Union (ITU)
media access is becoming ubiquitous. These changes has been leading global spectrum allocation efforts
have altered the map for both new and existing service over the past decades. Analogue broadcast services
providers in many ways. The traditional terrestrial form traditionally occupied several frequency ranges in the
of television broadcast competes with and in some cas- UHF and VHF bands. The band plans and technical
es has been replaced by other wired and wireless standards vary across the three regions of the ITU. Be-
means of access that may now have the upper hand. cause markets are different and the bands and tech-
Terrestrial digital radio broadcast continues to hold its nologies used vary, different timelines for Digital
own against new forms of access in developed markets Switchover have evolved (see Table 5.1).
such as the US and is likely to grow in developing mar-
kets. Changes in consumer demand are not uniform Table 5.1 illustrates the spectrum bands typically
across all markets and the technologies used by differ- used for radio and TV services.
ent consumer groups are not the same. With the re-
lease of the Digital Dividend spectrum, new For ease of reference, the regions defined by the
opportunities open up for expanding existing services ITU Radio Regulation appear in Figure.5.7.
Table 5.1: Typical Spectrum Bands for Radio and Television Broadcast
Band Region 1 Region 2 Region 3
LF and MH
3 kHz – 3000 kHz
AM Radio 148.5-283.5 kHz – –

526.5-1606.5 kHz 525-1705 kHz 526.5-1606.5 kHz
HF
3.0 MHz – 30 MHz
Short-wave Radio Various Various Various

VHF
30 MHz – 300 MHz
FM Radio 87.9-107.9 MHz 87.9-107.9 MHz 87.5-107.9 MHz 76-90 MHz

(Japan only)
Television Western Europe: North and South America: Asia:
40-88 and 174-230 MHz 54-88 and 174-216 MHz PRC – 48-92 and 166-223 MHz
Eastern Europe: Japan – 90-108 and 170-222 MHz
48-100 and 174-230 MHz
Australia/New Zealand –
54-88 and 174-230 MHz
UHF
300 MHz – 3.0 GHz
Television Europe: PAL12 North America: NTSC14 Asia: NTSC, PAL, SECAM
470-890 MHz 470-608, 624-890 MHz
PRC 470-862 MHz
France: Secam13 South America: NTSC and PAL
Japan 470-890 MHz
470-890 MHz
Africa: PAL and SECAM
470-862 MHz
Note: For a detailed description of spectrum bands 460-890 and the current allocation to services, see the ITU Radio Regulations 2006
(RR5-54). For reference notes also refer to the ITU RRs.
Source: McLean Foster & Co. based on the ITU Radio Regulations 2006.
Chapter 5 161
Figure 5.7: ITU Regions
170°
170°
160° 140° 120° 100° 80° 60° 40° 20° 0° 20° 40° 60° 80° 100° 120° 140° 160° 180°
75° 75°
60° REGION 1 60°

REGION 2
40° 40°
30° 30°
20° 20°
0° 0°
20° 20°
30° 30°
40° 40°
REGION 3 REGION 3
60° 60°
160° 140° 120° 100° 80° 60° 40° 20° 0° 20° 40° 60° 80° 100° 120° 140° 160° 180°
170°
170°
Source: ITU Radio Regulations 2006 (RR5-01).
5.2.2.5 The Size of the Digital Dividend The amount of spectrum vacated by television
broadcasting services and making way for DTT accord-
The Digital Dividend arises from digital technologi- ing to the Final Acts of WRC-07 varies by region. Ta-
cal advances leading to efficiencies in the way in which ble 5.2 shows the size of the Digital Dividend resulting
TV signals are transmitted. Digital compression systems from Digital Switchover by ITU Region.
for digital television allow the transmission of several
(up to six, depending on the coding and modulation 5.2.2.6 Categories of Digital Dividend Spectrum
techniques) standard digital television channels of ac- – Cleared and Interleaved (whitespaces)
ceptable quality in the radio-frequency spectrum pre-
viously used by a single analogue channel.15 Simply put, There are two categories of Digital Dividend Spec-
more content can be carried for a given amount of trum:
spectrum, and this trend is expected to continue. New
• Cleared spectrum refers to the broadcast spectrum
technologies are likely to increase the capacity of the
that will become available once Digital Switchover
current DTT multiplexes (by at least 20 per cent) and
occurs and appears in Table 5.2 as Digital Dividend.
hence allow more services to be provided without us-
ing additional spectrum that is in high demand for • Interleaved spectrum (whitespace) is additional
other uses. capacity available within the spectrum that will be
used in digital broadcast based on how digital ter-
Digital audio has benefitted in the same way, al- restrial television (DTT) networks are deployed. The
though unlike the case of digital television, there has interleaved spectrum is so called because it can be
been no coordinated effort to harvest a digital dividend. used at a local level by different users on a shared
The particular bands used for radio, the amounts of (interleaved) basis with terrestrial television.16 For a
spectrum involved, and the social and cultural con- more detailed explanation of DTT and the technol-
straints associated with radio broadcast make it difficult ogies involved see Section 5.2.3.3 – Digital Terre-
to determine at this stage whether there will be a Digi- strial TV.
tal Dividend in the radio broadcast bands.
162 Chapter 5
Table 5.2: The Digital Dividend by ITU Region

Band Region 1 Region 2 Region 3
698 - 806 MHz 698 - 806 MHz (2)(3)

806 - 862 MHz 806 - 862 MHz (2)(4)
698 - 790 MHz 698 - 790 MHz (5)
790 - 862 MHz 790 - 862 MHz (1)(6)(7) 790 - 862 MHz
(8)
Digital Dividend 72 MHz 164 MHz 164 MHz
Spectrum
Notes:
(1) Identified for IMT services on a primary basis past 17 June 2015.
(2) Identified for IMT services on a co-primary basis. Effective now with various dates set for DSO (USA, 2009; Canada, 2011; Mexico, 2022).
(3) Brazil has opted to allocate 698 - 806 MHz for IMT on a secondary basis.
(4) The USA had decided earlier in 2003 to vacate broadcast services from the 700 MHz band.
(5) China, India, Japan, New Zealand and Singapore opted to identify the 698-790 MHz band, in addition to the 790-862 MHz band, which
was accepted by all countries in the region.
(6) The European Commission adopted the policy of analogue shut-off for 790-862 MHz to take place 1 January 2012. COM(700)2007.
(7) The EC approved harmonized technical rules for the use of the 800 MHz band (790-862 MHz) for mobile broadband 2010/EU/267.
(8) In 2003 Ofcom allocated 112 MHz of spectrum for the Digital Dividend resulting from DSO.
Source: McLean Foster & Co. based on the ITU Radio Regulations 2006.
ences 2004 and 2006 and replaced the Stockholm Plan

5.2.2.7 International Regulation and the Digital of 1961 (ST61) that established the broadcast fre-
Dividend quency plan for Europe, Africa and many parts of Asia17.
The GE06 Plan sets 17 June 2015 as the date when par-
Different allocations and standards for television ticipating countries will no longer protect the analogue
took many years to evolve and were firmly in place services of neighbouring countries and can then begin
when policy makers, regulators and the ITU first em- to use frequencies assigned to them in the GE06 Plan
barked on a course leading to the Digital Dividend. for transmission of domestic digital services. Implemen-
tation of the GE06 digital plan can occur during the
Since the 1990s, the ITU’s Radiocommunication transition period (between 17 June 2006 and 17 June
Sector (ITU–R) has made a number of recommenda- 2015) but requires prior agreement of neighbouring
tions dealing with coding, compression and modulation countries that may be affected.
techniques for digital terrestrial television broadcasting.
These recommendations have contributed to the The GE06 Agreement has the binding force of a
process that is finally yielding the Digital Dividend. For treaty and addresses 72,761 country requirements for
example, the pioneering Recommendation ITU–R the transmission of DVB-T and T-DAB services in fre-
BT.798 published 1 January 1994 stipulates "that digital quency Band III (174-230 MHz) and DVB-T services in
television terrestrial broadcasting should fit in the frequency Bands IV/V (470-862 MHz). Generally, coun-
channels (6, 7 and 8 MHz) intended for analogue televi- tries have been allocated 3 T-DAB and 1 DVB-T "cover-
sion emission in the VHF/UHF bands”. This Recommen- age layers" in the Band III and 7-8 DVB-T layers in
dation prohibited the bandwidth used for digital Bands IV/V.
programmes to go beyond the analogue channel
bandwidth and thus paved the way for the develop- WRC-07: World Radio Conference Allocations
ment of sophisticated digital compression techniques.
The World Radiocommunication Conference
The Geneva 2006 Frequency Plan 2006 (GE06) (WRC-07), held in November 2007, allocated the
790-862 MHz sub-band in Region 1 (covering the Euro-
The Geneva 2006 Frequency Plan (GE06) Agree- pean Broadcasting Area and Africa) to the Mobile Ser-
ment resulted from the work of Regional Radio Confer- vice for IMT technologies such as 3G, 4G, WiMAX on a
Chapter 5 163
primary basis, except for aeronautical mobile, and on Contracting Members of the GE06 Agreement (Issue A).
shared basis with the broadcasting service until 17 June Appropriate methods have been proposed for each is-
2015. Prior to WRC-07, the frequency band sue and case.
790-862 MHz was allocated in Regions 1 and 3 to the
broadcasting service and the fixed service on a primary The work of the Joint Task Group in providing the
basis and in Region 3 to the mobile service on a primary text for the draft CPM Report addressing the results of
basis and, additionally, in nineteen countries of Re- sharing studies for fixed, mobile and broadcasting ser-
gion 1, to the aeronautical radionavigation service vices in the band 790-862 MHz in Regions 1 and 3 was
(ARNS) on a primary basis (RR No. 5.312). completed in May 2010 and indicates that there is a
need to protect certain other primary terrestrial servic-
WRC-12 es from the newly allocated mobile service in Region 1.
Of particular significance is ensuring coordination and
Resolution 749 (WRC-07) and Agenda item 1.17 of interference avoidance between mobile services and
WRC-1218 tasks the ITU-R Sector “to conduct sharing aeronautical radionavigation services (ARNS) in those
studies for Regions 1 and 3 in the band 790-862 MHz countries where ARNS has a primary allocation.20
between the mobile service and other services in order
to ensure adequate protection of services allocated to Coordination between GE06 Contracting and Non-
the band and to take appropriate action." Contracting member states requires careful considera-
tion of the spectrum sharing studies. Sharing options
In view of the complexity and importance of are outlined in the Annexes attached to the report.
WRC-12 Agenda item 1.17 issues, a dedicated Joint Task However, a number of interference issues are not yet
Group 5-6 (JTG 5-6) was established to study how mo- resolved, suggesting that further study of interference
bile service can share the band 790-862 MHz band issues is necessary. In some cases, a consensus could
with: not be reached around a single option. The implication
is that digital switchover will occur at different times
• the Broadcasting service (Issue A);
over the period leading up to analogue shut-off.
• the Aeronautical radionavigation service (Issue B);
and
• the Fixed service (Issue C).
These issues were further sub-divided by cases ac-

cording to either an ITU-R Region19 (for Issue B and Is-
sue C) or to whether the countries were or were not
Box 5.2: ITU-R Resolution 749

Resolution 749 (WRC-07) is referenced within RR No. 5.317A and resolves:
1. to invite ITU-R to conduct sharing studies for Regions 1 and 3 in the band 790-862 MHz between the mobile service
and other services in order to protect the services to which the frequency band is currently allocated;
2. to invite ITU-R to report the results of the studies referred to in resolves 1 for consideration by WRC-12 to take ap-
propriate action.”
Studies to be carried out
CPM 11-1 decided that JTG 5-6 is to conduct sharing studies for Regions 1 and 3 in the band 790-862 MHz between
the mobile service and other services in order to protect the services to which the frequency band is currently allo-
cated (see Annex 1-1).
Source: ITU-R Resolution 749 “Studies on the use of the band 790-862 MHz by mobile applications and by other services”, at:
www.itu.int/dms_pub/itu-r/oth/0C/04/R0C040000070001PDFE.pdf
164 Chapter 5
5.2.3 How to use the Digital Dividend? An issue related to DTT involves the choice be-
tween MPEG-2 and MPEG-4 compression techniques
How the Digital Dividend is used varies from one for countries that have yet to deploy DDT. 22 Early
country to another, owing to national circumstances adopters had less choice in this matter; many early
such as the country’s geographical position, size and adopters opted for MPEG-2. The choice can now be
topography, penetration of satellite/cable services, and made based on equipment cost and availability, with
spectrum usage in adjacent countries (see Regional Ex- the cost of upgrading CPE to enable MPEG-4 thought to
periences in Section 5.4). be low.
The issues of regulatory approaches, allocation and The size of the Digital Dividend will not be known
assignment, economic considerations such as econo- until the choices are finalized and migration from MPEG
mies of scale achieved through harmonization, and – 2 to MPEG – 4 is more complete. A four-phase devel-
technical considerations such as interference, sharing opment is forecast to take place in many countries:
and migration from analogue to digital broadcast are
• conversion from analogue to SDTV (using MPEG-2);
discussed in Section 5.2.4 – Issues.
• conversion from MPEG-2 to MPEG-4 AVC;
This section begins with an overview of the main • choice between single frequency networks (SFN’s)
uses of and technologies involved in the Digital Divi- and multi-frequency networks (MFN’s)23; and
dend.
• transition from SDTV to HDTV.
5.2.3.1 New Services and Technologies
Whereas the first and second switchover phases
The main uses for the Digital Dividend spectrum in- will probably reduce spectrum consumption, the third
clude both broadcasting and fixed telecommunication one will require additional spectrum.24
services, as well as a mix of both over mobile platforms:
5.2.3.3 Broadcast Mobile TV
• Digital Terrestrial TV – DTT;
• Broadcast Mobile TV; Broadcast mobile TV is a very efficient multicast
service that allows users with a mobile device to watch
• Commercial Wireless Broadband; and
multiple TV channels in way similar to DTT. Broadcast
• Commercial Wireless Broadband and Public Protec- mobile TV services are available in several countries in-
tion and Disaster Relief. cluding Austria, Finland, Italy, the Netherlands and the
USA, using several technologies based on standards
These services are described in more detail below. such as:
• Digital Video Broadcast – Terrestrial (DVB-T);
5.2.3.2 Digital Terrestrial TV – DTT
• Digital Video Broadcast – Handhelds (DVB-H);
DTT can be viewed either through free-to-air ser- • Digital Multimedia Broadcast (DMB);
vice or by subscription. DTT offers standard or high-
definition channels on a national, regional, or local ba- • Advanced Television System Committee – Mo-
sis and uses much of the existing customer premise bile/Handheld (ATSC M/H);
equipment (CPE) such as aerials, set-top boxes, and ex- • Integrated Services Digital Broadcasting – Terrestri-
isting television transmitter equipment. The European al 1 seg (ISDB-T 1seg); and
Broadcast Union (EBU) claims that the UHF band
(470-862 MHz) is the only band that can be used for • China Mobile Multimedia Broadcast (CMMB);
widespread development of DTT services and argues
that mobile telecommunications services, including The 470-862 MHz band is preferred by mobile op-
wireless broadband services (e.g. WiMAX), can be dep- erators for simultaneous use of broadcast mobile TV
loyed in several other frequency bands.21 With respect and GSM/3G services. Other bands could be used for
to options such as Satellite, the EBU notes that restric- broadcast mobile TV such as the VHF television band.
tions on deploying dishes and issues with weather pre-
vent Satellite from being a preferred technology of
choice over DTT.
Chapter 5 165
5.2.3.4 Commercial Wireless Broadband 5.2.4 Issues
Figure 5.8 shows the rapid growth in mobile cellu- Decision-making processes for digital switchover
lar and mobile broadband subscriptions compared to and potential uses of the Digital Dividend, along with
the much slower growth in older technologies. spectrum re-allocation decisions, have been driven es-
sentially by political considerations. In some cases,
Not surprisingly, many ICT players hope that the these decision-making processes have pitted one set of
Digital Dividend spectrum will be used for fixed or mo- interests (telecommunication operators and service
bile wireless broadband services, especially to extend providers) against other influential and powerful inter-
coverage in rural areas because of excellent propaga- ests such as consumers27 and stakeholders such as gov-
tion characteristics. Mobile broadband subscriptions ernment departments and broadcasters (e.g., the
are on the increase using two main technologies: European Broadcast Union). This section discusses
some issues related to using the Digital Dividend and
• UMTS/LTE: UMTS is widely deployed, especially
changes that may be required to leverage the Digital
throughout Europe, and plans are being made to
Dividend.
deploy next generation technologies such as LTE.25
European operators are moving towards LTE and
5.2.4.1 Regulatory Frameworks Differ
coordination on spectrum pairs will be critical for
Europe-wide deployments.
This section provides an overview of international,
• Mobile WiMAX (802.16M) is being deployed in a regional and national regulatory frameworks. In addi-
number of countries, especially across Asia and the tion, regional political institutions such as the European
Americas, and is able to offer similar data rates us- Commission significantly influence the nature, extent
ing either Frequency Division Duplex (FDD) or Time and timing of re-allocation decisions and the technical
Division Duplex (TDD) profiles. Mobile WiMAX will rules that affect the size and scope of the Digital Divi-
most likely be deployed using TDD. dend.
The 470-862 band can be used for wireless broad- As discussed in section 5.2.2.7 above, the ITU acts
band, however, it will be very important to coordinate to harmonize the efficient use of the spectrum resource
and harmonize frequencies to achieve economies of on a global basis on behalf of governments. Ultimately
scale and to achieve regional wide deployments. The the implementation – how and when recommenda-
US has already decided to deploy advanced wireless tions and regulations are implemented – rests with na-
services in the 700 MHz band.26 There are other bands tional governments. Allocations of radio spectrum are
that can be used for mobile broadband, especially agreed upon at the ITU World Radiocommunication
those bands currently used for GSM services that will Conferences (WRC) for each ITU Region, and the Radio
eventually be phased out. Regulations are then revised. Agreements on changes
to allocations made at WRCs have treaty status, and
5.2.3.5 Public Protection and Disaster Relief international harmonization and coordination of spec-
trum allocation are essential for many public sector
Frontline Public Protection and Disaster Relief services such as transport.
(PPDR) agencies need to be able to communicate relia-
bly and effectively with first responders and emergency Practices across regions vary and decisions made
services in order to coordinate responses to disasters. about spectrum allocation vary across the three ITU re-
Traditionally, this coordination has occurred using tele- gions. Region 1 has multiple sovereign markets and at-
phony-based, voice communication. Existing standards tempts a unified approach. Region 2 is dominated by
for public protection and disaster relief services support the US and often reflects a single market approach
voice and narrowband networks. There is increasing whereas there multiple sovereign markets and no real
demand for broadband applications and services, how- unified approach across Region 3 encompassing Asia-
ever. Spectrum below 1 GHz is viewed with interest as Pacific and Oceania.
being the most suitable for a range of new capabilities.
166 Chapter 5
Figure 5.8: Mobile Subscriptions to Reach 5 Billion in 2010
80
Fixed telephone lines
70 Mobile cellular telephone subscriptions 67.0
Internet users
60 Fixed broadband subscribers
per 100 inhabitants
Mobile broadband subscriptions

50
40
30 25.9
20 17.8
10 9.5
7.1
0
98 99 2000 01 02 03 04 05 06 07 08 09*
Source: ITU World Telecommunication/ICT Indicators Database.
* Estimate.
In Europe, common positions in relation to WRC world. As previously noted, there are three dominant
agenda items are developed by the European Confer- analogue television standards: NTSC, PAL and SECAM.
ence of Postal and Telecommunications Administra- There have been some intensive efforts made to
tions (CEPT); the CEPT includes 48 European member achieve cooperation at the regional and trans-regional
states. The European Union presents a particularly situ- level to smooth out the process and simplify the inhe-
ation since broad policy in terms of goals, direction and rent diversity. The Geneva Frequency Plan referred to
timelines is set on a pan-national basis while the de- as GE06 is a prime example.
tailed implementation of policy is left with individual
countries. 5.2.4.2 Allocation and Assignment
Much like North and South America, outside of the Two topics are explored in this section. The first in-
GE06 agreement, there is no formal process for setting volves contrasting public and private goods and consi-
a common agenda in Asia to coordinate and harmonize dering how the differences influence the debate on
spectrum use and the Digital Dividend. how to use the Digital Dividend. The second topic in-
volves a discussion of how certain services say public
At the national level, the regulatory framework for broadcast, strongly influence the allocation and as-
broadcast and telecommunications is characteristically signment process and the choice between administra-
diverse: tive and market-based methods.
• in some cases, there is one regulator for both
How are public goods defined? Publicness is a
broadcast and telecommunications, and
technical term that refers to the impact of one more
• in other cases, the regulation of these services is user of a particular service on the consumption oppor-
divided between separate regulators. tunities of other users. The “pure public good” is one
where the addition of one more user has no effect at all
Figure 5.9 illustrates the issue by showing that on how much anyone else can consume -- an additional
there is no consistent pattern in regulatory mandate viewer of a national news broadcast, for example. On
and function across the regions of the globe. the other hand, there is the “pure private good" case
where consumption by one person leaves nothing for
At the policy and standards level, the same diversi- anyone else, such as high power transmitters blocking
ty is evident. For example, for television systems, differ- out other transmitters.
ent standards apply to various regions around the
Chapter 5 167
Figure 5.9: Regulatory Functions
Mandate of the regulator, 2009

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Africa Americas Arab States Asia-Pacific CIS Europe
ICT/telecom only ICT & Utilities ICT & Broadcasting Spectrum Other
Note: Those regulators dealing with more than one area (i.e., ICTs & broadcasting and spectrum) are counted twice.
Source: ITU World Telecommunication Regulatory Database.
Across various regions and in many countries, 5.2.4.3 Reserving Spectrum for Future Use
broadcast activities may be found at many points along
the spectrum that runs from pure public goods to pure Along with the discussion on current uses of the
private goods, making pure comparisons of public- Digital Dividend spectrum, spectrum regulators are also
value and market-value a difficult task. An important faced with issues related to future use. Should some of
feature of public goods is that they are often strongly the Digital Dividend be reserved for future use? The
defended by those who benefit the most from their central issues are the uncertainty over the best use of
availability. the reserved spectrum both now and in the future and
the lack of information available, as well as the poten-
In choosing how much spectrum to allocate and for tial for regulatory decisions to have undesirable effects
whom, regulators not only place emphasis on market on the incentives for spectrum efficiency. Ofcom in the
valuations and economic efficiencies but also on social, UK conducted an assessment of the potential signifi-
development and cultural goals. Market mechanisms cance of regulatory failures. It determined that regula-
do not necessarily or easily take public policy priorities tory decisions to reserve the Digital Dividend for
into account, and so in the case of broadcast govern- potential uses are prone to regulatory failure (see
ments often intervene in allocation decisions to ensure Box 5.3).
that public-value broadcast content is available.
5.2.4.4 Interference
Public value is therefore strongly defended and yet
it is hard to quantify because it is difficult to measure in Interference issues are never simple. In the case of
terms of incremental spectrum assignments. Adminis- the analogue switch-off and the Digital Dividend, inter-
tered Incentive Prices (AIP) and the measurement of ference issues are complicated by the scale of the
marginal benefits is one approach being used in a range change in terms of regions and countries and the range
of countries that can help in determining where the of potential options, including fixed, mobile, broadcast
balance lies between broadcast and other services such and the presence of new and evolving technologies.
as mobile services.
168 Chapter 5
Box 5.3: Reserving the Digital Dividend for potential future uses: the view of the UK regulator
In Ofcom's view, a market-led approach to determining the uses for the Digital Dividend is superior because:
• Where there is considerable uncertainty over the highest value future use, market mechanisms can help to ensure
that the spectrum is used by those who value it the most. Markets allow the superior information held by partici-
pants to be revealed and combined in order to identify those who have the highest value.
• Market mechanisms also help to resolve uncertainty because markets help to reveal information about how much
a resource is worth to others.
• Finally information about value and flexibility of use give users strong incentives to get the most out of the spec-
trum they own and hence to ensure efficient use in the longer term and promote innovation. The ability to make
these changes and to be flexible in responding to unforeseen changes quickly is particularly important for promot-
ing efficient spectrum use in the longer term.
Source: Ofcom UK, Digital Dividend Review 2007.
Two main types of interference likely to occur: 5.2.4.5 Migration

• adjacent channel interference, which occurs be-
It is generally accepted that it is in the public inter-
tween radio systems operating in neighbouring
est to ensure that the exploitation of the Digital Divi-
frequencies, and
dend is managed as efficiently and effectively as
• co-channel interference, which occurs between ra- possible, that results satisfy the maximum demand for
dio systems sharing the same frequency. spectrum, and that obstacles to efficient use are re-
moved by policy makers and regulators. This should be
In the UHF spectrum, for example, several interfe- a fundamental goal of spectrum policy and should be a
rence problems are likely between DTT and wireless general guide to the main proposals coming out of
broadband base station receivers, mobile and aero- coordination efforts by policy makers and regulators. If
nautical radionavigation systems, and similar systems in the Digital Dividend is properly organized and if the re-
border areas or where high-power transmitters are be- sults are coordinated and harmonized, then a wide
ing used. range of uses is possible, as virtually all common wire-
less applications could make use of this part of the
Solutions to interference issues involve well- spectrum.
established international coordination steps for border
areas as well the creation of band plans providing suffi- If we are to achieve the goal of efficient and effec-
cient guard bands between services. As mentioned ear- tive use of the Digital Dividend, an important issue cen-
lier, the ITU Joint Task Group 5-6 created at WRC-10 tres on who should lead the migration process. Is it the
was mandated to conduct sharing studies to help re- policy maker, the broadcast regulator, the telecommu-
solve potential interference issues. The results of the nication regulator or the spectrum agency?
work done will be considered at WRC-12. Some interfe-
rence issues will likely require further consideration. Ultimately, irrespective of whether the debate on
the Digital Switchover and the Digital Dividend is in-
The European Broadcast Union states that deploy- itiated within a ministry, regulator or by a private sector
ing two-way mobile communications services and wire- interest, the decision to switch-off analogue broadcast
less broadband services alongside broadcasting could services is very much a political one. This decision in-
result in unacceptable interference to broadcasting volves trade-offs between cultural, social, and econom-
caused by mobile terminals.28 This type of interference ic objectives and the decision is strongly coloured by
from portable transmitters is very difficult to predict historical considerations and, quite likely, security con-
and prevent. In particular, where channels 61 to 69 (i.e. cerns. Successful switchover strategies depend on ef-
790-862 MHz) are used by mobile services, broadcast- fective communication with the public, as well as, in
ing services using adjacent channels (i.e. channel 60 some cases, some form of incentive or subsidy, general-
and below) will experience interference unless specific ly funded through public revenues, to equipment sup-
technical limitations are imposed to mobile services. pliers, service providers, and consumers. (See the
These technical limitations could include power limita- experience of the US and South Africa in Section 5.4.)
tions, restrictive spectrum masks, and guard bands, for
example.
Chapter 5 169
The political decision is then followed by decisions become available for other uses, especially for
that should directly support the goal of efficient and wireless broadband. The incremental value of
effective exploitation of the Digital Dividend. Who using the Digital Dividend spectrum for wireless
makes these decisions will depend on the legislated broadband across the EU is estimated to be be-
powers and roles of various authorities within the regu- tween EUR 150 – EUR 200 billion. The Digital
latory framework. Dividend could allow Europe to extend its leader-
ship in electronic communications services,
Table 5.3 matches decisions with stakeholders. creating growth and jobs, increasing productivity
and giving greater access to broadband services
The ITU has recently prepared Guidelines for the for all Europeans."30
Transition from Analogue to Digital Broadcasting to faci-
litate the Digital Switchover and to leverage the Digital The European Commission refers to an estimate in
Dividend spectrum. These guidelines identify and dis- the value of the Digital Dividend that exceeds EUR 150
tinguish many technical considerations, such as the billion, which is about 2.2 per cent of the annual Euro-
main DTTB or MTV network elements.29 pean GDP for the total value of electronic communica-
tions services that depend on use of radio spectrum in
Section 5.5 – Regional Examples provides an over- the EU. Radio spectrum has an essential role as an
view of national experiences in migrating from ana- enabler for growth, as was pointed out in the i2010 in-
logue to digital radio and television broadcasting. As itiative. There are many complex steps and skills (which
well, a summary of best practices based on existing often go beyond the capabilities of regulators in devel-
models and internationally adopted policies appears in oping countries) that are involved in determining a
Section 5.4 – Best Practices. measurement of the value of Digital Dividend spec-
trum. Measuring this value requires the development
5.2.5 Economic Value and assessment of economic, financial, and infrastruc-
ture models; a deep understanding of local markets
5.2.5.1 Valuing the Digital Dividend and sectors such as education, banking and manufac-
turing and an understanding of the interaction of the
Europe has lead the way in studying the value of sectors with new technologies; assumptions about
the Digital Dividend in member economies, believing technology choices; and the impact of the Digital Divi-
that harmonization efforts at a National and European dend on incomes, employment, investment in new
level can help to achieve significant benefits. technology, growth in productivity, etc. Development of
robust models and determination of reliable estimates
"As a result of the switchover from analogue to play a central role in deciding how best to use the Digi-
digital TV, tremendous spectrum resources will tal Dividend.
Table 5.3: Digital Dividend Decisions and Stakeholders

Required Decision Entity/Stakeholders
Analogue Shut-off Essentially a political decision taken by the political authority (the legislature),
likely led by a ministry or a regulator
Digital Dividend – Size and Allocations A complex set of issues combining economic, social, and technical considera-
tions with a critical need to coordinate and harmonize results ensuring max-
imum benefits. The process and decisions are best suited for entities
primarily responsible for policy assessment and policy setting, aided by tech-
nocracy and user input (through public consultation processes, etc.).
Technical Standards Requires decisions and collaboration amongst regulatory agencies.
Interference Management Best suited to the spectrum management agency.
Source: McLean Foster & Co.
170 Chapter 5
Box 5.4: Technical Considerations in Implementing DTT

1. Television presentation formats: for DTTB platforms either Standard Definition Television (SDTV) and/or High Defi-
nition Television (HDTV) and for MTV platforms a minimum bit rate per service;
2. Transmission standard: for DTTB platforms e.g. DVB-T or ATSC and for MTV platforms DVB-H or T-DMB;
3. Compression technology: for DTTB platforms MPEG2 or MPEG4 and for MTV platforms e.g. H264/MPEG-4 AVC or
open;
4. Conditional Access (CA) systems and Digital Rights Management (DRM): interoperability between deployed systems
for respectively DTTB and MTV platforms;
5. Application Programming Interface (API) for additional and interactive services: for DTTB platforms e.g. MHP or
proprietary and for MTV platforms specific technical requirements to support integration between broadcast TV
and 3G mobile TV networks.
Source: ITU, Guidelines or the Transition from Analogue to Digital Broadcasting, May, 2010,
www.itu.int/publ/D-HDB-GUIDELINES.01-2010/en.
Significant estimates of the economic value of the scale. Careful consideration is needed in setting stan-
Digital Dividend in the EU have been made and are pro- dards in order to balance the pros and cons affecting
vided in Table 5.4. local market dynamics.
An excellent example of the value of Digital Divi- At present, there are two basic models for harmo-
dend spectrum determined by market based methods nizing standards in an efficient manner:
is the 700 MHz Digital Dividend spectrum auction com-
• Mandating single technologies and standards: this
pleted by the FCC in 2008 which raised over USD 15 bil-
model delivers full harmonization and most poten-
lion. The auction determined a spectrum price for the
tial for reaping the benefits of economies of scale
spectrum. It did not determine the value of Digital Divi-
and interoperability, or
dend spectrum in terms of overall benefits to the econ-
omy such as the range of estimates depicted below in • Letting the market decide how services will devel-
Table 5.4. op; this approach ensures maximum choice for
consumers.
5.2.5.2 Harmonization
When regulators set standards for services, they

aim to achieve interoperability to gain economies of
Table 5.4: Estimates in Value for the Digital Dividend

Use Assumptions Valuation
Digital Terrestrial Television Six DTT multiplexes in each Member State requiring Between EUR 130 Billion and
48 MHz when using National SFN's (8 MHz channels EUR 370 Billion discounted over
per SFN) and 384 MHz when using MFN's (64 MHz 15 yrs.
spectrum channels per multiplex).
Mobile Television One multiplex using either 8 MHz per SFN or ap- Between EUR 2.5 Billion and
proximately 48 MHz for an MFN. EUR 25 Billion discounted over
15 yrs.
Wireless Broadband Use of a 72 MHz sub-band within the 470-862 MHz Between EUR 50 Billion and
band for wireless broadband services. EUR 190 Billion discounted over
15 yrs.
Total Between EUR 182.5 Billion and
EUR 585 Billion discounted over
15 yrs.
Source: Exploiting the Digital Dividend – a European Approach, Analysis Mason, DotEcon, Hogan & Hartson, 2009.
Chapter 5 171
Box 5.5: Harmonization principles in migrating to DTT

It can be concluded that, in most cases, the Regulators seek to strike a balance by not prescribing or recommending tech-
nologies/standards for all system/network elements but only for selected elements.
• For example, the Regulator prescribes the transmission standard (e.g. DVB-T) but leaves the television presentation
format (either SDTV or HDTV) for the market to decide, defining a minimum set of standards and leaving room for
entrepreneurship in developing new services.
• The Regulator does not lay down standards for all multiplexes but only for a selected number of multiplexes. For
example, the Regulator prescribes one multiplex to be operated on the basis of the DVB-H transmissions standard
(for the provision of a MTV service) and leaves the rest of the available multiplexes technology neutral.31
Source: ITU, Guidelines or the Transition from Analogue to Digital Broadcasting, May, 2010,
www.itu.int/publ/D-HDB-GUIDELINES.01-2010/en.
There is strong pressure to adopt both models in harmonization leads to fragmented markets, espe-
some capacity since both of the above models have a cially for small home markets.
downside:
The Guidelines for the Transition from Analogue to
1. Mandating of technologies and standards – picking
Digital Broadcasting developed by the ITU are helpful in
a winner by regulation – involves the risk that the
providing guidance on the extent to which standard de-
wrong standard will be selected, which would have
finitions should be flexible, demonstrating the balance
serious consequences such as hampering innova-
between prescribing standards and allowing the market
tion, impairing service roll out, and reducing tech-
to determine them (see box 5.5).
nology take-up. Unfortunately, this problem has
occurred often enough to consider this is a high risk.
With respect to standards, the Guidelines offer use-
2. A lack of harmonized standards increases the risk ful references to technology regulation best practices in
of favouring first-movers (e.g. those acquiring a li- countries where the Digital Switchover has already tak-
cence first) and technology-led market power. en place or is imminent. Table 5.5 illustrates the similar-
Once such market power is established, regulation ity of choices made by regulators in various countries.
can be imposed only by bearing high costs (e.g. for
expropriating investors). Moreover, absence of
Table 5.5: Choices in Technology Regulation

Country TV Presentation Transmission Compression Additional
Format Standard Technology Services
Belgium Neutral S Neutral Neutral

Denmark R S Neutral Neutral
Finland Neutral S Neutral Neutral
France S S S Neutral
Germany Neutral S Neutral Neutral
Rep. of Korea S S S Neutral
UK Neutral S Neutral Neutral
US S S Neutral Neutral
R=Recommended
S=Stipulated
Source: ITU – Guidelines or the Transition from Analogue to Digital Broadcasting, p. 1732
172 Chapter 5
It is worth noting that with respect to compression Spectrum has traditionally been managed in an
technology, MPEG2 or MPEG4, there is complete administrative way with regulations detailing who can
agreement on an approach that remains neutral and use spectrum, for what, and how. As scarcity of spec-
that does not require the adoption of one or the other trum has increased with the advent of new technolo-
compression technology. However, it should be noted gies and services (see section 5.2.2 above), approaches
that, as time goes on, this issue will become increasing- to spectrum management have been changing. This is
ly moot as the assumption of HDTV television formats now more emphasis on market mechanisms and flexi-
become widely accepted. bility for users and less resort to regulation.
5.3 Policy Options Related to the Choosing a market-led approach to the Digital Divi-
Digital Dividend dend reflects a wider strategy for spectrum manage-
ment that involves reducing regulation and making
Policies to promote ICT access and innovation and more use of market mechanisms. However, there is in-
to contribute to development are commonly shared by creased risk of market failure: the risk that markets
ITU Member States. This section describes important might not deliver the best outcome for citizens and
policy considerations. How these goals and objectives consumers in all circumstances. One key concern in
translate into practical approaches to handling the Digi- considering the risk of market failure is coordination of
tal Switchover and the Digital Dividend can differ due to the demands of a large number of small users, i.e. indi-
varying geographical, cultural, social and economic fea- viduals and local broadcasters in a market test of one
tures of each country. service versus another or in gaining access to spectrum.
Measuring social value is another concern since some
5.3.1 Market-Led or Regulatory Intervention? services may provide greater opportunities for growing
participation in civil society. The assessment of the ap-
Several approaches exist to determine how many proaches comes with cautionary guidance: a decision
services and what technology options should be chosen to not intervene because the economic value of the
for the use of the Digital Dividend. Regulators can Digital Dividend exceeds broader social value does not
choose between market-led approaches and regulatory mean that the presence of broader social values is un-
intervention. Even in highly liberalized markets that al- important.
low for more flexibility through service and technology
neutral licensing, policy makers and regulators usually If a decision to intervene is made to set aside spec-
consider social, cultural and developmental objectives. trum, what potential value is lost? For example, such a
Simply put, there are trade-offs between economic and decision may result in the loss of the opportunity of
value considerations and access to broad forms of me- universal access to mobile broadband services. To an-
dia and content. swer this question and to address concerns properly
requires a clear analytical framework where the poten-
Under a market-led approach, the national spec- tial benefits and the potential costs of intervening are
trum manager releases the spectrum in a way that considered and measured. The framework should in-
permits the widest possible range of technologies and clude opportunities for consultation with stakeholders
services to be deployed. It is left to the market to de- and consumers. An example of framework used by one
termine how the Digital Dividend should be used. This regulator appears in Figure 5.10.
allows more flexibility for users to change the use of
spectrum over time, reflecting changes in technology The key question for the allocation of the Digital
and the preferences of citizens and consumers. Dividend appears to be what is the best way of maxi-
mising the total value to society and what are the
The interventionist approach, by contrast, places trade-offs. Assessing the trade-offs is important in con-
regulatory limits on the way that the Digital Dividend sidering whether to intervene or allow markets to de-
spectrum can be used. This approach selects particular termine how the Digital Dividend is to be used. The UK
uses or users by reserving spectrum for them and/or regulator, Ofcom, has suggested a framework for help-
excluding others from gaining access. ing with assessing the two approaches. The Ofcom
framework appears in Figure 5.11.
Chapter 5 173
Figure 5.10: Total Value Framework
KEY: Consumer interest Citizen interest Consumer and citizen interest
TOTAL VALUE
PRIVATE VALUE EXTERNAL VALUE
Producer Consumer Broader social Other sources

value value & citizen value of external
value
Benefits 1) Access an inclusion

consumers 2) Quality of life
through 3) Educated citizens
innovation* 4) Informed democracy
5) Cultural understanding
6) Belonging to a community
* Producer value should be taken into account owing to the knock-on effect of innovation on consumer (and, in some cases,
citizen) value. However, consideration might need to be given to the weight given to producer value relative to consumer
and citizen value.
Source: Ofcom 2007, Digital Dividend Review.
Figure 5.11: Approach to Trading Off Market Led and Interventionist Approaches
Are there intervention Select appropriate

Risk of market failure What is the risk of
options that could intervention
identified regulatory failure?
remedy the failure?
Understand the Consider full range of Consider potential Either:

potential impact: intervention options: problems with
• Choose best remedy
remedies:
• identity source of • remedies consistent with lowest risk
market failure with a market led • are they an
approach effective solution? or:
• understand
magnitude of • remedies that • are there likely to • decide that
potential impact determine use and be unintended accepting risk of
so involve an consequences? market failure is
interventionist better than risk of
approach regulatory failure
Opportunity cost of spectrum affects:

• strength of evidence of market failure required
• degree of concern in relation to risk of regulatory failure
Source: Ofcom 2007, Digital Dividend Review.
174 Chapter 5
5.3.2 Universal Access case can be made that a balanced approach to promot-
ing growth, competition and innovation, as suggested
Universal access is a widely accepted core policy by the European Commission, should be sought be-
goal that contributes to sustainable growth by ensuring tween the two highest value uses, namely DTT and
access to key services at a low cost to as many as possi- wireless broadband.35 The 2008 European Economic
ble. Education and healthcare are two chief areas of Recovery Plan published by the European Commission
social inclusion. Universal access to ICTs helps in devel- at the height of the financial crises identifies high-speed
oping digital skills necessary in a modernizing economy Internet connections as powerful means of promoting
and brings modern effective healthcare to isolated re- rapid technology diffusion that in turn creates demand
gions and communities. Universal access has tradition- for innovative products and services.36
ally meant access to telecommunications and
broadcast services, sometimes in the form of public se- The European Broadcast Union has steadfastly
curity and emergency broadcast. Access to broadband promoted the idea that preservation of TV channel
has entering the equation of universal access only re- provisioning is needed to support DTT becoming a vi-
cently. able competing platform.
The use of Digital Dividend spectrum to meet uni- The terrestrial broadcasting platform
versal access goals such as access to wireless broad- represents a unique combination of elements
band is an important policy consideration. However, such as technical excellence and efficiency,
the likely importance of terrestrial TV in developing favourable coverage and service characteris-
countries as an inexpensive means to distribute news, tics, flexibility, market success and wide sup-
culture and entertainment to the broad public cannot port across the industry as well as by the
be overlooked. public in most European countries. It serves
equally well public service broadcasters and
The 2002 European Commission Universal Service commercial broadcasters as well as many
Directive requires national governments to periodically other players in the value chain. As a result
review which services are to be included in the bundle the terrestrial broadcasting platform gene-
of universal access services. Countries such as the Re- rates significant social and economic benefits.
public of Korea and Canada33, as well as a number of It would be very difficult to replicate such a
developing countries as varied as Kazakhstan, Malaysia, powerful mixture on another platform37.
Nigeria and Sri Lanka,34 have either mandated or are
considering altering the conventional policy view of The Total Value Framework illustrated in Fig-
universal access and including access to broadband ure 5.10 shows how economic and social considera-
services. tions can be combined to facilitate the analysis needed
to determine which approach is best suited to deciding
5.3.3 Growth, Innovation and Competition how to use the Digital Dividend in the most effective
and efficient way. Section 5.2.5 – Economic Value out-
The benefits of increased spectrum efficiency are lines how economic tools can be used to determine the
widely accepted to include promoting growth, innova- comparative value of spectrum in different uses in or-
tion, and competition derived from liberalized and der to help answer the fundamental question for regu-
more flexible spectrum use. In general, improvements lators: how to maximize the benefits to society from
are gained because: the use of the Digital Dividend spectrum.
• existing users are motivated to make better use of
5.3.4 Public Safety Requirements
their spectrum;
• the true value of spectrum is revealed; Taking a co-ordinated approach to communications
• new entrants stimulate competition in downstream standards and interoperability is necessary to ensure
markets; and efficient future use of government resources and relia-
ble communications under adverse conditions. Deci-
• new services are adopted more quickly and cheap- sions to use spectrum for public protection and disaster
ly through innovation. relief purposes (PPDR) usually take place at the national
level and comprise values more akin to public goods
Keeping these considerations in mind is important than commercial or private goods (although not exclu-
when determining how to use the Digital Dividend. A
Chapter 5 175
sively public). The benefits of a coordinated approach • Allowing existing users to share the spectrum;
are seen as:
• Assigning whitespace spectrum to a band manager
• ensuring that the technological, operational, and who manages the spectrum for users; and
organizational benefits of collaborative operation
• Choosing between market based and administra-
can be maximized by all PPDR agencies in central
tive assignments.
and local governments, and
• the strengthening of effectiveness and the im- Study will be necessary and consultation with
provement of the resilience and reliability of the stakeholders should be done in every case to commu-
systems deployed. nicate how technology may affect whitespace spectrum
in certain locations and to obtain input into decisions
In Europe an effort has been made through the Eu- on appropriate options and strategies.38
ropean Conference of Postal and Telecommunications
Administrations (CEPT) to harmonize an approach for a The experience of some European countries is
public safety allocation in the 470-862 MHz band. In summarized in Box 5.6.
this case, as in others, even if a public safety network is
considered valuable it is important to consider the op- 5.4 Regional Experiences
portunity cost of displacing other services.
In this section, examples from each of the three re-
5.3.5 Economies of Scale and Interoperability gions of the ITU are given with respect to how the digi-
tal switchover has taken place or is planned; examples
It is generally accepted that economies of scale in of the tools and mechanisms adopted in each of the
ICT equipment manufacturing and interoperability three regions to facilitate the transition and use of the
translate into lower costs to consumers leading to uni- Digital Dividend are also provided.
versality of service access. Economies of scale are aided
by common radio frequency allocations and common 5.4.1 Region 1
technical standards. Strong linkages exist between in-
creased usage and penetration and economic growth. 5.4.1.1 European Union
The policy concern revolves around several service In Europe, a crowded place, the nature of terrestri-
and allocation options or scenarios that may be consid- al broadcasting signals requires careful planning of fre-
ered for DTT, broadband or other services. For example, quencies. The ITU Regional Radiocommunication
of three options considered by the EC, the option creat- Conference (GE06) establishes detailed allotments for
ing the highest probable value involves broadband in each country based on the prospect of digital transmis-
the 790-862 MHz sub-band and DTT in the remainder sion replacing the analogue television regime adopted
of the 460-790 MHz band. The recommendation for in 1960. Within the European Union, the latest date for
policy makers is to carefully consider various options analogue switch-off is 2012. GE06 leaves significant
while weighing consumer value and economies of scale. scope for flexibility in implementing the plan. First,
there is a high degree of flexibility regarding the loca-
5.3.6 Using Interleaved (whitespace) Spec- tion of transmitters within the service area and inter-
trum ference envelope in the plan. Secondly, a declaration
was signed that permits services other than broadcast-
The first step in determining whether it is feasible ing, provided they do not cause interference to allotted
to use whitespace spectrum involves knowing the ex- broadcast frequencies and will not receive any protec-
tent to which whitespace spectrum exists in a geo- tion from interference beyond what would be granted
graphic area. There are several options for the use of for broadcasting use.
whitespace spectrum:
• Allowing the use of unlicensed devices;
• Assigning whitespace spectrum to local broadcast;
176 Chapter 5
Box 5.6: Amount of free interleaved spectrum in the US, UK and Italy
In the US, a recent study concludes that urban and sub-urban areas in addition to rural areas could derive substantial benefit
from whitespace spectrum. They conclude that overall, the opportunity provided by TV whitespaces is “potentially of same
order as the recent release of “beachfront” 62 MHz of 700 MHz spectrum for wireless data service”. In an era and in a coun-
try stretched for spectrum, this is a sizeable market opportunity and one which industry is keen to exploit.
After the Digital Switchover in the UK, interleaved spectrum exists at 248 MHz. But the amount of interleaved spectrum in
any given location depends on whether both adjacent channels are required to be free.
120%
Conservative
Locations with > x-axis amount of spectrum
Optimistic
100% Adjacents free
80%
60%
40%
20%
0%
0
16
32
48
64
80
96
112
128
144
160
176
192
208
224
240
Free spectrum (MHz)
Similar estimates have been produced for Italy, where switchover has already been completed, by population density, with
both conservative and optimistic projections.
100,0%
90,0% Optimistic
% pop. with white spaces > abscissa
Conservative
80,0% Adj Free Opt.
70,0% Adj Free Cons.
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0%
0 50 100 150 200 250
Free Spectrum (MHz)
Source: How much white space capacity is there? Harrison et al, 2010, IEEE DySPAN 2010; Guido Riva, Ugo Bordoni Foundation.
Chapter 5 177
The view of the European Commission is that the events (PMSE). Channel 69 was assigned on a national
spectrum making up the Digital Dividend is currently licensed basis for PMSE.
highly fragmented into relatively narrow bands, scat-
tered over many frequencies, and intertwined with dig- In 2008 and 2009, Ofcom determined that, since an
ital broadcasting channels. increasing number of European countries were identi-
fying a Digital Dividend in the 800 MHz band (which is
These circumstances are a consequence
different from the UK), it was important to align with
of regional spectrum planning options
adopted at the ITU Regional Radio- the European approach. In Ofcom’s view, such an
communication Conference, which pro- alignment would allow the UK to derive benefits from
duced an international plan, the Geneva international economies of scale in equipment manu-
2006 agreement, on the basis of tradi- facture and from having fewer restrictions on how the
tional broadcasting use. Some flexibility spectrum could be used, particularly for the next gen-
is provided in the Geneva agreement to eration mobile broadband services. However, refarming
open up the spectrum to other uses. the 800 MHz band and clearing it of existing and
However, this flexibility is limited under planned authorized users (a significant number of digi-
the existing technical conditions and, in tal terrestrial television transmitters and an overwhelm-
practice; the current situation is not ing majority of wireless microphones) were necessary.
conducive to the allocation of this spec- The costs and benefits of clearing the 800 MHz band
trum to more efficient alternative were examined and a consultation document was pub-
uses.39 lished in February 2009.41 It was determined that signif-
icant net benefits, conservatively estimated at
In 2007, the European Commission adopted a £2-3 billion in net present value, would result. Accor-
Communication COM(2007)700 that describes the na- dingly, in 2009, Ofcom decided to clear the 800 MHz
ture and opportunities of the Digital Dividend and that band. In August 2010, it issued a statement that the UK
demonstrates the added value that can be derived Government had decided to provide new spectrum li-
from a common approach at EU level. Within Europe, cences in another band and partial equipment re-
France, Sweden, Finland, Germany, and Switzerland placement funding to Channel 69 programme-making
have already decided to use the sub-band for Mobile and special event licensees using a formula that, on av-
Services. Those countries have already started very in- erage, provides 55 per cent of the replacement cost for
tensive coordination meetings to liberate the new equipment.42
790-862 MHz sub-band from broadcasting services. In
other countries like Austria, Czech Republic, and Ire- 5.4.1.3 Germany
land, spectrum regulators have opened consultations,
and decisions will be taken very soon. The analogue shut-off of terrestrial broadcasting in
Germany was completed nationally at the end of 2008.
5.4.1.2 United Kingdom In July 2009, broadcast radio spectrum for fixed and
mobile services in the frequency range for the Digital
The UK Government decided in 2003 to create a Dividend (790-862 MHz) was released by amending the
Digital Dividend of 112 MHz from 368 MHz of spectrum frequency allocation ordinance with the agreement of
used by analogue terrestrial broadcast leaving 256 MHz the federal states. Bundesnetzagentur (BNetzA), the
for transition to DTT. The Digital Switchover began in German regulator, conducted a large mobile frequency
2008 and will be completed by 2012. auction, including Digital Dividend frequencies, in May
2010. Existing mobile operators, as well as new parties
In 2007, Ofcom concluded a Digital Dividend Re- such as cable network operators, infrastructure opera-
view40 that included a consultation with stakeholders tors and wholesalers were involved to participate in the
on how to allocate and award the Digital Dividend. Digi- bidding. The frequency package generating the most
tal Dividend spectrum is to be assigned using auctions interest was a block of 60 MHz of so-called Digital Divi-
and packaged in such a way as to permit the maximum dend spectrum in the 800 MHz range, which was di-
number of uses. It was not reserved for mobile or vided into six blocks of 2x5 MHz each.
broadband uses. Ofcom also decided to continue per-
mitting the use of interleaved spectrum (the frequen-
cies used by terrestrial television and shared by low-
power application) for programme-making and special
178 Chapter 5
5.4.1.4 France cent of the population was to have coverage by 2010;

and 100 per cent was to have coverage by 1 November
Whereas Germany completed analogue shut-off in 2011. 44 However, The Independent Communications
2008, France continues to phase in the Digital Switch- Authority of South Africa (ICASA) has recently indicated
over with the deployment of Digital terrestrial TV that South Africa’s switch over to digital terrestrial tele-
(DTTV). By January 2010, it covered 89 per cent of the vision (DTT) will be delayed until at least 2013. ICASA
population of Metropolitan France.43 National free-to- cites lack of availability of locally manufactured set-top
air broadcasters are required by law to cover 95 per boxes and delays in promulgating regulations as the
cent of the population by November 2011. Further- reasons for the postponement of the full Digital
more, in those départements where the coverage will Switchover.
be lower than 91 per cent of the population, CSA re-
quested that the broadcasters ensure operation of all As a means to achieve universal service and access
the sites that cover at least 500 inhabitants. Analogue to DTT, government policy established that basic set top
terrestrial TV is planned to be switched off as of 30 No- box prices would be set low and they would be sourced
vember 2011. from South African suppliers. The price for the set-top
boxes will be in the region of R800 each, and Govern-
Independent of each other, France and Germany ment is set to subsidize poor households to the tune of
announced strategic orientations for the future use of R2.45-billion.
the Digital Dividend, in particular with the aim of open-
ing up the upper part of the Digital Dividend (the In July 2009, ICASA issued a statement indicating
800 MHz band) for wireless broadband and advanced that processes (including consultations) for freeing
electronic communication services. spectrum in the 790-862 MHZ range, which is required
for broadband purposes, would begin.
5.4.1.5 Africa
5.4.1.7 Kenya
Very few African countries have taken steps to be-
gin planning the launch of digital terrestrial TV (DTTV) Of the three possible approaches to digital switch-
platforms because there is limited consumer demand over (national switchover, phased in switchover and
for the service. Not many consumers have the neces- partial switchover), the Government of Kenya has cho-
sary disposable income to afford a subscription to sen a phased in approach, with analogue switch‐off tak-
DTTV, and many prefer other ICT services such as mo- ing place on a region by region basis. The
bile phones. Communications Commission of Kenya (CCK) believes
that the phased in approach has several benefits in the
It has been suggested by some that a better priori- Kenyan context:
ty for African regulators would be to focus on access to
• Firstly, the lessons that are learned in one region
broadband services given that the macro-economic ef-
can be applied in other regions to improve the
fects are relatively well understood and can be antic-
process;
ipated. It might make more sense for many African
countries to use any excess spectrum for the deploy- • Secondly, the released frequencies can be re‐used
ment of mobile broadband networks since spectrum in a neighbouring region in order to increase its dig-
below 900MHz is very well suited for rural networks ital coverage and expand the digital service offering;
because the favourable propagation characteristics of and
the band lead to reduced costs for wireless broadband • Thirdly, this approach allows the cost and effort of
roll-out. In other words, spectrum below 900MHz re- migration over time.
quires fewer base stations to connect more people.
Digital TV broadcasting will occur in the
5.4.1.6 South Africa 470-806 MHz frequency band. The CCK has adopted
the DVB-T standard for digital television broadcasting in
The switch-on date for DTT broadcasting occurred accordance with the decisions taken at RRC- 06. The
towards the end of 2008 whereas switchover dates for introduction of DVB-T standard for television broadcast-
analogue broadcast occurred in stages in an effort to ing service in Kenya is to be facilitated through licensed
minimize the costs of digital migration. Fifty per cent of signal distributors.
the population was to have coverage quickly; 80 per
Chapter 5 179
The key dates are: lined Spectrum Relocation Fund (SRF). The SRF provides
funding through which Federal agencies can recover
• Switch on of DTT and commencement of the si-
the costs associated with relocating their radio com-
mulcast phase commencing 30 August 2009;
munications systems from certain spectrum bands
• Simulcast phase continues to 30 June 2012; and where these frequencies were authorized to be auc-
• Analogue shut-off occurs on 1 July 2012. tioned for commercial purposes. The SRF provides the
regulator with a powerful tool to facilitate reallocation
5.4.2 Region 2 of certain services and users. The CSEA appropriates
such sums as are required for relocation costs, which
5.4.2.1 United States are financed by auction proceeds. In 2007, the CSEA
appropriated USD 1.008 billion from the Advanced
In the United States, the Federal Communications Wireless Spectrum (AWS) auction proceeds of USD 13.7
Commission (FCC) has been heavily involved with man- billion and these funds were allocated across 27 gov-
aging the transition from analogue to digital television. ernment departments and agencies. An annual report
Commencing with an FCC order in 2003, analogue tele- to Congress on the status of the fund, including appro-
vision broadcasters in channels 52-69 were directed to priations and distributions, is submitted by the US Of-
vacate the 698-806 MHz band and only operate DTV in fice of Management and Budget.
channels 2-51 (500-600 MHz). The switchover was orig-
inally scheduled for 17 February 2009 and provided for On 23 September 2010, as part of its National
an analogue-to-digital converter box subsidy. However, Broadband Strategy, the FCC approved a proposal that
the switchover was then delayed by the US Congress will enable mobile device manufactures to use whites-
through the DTV Delay Act since it was estimated that a pace portions of the television broadcasting spectrum
large number of households – about two million for unlicensed mobile broadband operations. The whi-
households – would be cut-off from television because tespace signal spectrum spaces were freed up as part
they were either unprepared for the transition or no of the United States’ transition from analog to digital
new signal would be available to them. The legislation television broadcasting.45
permits television stations to retain their analogue au-
thorization beyond the switchover date in markets 5.4.2.2 Canada
where household penetration of DTV reception equip-
ment is less than 85 per cent. In 2001, Canada began in earnest to study the Digi-
tal Switchover and began to coordinate plans, espe-
Nevertheless, to date about half of the UHF spec- cially with respect to cross-border public safety uses
trum was released by broadcasters after the switch-off with the United States, for use of frequencies in the
of analogue and was reserved as a Digital Dividend for 746-806 MHz range (Television Broadcasting Channels
redistribution to new services, mainly via technology- 60-69) once switchover takes place. Whereas the
neutral auctions completed in March of 2008. In addi- United States adopted a cut-over date of 2009, Canada
tion, regulatory plans are being considered to allow “in- has adopted a more “wait and see” approach and de-
telligent” devices to use the so-called “white space” of cided on a switchover date of 31 August 2011.
unutilized spectrum in broadcast coverage areas.
There were several factors influencing the decision
The FCC concluded the Digital Dividend auction of to adopt a “wait and see” approach:
the 700 MHz band on 18 March 2008; it issued 261 li- 1. According to many of the measures reported in the
cences for a total value of just over USD 19 billion. The Berkmann Centre comparative study of Next Gen-
auction also included 10 MHz of spectrum designated eration Connectivity, broadband penetration is lag-
as the D Block (public service spectrum) intended to ging in Canada and pricing is high for the lowest
provide sufficient bandwidth for a national broadband speeds46. Broadband got off to a flying start early
public safety network. This spectrum was not auctioned on, due in part to the presence of two sectors –
since bids failed to meet the minimum reserve prices. telecommunications and cable TV – that were both
eager to enter each other’s markets. These sectors
Another important feature of the US regulatory had been prevented from directly competing with
framework is the Commercial Spectrum Enhancement each other up to that point due to restrictions on
Act, which was signed into law in 2004 (CSEA, Title II of cross-ownership; there was therefore pent-up de-
P.L. 108-494). This Act created a centralized and stream- mand for broadband. However, penetration has
180 Chapter 5
stalled at 65 per cent and ranks in bottom quartile IMT, aligning with Region 2. China is to wait until 2015
of OECD countries. for the implementation of the analogue shut-off and
the realization of the Digital Dividend.
2. Spectrum supply seems to be adequate. Some sug-
gest that robust intra-modal competition is lacking
5.4.3.1 India
because there is little scope or incentive for new
entrants in either fixed-line telecommunications or
In August 2010, the Telecom Regulatory Authority
cable TV since in most geographic areas a cable TV
of India (TRAI) released a plan to implement the Digital
provider and an incumbent telecom operator al-
Switchover in phases, beginning in 2011 and concluding
ready exist. Foreign ownership restrictions are of-
by the end of 2013. There are four phases with each
ten cited as another impediment to increased
involving fiscal incentives to operators such as tax holi-
competition.
days and duty exemptions. The phases are as follows:
3. Similarly, some unfortunate choices concerning re-
• Phase I: commencing in 2011 with the four metro
gional licences, price structure, technology, and
areas of Delhi, Mumbai, Kolkata and Bangalore;
spectrum have meant that the mobile sector has
been poorly equipped and slow to move to 3G. The • Phase II: cities with a population of one million;
Advanced Wireless Services Auction concluding in
• Phase III: covering all remaining urban areas in the
July 2008 raised USD 4.26 billion for 105 MHz of ra-
country; and
dio spectrum for IMT services in the 2.1 GHz band.
As of 2010, most of that spectrum remains underu- • Phase IV: the rest of the country completed by
tilized. In other words, operators are not being 2013 December in the fourth phase.
pressured to obtain additional spectrum. This is in
contrast with the United States where the AWS India, along with China and others has identified
Auction in 2008 released 90 MHz which is highly the 698-862 MHz band for IMT.
used.
5.4.3.2 Republic of Korea
4. Regulatory processes are following the United
States that did complete an auction in 2008 of
The Korean Communications Commission (KCC)
60 MHz of Digital Dividend spectrum in
completed its action plan in 2009 to begin accelerating
746-806 MHz band in connection with the original
the progress towards DTV transition, which is set for
switch-off date of 17 February 2009. Canada has
2012. The KCC plan includes steps to conduct public in-
yet to determine firm dates for the auctioning of
formation campaigns and to conduct pilot projects to
700 MHz spectrum.
test elements of the transition strategy and hopefully to
reduce errors occurring in the transition itself. Some of
5.4.3 Region 347
the key steps in transition include new legislation and
regulatory changes:
The situation in Asia (Region 3) is quite different
than in other regions. Some countries have concluded • IPTV Act (2008) related regulations, and
their plans for the analogue switch-off, while others are • Special Law on DTV Transition and related regula-
only considering the possibility for switchover. There tions.
are several technical constraints in Asia. Though digital
terrestrial television services have been introduced in 5.5 Best Practices
some countries of the region, the services are based on
different standards (DVB-T, ATSC, ISDB-T, DMB-T), and In June 2010, there were just over 45 countries
all use different channels (6, 7 and 8 MHz). In contrast, planning for Digital Switchover and 15 countries that
in most cases a single standard (DVB-T) exists for GE06 have already completed the switchover. This provides a
countries. 48 Another constraint is that broadcasting rich source of experience to review and from which les-
channels are scattered on a non-contiguous basis sons may be drawn.
across the whole UHF band.
In this section, we review some of the best prac-
However, in an effort to harmonize the use of the tices used by spectrum managers when implementing
Digital Dividend across the region, China, Japan, New change. It is important to note that, based on experi-
Zealand, India and Singapore along four other countries ence, the best practices outlined below are not consis-
in the region have identified the 698-862 MHz band for tently applied.
Chapter 5 181
5.5.1 Spectrum Planning • It may be that the international table of frequency

allocations has changed, as in the case of WRC-07,
Spectrum planning has been at the centre of the resulting in the realignment of national table of
Digital Switchover and Digital Dividend. Few countries frequency allocations;
have sectors robust enough to afford market adjust-
• Demand for radio services may be changing and
ments that result in market failure. Some level of plan-
there may be more demand for mobile broadband
ning is required to ensure that at least the goals of
and less demand for traditional terrestrial TV; and
harmonized allocations and standards can be achieved.
The speed at which plans can be implemented depends • sometimes, new spectrum-efficient technologies
very much on the homogeneity of markets and the re- allow spectrum to be freed up, as in the case of the
solve of policy makers to move with determination. Digital Dividend
Clearly, the stakes differ by country. Some countries are
compelled by the desire to lead technology develop- Various approaches exist for re-farming. For exam-
ment and market development while others can only ple, in some cases featuring administrative approaches,
afford to adopt a wait and see approach. regulators address the issues; in other cases featuring
market-driven approaches, users determine the timing
5.5.2 Reallocation – Refarming Processes and price. Some approaches simply require the user to
(are they up to the task?) absorb the cost. In other cases, the beneficiaries of the
change are either invited or required to reimburse all or
The need for reallocation, often known as re- part of the transition costs of the incumbent user.
farming, can arise in several ways:
Figure 5.12: Status of Digital Switchover
Legend: Status of DSO Transition

Transition completed, all analog signals terminated
Transition completed for full power stations, not yet completed for low power stations
Transition in progress, broadcasting both analog and digital signals
Transition not yet started, broadcasting analog signals only
Does not intend to transition, broadcasting analog signals only
No information available
Source: Adapted from Wikipedia.org
182 Chapter 5
Reallocation and refarming of spectrum are activi- tant tools helping to properly frame the key questions
ties in many spectrum management organizations that of when to take a decision on how to best use the Digi-
continue to pose challenging issues with respect to es- tal Dividend? Examples of recent studies and evalua-
tablishing policy and procedures for governments, tions include:
regulators, and users alike. Key issues include deciding
• The European Union – Transforming the Digital
who pays and the amount that must be paid for reallo-
Dividend opportunity into social benefits and eco-
cation and refarming of spectrum. These issues trigger
nomic growth in Europe, July 2009,
all sorts of conflicts, some of which that escalate to le-
http://ec.europa.eu/information_society/policy/ec
gal challenges.
omm/radio_spectrum/_document_storage/consult
ations/2009_digitaldividend/2009_0710_0904_digi
Several tools exist and have proven to be effective
taldividendconsultation.pdf, and
including: Spectrum Refarming Funds (e.g., France and
the US); dispute resolution techniques; and, in some • Sweden – The use of radio spectrum following the
cases, methods for spectrum valuation to determine switch-off of analogue terrestrial television broad-
compensation. Nevertheless, policies and tools often casting,
do not provide clear paths to solutions for reallocation www.pts.se/upload/Documents/EN/Use_of_radio_
problems.49 spectrum_2006_35.pdf
5.5.3 Migration 5.6. Lessons Learned

Analogue shut-off is feasible. If properly managed, Setting the targets for analogue shut-off is a politi-
new services can be introduced and existing services cal decision and requires political leadership and politi-
migrated to new spectrum. The migration process be- cal unity. If properly managed, analogue shut-off is
gins with a political decision about the dates to shut-off feasible. The pace of the transition process can be ac-
analogue services. This is followed by regulatory deci- celerated where political leadership is strongly evident.
sions concerning standards and bands. Roles and re- Likewise, political unity across a region contributes to
sponsibilities for decision makers can be defined and accelerated implementation. Uniform and geographi-
allocated at various stages of the switchover process cally separated large states (Canada, United States and
(See Table 5.3.). The transition process has taken place Sweden) have been able to move more quickly. The EU
in enough countries to date to provide sufficient guid- has made significant progress given the size, number,
ance on what decisions should be mandated and what distinct differences between its member states, and the
decisions are best left in the hands of the market-place. explicit desire to allow for flexibility in implementation.
Furthermore, there are comprehensive guidelines A flexible approach has consequences. In Europe a
available to regulators interested in an in-depth discus- harmonized approach on how to use the Digital Divi-
sion of the topic.50 Finally some countries have used pi- dend is still lacking. Powerful interests (telecom opera-
lot studies to test migration strategies. (See tors and broadcasters) argue for different approaches
Section 1.4.3.2, the Republic of Korea and the 2009 An- and outcomes. These views and interests are pursued
nual Report of the Korean Communications Commis- through separate telecommunication and broadcast
sion.) processes. Eventually, the regulatory framework will
need to be adjusted to reflect converged markets.
5.5.4 Consultation and assessment of the
value of the Digital Dividend Where there has been progress in completing the
switchover quickly, it has occurred primarily due to lib-
The means of achieving greater spectrum efficiency eralized markets that are underpinned by economic
in order to contribute to policy goals such as economic considerations and focussed policy. Additional urgency
growth and competition lead to many debates on the is often tied to economic and commercial strategies to
economic value of the Digital Dividend spectrum in ex- achieve or maintain technology leadership. For devel-
isting uses such as television or in new uses such as oping countries, the switchover urgency is a less com-
wireless broadband. As a result, many regulators and pelling argument due to the continuing importance of
spectrum managers are beginning to conduct user sur- broadcast as media access technology. Early adoption
veys and studies to evaluate the demand for spectrum places a burden of high cost of converting on low in-
and to estimate the value of spectrum in various uses, come consumers. For regulators, choosing standards
including both new and existing uses. These are impor- early in the game can pose risks for the market and
Chapter 5 183
consumers. Delay can be viewed as a viable option Services are converging and in some countries tele-
when considering economies of scale and strategies to communication and broadcast companies are merging
promote local industry. capabilities. In both developed countries and develop-
ing countries people are accessing content using a va-
Implementation of the Digital Dividend spans near- riety of means. Regulators need to be careful in
ly two decades. The initial discussions amongst regula- choosing technical standards so that they do not be-
tors on topics such as spectrum supply and demand come obstacles to change. Interference, especially in
and technology change were pressing issues in the mid- relation to service neutral licensing, is an enormous
1990s. Countless resources have been expended in the problem. In deciding what services should use the Digi-
effort. It is not yet complete, as major challenges such tal Dividend spectrum, market and economic factors –
as interference management and harmonization of growth, innovation and efficiency – should be para-
standards and allocations remain unresolved. Still, re- mount while not ignoring social and development ob-
cent statements and pronouncements presage even jectives. Tools such as spectrum prices, spectrum
more effort and time to obtain new spectrum to meet valuation, and market-based assignments that incorpo-
demands and so the work must continue. There are rate market drivers are needed to resolve issues.
pressing requirements for new regulatory tools based
on more flexible and adaptive mechanisms in order to
facilitate more rapid change.
1
The author wishes to acknowledge Prof. Martin Cave for is valuable comments and suggestions on this chapter.
2
There are two very notable exceptions: fibre-optic cable and lasers are two commonly used analogue systems which continue to
decline in cost.
3
European Broadcast Union, Technical Review – Spectrum Management, October 2006, p.17.
4
UN Millennium Report 1999.
5
ITU World Telecommunication Regulatory Database.
6
Google Analytics.
7
Forrester, 2005.
8
OFCOM, Communications Market Studies, 2008.
9
Digital Audio Broadcasting.
10
OFCOM, Communications Market Studies, 2008.
11
Of course there are exceptions. In Germany where cable prices are high, cable subscriptions declined while Free to Air (FTA) user
increased in number.
12
PAL is the analogue television system used primarily in Europe. It was developed largely to improve upon deficiencies observed
in using NTSC for colour TV and in conjunction with the standard European 50 Hertz TV design.
13
SECAM is the analogue television used in France, Russia and former CIS countries and in parts of West Africa
184 Chapter 5
14
NTSC is the analogue television system used in most of North America, most countries in South America, Myanmar, Republic of
Korea, Japan, Philippines, and some Pacific island nations and territories (see map). The National Television System Committee is
the name of the U.S. standardization body that developed this broadcast standard.
15
ITU-D Q11/2 (2006-2010 study period).
16
The size of spectrum whitespace has been estimated to be as large as 100 MHz based on deployment of six DTT multiplexes.
This will vary depending on geography.
17
African nations signed the ST61 agreement in 1989.
18
www.itu.int/ITU-R/index.asp?category=study-groups&rlink=rcpm-wrc-12-studies&lang=en
19
See RR provision No. 5.2.
20
See RR provision No. 5.312.
21
European Broadcast Union, Using the Digital Dividend, 2009.
22
Acceptable quality can be offered if one 8 MHz channel accommodates five or six standard definition digital television (SDTV)
services (using the MPEG-2 compression system) or two or three digital high-definition television (HDTV) services (using MPEG-4
AVC). Most SDTV transmissions today are based on MPEG-2.
23
MFN’s refer to multi-frequencies networks which have typically been used in the past with analogue broadcast although they
are occasionally used in national DTT networks. Single frequency networks (SFN’s) are most often associated with spectrally effi-
cient and lower powered regional and local DDT network dedicated to providing identical content over the network on a par-
ticular channel.
24
European Commission, Exploiting the Digital Dividend – a European Approach, Analysis Mason, DotEcon and Hogan & Hartson
LLC, August, 2009.
25
LTE – Long Term Evolution is a further evolution capable of data rates up to 14.4Mbit/s using either Frequency Division Duplex
(FDD) or Time Division Duplex (TDD) profiles.
26
In 2008, the 700 MHz band auction in the US was the largest in its history collecting over USD13 billion.
27
Consumer interests stem from the fact that the costs borne by consumers in replacing existing devices may not be trivial.
28
Please add reference.
29
ITU, Guidelines or the Transition from Analogue to Digital Broadcasting, May 2010.
30
Please add reference.
31
ITU, Guidelines or the Transition from Analogue to Digital Broadcasting, May 2010, p.15.
32
The footnotes appearing in Table 2.1.1 of the Guidelines refer to the regulatory documents containing national decisions on var-
ious DTTB technical standards and have not been reflected in Table. 5.0.
33
Canada has launched in 2010 a program – Broadband Canada: Connecting Rural Canadians with targeted commitments to
achieving broadband access.
34
ITU Telecommunication/ICT Regulatory Database.
35
European Commission, Exploiting the Digital Dividend – a European Approach, Analysis Mason, DotEcon and Hogan & Hartson
LLC, August 2009.
36
European Commission, COM(2008), A European Economic Recovery Plan, November 2008, p.16.
37
European Broadcast Union.
38
Ofcom, 2010 – Digital dividend: consultation on potential uses of the 600 MHz band and geographic interleaved spectrum.
39
The European Commission, COM(2007) 700 Final – Reaping the full benefits of the Digital Dividend in Europe.
Chapter 5 185
40
Ofcom 2007, Digital Dividend Review.
41
Ofcom: Digital Dividend: clearing the 800 MHz band, Consultation, 2 February 2009.
www.ofcom.org.uk/consult/condocs/800mhz/800mhz.pdf.
42
Ofcom: Clearing the 800 MHz band Funding for moving programme-making and special events from channel 69, Statement,
5 July 2010.
43
European Commission: COM(2010)253 final/3,15th Progress Report on the Single European Electronic Communications Market,
2009.
44
In March of this year, Sentech, a SA manufacturer of set-top boxes, foreast that it would achieve 56% DTT population coverage
by 31 March 2011
45
www.fcc.gov/Daily_Releases/Daily_Business/2010/db0923/FCC-10-174A1.pdf.
46
Berkman Center for Internet and Society, Harvard University. Next Generation Connectivity: A review of broadband Internet
transitions and policy from around the world, February, 2010
(http://cyber.law.harvard.edu/sites/cyber.law.harvard.edu/files/Berkman_Center_Broadband_Final_Report_15Feb2010.pdf)
47
The ITU has financed a project being conducted by the Korean Communication Commission for the implementation of the DTT
in Asia Pacific and in Africa.
48
Although some countries have chosen to implement other standards, i.e., South-Africa selected ISDT-T.
49
The revised ITU-D Resolution 9 is expected to deal with the question of appropriate pathways to re-allocation solutions.
50
See e.g., ITU, Guidelines for the Transition from Analogue to Digital Broadcasting.
186 Chapter 5
6 THE ROLE OF ICT REGULATION IN ADDRESSING OFFENSES

IN CYBERSPACE
Authors: Marco Gercke, Director and Tatiana Tropina, Researcher,
Cybercrime Research Institute; and Christine Sund, Technical Officer and
Youlia Lozanova, Regulatory Analyst, BDT/ITU
6.1 Foreword1 tiple sectors and industries. Its crime scenes are in the
virtual world and evidence is typically electronic rather
In many countries around the world, information than physical in nature. The “neighborhood” where cy-
and communication technology (ICT) in all its forms has bercrime occurs is the global network and thus it is –
become a critical driver for growth and innovation. just like in the real world – impossible to contain or to
Breakthroughs in the development of ICTs and the in- monitor at all times. The diffuse and global nature of
novative use of these technologies and applications the Internet implies that many, including international
play a pivotal role in helping governments respond to a stakeholders must be involved in coordinated res-
number of unprecedented challenges, ranging from ponses to cybersecurity and cybercrime as criminals are
improving healthcare and education to addressing cli- able to exploit vulnerabilities in one area to attack users
mate change to dealing with natural disasters. In this in many other places. Moreover, because cybercrime
regard it is necessary to highlight that in many ways, stems from the use of evolving technologies, those
societies have become highly dependent on ICTs. With charged with policing cybercrime must be nimble
the growth in the number of private users and busi- enough to keep pace with a rapid element of change.
nesses relying on ICTs for the functioning of their eve-
ryday lives, ICTs should be seen as a critical part of In this context, traditional centralized models of
national infrastructures. This growing dependence on regulation – with the government at the top of hierar-
ICTs represents a major potential vulnerability as even chical decision-making structures – might not be the
brief interruptions to ICT-based services can cause sig- only solution for responding to cybercrime since mod-
nificant economic or social damage. As a result, as ern global digital networks have evolved beyond direct
countries’ reliance on ICTs increases, there is a growing governmental influence. The Internet has eroded old
awareness that cybersecurity and the fight against cy- models of division of responsibilities between govern-
bercrime must be taken more seriously. Given the link ment, private sector and civil society. In this regard, the
between ICTs and political, social, and economic growth, Internet requires the fight against cybercrime to be
cybersecurity and cybercrime are now being consi- based on multi-stakeholder involvement. This raises
dered as an important element in national develop- new issues and concerns with regard to the roles and
ment agendas. Drawing on the experiences of both responsibilities of various actors. Moreover, due to the
developed and developing countries, this chapter un- international nature of offenses in cyberspace there is a
derlines some of the major challenges and considera- pressing need for international harmonization of law,
tions. standards, and protocols and for cross-border coopera-
tion in investigating and prosecuting cybercrimes. At a
Many countries are currently in the process of de- domestic level, policy makers and regulators from dif-
veloping legal and regulatory frameworks for cyberse- ferent sectors must coordinate their activities, while
curity, including legislative frameworks for addressing legislators must work to close loopholes in existing na-
cybercrime. Because of its nature, addressing cyber- tional legislation that facilitate cybercrime. The tools
crime challenges traditional regulatory approaches and and actions required to respond effectively to cyberth-
criminal law paradigms. Cybercrime and offenses in cy- reats and to address cybercrime are evolving and must
berspace traverse national borders and impacts mul- be assessed within a wider context of national and in-
Chapter 6 187
ternational cross-sector approaches and collaborative laws and other resources are in place that criminalize
arrangements. the misuse of ICTs and to investigate, prosecute, and
punish offenders.
The urgent need to criminalize the misuse of ICTs
goes hand-in-hand with another trend – namely, the To provide context for the discussion, the first part
ongoing transformation of the traditional role of ICT of this chapter (Sections 6.2 and 6.3) provides an over-
regulators. Due to convergence and the rapid evolution view of the cyberthreat environment, gives a general
of ICTs, ICT regulators must now strive to address fac- introduction to cybercrime threats and challenges, and
tors that impede ICT development and undermine con- explains their relevance for ICT regulation. Section 6.4
sumer trust while creating an enabling environment for discusses the cybercrime ecosystem with a view to ex-
investment, fostering market growth, and ensuring digi- ploring the roles that different stakeholders have in
tal inclusion for all. As a result, many ICT regulatory au- fighting cybercrime and the position of the ICT regula-
thorities have found themselves involved in a range of tor in this multi-stakeholder environment. Section 6.5
activities related to tackling offenses in cyberspace. In outlines some regulatory approaches and tools to ad-
some cases, these activities involve new duties and re- dressing cybercrime. Section 6.6 explores in greater de-
sponsibilities, while other activities are direct expan- tail the roles that the ICT regulator may play and the
sions of normal tasks of the ICT regulator. From this contributions that the ICT regulator may make in the
point of view, fighting cybercrime can be seen as a part fight against cybercrime both at present and going for-
of the broader trend of moving from strictly centralized ward. Section 6.7 concludes.
models of regulation towards more flexible and non-
hierarchical structures. 6.2 Introduction to cybersecurity,
cyberthreats and cybercrime3
6.1.1 Purpose, scope and value of the chapter
6.2.1 What constitute cybersecurity and
Maintaining cybersecurity and responding effec- cybercrime?
tively to cybercrime requires cooperation and coordina-
tion among a wide variety of stakeholders both within The term “cybersecurity” refers to various activities
and between countries. In light of the importance of such as the collection of tools, policies, security safe-
the ICT sector and the threats posed by cybercrime, this guards, guidelines, risk management approaches, train-
chapter seeks to develop an understanding of the na- ing, best practices, and technologies that can be used
ture of the cybercrime ecosystem and to consider how to protect the cyber environment and the assets of or-
the mandates of ICT regulators are changing according- ganizations and users. These assets include connected
ly2. computing devices, infrastructure, applications, ser-
vices, telecommunications systems, and the totality of
The involvement of regulatory authorities in the transmitted and/or stored information in the cyber en-
fight against cybercrime is a relatively new trend, which vironment. Cybersecurity initiatives aim to protect the
is one of the reasons there is a basic lack of research on security of the assets of organizations and users against
the issue. This chapter seeks to contribute to filling that relevant security risks in the cyber environment.4 The
gap and to facilitate the discussion on the evolving roles growing number of initiatives launched by international
of ICT regulators in addressing offenses in cyberspace. organizations, national governments, and industry
It provides ICT regulators and other interested parties players is a sign of the importance of cybersecurity. To-
with examples of how regulators around the world are day enhancing cybersecurity and protecting critical in-
becoming involved in addressing cybercrime, together formation infrastructures are essential to each nation's
with some practical suggestions for how regulators may security and economic well-being. Making the Internet
address the challenges associated with this changing safer for both service providers and users has become
mandate. The growth in cybercrime globally is raising a integral to the development of new services as well as
number of challenges for regulatory frameworks that government policy.5
these frameworks were not initially intended to ad-
dress. It is hoped that the ideas presented through this With countries’ growing reliance on ICTs, cyberse-
chapter will assist countries in better understanding curity has risen to the top of some countries’ develop-
what steps need to be taken to put in place the neces- ment agendas. This trend goes far beyond the usage
sary regulations to effectively respond to these offenses. and reliance of private users and businesses. ICTs are
These steps include ensuring that a system of policies, increasingly used to manage critical national informa-
188 Chapter 6
tion and networks. The growing dependence on ICTs a country has policies, laws, and other resources in
makes critical infrastructures more vulnerable to at- place to criminalize the misuse of ICTs, as well as to in-
tacks, as even short interruptions to services can cause vestigate, prosecute, and punish offenders.
significant damage. For instance, in 2004, when the
“Sasser” computer worm affected computers running Once a country is connected to the global network,
versions of Microsoft’s operating system Windows, US- it is likely that the users become targets for cybercrime
based Delta Airlines had to cancel several trans-Atlantic and the network’s vulnerability increases as a result.
flights because its computer systems had been This is an additional reason for developing countries to
swamped due to the worm; the same worm also dis- attend to the issue of cybersecurity, particularly since
abled electronic mapping services of the British Coast- many such countries have focused on the deployment
guard for a few hours.6 The result of the first analysis of of advanced technical solutions such as of wireless
the Stuxnet computer worm, which was discovered in networks. Although wireless networks enable the im-
2010, highlights that the impact on critical infrastruc- plementation of affordable ICT solutions, using rela-
tures may not only be a side effect of the attacks but tively cheap technology and without huge
the key function of certain types of malicious software. infrastructure investments,10 they are also considered
generally more vulnerable to attack than wired net-
Cybersecurity is not only an issue for industrialized works. In addition, the vulnerability of developing coun-
nations that rely heavily on ICT infrastructure. It is an tries is heightened by the absence of legal and
important issue for developing countries. There is a regulatory frameworks to combat cybercrime; the lack
common misconception that developing countries have of an inherent culture of cybersecurity and awareness
too many basic “bread and butter” problems7 to worry among individual users and businesses; and inadequate
about (e.g., food and water supply, fighting traditional financial, technical and human resources. Ultimately, in
crime, poverty reduction, etc.), and thus do not need to light of the interconnectedness of ICT networks, the
attend to building a culture of cybersecurity or imple- vulnerability of developing countries in this regard
menting cybercrime legislation. Yet, the lack of appro- represents a global concern.11
priate regulation in the area of cybersecurity and
cybercrime can hinder these countries from reaching Although the term ‘cybercrime’ is used to discuss
fundamental development goals and risks opening a the issue of cybersecurity in the broader context, a
new gap between developed and developing countries clear line between cybersecurity and cybercrime can be
and creating what could be termed as “the cybersecu- drawn. ‘Cybercrime’ is often defined as criminal acts
rity divide”. This potential gap can deepen the digital committed within computer networks, by the means of
divide, undermine other efforts put in place to facilitate computer networks, or against them,12 while the term
economic and social development, and, as a result, ‘cybersecurity’ refers to as a complex set of measures,
open a new schism “between (the) haves and have tools, policies and concepts to prevent cybercrime and
nots”.8 related offenses. Deterring and preventing cybercrime
can thereby be seen as an integral part of a cybersecu-
Deploying ICT infrastructure and establishing an ac- rity and critical information infrastructure protection
cess point to global telecommunications networks strategy. However, analysis of cybercrime focuses the
should be accompanied by measures to make these investigation and criminalization of certain offenses, as
networks secure, resilient, and robust. In addition, well as their prevention and deterrence, while cyberse-
promoting awareness amongst consumers about the curity includes topics that extend beyond merely fight-
threats that accompany the use of ICTs9 and developing ing cybercrime. Moreover, cybersecurity deals with the
appropriate legislation are necessary components of organizational, technical and procedural aspects of pro-
ICT infrastructure and services rollout. Developing tecting the integrity of ICT networks against attacks,
countries need to address the call for international so- such as developing less vulnerable technologies.13
lutions to fight cybercrime. Unless this is considered in
conjunction with the deployment of new technologies, The legal, technical and institutional challenges
developing countries might find themselves confronting posed by threats to cybersecurity and cybercrime are
the problem of being safe havens for cybercriminals global and far-reaching and can only be addressed
and unable to protect Internet users within their terri- through a coherent strategy. In this regard, the ITU Sec-
tory, in addition to dealing with ‘bread and butter’ retary-General launched the Global Cybersecurity
problems. Putting in place the necessary framework to Agenda (GCA)14 on 17 May 2007, alongside partners
take action against cyberthreats includes ensuring that from governments, industry, regional and international
Chapter 6 189
organizations, and academic and research institutions. national investigations is an immediate reaction of their
The GCA establishes a global framework for dialogue counterparts in the country where the offender is lo-
and international cooperation with seven main strate- cated.22 Traditional instruments of mutual assistance do
gic goals15, built on five work areas: not, in most cases, meet the need for speedy action re-
quired by investigations dealing with the Internet.
• “Legal measures” focuses on how to address the
legislative challenges posed by criminal activities
Creating a criminal law framework for addressing
committed over ICT networks in an internationally
cybercrime must be complemented by other measures.
compatible manner.
The ICT sector is highly decentralized, and responding
• “Technical and Procedural Measures” focuses on effectively to cybercrime requires a decentralized ap-
key measures to promote the adoption of en- proach. As a result of the shift from monopoly to com-
hanced approaches to improve security and risk petition, ICT infrastructure is owned and operated by a
management in cyberspace, including accreditation diverse group of service providers and private infra-
schemes, protocols, and standards. structure owners. The interdependence between the
• “Organizational Structures” focuses on the preven- providers of backbone services and the providers of
tion, detection, response to and crisis management dependent services is increasing. Moreover, peer-to-
of cyberattacks, including the protection of critical peer technologies allow millions of end-users of ICTs to
information infrastructure systems. become service providers in their own right allowing
them to share music or any other files.23 Centralized
• “Capacity Building” focuses on elaborating strate- approaches to cybersecurity alone cannot be effective
gies for capacity-building mechanisms to raise in such a decentralized network environment. An effec-
awareness, transfer know-how, and boost cyberse- tive cybersecurity strategy therefore requires a com-
curity on the national policy agenda. prehensive approach that includes engaging a variety of
• “International cooperation” focuses on interna- different stakeholders in the task of protecting and
tional cooperation, dialogue, and coordination in maintaining the integrity of global ICT networks.
dealing with cyberthreats.16
Deterring cybercrime extends beyond the imple-
The GCA notes that the development of adequate mentation of an appropriate criminal law and enforce-
legislation is an essential part of a cybersecurity strat- ment framework; it can include preventive measures,
egy. This requires first of all the necessary substantive as well as self-regulatory and co-regulatory approaches.
criminal law provisions to criminalize acts such as com- Although the adoption of appropriate legislation
puter fraud, illegal access, data interference, and child against the misuse of ICTs for criminal purposes is one
pornography.17 The fact that provisions exist in a coun- of the most important prerequisites to building cyber-
try’s criminal code that are applicable to similar acts security, at the national level, a cybersecurity strategy
committed outside the network does not mean that should be considered a shared responsibility among
such provisions can be applied to acts committed over policy makers, regulators, the private sector, and citi-
the Internet.18 Therefore, a thorough review and analy- zens. There must be coordinated action related to pre-
sis of current national laws are vital to identifying any venting cybercrime and preparing for, responding to,
possible legislative gaps. and recovering from cybersecurity incidents.
In addition to the need for appropriate substantive The development and sustainable functioning of a
criminal law provisions, law enforcement agencies re- country’s ICT network in general implies that the ICT
quire the necessary tools and instruments to investi- regulator has a central role to play with respect to cy-
gate cybercrime. Such investigations themselves bersecurity. In many countries, Internet consumer
present a number of challenges. Perpetrators can act safety and consumer protection24 have already become
from nearly any location in the world and take meas- an issue for the ICT regulator. Consumer protection, for
ures to mask their identity.19 The tools and resources example, has now broadened beyond quality of service
needed to investigate cybercrime are quite different issues to include protection from cybercrime.25 More-
from those used to investigate ordinary crimes. Fur- over, the end-users of ICT services are both targets for
thermore, as an increasing number of cybercrimes have cybercriminals and simultaneously a security risk to the
an international dimension,20 the legal framework must integrity of the network by acting as unwittingly entry
therefore also facilitate international cooperation. 21 points to the network for dissemination of malicious
One of the key demands of investigators handling trans- software, viruses, worms and the like. Indeed, end-
190 Chapter 6
users probably represent the principal security risk to 6.3 Setting the scene3
the network.26 ICT infrastructure and service providers
can safeguard most of the physical components of the 6.3.1 Offences in cyberspace
network, but they cannot guard against the potentially
destructive data and software placed on the network There is no single definition of cybercrime27 but
by end-users. ICT regulators are thus becoming increas- there are certain categories of offences that are linked
ingly involved with various activities associated with to it. Box 6.1 summarises the different categories of of-
cybercrime, including investigation, enforcement, pre- fences representing a growing concern for ICT regula-
vention and awareness raising. tors.
Box 6.1: Different types of cyber-offences

Illegal access
Illegal access is one of the most traditional offences, often associated with the term “hacking”.28 One example of such an
offence is the circumvention of a password requirement or other protection mechanism in order to access a system or data,
without authorisation. Following the development of computer networks, this crime has become a mass phenomenon.29
Data espionage
Data espionage refers to the act of obtaining data without authorisation. As sensitive information is often stored in com-
puter systems that are connected to networks, offenders can try to access this information remotely. As a consequence, the
Internet is increasingly used to obtain trade secrets.30
Illegal interception
With the increasing use of email in general and the use of wireless Internet access, often non-secured and un-encrypted, the
opportunities for illegal interception multiply.
Data interference
Data interference, like illegal access, involves attempts to destroy or alter data by inserting malware such as viruses or
worms, and is among the more traditional cybercrimes. Offenders can manipulate data to create backdoors through which a
computer can be accessed or controlled from outside or install spyware or key loggers, which record the keystrokes of users,
and send this information to criminals.
System interference
As with computer data, computer systems can be manipulated. The insertion of malware, as one type of system interfer-
ence, can affect the functioning of a computer system. Another example is a denial-of-service attack, where a massive num-
ber of requests or “hits” are sent to a computer system in order to hinder its operation. Such attacks can be committed
through powerful distributed botnets.31
Fraud and computer-related fraud
Fraud and computer-related fraud constitute typical offences related to cybercrime. Credit card fraud, advance fee fraud,
Internet marketing and retail fraud and auction fraud involving electronic auctions platforms over the Internet are just some
examples of fraudulent means of using the Internet and other technology.
Illegal content
The activities of criminals in disseminating illegal content range from making available child pornography and hate speech, to
running illegal gambling websites. The dissemination of illegal content such as instructions on how to make explosions or
organize terrorist attacks is also a serious concern.
Spam
Spam refers to the emission of unsolicited bulk messages. Today, e-mail provider organizations report that as much as 85 to
90 per cent of all e-mails are spam.32
Copyright violations
Copyright violations have moved online to sharing systems like peer-to-peer-based networks providing direct connectivity
between participants in networks instead of communicating over conventional centralized server-based structures. This en-
ables users to share files and data, often with millions of other users. File-sharing systems can be used to exchange any kind
of computer data, including photos, music, movies, software, and even sensitive personal documents.33
Identity-related crimes
While most thieves still obtain personal information through traditional rather than electronic channels34, this type of of-
fence represents a growing concern as more data, services, and transactions are moved to global networks.
Chapter 6 191
All the crimes outlined above either target end- 6.3.2 Challenges related to fighting
users or represent a threat to the normal functioning of cybercrime
ICT networks. Some of these offences such as fraud,
scams, spam, illegal or harmful content, especially con- There are unique challenges associated with inves-
tent related to child pornography, are recognised as be- tigating, prosecuting, and preventing cybercrime. Exist-
ing Internet security concerns for consumers. 35 ing approaches to regulating the ICT sector and to
Although many ICT regulators have responsibility for policing criminal activity are not well-adapted to the
consumer protection, they often do not have sufficient particular nature of cybercrime. These existing ap-
powers and resources to address these types of con- proaches have been designed to address issues in the
cerns, many of which are treated primarily as criminal “real” world, as opposed to the virtual world, and are
law, rather than regulatory, matters. Some of the generally country-specific, as opposed to the borderless
crimes also fall within the jurisdiction of other national nature of the Internet. This section outlines the main
regulatory bodies such as data protection agencies. challenges related to fighting cybercrime; strategies for
When various agencies have overlapping mandates re- addressing cybercrime must take into account these
lated to a certain type of crime, then these agencies issues.
must work together to coordinate their activities with
respect to the crime. For example, in the Netherlands, 6.3.2.1 Number of users
the ICT regulator OPTA cooperates with the Data Pro-
tection Authority on the issue of addressing spam.36 The popularity of the Internet and its services is
growing fast, with over 2 billion Internet users world-
The impact of various cyber crimes is different for wide by the end of 2010.41 In 2005, the number of
developed and developing countries. For instance, in Internet users in developing countries surpassed the
developed countries, spam is not only a nuisance but number in industrial nations.42 The rising number of
also poses a risk due to the malware and harmful con- Internet users poses a challenge for law enforcement
tent it can contain; spam also poses a threat to users’ agencies since there are literally millions of people who
privacy and to the security of users’ personal identities have the means and opportunity to perpetrate cyber-
through phishing and the like.37 Developing countries crimes. Developing a suspect list for a particular cyber-
face these same spam-related issues. However, in de- crime is thus very difficult given the potential number
veloping countries, spam represents a major problem of individuals who could be involved. At present, it is
for the general functioning and use of ICT networks, as difficult to automate the process of vetting suspects.
it constitutes a heavy drain on resources that are Thus, investigating who may be involved in a cyber-
scarcer and costlier in developing countries than else- crime is a labour-intensive and time-consuming process.
where.38 Due to the limited availability of Internet re-
sources, many users in developing countries rely on The large number of Internet users who do not
free, web-based email services with generous storage have a good understanding of how to protect them-
limits, which are particularly targeted by spammers. selves while on-line also poses a significant problem
The cost of receiving and deleting spam over low-speed with respect to preventing cybercrime. This lack of un-
lines, for which charges often accrue on a minute by derstanding is exploited by criminals.43 Those engaged
minute basis, also represents a significant cost for the in cybercrime prevention, consumer protection, and
users in developing countries. In essence, this means general awareness-raising, including ICT regulators, face
that the growing level of spam has the same overall ef- the challenge of educating an ever-growing number of
fect as a denial-of-service attack.39 Moreover, because users.
developing countries have less effective security meas-
ures and protection, computers on broadband net- 6.3.2.2 Availability of tools and information
works are often compromised and hijacked to send
spam and to perpetrate other undesirable activities. In There are ample materials available on the Internet
some cases, the emails of entire networks are rejected that provide guidance on how to commit various types
(“blackholed”) by recipients due to the failure of the of cybercrimes. Cyber criminals do not require in-depth
networks to deal with these problems.40 ICT regulators technical knowledge; they are able to commit a range
in a number of developed states have already become of cybercrimes by employing easy-to-use software de-
involved in addressing this problem at both the national vices and tools that are designed to locate open ports
and international levels. For stakeholders in developing or break password protection.44 This problem is com-
countries, focused capacity building is still needed. pounded by the fact that it is difficult to contain the
192 Chapter 6
availability of these devices and tools due to mirroring 6.3.2.3 Difficulties in tracing offenders
techniques and direct peer-to-peer exchanges.45 Thus,
virtually any computer user has access to the means It is difficult for law enforcement agencies to iden-
necessary to commit cybercrime. Moreover, in addition tify offenders who use public Internet terminals or
to specific software, potential offenders can find a open wireless networks. Offenders may also hide their
range of instructions on how to commit online as well identities by using anonymous communication ser-
as offline crimes on the Internet. “Googlehacking” or vices.47
“Googledorks”, for example, describes the use of com-
plex search engine queries to filter many search results
for information on computer security issues.46
Figure 6.1: Difficulties in tracing offenders
Offender:
124.23.133.4
Log File:
124.23.133.4
Forum
Offender:
124.23.133.4
214.187.3.9
Log File:
214.187.3.9
Forum
Offender uses
124.23.133.4
214.187.3.9
LEA
Forum
Chapter 6 193
In response to this challenge, some countries have offenders may deliberately include more than one
put in place procedures and measures to restrict the country in their attacks to make investigation more dif-
free use of public Internet access points. These kinds of ficult.54
preventive measures illustrate how cybercrime can in-
directly disrupt the facilitated availability of ICT tech- The international dimension of cybercrime has im-
nologies. This approach can be dangerous for countries, plications for the strategies adopted by ICT regulators
especially for developing states that are developing and to promote cybersecurity. Where the regulator has re-
promoting access to Internet technologies for consum- sponsibilities that relate to cybercrime, for example,
ers who do not have the opportunity to obtain Internet policing spam, the regulator will face the same sort of
access in any other way but through public points such challenges to effective enforcement experienced by law
as cyber-cafes, Internet access points in libraries and enforcement officials and intelligence agencies.55 Gov-
schools, etc. The real challenge for ICT regulation is to ernment actors, whether the ICT regulator, law en-
find a balance between strict preventive measures forcement officials, or intelligence agencies, face the
availability and access to Internet services. same critical issue: it is nearly impossible to ensure ef-
fective crime prevention within one country or one re-
6.3.2.4 Missing mechanisms of control gion due to the interconnectedness of networks.56 ICT
regulators must cooperate with agencies in other coun-
As is often pointed out, the Internet was originally tries when investigating cybercrimes, and therefore will
designed as a military information network48 based on face the same challenges related to coordinating re-
a decentralized network architecture designed to main- sponses to cybercrimes and the consequent time de-
tain functionality even when components of the net- lays as law enforcement officials and intelligence
work were attacked. As the Internet was not originally agencies.
designed to facilitate criminal investigations or to pre-
vent attacks from inside the network, undertaking in- The international nature of cybercrime also has
vestigations that require a centralized means of control implication for legislators. Governments must seek to
poses unique challenges.49 One example of the prob- harmonize national legislation, regulations, standards,
lems posed by the decentralized nature of the Internet and guidelines in order to create effective regional and
is the ability of users to circumvent filter technology50 international frameworks for fighting cybercrime. Cy-
by using encrypted anonymous communication ser- bercriminals often exploit inconsistencies in the legisla-
vices. Developing centralized mechanisms of control tive and regulatory approaches of different countries to
requires the cooperative participation of a range of avoid detection, prosecution, and conviction.
stakeholders at the national, regional, and international
levels in formulating cybersecurity strategy. 6.3.2.6 Independence of location and presence
at the crime site
6.3.2.5 International dimension
Another challenge for law enforcement agencies is
Cybercrime often has an international dimension. that cybercriminals do not necessarily need to be pre-
One consequence of the protocols used for Internet sent at the same location as the target. Offenders can
data transfers that are based on optimal routing is the therefore act from locations where there is a lack of ef-
fact that many data transfer processes affect more than fective cybercrime legislation or weak enforcement of
one country. Moreover, offenders do not necessarily such legislation, or both. Preventing “safe havens” is
need to be located in the same jurisdiction as their tar- therefore one of the key goals when considering inter-
gets. (See Section 6.3.2.6). Where cybercrime crosses national approaches to fighting cybercrime.57
national borders, the related cybercrime investigations
need the cooperation of law enforcement agencies in 6.3.2.7 Automation and resources
all of the affected countries since international law
principles related to national sovereignty51 do not per- Cybercrime offenders can often use automation to
mit investigations within the territory of other countries scale up their activities. As an example, many millions
without the permission of local authorities.52 However, of bulk spam messages can be sent out using auto-
the formal processes, requirements, and time needed mated processes within a short time frame. Hacking
to collaborate with foreign law enforcement agencies attacks are also often automated,58 with as many as 80
often hinder investigations53 as cybercrime investiga- million hacking attacks occurring every day.59 This is
tions tend to be very time-sensitive. As a consequence, possible with the help of software tools that can attack
194 Chapter 6
thousands of computer systems in hours. Offenders can it was committed by thousands of computers within a
make great profits by automating processes and de- “botnet” or group of compromised computers running
signing scams that are based on a high number of of- programs under external control.62 Over the past few
fences with a relatively low loss for each victim. 60 years, botnets have become a serious risk to cybersecu-
However, it is not only the automation that causes diffi- rity.63 The size of a botnet can vary, from a few com-
culties in investigating and preventing cybercrime. puters to more than a million computers working
together.64 The figures in Box 6.3 give an indication of
Offenders can use botnets to commit powerful at- how a botnet operates and the scale and power of the
tacks, such as the attack against computer systems in networked structure of an attack.
Estonia.61 Analysis of the Estonian attack suggests that
Figure 6.2: Example of a botnet attack

Step 1: Sending out virus
that is infecting computer Offender
and enables the offender
to take over the control
Offender
Step 2: Offender sends

order to start the attack Offender
Target
Chapter 6 195
Botnets represent a threat for both network secu- has been reported that terrorists are also users of en-
rity and consumer protection. As such, botnets fall cryption technologies.68 The availability of technologies
within the mandate of many ICT regulatory authori- designed to break encryption codes constitutes a key
65
ties. ICT regulators thus need to be involved with de- tool in the fight against cybercrime.69
veloping regulatory instruments to fight botnets.
Regulators should also endeavour to cooperate with The rapid pace of innovation in the ICT sector can
the ICT industry to take down botnets and to raise con- result in gaps in the legislative and regulatory cyberse-
sumer awareness about botnets, the risk posed by curity framework. The challenge for the legislator is the
them, and measures that should be taken to guard delay that exists between the recognition of new types
against them. Raising consumer awareness in this con- of offences and the adoption of amendments to appli-
text extends beyond mere consumer protection to en- cable legislation. Furthermore, as discussed above, this
compass measures to ensure the overall security of ICT legislation cannot be drafted in isolation due to the
networks. cross-border and truly international nature of cyber-
crime. Participation in the process of regional and in-
6.3.2.8 Encryption technology and innovation ternational harmonization of laws, regulations,
standards, and guidelines must therefore be an ongoing
Another factor that can complicate the investiga- activity.
tion of cybercrime is encryption technology,66 which
protects information from being accessed by unauthor- The unique nature of cybercrime poses challenges
ised people. Like anonymity, encryption is not new,67 that traditional approaches to preventing, investigating,
but computer technology has transformed the field. It and prosecuting crimes are not well-adapted to meet.
is now possible to encrypt computer data with a simple Legislators, law enforcement agencies, ICT regulators,
click of the mouse or keyboard, making it difficult for and other stakeholders must devise and deploy new
law enforcement agencies to break the encryption and approaches and tools to fight cybercrime while keeping
access the data. Offenders are already widely using en- an eye on adverse effects of ever more complex tech-
cryption technology to mask their activities. Likewise, it nologies (see Box 6.2).
Box 6.2: Clean-slate design of Resilient, Adaptive, Secure Hosts (CRASH)

Cybersecurity has become a major concern across the world. The number of attacks, the sophistication of the attackers, and
the monetary damage have all been increasing at exponential rates for several years.
Rather than attempting to eliminate or mitigate the risks associated with today’s IP-networks, an alternative approach may
be to act at the root of the problem by rethinking computer systems we use today in order to make them more resilient in
the face of cyber-attacks. This involves completely new ways of designing computer systems (both hardware and software)
so that computers adopt the survival strategies of organisms and societies. The immune systems of higher organisms, for
example, include "innate" elements that are fast and deadly, but deal with a fixed set of pathogens that are always in the
environment. But they also include a second "adaptive" system that responds more slowly but can mount adaptive re-
sponses to novel pathogens. Moreover, these systems interact. Such biological systems invest enormous resources into self-
defence at a level that any self-respecting computer designer would regard as untenable. But according to some analysts,
the trade-offs for computers are today more like those for biological systems: resources are abundant and the lack of adap-
tive self-defence can be fatal.
As aggressive scaling takes micro-electronics to ever finer geometry, soon devices will not work like "ideal" and "perfect"
switches but will rather begin to be unreliable. These "attacks from nature", transient errors, and high device failure rates,
are different from cyber-attacks; cyber attacks are conscious attacks on specific targets that have value to the attacker. Thus
if we are to continue to reap the benefits of Moore's law, we will have to begin to design processors to be resilient to device
failure. In both cases the standard tools of self-adaptive computation will prove to be key: self-monitoring, diagnosis, and
repair.
Source: Adapted from DAPRA paper on “Clean‐slate design of Resilient, Adaptive, Secure Hosts (CRASH), June 2010, at:
www.darpa.mil/tcto/docs/DARPA_CRASH_BAA‐10‐70.pdf
196 Chapter 6
6.4 The cybercrime ecosystem: also overlap with international matters, thus creating
An overview of roles and the need for coordination with international and re-
responsibilities70 gional bodies.
Fighting cybercrime requires effective international In order to illustrate the interactions between the
cooperation and coordination on cyber-related issues in different stakeholders, the focus of analysis should be
order to ensure that cybercrime policies are coordi- shifted to the functions that need to be executed rather
nated at the national level.71 Moreover, an effective than on the actors and the specific institutions involved.
strategy to combat cybercrime requires a multi- A networked model74 could be applied to illustrate the
stakeholder approach that is implemented at the na- truly cross-sector and multi-linked stakeholder ecosys-
tional level. Efforts by national governments to estab- tem and to promote the concept of what should be
lish policies and legal measures should be supported by done instead of who should do it (see Figure 1). In this
the technical and economic expertise of the private regard, each country can determine which actor or in-
sector and the readiness of civil society, and should be stitution is best suited to hold this responsibility in light
facilitated by the activities of intergovernmental and of the country’s specific circumstances and situation.
international organisations.72 This section briefly dis-
cusses the cybercrime ecosystem and highlights the 6.4.2 The role of the State (public sector)
roles, responsibilities and activities of the main stake-
holders in this field, as well as the tools to fight cyber- “National governments” are typically identified as
crime. This discussion will provide a framework for being among the principal stakeholders in fighting cy-
further analysis of the role of the ICT regulator in com- bercrime because of their mandate to lead in the de-
bating cybercrime. velopment of the national cybercrime and
cybersecurity strategy and to distribute responsibilities
6.4.1 Cybercrime ecosystem and duties among the other stakeholders involved.75 In
this coordinating role, the government must ensure
The cybercrime ecosystem is a multi-stakeholder that there is a framework comprised of policies, laws,
environment where the tasks to be undertaken can be and other resources to protect the integrity of ICT net-
performed by different stakeholders or shared by two works and to investigate, prosecute, and punish cyber-
or more stakeholders. Naturally, some of the roles are crimes. A 2007 Working Group on Internet Governance
determined by the authority and the power of the (WGIG) report highlights the role of the national gov-
stakeholders. For instance, at the level of the state only ernment in addressing the issue of cross-border juris-
a few actors can exercise the mandate of policy-making diction and in developing tools and mechanisms such
or law-making. However, with the rising importance of as treaties and inter-agency cooperation to allow effec-
co-regulation and self-regulation, more and more play- tive criminal investigation and prosecution of cyber-
ers within industry are becoming involved in various crimes.76
processes related to regulating cyberspace and ad-
dressing cybercrime. While it is clear that there is a role for “national
governments”, it is necessary to consider what this
With regard to the regulation of different sectors term means in practice. “National governments” can
and services that are affected by growing cybercrime, refer to the government as a symbol of national sover-
such as banking (including mBanking and eBanking) eignty, the highest level of government institutions that
and telecommunications/ICTs, regulatory spheres can deal with policy-making, or to different governmental
overlap (e.g., finance and mobile technologies). Coun- institutions and agencies working in the area of policy
tries often give multiple agencies overlapping man- implementation. Different states have different agen-
dates to deal with the same issue. For example, cies involved with addressing cybercrime and these
addressing spam may come under the jurisdiction of agencies also have different institutional designs. It is
the ICT regulator, crime units, and/or data protection therefore difficult to define the role of the “national
agencies. Critical information infrastructure protection government” within the cybercrime ecosystem and to
is another example of an issue for which multiple agen- identify which institutions are associated with this role.
cies such as national security services, utility agencies Nevertheless, it is possible to distinguish between “high
and ICT regulators,73 have overlapping responsibilities. level policy making”, where only a few government ac-
In this case, not only is there a need for cooperation tors are involved in the decision-making processes, and
between the agencies, but different areas of regulation
Chapter 6 197
“policy implementation”, where a variety of different It is becoming extremely difficult for governments
agencies may be involved. to prevent and prosecute cybercrime on their own.77
With the rapid changes in ICT technologies and the on-
The roles and duties of the national government in going developments in this sector, government cannot
fighting cybercrime include: and should not be expected to compete with the pri-
vate sector’s expertise and resources.78 Instead, gov-
At the high policy making level ernment is increasingly engaging in partnerships with
79
the private sector to fight cybercrime. While govern-
• Conceptualize and develop cybercrime policy and
ments dominate the process of establishing and enforc-
establish a national cybercrime/cybersecurity strat-
ing legal provisions, particularly where the use of
egy;
coercive power is necessary, non-governmental stake-
• Coordinate policies and strategies on broader ICT holders that have practical experience in the ownership
policies at the national level and coordinate efforts and operation of ICT infrastructure have valuable skills
to fight cybercrime at the national level; and knowledge to contribute.80
• Develop policy and coordinate efforts to fight cy-
bercrime at the regional and international levels; Due to the low reporting rates on cybercrime81 and
to a lack of resources, government authorities can do
• Develop and adopt cybercrime laws and standards; little more than investigate and prosecute a “tiny frac-
and tion”82 of cybercrime. Accordingly, there is a growing
• Take part in the process of international harmoni- emphasis on the importance of adopting proactive
sation of cybercrime laws (this task may be as- measures that seek to prevent cybercrime and to pro-
signed to agencies at lower levels of authority mote cybersecurity rather than relying on reactive
when the mandate for enforcement has been de- measures that address cybercrime once it has already
termined). been committed (e.g., investigations and prosecutions).
Preventive measures include technical measures that
At the policy implementation and institutional level are aimed at protecting information systems and com-
munications (e.g., encryption, electronic signatures and
• Implement cybercrime policy; certificates, etc.), as well as efforts to foster under-
• Coordinate cybercrime efforts at the regional and standing among users about cybercrime and current
international levels for policy implementation; threats (e.g., awareness-raising campaigns, guidelines,
alerts, etc.). The effective implementation of these
• Identify gaps in national legislation (e.g., in criminal types of proactive, preventative measures requires the
law statutes) and adopt measures to fill these gaps; engagement of non-governmental actors. Thus, while
• Enforce cybercrime laws and regulation the national government must take the lead in the fight
against cybercrime, the government cannot effectively
• Build capacity among other stakeholders and build protect ICT infrastructure and the users of ICT services
awareness of cybercrime-related issues and cyber- without the involvement of non-governmental industry
crime prevention strategies; stakeholders and the general public.
• Foster international, regional and sub-regional co-
operation; 6.4.3 The role of businesses and the private
sector
• Develop mechanisms for collaboration with the
private sector, for example, through public-private
Private actors have played a dominant role in driv-
partnerships.
ing innovation and in the overall development of the
ICT sector. As owners and operators of the infrastruc-
As policy- and law-maker, the national government
ture itself, industry players have a key role in the fight
at the high level has the authority to give priority to the
against cybercrime. While government has the power
problem of cybercrime. The government at the high
to establish the legal and regulatory framework for ad-
level also delegates the authority that flows from its na-
dressing cybercrime, the private sector understands the
tional sovereignty to a variety of ministries and agen-
changing and converging nature of the ICT environment
cies and equips these bodies, in addition to other
and has greater adaptability to new technologies and
stakeholders, with the necessary legal and regulatory
their utilization. The competences and resources of the
measures to address cybercrime.
government and the private sector thus complement
198 Chapter 6
each other, creating a fruitful environment for volun- The ICT sector can make an important contribution
tary collaboration. to cybersecurity by implementing forms of co-
86
regulation and self-regulation. Co-regulation involves
An important contribution that can be made by regulation of industry by government and industry
private sector actors such as Internet Service Providers working together, while self-regulation involves indus-
(ISPs) relates to monitoring of the Internet. The gov- try regulating itself. Co-regulation represents a tougher
ernment does not have the capability and resources approach to regulation since there is still a threat of en-
required to monitor the full volume of Internet com- forcement; by contrast, self-regulation is based on vol-
munications and transactions taking place at all times; untary commitments that industry players make due to
furthermore, the government is not in a position to col- industry self-interest (e.g., industry voluntary codes of
lect and store all existing ICT-related data. ISPs and practice) or brand self-interest (e.g., unilateral codes of
other sector actors are better placed to manage the conduct).87 One example of co-regulation is the Austra-
monitoring of potential threats such as viruses and lian Cybercrime Code of Practice that was developed as
botnets and to store digital records of ICT-related data. a result of joint efforts between the Information Indus-
Successful prosecutions of and convictions for cyber- try Association (IIA) and the Australian Securities and
crimes depend on a combination of the monitoring and Investments Commission (ASIC). The Cybercrime Code
data management of ISPs and other sector actors83 and outlines procedures for interaction between Internet
the government’s authority to enforce criminal law and stakeholders, particularly ISPs, and law enforcement
regulatory provisions related to cybercrime. Recent with regard to e-crime. It also sets base criteria for the
cases, like Microsoft’s initiative to shut down a botnet retention of records.88 The Cybercrime Code provides
through court procedures84, illustrate that sector actors the private sector with a clear framework for collabora-
are extremely interested in stopping criminal activities tion both within industry and externally with law en-
taking place online and are willing to cooperate with forcement agencies.
the government to do so.
There are a range of potential benefits that flow
Collaboration between government and industry from collaboration between industry and the state. As a
can be pursued in the form of public-private partner- number of papers have noted, such cooperation, along
ships that may be conducted either as operational co- with the development of co- and self-regulation, has
operation for specific cases or as more long-term the potential to deliver even better results than crimi-
initiatives. For example, ongoing collaborative efforts nal law enforcement.89 Moreover, self-regulation and
could include joint initiatives to deliver training on cy- co-regulation have become necessary complements to
bersecurity and to monitor and block illegal content on centralized regulation in light of the decentralised archi-
the Internet; collaboration might also include setting up tecture of the Internet and its borderless nature. Cen-
networks of contact points in both the private and the tralized state intervention is readily frustrated since
public sector.85 criminals can easily bypass traditional regulatory
frameworks.90 At the same time, over-regulation can
Collaboration between the state and sector actors hamper the development of ICT networks and the
requires that care be taken to avoid breaching the availability of ICTs. In this context, co-regulation and
rights of private users. For example, efforts to monitor self-regulation offer sensible approaches to managing
Internet communication to detect threats must be bal- cybersecurity.
anced with the privacy rights of users. The importance
of cybersecurity cannot be used to circumvent the pri- However, self-regulation and co-regulation have
vacy rights that users have in their personal information their limitations when it comes to deterring cybercrime.
and communications. Moreover, where the govern- For instance, the enforcement by industry of codes of
ment seeks access to data held by sector actors such as conduct for regulating child pornography cannot alone
ISPs, the government should be required to obtain a guarantee that the appropriate investigation of the
warrant for such data. Sector actors should also be crime and prosecution of offenders is undertaken. The
aware that their collaboration with government may protocols adopted by industry cannot completely pre-
render them an agent of the state for criminal law pur- vent certain forms of cybercrime, such as the distribu-
poses and that they may therefore be required to up- tion of child pornography. Thus, a proper legal
hold the criminal procedural rights of their end-users, framework is necessary to prosecute offenders who are
including, for example, the right to be free from unrea- able to circumvent industry protocols. Nevertheless,
sonable search and seizure. the self-obligations adopted by the private sector can
Chapter 6 199
ensure that safe havens for cyber-criminals do not exist (CERTs) or Computer Incident Response Teams (CSIRTs)
or emerge. are even established and run by academic institutions.96
6.4.4 The role of civil society, academia and The end-user is also a critical component in the cy-
individual users bercrime chain of actors. Many of the opportunities
exploited by the criminals in cyberspace directly result
The various interests of civil society are usually rep- from human error or a lack of understanding about the
resented by different groups performing a variety of importance of protecting personal data. Since cyber-
functions. Consumer groups, trade associations, non- criminals constantly develop sophisticated social engi-
profit organizations, and mass media can play a key role neering techniques and new kinds of malware, end
in raising awareness about cybercrime and in helping users need to be aware of how to create the necessary
citizens to understand that each person is an important level of individual security and how to keep this security
part of a larger ‘security chain’. These groups and or- up to date.97 For individual users, prevention cannot be
ganizations can also pressure the government to ad- limited to technical protection alone. On the contrary,
dress cybercrime issues. Civil society already plays an awareness campaigns should also focus on social engi-
important role in consumer protection campaigns and neering techniques and other means that cybercrimi-
in promoting cybersecurity awareness, tools and prac- nals use.98
tices.91
6.4.5 The role of regional and international
As a part of civil society, academia can also be an organizations
important player in addressing cybercrime. Both indus-
try and government appreciate input and analytical The trans-border character of cybercrime calls for
studies on cybercrime-related topics from academic counter-actions that are coordinated on different levels
communities, especially with regards to projections for – national, regional, and global. Many international and
the future and ‘over-the-horizon’ perspectives.92 Uni- regional organizations are already engaged in dealing
versities are also carrying out research in cybercrime with threats to cybersecurity and fighting cybercrime.
and developing solutions based on new understandings This includes the following organizations: ITU, Council
and emerging technologies. For example, academic re- of Europe (CoE), INTERPOL, United Nations Office on
searchers have developed many key security algorithms Drugs and Crime (UNODC), G8 Group of States, Organi-
used to encrypt confidential data exchange and online zation of American States (OAS), Asia Pacific Economic
transactions. Universities are increasingly becoming in- Cooperation (APEC), The African Union, The Arab
volved in joint industry-academia-government partner- League, The Organization for Economic Co-Operation
ships for delivering training programs.93 Independent and Development (OECD), The Commonwealth, Euro-
experts from academia, such as university professors, pean Union, Association of South East Asian Nations
can contribute to the harmonization of cybercrime leg- (ASEAN), North Atlantic Treaty Organization (NATO) and
islation and can assist countries with implementing in- the Shanghai Cooperation Organization (SCO). More
ternational standards. information on the specific activities of the various re-
gional and international organizations active in this area
Academic experts can also be involved in the activi- can be found in ITU’s publication Understanding Cyber-
ties of international organizations.94 The ITU High-Level crime: A Guide for Developing Countries99.
Expert Group on Cybersecurity is an example of a part-
nership between academia and international organiza- 6.5 Addressing cyberthreats:
tions. The ITU High-Level Expert Group on Understanding regulatory
Cybersecurity included academia, research institutions issues and available tools1
and individual experts.95 It was established as an advi-
sory body to assist ITU’s Secretary General in address- This section explores the regulatory issues raised by
ing concerns related to cybersecurity and cybercrime. cyberthreats around the world today, as well as the
tools that may be used to address those issues. As will
Cooperation with academia has become especially be seen, the various stakeholders in the cybercrime
relevant in the area of critical information infrastructure ecosystem can make use of a range of tools to fight cy-
protection. Some national Computer Incident Response bercrime. These tools can be administered under dif-
Teams (CIRTs), Computer Emergency Response Teams ferent policy and regulatory approaches, which will in
turn determine the scope and nature of the tools.
200 Chapter 6
The main regulatory issues involve adopting consis- cally based on a set of strategies and goals. These can
tent and streamlined policies and regulations that in- be specific to cybersecurity and cybercrime or stem
clude clear definitions, unambiguous division of from broader national strategies and priorities, such as
responsibilities among government agencies involved economic development and national security.
in fighting cybercrime, and clear enforcement mecha-
nisms. At the same time, however, regulators and pol- Current practices related to regulatory approaches
icy-makers should be mindful to avoid excessive and to cybersecurity issues fall broadly into five categories,
disproportionate interventions in the market in order depending on the level of readiness (policy, regulatory,
not to stifle market players and ultimately market and institutional) of countries to address cyberthreats.
growth. Moreover, an overly rigid legal and regulatory These categories do not necessarily imply the adoption
framework for addressing cyberthreats will be unable of a regulatory approach to cybersecurity; indeed,
to adapt to new forms of cybercrime, thereby creating some categories are characterized by the lack of ap-
gaps that can be exploited by cybercriminals. proach or overall strategy, while other can be described
as pre-approaches or elements of a nascent approach:
In an ideal world, all countries, regardless of the
• Laissez-faire (no framework, no specific policies or
maturity of their markets, would adopt a full-fledged
regulation in place such that country will address
set of policies and regulations to ensure the highest
issues later on or when faced with concrete
level of protection against cyberthreats and cybercrime.
threat/crime); the majority of developing countries
However, in the non-ideal world in which we live, a host
unfortunately fall into this category.
of difficulties, both political and practical in nature, pre-
vent ICT markets from achieving a high level of cyber- • Loose consensus (no legal text or related policies,
threat readiness. This is especially true in developing no entity explicitly mandated by law to deal with
countries, where policy-makers often consider that cybercrime but some efforts deployed outside the
there are more pressing development issues to address regulatory framework); found in some developing
before developing a framework for cybersecurity. countries.
Greater priority must be given to cybersecurity in these • Elements of policy and regulatory framework in
countries. Indeed, cybersecurity needs to be integrated place (e.g., policy document or declaration, indi-
in a holistic way as a fundamental component of a vidual regulations on concrete topics), but no
wider development strategy that includes using ICTs to mechanisms for implementation; both developing
promote positive development outcomes. The lack of and some developed countries follow this model;
human and institutional capacity and the lack of suffi-
cient expertise in this highly specialized field may be a • Policy and legal framework and implementation
constraint in so doing, however. A detailed discussion of mechanisms in place, including an entity or entities
this matter is contained in Section 6.6.1.2. with a mandate in this field; more than 50 coun-
tries, a majority of which are developing countries,
One way to address the lack of adequate resources have adopted cybersecurity-related legislation or
and expertise necessary for building an effective cyber- regulations and at least 73 countries had an entity
security framework is to adopt a staggered or phased or entities in charge of addressing cybersecurity is-
approach to addressing cyberthreats. Table 6.1 outlines sues, as of the end of 2010.100 (See also the discus-
various policy and policy implementation outcomes sion in Section 6.5.2.)
that may be adopted at various stages as a country’s • Sound and streamlined regulatory and legal
ability to respond to cybercrime matures. The proposed framework in place complemented by effective en-
checklist of policy and policy implementation outcomes forcement; this is a moving target as cyberthreats
is neither exhaustive nor prescriptive, and should be continue to evolve; no countries have yet achieved
regarded as an attempt to capture some of the specific this stage.
regulatory issues related to forging a framework to ad-
dress cybercrime. Although very few countries have applied stream-
lined regulatory approaches to cybercrime to date, it is
6.5.1 Regulatory approaches clear that there are diverging visions with regard to the
degree of regulatory intervention required.
The high-level regulatory and policy approach
adopted by a country to respond to cybercrime is typi-
Chapter 6 201
Table 6.1: A phased approach to addressing regulatory issues related to cyberthreats

Phase 1 Phase 2 Phase 3
• Define cyberthreats. • Create incentives for infrastructure • Strengthen the incentives for
and service providers to address infrastructure and service pro-
• Develop and adopt a national
cyberthreats and to collaborate viders to prevent cybercrime
broadband strategy or ICT master
with the regulator and other gov- and protect consumers.
plan, etc., incorporating and ad-
ernment agencies.
dressing cybercrime and setting • Impose specific obligations (i.e.,
broad cybersecurity goals. • Pass more comprehensive legisla- in licences, related to QoS or
tion to criminalize harmful activity consumer protection) on infra-
• Develop a national cybersecurity
in cyberspace. structure and service providers
strategy that addresses in detail
to address cyberthreats and
the broad cybersecurity goals • Develop and enforce technical
collaborate with the regulator
identified in the national ICT plan. regulations (i.e., setting security
and other government agen-
requirements for ISPs; adopt-
• Awareness raising among lead cies).
ing/transposing internationally
ICT users (government officials,
agreed cybersecurity standards • Develop an operational net-
public servants, educational insti-
(ITU-T, ITSO, etc.) and work toward work for collaboration among
tutions, organizations, small-and-
eventually integrating them into government agencies in charge
medium sized enterprises, etc.),
existing Quality of Service (QoS) of cybersecurity, cybercrime, or
target user groups (youth, chil-
standard requirements. specific aspects of cybersecurity
dren), and the general public.
(data protection, privacy, etc.)
• Train experts in the various aspects
• Review existing legislation to as- and all stakeholders. (See also
of cybercrime/cyberthreats and
sess whether it is capable of hold- Section 6.5.2.1.)
build institutional capacity (i.e.,
ing people accountable for
regulator, specialized agencies, • Develop or extend Internet con-
criminal/fraudulent activities
etc.). tent regulation focusing on, in-
conducted using ICTs.
ter alia, illicit and offensive
• Develop an understanding of the
• Develop the necessary legislation content, hatred and obscene
mandates and practices of the
to address gaps in the legislative speech, and protecting minors
various agencies in charge of cy-
and regulatory framework. (including banning child por-
bercrime-related issues and how to
nography), etc.
• Develop an understanding of the facilitate coordination between en-
different tasks and mechanisms tities. • Develop intellectual property
required to address threats to cy- rights (IPR) legislation and regu-
• Ensure that the national cybersecu-
bersecurity. lations.
rity/cybercrime entities are linked
• Identify actors on the national to existing sub-regional, regional • Put in place effective mecha-
level that can implement and and global networks pertaining to nisms for assessing readiness of
maintain some of the required cybersecurity and fighting cyber- national infrastructure to with-
activities/functions. crime. stand cyberthreats, prevention,
early warning detection, etc.
• Consider the possibility of estab- • Ensure that national legal meas-
lishing a national computer inci- ures enable the cooperation be- • Enhance mechanisms to inves-
dent response team (CIRT). tween law enforcement agencies tigate cybercrime (cyber foren-
in different countries. sics, etc.) and ensure
enforcement mechanisms for
penalizing cybercriminals.
Note: Some countries implement activities from different phases simultaneously.
Source: Authors.
An additional layer of complexity is added by the pose serious obstacles to the prompt and concerted
lack of international harmonization and the very differ- response by all concerned parties.
ent regulatory treatment of cybercrime in different na-
tional jurisdictions. In the event of cross-border 6.5.2 Tools for addressing cybercrime
incidents, the lack of a harmonized regulatory approach
and/or the competition between national regulatory As public access to and use of the Internet has
agencies seeking to impose their own approaches may grown, so has cybercrime and cybersecurity-related
202 Chapter 6
concerns. Policy-makers and regulators have responded 2. For what purpose are the tools applied? The ex
to the growth of cybercrime and the need for more ro- ante tools for preventing cybercrime and assessing
bust cybersecurity by reforming the legal frameworks the specific risks associated with ICT development
governing the use of ICTs, by amending criminal law in a country as well as the ex post tools for enforc-
provisions, by introducing new legislation and regula- ing rules and regulations and penalizing cyber-
tions focused on cybercrime, or a combination of these criminals are equally important to ensure the
types of reforms. Given the nature of cybercrime, integrity of networks and organizations, and the
reform of ICT legislation is increasingly coordinated private sphere of individual users.
with legislative reform that affects other sectors of the
3. In which area can the tools be applied? The variety
national economy. In some cases, more holistic ap-
and sophistication of existing and emerging cyber-
proaches are taken that feature the adoption of legisla-
threats require a high degree of caution and coor-
tion and regulations designed to apply across all sectors
dination as well as fine-tuned, flexible and modular
of the economy and throughout society generally.
tools in each and every target area, from botnets to
Countries that have not integrated cybersecurity meas-
e-fraud and intellectual property rights violation.
ures into the legislative frameworks governing a variety
of economic sectors tend to have fewer regulatory tools 4. Who can apply the tools? There is no unanimity to
available to deal with cybercrime and, consequently, date on the unique entity that should be responsi-
are less effective in addressing cybercrime. As a result, ble for handling cyberthreats and various national
such countries may not realize the full benefits of the models co-exist across regions. Typical examples
development of broadband networks and the take up are described in the related sub-section below.
of advanced services by the market. For instance, if re- 5. How are these specific tools different from tradi-
forms developed in the ICT regulatory framework are tional regulatory tools? The open nature of the
not integrated into the regulatory frameworks govern- Internet has led to fundamental changes in the ar-
ing other sectors, end-users of ICT services will be re- chitecture of and the service delivery over commu-
luctant or unable to make full use of all ICT capabilities nication networks, which require the centralized
due to security-related issues; this, in turn, will impact regulatory models from the past to be rethought
market performance. and reinvented. The different threat scenarios that
countries are faced with require not only more effi-
Although there are a multitude of tools available to cient technology, but also dedicated laws and regu-
address cybercrime, no one tool is sufficiently powerful lation (including data protection and privacy laws),
to address all issues, let alone resolve all such issues. A and the appropriate enforcement mechanisms.
combination of tools is necessary. Adopting comple-
mentary general-purpose and specialized tools repre- A practical overview of the key aspects of these
sents the most effective approach to fight cybercrime. tools is presented in the following sub-sections.
Once a general cybersecurity strategy has been
adopted at a national level, regulators and policy- 6.5.2.1 What is the nature of the tools?
makers must carefully pick and choose among tools
and mechanisms in order to develop an integrated and There is a range of complementary and sometimes
coherent approach to policy implementation that bal- overlapping tools that can be applied to enable an ef-
ances policing cybercrime with promoting network de- fective response to cyberthreats.
ployment and use.
Policy tools
The tools available to regulators and policy-makers
in this regard can be classified using the “5Ws” analyti- In the 2000s, the ICT sector became the nexus
cal framework, as follows: point where virtually all other sectors of the national
1. What is the nature of the tools? Ranging from economy meet. The overall economic performance of a
broad policies through specialized rules and regula- country is now directly impacted by the integration of
tions to individual customized incentives or reme- ICTs (and increasingly broadband, in particular) into
dies, the available tools can activate a national public governance, industrial and commercial processes,
strategy and enable an effective response to cyber- and social lifestyles. The productivity gains and other
threats. non-economic efficiencies of this integration are likely
to boost the national economy if the necessary ena-
bling framework is put in place101. Consequently, coun-
Chapter 6 203
tries have begun to pay closer attention to ICTs in policy in the National ICT Development Plan or the National
development; a number of countries have also adopted ICT Strategy, given its cross-cutting nature and para-
broad national strategies related to the ICT sector and mount importance but criminalization requires specific
the digital economy. measures. A growing number of countries are develop-
ing national broadband strategies that include elabora-
Both policies related to economic development in tion on how to secure broadband networks and
general and policies that focus specifically on ICTs have ensuring a safe and secure user experience. Increasingly,
key roles to play in establishing an effective governance cybercrime is being addressed in national security poli-
framework for addressing cyberthreats. In addition, cies and plans. Alternatively, at least a quarter of coun-
general political support for ensuring a healthy ICT sec- tries worldwide, both developed and developing, have
tor and increased public awareness of cybercrime- adopted specific cybersecurity policies or legislation.104
related issues can propel cybersecurity to a more In countries where more than a single policy document
prominent place on the national political agenda. This exists (i.e., a national ICT strategy and a broadband
increased prominence of cybersecurity in turn can pave plan), a consistent and effective interplay between
the way for a concerted and more efficient response to those documents must be ensured. In the foreseeable
cyberthreats. future, separate cybercrime policies may come into be-
ing as a result of greater political awareness of the un-
ICT policy goals have evolved considerably over the derlying issues.
past decade. While initial targets for Internet and
broadband service provision typically focused on public Legal and regulatory frameworks
access (e.g., telecentres and cybercafés),102 private ac-
cess to such services has increasingly become a major As Box 6.3 illustrates, the design of the legal and
part of overall policy objectives. This transformation of regulatory frameworks used to regulate the ICT sector
policy goals has drawn greater attention to issues re- typically involves a hierarchy that allows the need for
lated to cybercrime and the responsibility of citizens to certainty and stability in the sector to be balanced with
protect themselves online. Increased attention to cy- the need to be able to adapt regulations in response to
bersecurity and cybercrime issues has also been driven technological developments.
by the awareness that a minimum level of cybersecu-
rity readiness is essential for the massive uptake and a. Primary legislation and legal measures
ultimately universal availability of ICT services. Specific
targets included in national strategies and policies and Some ten years ago, cybercrime was not addressed
the tools for implementation need to be selected care- through any legal or regulatory instruments governing
fully in accordance with best practices and standards the ICT sector. More recently, however, telecommunica-
and in light of national circumstances. This may be chal- tion/ICT legislation and/or national penal laws have
lenging, as targets must be realistically achievable, yet been amended in many countries to address cyber-
forward-looking and not unduly limited or prone to be- crime. The introduction of provisions targeting cyber-
coming outdated as the market and technology devel- crime into such telecommunication/ICT and criminal
ops. Most general policies are designed to last at least legislation has a number of benefits. For instance, once
for five to ten years but in view of the rapid develop- written into law, the process of implementing policy
ment of the ICT sector in general and of cyberthreats in objectives becomes easier. More dedicated resources
particular, it might be more practical to set targets for become available for policing cybercrime. Furthermore,
three to five years. Needless to say, policies should al- the legislative provisions typically identify clear roles
low for a process of review and update so that targets and responsibilities for different agencies involved in
may be adjusted as necessary.103 responding to cybercrime and specify implementation
mechanisms available to such agencies. In this regard,
There is no single or universally recognized model amendments to telecommunication/ICT legislation and
of addressing cybercrime at the national policy level. criminal law can enhance a country’s ability to respond
Rather, countries have adopted a variety of different effectively to cybercrime.
policy frameworks, depending on their specific national
circumstances, priorities and perceived needs. For ex-
ample, cybersecurity and cybercrime can be addressed
204 Chapter 6
Box 6.3: Hierarchy of regulatory frameworks

Generally, the legal framework governing the ICT sector follows a hierarchy, which is depicted in the figure below. The pri-
mary legislation for the sector, such as laws and decrees, should establish the broad framework that will be used to regulate
the sector. The more detailed dimensions of regulatory regime is typically best addressed in secondary legislation, which can
be amended and modified more easily to complement the pace of technological development without the intervention of
the legislature. Secondary legislation, in turn, provides the legal basis for the regulator or the relevant ministry to issue au-
thorization instruments such as licences, concessions, and permits to operators. This legal hierarchy provides certainty and
predictability to consumers and other stakeholders because it specifies the rights and obligations (i.e., the rules of the game)
that apply to the sector.
Primary Legislation Telecom Law
Regulations
Degrees
Secondary Legislation Instructions
Guidelines
Licenses
Concessions
Authorization Framework Permits
Registrations
Notifications
Source: ITU‐infoDev ICT Regulation Toolkit, available at: www.ictregulationtoolkit.org
There is no established approach for introducing • Legislation to deal with cybercrime-related issues,
cybersecurity and cybercrime-related matters into na- such as data protection legislation, ISP liability legis-
tional and regulatory frameworks, though some useful lation, etc.
tools exist. Since cybercrime-related amendments to
telecommunication/ICT legislation and criminal law are The range of legal measures that countries should
relatively recent developments, it is not yet possible to adopt include, first of all, substantive legal provisions to
evaluate the impact of different approaches to legislat- criminalize acts such as illegal access, illegal intercep-
ing in relation to cybercrime. tion and data interference, the violation of copyright
and related rights, computer fraud and electronic for-
There are two principal ways of introducing cyber- gery, and offences related to the distribution of child
crime issues into ICT legislative and regulatory frame- pornography over the Internet. 105 As has been dis-
works. First, amendments can be made in a piecemeal cussed above, gaps in national legislation must be iden-
fashion, responding to issues as they arise. Second, tified and amendments introduced to close these gaps.
countries can introduce entirely new legislation to regu- Criminal law provisions, for example, frequently must
late the ICT sector that includes provisions relating to be amended to facilitate the laying of charges in con-
cybercrime. The latter, more radical approach may offer texts where the criminal act takes place online or in a
a more practical way to integrate cybercrime issues into digital format.
existing telecom and ICT laws, allowing for a common,
coherent approach to current issues facing the sector Next, countries should adopt amendments to pro-
and a single, consistent legal point of reference with cedural law and regulations in order to ensure that law
regard to available means and tools. A third way is to enforcement agencies have the powers and tools nec-
integrate cybercrime issues into a general criminal law. essary to conduct cybercrime investigations. These in-
vestigations are significantly different from
Whatever option is chosen by countries, a legal investigations of traditional crimes due to the trans-
framework for fighting cybercrime should include: border nature of networks, the international dimension
of most cybercrimes, and the “virtual” nature of cyber-
• Updated criminal legislation;
crimes as opposed to the “real world” nature of tradi-
• Criminal procedural legislation; tional crimes. The international nature of cybercrime
• Legislation to facilitate international cooperation; also highlights the need to ensure that national legal
and measures facilitate the cooperation between law en-
forcement agencies in different countries. 106 Despite
Chapter 6 205
107
the challenges that are bound to lie ahead, regulators berthreats. National telecommunication/ICT legisla-
could encourage the adoption of an anti-cybercrime tion can mandate the development of co-regulatory
law or legal provisions in general communication legis- practices, such as ISP codes of conduct. Adherence to
lation that are harmonized as much as possible with such codes could be a licence condition or the obliga-
those of other countries. tion could be imposed in regulations or in other in-
struments adopted in a rulemaking proceeding. For
Although criminal law is an essential component of example, obligations related to adherence to industry
the legal and regulatory frameworks for combating cy- codes of conduct may be imposed on ISPs in much the
bercrime, these legal and regulatory frameworks same way that facilities-based operators have been re-
should not be limited to criminalization. For example, quired to interconnect with competing carriers:
non-criminal law provisions were used by the court to through interconnection regulations, terms of licence,
order VeriSign Inc., a domain name service provider, to orders to develop a reference interconnection order,
take down the “Waledac” network in early 2010 and to and the like, with an emphasis on collaboration with
deactivate domain names administered by VeriSign industry stakeholders to determine the terms of inter-
that had been used by a botnet. In the future, botnet connection.108 As markets mature, many regulators en-
operations are very likely to use top level domains courage industry self-regulation such as industry self-
hosted by different naming service providers in order to reporting for enforcement purposes and reliance on
make it more difficult to get such a court decision. De- alternative dispute resolution techniques to resolve
veloping a legal framework that enables the shutting conflicts. These forms of industry self-regulation help
down of domain names hosted by different naming regulators to successfully oversee the multiple players
service providers is one of the examples of future legal in the dynamic the ICT sector.109
frameworks.
Practices related to fighting spam provide a poten-
b. Regulatory tools tial model for co-regulatory initiatives related to cyber-
crime.110 Just as regulators have required ICT service
Adapting a country’s regulatory framework to re- providers to develop and to implement guidelines and
spond to cybercrime-related issues takes time and of- standards for fighting spam, regulators could require
ten repeated attempts. Effective adaption depends on ISPs to establish co-regulatory initiatives related to cy-
the provisions contained in existing sectoral or general bercrime such as an industry code of conduct. The ena-
policies and in primary legislation. Moreover, the roles bling legislation underlying the order to develop such a
and responsibilities of government agencies and other code should stipulate that the regulator has the author-
potential partners in this field must be defined at a ity to enforce the code against any ISP in violation of it.
higher level and adequate authority to discharge these Although not yet very common, such practices could
responsibilities must be delegated to government prove very useful to regulators as they discharge their
agencies in order to ensure that these agencies and responsibilities both to rely on market forces to the
partners can develop the necessary regulatory tools to greatest extent possible and to protect the sector and
respond to cybercrime. ICT networks from various forms of threats and market
failures. As essential players in developing the digital
A critical challenge for government agencies deal- economy, ISPs have generally been left alone by legisla-
ing with cybercrime is keeping pace with cybercriminals tures, administrative agencies, and judges. They may be
who have proven to be adept at using new technologi- licensed and overseen by regulators in some contexts,
cal developments and fats-adapting techniques to per- but ISPs have largely been immune from prosecution
petrate new forms of cybercrime. Regulatory for criminal acts committed by people using their ser-
frameworks for cybercrime therefore must be flexible vices.
and forward-looking, while still well-defining the issues,
offences and remedies in order to be proved effective. Over the past decade, ISPs around the world have
taken an active role in attacking spam at the source, be-
c. Co-regulation and self-regulation fore it reaches customers’ premises. Pursuant to codes
of conduct, ISPs have committed themselves to denying
In addition to enacting anti-cybercrime legislation, service of any kind to spammers, phishers, spoofers and
other alternative regulatory approaches such as co- other actors who violate spam-related policies. 111
regulation and self-regulation may be adopted in order Where such codes are in place, they could be extended
to enhance the readiness of the sector to address cy- to cover a wider range of offences and can be trans-
206 Chapter 6
formed into functional barrier to cybercrime. An impor- cybercrime, the international dimensions of cybercrime,
tant advantage of this type of industry involvement is and the “virtual” world in which cybercrime occurs.
that by acting at the root of the content distribution What are some of the steps that the ICT regulator or
network, ISPs can rapidly and effectively counter a the any government agency can take to build cyberse-
number of cybercrime threats. Regulators need to be curity and cybercrime capacity when these fall under its
careful, however, not to over-burden ISPs by imposing mandate?
overly onerous obligations and requirements related to
co-regulation. Drawing on past examples from other utilities and
industries and under different circumstances113 , the
As an alternative to a mandated code enforced by regulator could consider contracting out some of the
regulators, governments might encourage ISPs to de- specific tasks. Here are some of the reasons why this
velop their own, industry-enforced codes of conduct. In may be useful:
fact, such self-regulatory practices have already
1. To supplement limited in-house capacity. ICT regu-
emerged to address issues related to cybercrimes such
lators are often faced with sharp peaks in their
as spam. In the case of spam, the terms and require-
workload or need small amounts of specialized in-
ments adopted in self-regulatory mechanisms are often
puts and technical skills that tend to be in short
built into “acceptable use” policies for customers and
supply, particularly in the public administration and
peering arrangements. 112 Under this voluntary, self-
especially in the areas of cybersecurity, cybercrime,
regulatory model, regulators could advise the industry
and countering spam.
in developing the codes. The corporate responsibility of
participating ISPs can effectively be used as a promo- 2. To reduce costs. When looking at security from an
tional strategy to attract consumers from other, less se- innovative point of view, providing a specialized
cure ISPs, and can actually prove to be a sound business service is almost never considered as a means of
strategy in itself. Strong involvement in the fight against reducing costs. However, strategically contracting
cybercrime is not necessarily incompatible with a desire out some of the cybersecurity tasks may help re-
to increase revenue and subscriber growth. ISPs are duce the costs of procuring expertise or, for a given
very much aware that cybercrime and cyberthreats in cost, increasing regulatory competence. Third par-
general are likely to considerably compromise their fi- ties can spread the fixed costs of acquiring special-
nancial and operational sustainability and thus have in- ized experience over large markets, both nationally
centives to partner with government agencies to and globally.
counteract cybercrime. In this regard, regulators should 3. To improve the quality and credibility of the regu-
carefully study and analyze market realities and pecu- lation. Contracting out tasks related to cybersecu-
liarities with a view to designing and adapting targeted rity may assure investors of the independence of
incentives for industry players, especially to ISPs, to the regulatory process from short-term political
work with them to fight against cybercrime. capture, particularly in countries with institutions in
transition. Cybersecurity and cybercrime is a grow-
Partnership tools: Regulating with the assistance of ing concern and external expertise may also be
the private sector, other regulatory agencies, and useful to assure investors that the regulator is ca-
industry stakeholders pable of developing and adopting the measures
necessary to protect their investments in the sector.
a. Contracting out specific tasks
Agencies may decide to contract out different tasks
Ensuring the capacity of government agencies to at various stages in the development of their institu-
cope with unexpected incidents requires leading edge tions and for different reasons. New ICT regulators, for
technological expertise and highly specialized knowl- example, may need extra support when they are first
edge of the latest trends in encryption technologies, established to build credibility and competence; as cy-
threat analysis, and layered preventive measures. This bersecurity and cybercrime is a highly specialized area,
is particularly challenging for ICT regulators, as their engaging experts at an initial stage may be preferable
mandate and field of oversight is broad and multifac- so that the regulator can concentrate on its other core
eted. More often than not, ensuring that the institu- duties. More experienced and established ICT regula-
tional arrangements for addressing cybersecurity and tors may contract out a particular task, like analysis and
cyberthreats are effective requires new ways of operat- research into malware and spam, because doing so is
ing in order to address the rapid pace of evolution in less expensive than performing it in-house. From a risk
Chapter 6 207
management perspective the institution needs to con- cies in the area of cybercrime. One advantage is that
sider thoroughly what activities should be performed there is no need for action or involvement of higher
in-house and which tasks can be outsourced. level institutions such as the ministry or legislative body,
and therefore no additional delay and administrative
b. Institutional cooperation: Memoranda of procedures before the agreement is enacted. On the
Understanding and Cooperation Protocols other hand, the memoranda or protocols used provide
a supple framework for joint action while limiting the
It is not commonplace for an ICT regulator to have wide discretionary scope of general administrative laws.
complete and exclusive jurisdiction over all legal and Thus, complexity and bureaucratic hurdles are reduced
regulatory aspects of cybersecurity or cybercrime. In and the collaborative processes are smoothened, has-
many cases, there are a number of government agen- tened, and focused on the topical issues rather than on
cies that share the responsibility of overseeing this area procedural ones. Such frameworks also allow for
(see also Section 6.4 and Section 6.5.2.4). The relation- greater predictability of the actions of the agencies in-
ship between the ICT regulator and sector ministries volved and better guarantees that the objectives set in
are often well defined in legislation. The coordination laws and regulations will not be distorted.
with some other specialized bodies such as the national
data protection agency and the consumer protection c. Mechanisms for stakeholder involvement
agency are often much less clear or may be missing en-
tirely. Cooperation with courts and the national police No matter how many resources have been mobi-
are unfortunately often not codified in legislation but lized through official government channels to prevent
instead established through administrative proce- and to police cybercrime, they may prove limited and
114
dures . partial. The exploding amount of online traffic signifi-
cantly complicates addressing cybercrime incidents.
When the existing legislative framework does not Every additional piece of information or indication that
define clear roles and responsibilities for the agencies responsible agencies can get allows them to better un-
involved with fighting cybercrime, inter-agency coop- derstand cybercrime, to better monitor evolving cyber-
eration may be hampered, especially if two or more threats, and ultimately to better respond to incidents.
agencies have concurrent jurisdiction set out in differ- In this respect, it is important to involve users in ad-
ent legislative frameworks. This situation creates uncer- dressing cybercrime and to put the appropriate partici-
tainty and confusion for industry stakeholders and risks pative mechanisms in place. Free hotlines (through the
inconsistent regulatory approaches; moreover, it can web, by email or by telephone) for users to make com-
result in a waste of scarce regulatory resources as vari- plaints or report fraud and other abuses may be set up
ous agencies complete the same or similar tasks.115 It to get real-time feedback and allow for rapid responses
may even result in competition between regulatory to incidents and potentially minimize their impact. User
agencies to assert jurisdiction and control, to the det- feedback may also be sought on a continuous basis in
riment of all sector stakeholders. order to better monitor and understand imminent
threats in cyberspace and to anticipate harmful or mali-
In other, more traditional areas of regulation, a cious acts.
number of regulators have responded to the need to
coordinate their actions in matters of concurrent juris- d. International cooperation
diction by adopting Memoranda of Understanding or
cooperation protocols. 116 For example, the separate Cybersecurity is as global and far-reaching as the
Dutch ICT regulator and competition authority have es- Internet. Since threats can originate anywhere around
tablished a cooperation protocol to provide clarity on the globe, the challenges are inherently international in
how they will cooperate on matters of mutual inter- scope and require international cooperation, investiga-
est.117 Similarly, the Nigerian Communications Commis- tive assistance, and common substantive and proce-
sion (NCC) and the Nigerian Consumer Protection dural provisions. Therefore solutions need to be
Council (CPC) have adopted a Memorandum of Under- harmonized to the extent possible across all borders
119
standing that establishes how the agencies will collabo- and for many of the different measures put in place.
rate on matters related to consumer protection.118 This necessarily entails international cooperation, not
only at government level, but also with industry, non-
This mode of cooperation may usefully be repli- governmental and international organizations. Due to
cated to enable enhanced interplay among peer agen- the differences in national laws and the limitations of
208 Chapter 6
existing instruments and tools, international coopera- unified framework. For example, in April 2010, nations
tion is considered of the major challenges in the fight at the 12th UN Congress on Crime Prevention and Crim-
against cybercrime. As noted in Section 6.4.5 a number inal Justice failed to agree on the necessary response to
of international and regional organizations collaborate take to cybercrimes. While some countries supported
and undertake activities in the areas of cybersecurity expanding the European Union’s Convention on Cyber-
and fighting cybercrime. This further underlines the crime, others have argued for new multilateral negotia-
importance of the prosecution of cybercrime, including tions.125 However, the generally agreed upon principles
cybercrime committed in one jurisdiction, but having of implementing international cooperation include:
effects in another. There is a need for effective and effi-
• providing cooperation in international investiga-
cient tools and actions, at national and international
tions to the greatest possible extent;
levels, to promote international cooperation among the
different stakeholders, including law-enforcement • facilitating extradition for cybercrimes; and
agencies. • requiring mutual legal assistance in order to expe-
dite communications among law enforcement
There are several international and regional initia- agencies in multiple countries, including designat-
tives working towards harmonizing the legal frame- ing contacts within agencies that process requests
works of various countries. For example, the Tunis for assistance.126
Agenda for the Information Society adopted during the
second phase of the World Summit on the Information The main obstacles to a globally harmonized cyber-
Society in 2005 highlighted the need for international crime framework are time and money. While cyber-
cooperation in the fight against cybercrime and called crimes occur quickly, the development and
upon governments in cooperation with other stake- implementation of international agreements take time.
holders to develop necessary legislation for the investi- Furthermore, enforcement and technical protection
gation and prosecution of cybercrime120. The Group of measures are costly, particularly for developing coun-
Eight (G8) adopted Ten Principles to combat cyber- tries. However, the commitment of sufficient resources
crimes, which included commitments to 1) ensure that to ensure online security is necessary to protect con-
there would be no safe havens for cyber criminals any- sumers, businesses and the government against cyber-
where in the world and 2) implement a coordinated crimes.
international legal framework capable of investigating
and prosecuting cybercrimes regardless of where the Technical tools and technical standards
harm has occurred.121 The Council of Europe has estab-
lished the Convention on Cybercrime, which sets out At the network level, a range of tools exist to im-
measures to be implemented by Member States to pede or to terminate activities that constitute cyber-
help ensure that domestic laws regarding confidentiali- crime offences. Technical measures can usefully
ty, integrity and availability of computer data and sys- complement legal and regulatory measures and sub-
tems, such as illegal access or interception, were stantially enhance the cybercrime readiness and re-
consistent.122 The Council of Europe Convention on Cy- sponse of a country. One example is the technical
bercrime also requires Member States to establish rules measures applied by ISPs (i.e., restricting Internet ac-
related to extradition and mutual assistance in order to cess to offenders) in or outside the framework of co-
guarantee international cooperation.123 Additional re- and self-regulatory practices.
gional commitments to the prevention and prosecution
of cyber crimes have been implemented through APEC, Government agencies need to be clear on what
the African Union, the Arab League, ASEAN, and OAS.124 their responsibility is with regards to website applica-
Although there are multiple organizations working to- tions that feature software that installs itself on users’
wards a harmonized framework, developing countries computers and that automatically reports back to re-
may face a variety of different challenges in implement- mote computers with information on users’ specific
ing effective domestic and international frameworks for behaviour. Cookies are an example of such an applica-
the prevention and prosecution of cybercrimes, which tion; cookies install automatically on users’ computers
may require specialized strategies. and report back to the companies that created them,
for example, search engines, about the users’ online
Despite these international initiatives, there has activities. The trend in this area shows that some coun-
been little harmonized action in fighting cybercrimes, tries are taking steps to protect consumers’ privacy by
with countries divided over how to best approach a enacting legislation that requires such website applica-
Chapter 6 209
tions to request the users' permission and to specify have already developed methods of circumventing the
what the application does (e.g., report back to the crea- requirement to obtain explicit user approval such as the
tors of the application with information about online simple addition of a button in the browser for the ac-
activities) before the software installs on the users’ ceptance of cookies.
computers. However, the creators of such applications
Table 6.2: The purposes of anti-cybercrime tools

Tools Examples
Purpose Legal and
Policy Technical Cooperation
regulatory
Preventing cybercrime X X X X • Awareness campaigns through

media and Internet
• Adoption of anti-spam regula-
tion (which often takes the
form of a provision in the na-
tional telecommunication/ICT
legislation, e.g., regulating the
sending of unsolicited e-mail for
"commercial, ideological or
charity" purposes (in The Neth-
erlands), not limited to bulk
mail.)
Assessing the X X • Regular reporting and assess-
cybersecurity readiness ment of cybercrime incidents,
their impact, and scope
• National cybersecurity drills
Limiting the scope or im- X X X • Enforcing the anti-spam regula-
pact of cybercrime/ miti- tion
gating cybercrime
• Issuing warnings and discon-
tinuing service to offenders’ IP
addresses
• Enforcing technical measures to
take down unlawful content
from the web
Rendering cybercrime X X • High fines for unlawful behav-
uneconomic iour
Resolving disputes X X • Provide redress for consumers
and/or organizations
• Applying alternative dispute
resolution mechanisms (media-
tion, arbitration, etc.)
Investigating cybercrime X X X • Preservation of the crime
scene, cyber-forensics
Penalizing cybercriminals X X X • Impose fines and other sanc-
tions as prescribed by law
Source: Authors.
210 Chapter 6
What types of duties does the ICT regulator have when a cyberthreat is imminent or a cybercrime has
when obligations to notify users about ICT and tele- been committed. Of paramount importance are the
communication security breaches are put in place? One framework conditions (both regulatory and technical)
example of a measure to provide Internet users with that must be put in place to ensure a maximum level of
more protection is the establishment of mechanisms resilience is enabled over networks, services, applica-
that informing such users when their online bank actions and consumer behaviours (described in Sec-
count has been used by a non-authorized party. There tion 6.5.2.1).
are different ways this can be done such as through an
email, text messaging or a telephone call. Such proto- 6.5.2.3 In which areas are tools used?
cols would very likely increase users’ and businesses’
willingness to conduct more of their everyday activities There are heated debates over the exercise of regu-
online. latory authority to specific individual fields of cyberse-
curity/cybercrime such as network security, spam,
Standards development bodies have a vital role to phishing, denial-of-service attacks, and content regula-
play in addressing security vulnerabilities in protocols. tion. The extent to which each of these particular fields
Today there are security guidelines for protocol authors, are being regulated varies from country to country, and
security specifications for IP-based systems, guidance it is difficult to ascertain whether certain types of regu-
on how to identify cyberthreats, and countermeasures latory treatment are better than others. Nevertheless,
to mitigate risks, etc. and many more standards are be- adopting cybersecurity-related legislation is considered
ing developed to help address growing threats. ITU’s today a mainstay of a sound strategy for making cyber-
Telecommunication Standardization Sector (ITU-T) security mechanisms work better.
holds a unique position in the field of standardization as
its work brings together the private sector and govern- To present some insights into the range of issues
ments to coordinate work and to promote the har- that merit the attention of ICT regulators, it may be in-
monization of security policy and security standards on teresting to explore the specific areas in which coun-
an international scale.127 tries around the world have adopted cybersecurity-
related legislation or regulations. Experiences of se-
6.5.2.2 For what purpose are tools applied? lected countries in different regions are presented in
Table 6.3.
As in other regulatory and legal areas, each tool for
addressing cybercrime has its own role and its own use 6.5.2.4 Who can apply those tools?
and limitations. Most tools are single-purpose in nature;
accordingly, in order to address all aspects of cyber- In recent years, the Internet and the innovative ICT
crime, government agencies need to be equipped with services it enables have challenged this traditional sec-
a full set of complementary instruments. tor-specific approach to regulation, and have engen-
dered a call for new regulatory models able to respond
As shown in the table 6.2, regulatory tools can be to the complexity, breadth, and heterogeneity of the
used on a continuous basis, in parallel with regular modern Internet phenomena. Cybersecurity and cyber-
regulatory work related to stimulating investment and crime illustrate the need for current regulatory frame-
market growth, preserving competition, and ensuring works to move towards more decentralization and
affordable services to consumers. As a matter of im- cooperation among government bodies and all stake-
plementation strategy, an integrated approach to ad- holders in the cybercrime ecosystem (see also Sec-
dressing cybercrime will be characterised by a tion 6.4).
combination of ex ante and ex post tools, applied simul-
taneously in a range of target areas. But such an ap- According to ITU’s data, at least 45 regulators (or
proach should not be perceived as a sort of pervasive some 29 per cent of established regulators world-wide)
regulation and certainly should not be understood as a have been explicitly given the mandate to deal with cy-
move towards “more regulation” or additional regula- bersecurity, as of the end of 2010.128 Half of them, or
tory burdens or strings. Instead, an integrated approach close to 15 per cent, have jurisdiction over cybercrime
should feature smart, adaptive regulation, which builds issues, while in a quarter of all countries, the special-
protection mechanisms around vulnerable areas. More ized body responsible for cybersecurity is an agency
onerous enforced measures should only be applied other than the ICT regulator.
Chapter 6 211
Table 6.3: Examples of countries that have adopted legislation or regulations in cybersecurity-related areas,
2010
Online Critical in- Network Spam
Data Online Online gambling Child online formation security
Country Cybercrime
protection privacy fraud and protection infrastructure
gaming protection
Australia X X X X X X X
Brazil X X
China X X X X X X X X
Croatia X X X X X X X
Ecuador X X X X X X X X
Egypt X X X X
Finland X X X X X X
France X X X
Georgia X X X X X X
Germany X X X X X X X X X
Ghana X X X X X X X X
India X X X X X X
Kenya X X X X
Latvia X X X X X X
Moldova X X X X X
Nicaragua X X X X X
Pakistan X X X X X
Peru X X X X X X
Poland X X X X X X X X X
Qatar X X X X X X X X
Saudi X X X X X
Arabia
Senegal X X X
Singapore X X X X
St. Vincent X X X X X X
and the
Grena-
dines
Turkey X X X X X X X X
Zambia X X X X X
Note: This table is based on self‐reported information provided by countries through the ITU World Telecommunication/ICT Regulatory Survey
2010. Definitions may vary across countries.
Source: ITU World Telecommunication Regulatory Database
212 Chapter 6
Apart from the ICT regulator, the responsible body A new generation of peer-to-peer regulation is
is often the sector Ministry (e.g., in the Czech Republic, likely to promote collaboration and better performance.
India, and Japan), but it may also be the National IT Typically, performance will be closely related to respon-
Agency (e.g., in Ghana) or the police (e.g., in Singapore). siveness and willingness to cooperate among peers.
A handful of countries have created a specialized cyber- Nevertheless, there is also a need for alternative
crime agency (e.g., the National Response Center for mechanisms or routes for cooperation in regulation in
Cybercrimes in Pakistan) and others have assigned the case of a breakdown in cooperation or occurrence of
mandate to the government agency responsible for conflicts.
Internet-related issues (e.g., the Brazilian Internet
Steering Committee). In a number of countries, more In short, what would a comprehensive regulatory
than one entity has responsibilities in one or more ar- framework for cybercrime look like? Contrary to what
eas of cybercrime, for example network security, critical many may believe, it is not necessary to invent a com-
information infrastructure protection, and child online pletely new regulatory regime to accommodate the
protection (e.g., in Qatar, Q-CERT and ictQatar, the aforementioned concerns, but it does require the in-
regulator; in Austria, the ICT sector Ministry jointly with volvement of additional stakeholders and new forms
the Ministry of Justice and the Data Protection Com- and channels of cooperation at the national and inter-
mission; and, in Hungary, the ICT regulator and the na- national level. From the analysis carried out in the pre-
tional consumer protection agency). vious sections, it appears that the following elements
should be designed, applied and enforced:
6.5.2.5 How are those tools different from
– Adaptive and scalable mechanisms: there are in-
traditional regulatory tools and where is
creasing issues stemming from the accelerated
regulation headed?
pace of cybercrime and the cutting-edge technol-
ogy used to harm networks and consumers. The
Because of the large and growing number of play-
regulatory mechanisms put in place should be
ers in the ICT sector and the complexity of their interac-
flexible, forward-looking, and able to adapt quickly
tions, effective mechanisms for cooperation and
to new threats and offences. In fact, new measures
communication should be established in order to en-
may need to be conceived “on the fly” in order not
sure synergies and ultimately ensure resilient cyber-
to become overwhelmed by new generations of
systems and safe online experience. On the other hand,
malicious attacks. In the meantime, agencies have
these mechanisms need to allow for enough flexibility
to decide which regulations and requirements are
and openness in order to be capable of responding to a
important to retain and which should be replaced.
large array of circumstances without locking in the
agencies or stakeholders involved in regulation. – Modular approach: the ability of agencies in
charge of cybercrime oversight and response to
Cybersecurity and cybercrime cannot be treated as regulate efficiently in this area has major implica-
any other regulatory topic or subject matter. Although tions for investment in both communication net-
it is fair to include cybersecurity as a type of public works and services and a country’s long-term
good, the mechanisms for delivering it differ substan- competitiveness. Therefore, it is important to engi-
tially from other public goods in the ICT sector such as neer a modular approach to regulating the various
ubiquitous connectivity. There is a need for the design types of offences in a differentiated way to allow
of new mechanisms that support cooperation among for a greater or lesser degree of intervention and
stakeholders and the dynamic development of a shared coercion according to the magnitude of the offence
understanding of cyberthreat phenomena. Therefore, and the nature of the offender. The rationale be-
the cybersecurity ecosystem cannot be regarded as hind this is not to overload market players and con-
simply a network of institutions, entities, and individu- sumers with extra burdens (and ultimately not to
als following the same goals, but rather should be harm the market) while preserving the ability to
viewed as a community of interdependent and interact- fight back and block offences without delay.
ing constituencies. In a sense, regulation is only likely to – Dynamic decentralized control: the regulation of
be effective if distributed across the ecosystem or de- cybercrime is an ongoing process that requires
livered through peer-to-peer mechanisms — the func- regular attention as new issues emerge. As these
tioning and performance of which implicitly requires issues can occur at all network layers and at the
coordination and cooperation between peers. end user level, the response to cybercrime can only
be effective if it is distributed across the cybercrime
Chapter 6 213
ecosystem. A pure top-down, centralized approach responsibilities that include cybercrime (e.g., the Korea
to regulation is unlikely to prove efficient unless Communications Commission)130, older and more es-
combined with more open and dynamic models of tablished ICT regulators have extended their existing
cooperation with a host of agencies, network, and tasks to include various activities aimed at tackling cy-
service providers, as well as consumers. ber-related threats (e.g., the Swedish regulator, PTS)131.
– Agile procedures and protocols: ultimately, coop-
However, the exact mandate of ICT regulators in
erating agencies need to ensure that all known cy-
this field has not yet been clearly defined. With the
bercrime offences fall under the jurisdiction of at
field of vision and involvement for regulators expanding,
least one agency and that in areas of concurrent ju-
only a few ICT regulatory bodies have effective powers
risdiction, the procedures and protocols of the
to go beyond traditional telecommunication regulation
relevant agencies are non-controversial, comple-
and deal with wider ICT sector issues. Being active in a
mentary, and provide for concerted collaboration.
rapidly changing and developing sector exposes the ICT
As mentioned above, it is vital to ensure that there
regulators to new fields that have traditionally been
are no administrative or other hurdles to the
considered the domain of other government depart-
smooth applications of rules and regulations and
ments and agencies or possibly even no one’s do-
their effective enforcement.
main.132 Even if the regulator has enough competence
and industry expertise to be involved in addressing spe-
6.6 Role of the ICT regulator in cific problems, it should nevertheless have a clear un-
addressing cyberthreats70
derstanding about its mandate and of the
responsibilities and mandates of other stakeholders in
Traditionally, ICT regulators were not assigned a
order to interact and collaborate with them.
significant role in addressing cyberthreats since cyber-
crime was mainly considered the domain of lawmakers
The following discussion highlights some potential
and law enforcement agencies. However, with the in-
areas in which the ICT regulator can be involved and
creasing ubiquity and openness of ICT networks, the
analyzes activities that are generally handled by other
ICT sector and ICT users have become ever-more vul-
stakeholders. The analysis in this section provides in-
nerable. This vulnerability stems not from issues of
sight into some of the current trends and country ex-
dominance or anti-competitive practices,129 but from
amples. The section will answer the following questions
concerns about harmful and offensive content and in-
in order to probe the issue of extending the involve-
numerable cyberthreats to critical infrastructures, to
ment of the ICT regulator in issues related to cyberse-
privacy, and to the integrity of computer systems and
curity and to make some suggestions on specific
networks, to name but a few. When exploited by crimi-
functions and duties that the regulator could undertake:
nals, the vulnerabilities in question threaten not only to
harm individual users, businesses and financial institu- • What could be the reasons behind and the prereq-
tions but also to undermine the development of the ICT uisites for extending the mandate of ICT regulators
industry and related products and services. to address cybercrime?
• What are some of the specific areas where the ICT
What is the role of the ICT regulator in this complex
regulator has already been involved and/or can be
ecosystem? The ICT regulator can leverage certain core
potentially involved?
competencies and its position within the ICT sector to
make a material contribution to safeguarding cyberse- • What role can the ICT regulator play in each area
curity, particularly with respect to facilitating the mobi- when it is involved?
lization of various stakeholders and coordinating the
efforts of these stakeholders in the fight against cyber- 6.6.1 Extending the regulatory mandate to
crime. The long-term sustainability of the ICT industry address cybercrime: Areas of
depends on it. Consequently, ICT regulators in some involvement, skills and competences
countries have already explored the possibility of ex-
tending regulatory duties from dealing with universal 6.6.1.1 Extending the mandate of the ICT
access and competition and authorization issues to ad- regulator
dressing consumer protection, industry development,
cyber safety, and participation in cybercrime policy As ICT regulators, especially in developing countries
making and implementation. While some new regula- struggle to bridge the digital divide and to improve ac-
tory authorities have been created with mandates and cess to information and communications technology,
214 Chapter 6
they must prioritize the implementation of measures one who has contravened the prohibition
aimed at detecting and responding to vulnerabilities, of spam and unsolicited software by im-
the adoption of an appropriate cybersecurity strategy, posing fines.
and awareness raising among consumers about online
In 2009 OPTA raised the issue of a growing gap be-
threats.
tween cybersecurity and cybercrime for agencies
that deal with both issues. OPTA pointed out that it
At the same time, while there are reasons to sup-
is necessary to bring together competent national
port extending the ICT regulator’s mandate into the
authorities that deal with cybersecurity problems
area of cybersecurity, there are also reasons to be cau-
like spam and/or malware (ICT regulators, Data
tious in expanding the regulator’s mandate. When the
Protection Agencies, Consumer Protection Bodies)
responsibilities of the ICT regulator in this area are not
and police, public prosecutors, and other agencies
clearly defined or supported by the appropriate man-
fighting cybercrime. From the Dutch regulator’s
date, it will be challenging for the ICT regulator to de-
point of view, a bridge ‘between the world of cy-
termine how it can participate in the fight against
bersecurity and cybercrime’ should be built in or-
cybercrime alongside of other agencies and stake-
der to effectively address both issues. 134 The
holders. The jurisdiction of other agencies with respect
extension of regulatory power to address cyber-
to cybercrime must be ascertained and assessed to de-
crime provides the ICT regulator with a clear man-
termine if activities undertaken by these other agencies
date for further collaboration with different
should be transferred to the ICT regulator or possibly
agencies investigating and preventing cybercrime
shared with the ICT regulator. The main areas of regula-
and for developing legal and technical measures to
tory involvement that should be analyzed in each par-
address threats in cyberspace. This in turn
ticular case are discussed in the following sections.
strengthens the links between actors involved with
cybersecurity and facilitates capacity building
An analysis of country practices in selected coun-
within the whole ecosystem.
tries suggests that the mandate of ICT regulator can po-
tentially be usefully extended or strengthened into the 2) Taking over the responsibility for information se-
following areas: curity or network security. As a converged regula-
tor, the Malaysian Communications and
1) Implementing consumer protection duties. The
Multimedia Commission (MCMC) has an Informa-
Dutch Independent Post and Telecommunication
tion and Network Security (INS) department to en-
Authority (OPTA) highlights the fact that Internet
sure information security and network reliability
safety is a key area for regulation under the man-
and integrity within the communications and mul-
date of consumer protection. This is considered to-
timedia industry, and in particular the critical com-
gether with the task of addressing spam, spyware
munications and multimedia infrastructure. The
and botnets as threat to the privacy of anyone who
department’s mandate includes the promotion of
uses a computer. OPTA defines three key areas un-
education and awareness raising on information
der its consumer protection mandate:133
and network security best practices.135
• Prevention is better than cure. The ICT
3) Granting a newly established regulator with the
regulator can work together with ISPs and
operational mandate for Internet safety. The Ko-
other industry stakeholders to ensure the
rea Communications Commission (KCC) was
fulfilment of article 11.3 of the Dutch Tele-
formed after consolidating the former Ministry of
communications Act, which makes it man-
Information and Communication and the Korean
datory for ISPs to secure their networks
Broadcasting Commission in February 2008.
properly and to inform their customers of
Among other duties, the Commission is responsible
the risks that are peculiar to the Internet.
for the protection of Internet users from harmful or
• Spam prohibition. The Dutch regulator has illegal content.136
been given the authority to address any
contravention of the prohibition on unso- It should be noted that these activities and respon-
licited communication pursuant to its du- sibilities may in some cases overlap with the responsi-
ties to provide Internet safety for bilities of other agencies. In the case of established ICT
consumers. regulators, the regulator’s existing authority to address
certain issues such as consumer protection and ICT in-
• Fighting dissemination of malware. OPTA
frastructure protection and development may be ex-
has the power to take action against any-
Chapter 6 215
tended to include addressing cybercrime. For a newly ICT regulator to address cybercrime effectively de-
established regulator, the jurisdiction of other agencies pends to a large extent on its industry competency,
should always be taken into account to determine what technical knowledge, and perceived industry exper-
areas could fall under the responsibility of the ICT regu- tise.
lator. This is necessary to ensure the establishment of
• Availability of appropriate resources. Possessing
viable mechanisms for collaboration among govern-
the right financial and human resources, or being
ment agencies rather than creating redundant jurisdic-
able to acquire them through collaboration with
tions.
industry (public-private partnerships) or interna-
tional organisations, is necessary for the ICT regula-
6.6.1.2 Regulatory capacities and the extension
tor to be able to play an effective role in fighting
of the regulator’s mandate
cybercrime.
There are number of competencies and capabilities
If a regulatory authority does not possess all of
that an ICT regulator should possess before its mandate
these competencies and capabilities, extending regula-
is extended to include addressing cybercrime. These
tor’s mandate to cybercrime-related issues is likely to
competencies and capabilities are necessary for the ef-
prove challenging and even inefficient.
fective participation in the fight against cybercrime and
include:
The institutional design of the regulator also influ-
• Maturity of the regulator. Exercising duties and re- ences its ability to effectively take on broader mandate,
sponsibilities in the area of cybercrime may be a depending on whether it is a multi-sector regulator (like
difficult task for a newly established ICT regulator, utility commissions), a sector-specific telecommunica-
particularly when such duties and responsibilities tion/ICT regulator, or a converged regulator (also in
are added to the long list of conventional regula- charge of broadcasting regulation). While every model
tory duties and the challenge of dealing with of institutional design has its advantages and disadvan-
emerging issues such as convergence and introduc- tages from the perspective of ICT industry regulation,140
tion of new technologies. Newly created ICT regula- the type of institutional design should be taken into ac-
tors may be in a weak position as a newcomer, a count when assessing how and in what areas the ICT
factor that may have implications for its credibility regulator should be involved.
amongst other stakeholders to take on a leading
role in areas associated with domain of other au- Converged regulators have responsibility for broad-
thorities.137 For mature ICT regulators, it may be casting transmission and/or content as well as ICT ser-
easier to assess if there is room to extend the man- vices. Such regulators already face a challenge by taking
date, how the mandate can be extended within the on extensive and often complex workloads. However,
regulator’s existing activities, and what resources converged regulators may be well-suited to deal with
or specific competences will be necessary to deal cybercrime because of their broader mandate to ad-
with cybercrime issues. dress content issues (see Box 6.4); a converged regula-
tor thus has expertise that is relevant to fighting
• Links established within the ICT industry. The ma-
cybercrime. In a converged environment where tradi-
ture ICT regulator constantly interacts with other
tional telecommunication regulators may struggle to
stakeholders within ICT industry such as businesses,
resolve certain issues such as the consolidation be-
consumers, other governmental agencies, and in-
tween online content and telecommunications service
ternational organisations through different mecha-
providers, the converged regulator seems to be in a
nisms, including public consultations and
better position to address regulatory issues related to
consumer-feedback tools.138 The ability to leverage
content. Furthermore, the converged regulator is likely
existing links and mechanisms of collaboration to
to avoid imposing unequal regulatory interventions on
reach out to different ICT industry stakeholders is a
different content delivered over various platforms.141 .
prerequisite to addressing cybercrime.
• Technical expertise and industry expertise. Cyber-
threats are technology-driven.139 The ability of the
216 Chapter 6
Box 6.4: Content regulation as an essential component of fighting cybercrime

The digitalization of content allows it to be transmitted on different media, including cable, satellite, and over the Internet.
Despite digitalization, rules applied to broadcasting content usually do not apply to content delivered over the Internet. This
raises concerns about regulating the same type of content differently based on the platform used to deliver the content. It
also raises concerns about the unequal treatment of telecommunications, broadcasting, and Internet services, which are
regulated by different bodies pursuant to different laws. However, it is the lack of regulation of Internet content that raises
the most concerns from the perspective of cybercrime.
Content regulation is an essential part of fighting cybercrime since the unregulated or under-regulated Internet environment
facilitates different infringements of intellectual property rights and provides extended access to various kinds of illegal or
harmful information, including child pornography, hate speech, and terrorist propaganda.
Source: Authors.
Although the converged regulator has greater 6.6.1.3 Areas of involvement

adaptability and expertise in dealing with complex ICT
issues, the sector-specific regulator traditionally has Since the ICT regulator must interact with all stake-
substantial technical knowledge and understanding of holders involved with the functioning of the ICT sector,
the industry. Both types of regulators can potentially the regulator can be involved in many duties in almost
perform well in addressing cybersecurity and cyber- every area that concerns addressing cyberthreats or
crime issues. However, the greater institutional flexibil- cybersecurity. Although some fields or efforts are usu-
ity142 of the converged regulator can provide distinct ally considered to be the domain of other governmen-
advantages with regards to detecting areas of cyber- tal bodies, nevertheless the regulator’s core
crime activity and managing the ICT industry stake- competencies and its experience in international coop-
holders due to their broader regulatory involvement. eration on ICT issues suggest that the ICT regulator
This is not to suggest that sector-specific regulators could possibly be involved in many associated activities,
cannot play an important and effective role in cyberse- for example as an advisory body. The activities include
curity. Indeed, the reality is that there are fewer con- the following:
verged regulators while many sector-specific regulators
• Policy-making and developing policy approaches to
are actively involved with addressing content-related
address cyberthreats;
offences.
• Contributing to the development of cybercrime-
The rationale for creating multi-sector regulators related legislation and regulation;
relates to the network structure of the sectors (many of • Detecting and investigating cybercrime incidents;
which were at one time subject to monopoly control)
that are regulated by these agencies.143 Multi-sector • Contributing to law enforcement activities;
utility regulators can be less flexible and ICT-oriented • Facilitating national coordination to address cyber-
than converged or sector-specific regulators. However, crime;
due to the concerns related to critical information infra-
structure protection and protection against cyber- • Facilitating international cooperation to fight cy-
attacks, multi-sector regulators are in a good position bercrime; and
and hold the right competencies to play a central coor- • Awareness raising and capacity building among in-
dinating role as they typically regulate utilities that are dustry and consumers.
considered to be part of national critical infrastructure.
Consequently, the mandate of multi-sector regulators Since the activities of the ICT regulator and the de-
can often be extended to address cybersecurity and cy- gree of intervention differ from country to country and
bercrime on the basis of such regulators’ responsibility depend on various factors such as the current mandate
to protect the critical infrastructures. On the other of the ICT regulator and the jurisdiction of other agen-
hand, however, these regulators are much less pre- cies, the nature of the participation of the ICT regulator
pared to address content-related issues. in fighting cybercrime could be considered as an evolv-
ing process.
Chapter 6 217
6.6.2 Role of the ICT regulator in policy suing computer incident response (CERT/CSIRT) activi-
making and policy approaches ties, supervising observance of the Act on the Protec-
tion of Privacy and Data Security in
Although the traditional concept of delegation of Telecommunications, and encouraging national and in-
power within the state tries to separate policy making ternational cooperation.149
from policy implementation, it is nearly impossible to
attain the complete independence of the ICT regulator Degree of involvement:
from the ICT policy–making process.144 ICT regulators in
many countries play an important role in shaping the ICT regulators can use their core competencies to
policies and strategies for ICT industry development. offer help in shaping policy approaches and to provide
While the power of policy-making is traditionally specific input into the cybercrime policy-making proc-
granted to the higher level of governmental bodies, ess.
such as government ministries, the ICT regulator enjoys
clear advantages with respect to the formation of ICT 6.6.3 Role of the ICT regulator in developing
policy given its industry expertise and existing commu- cybercrime legislation and regulation
nication channels with other stakeholders.145 In some
countries, one of the main tasks of the ICT regulator is While the power to drafting and to formally adopt
providing inputs to the ICT policy-making process.146 It cybercrime statutes is the prerogative of legislators,
is quite likely that those ICT regulators will also be ex- analysis of country practices shows that the ICT regula-
pected to provide input into the cybercrime policy- tor can play an important role in the process of cyber-
making process. crime legislation enactment. Although ICT regulators in
general are designed to regulate industry, meaning they
When the ICT regulator’s mandate is extended to are not typically familiar with criminal law, some do-
include cybersecurity and related issues, the regulator mains exist where the ICT regulatory body can assist
can be involved in the policy-making process by: legislators. The areas where the regulator can be in-
volved vary from country to country, depending on
• Taking (or being given) the leading role in develop-
regulator’s field of expertise. However, what can be
ing and shaping the policy approaches in areas that
seen is that ICT regulators mainly participate in devel-
fall under its mandate (i.e., enforcement of regula-
oping or reviewing legislation when the data protection,
tions to ICT service providers; content), or
data transmission, spam, and ISPs responsibilities are
• Playing an advisory role by providing inputs into the being considered.150 As an entity that possesses techni-
development of policy, based on its expertise and cal knowledge, ICT industry expertise, and experience
competencies. in conducting public consultations, ICT regulators can
be involved in the process of developing cybercrime
The input that regulators provide to cybercrime regulation by:
policy-making can constitute a step in the process of
1) Acting as an advisory body. This is especially rele-
extending the mandate of ICT regulatory authority to
vant for developing countries that have limited or
address cybercrime. This was the case in Finland, for
no legislation to address cybercrime. When dealing
example. The Finnish government set up an Advisory
with ICT network deployment, ICT regulators
Committee for Information Security (ACIS) under the
should also promote cybersecurity and deliver a
Finnish Communications Regulatory Authority (FICORA)
clear message to other sector actors that the prob-
to develop the country’s national information strat-
lems of illegal use of global networks can under-
egy.147 The proposal released by ACIS in 2002 identifies
mine the benefits that Internet can bring to society.
goals and measures to promote the information secu-
An analysis of developing countries’ experiences in
rity strategy, including measures that can be considered
the area of drafting cybercrime legislation shows
as cybercrime–related. The proposal also highlights the
that the ICT regulator can be responsible for facili-
importance of the development and improvement of
tating the development of legal frameworks to ad-
appropriate legislation, facilitating international coop-
dress crime in cyberspace. Some examples are
eration, and increasing information security awareness
provided below.
among end-users.148 The government decision empow-
ers FICORA to act within the framework of implement- • The Ugandan Communications Commis-
ing the strategy as the national information security sion has played an advisory role in the
authority with different responsibilities, including pur- process of drafting cybercrime legislation
218 Chapter 6
by being involved in the multi-stakeholder Working Group (NCWG) established in

National Task Force which was established 2004 within the framework of the National
in 2003 to formulate cybercrime-related Cybersecurity Initiative. One of the tasks of
laws. Moreover, the Ugandan National NCGW was the criminalization of cyber-
Task Force on cybercrime legislation is now infringements through the drafting of cy-
part of a regional initiative called the East bercrime-related legislation, namely the
African Countries’ Task Force on Cyber Computer Security and Critical Information
Laws which is dedicated to an ongoing Infrastructure Protection Bill.155
process of development and harmonisa-
2) Initiating reviews and amendments of cybercrime
tion of cybercrime laws in the East African
legislation within the regulator’s area of expertise.
region.151
This opportunity is more relevant to countries with
• In Zambia, the Zambia Information and developed ICT networks, mature institutions deal-
Communications Technology Authority ing with cybercrime problems, and existing legisla-
(ZICTA, formerly CAZ) assisted in the activi- tion to address the problem of cybercrime. The ICT
ties of the National Working Group on Cy- regulator in this case deals with specific problems
bersecurity (NWG). This Working Group is that emerge within its areas of competence such as
in charge of drafting new cybercrime- the responsibilities of ISPs, blocking of harmful con-
related legislation152, namely the Electronic tent, and data retention (see Box 6.5).
Communications and Transactions Act
2009.153 This Act assigns the ICT regulator Degree of involvement:
the role of facilitating the creation of se-
cure communications systems and net- Since the input that ICT regulators can provide into
works; it also makes ZICTA one of the the development of legal frameworks depends on the
leading agencies with responsibilities for current state of the cybercrime legislation in a particu-
dealing with cybersecurity and cybercrime lar country, it is very likely that the degree of interven-
related issues.154 tion in this area will change once the initial bills are
drafted and approved.
• The Nigerian Communication Commission
participated in the Nigerian Cybercrime
Box 6.5: Reviewing cybercrime-related regulation in Belgium

In 2006, the Belgian ICT regulator (BIPT) was involved in the amendment of some specific areas of cybercrime legislation.
BIPT had detected the necessity of amending the data retention legislation and prepared a draft transposition of an EU di-
rective related to data retention into Belgian national law. The draft amendments were developed in cooperation with the
Federal Public Service of Justice and the Federal Computer Crime Unit. During the development process, the draft passed
public consultation. In addition, in 2008, BIPT announced that it was considering the possibility of rephrasing the legal provi-
sions with respect to privacy in the electronic communications sector.
Source: Annual report 2008 of the Belgian Institute for Postal Service and Telecommunication156
Box 6.6: CIRTs under the umbrella of the ICT Regulator

• Sweden - Sweden’s IT Incident Centre (Sitic) is located in the ICT Regulator PTS.157
• United Arab Emirates - aeCERT created as initiative of UAE Telecommunications Regulatory Authority to detect,
prevent and respond to the current and future cybersecurity incidents in the UAE.158
• Zambia - Zambia CERT was initially a project of Zambian Information and Communication Technology Authority,
supported by the ICT Regulator, ITU, and COMESA.159
• Qatar - National CERT (qCERT) was established by and acts on behalf of the Qatari ICT Regulator (ictQatar).160
Chapter 6 219
6.6.4 Role of the ICT regulator in detecting the ICT regulators are increasingly being granted law
and investigating cybercrime incidents enforcement powers in cybercrime-related areas such
as anti-spam laws enforcement, content regulation, or
As the ability to monitor, detect, analyze and inves- enforcing co-regulatory measures.
tigate cyberthreats and cyber-incidents is a critical ele-
1) Under the mandate of anti-spam law enforce-
ment in fighting cybercrime, the need to enhance the
ment, some European ICT regulators are already
ability to respond promptly and properly to computer
part of a contact network of anti‐spam enforce-
incidents have led to the creation of Computer Incident
ment authorities established by the European
Response Teams (CIRTs) both at the national and inter-
Commission in 2004 to fight spam on a pan-
national levels. Due to the multi-sector nature of cyber-
European level.162 At the global level, many ICT
crime, different CIRTs have been established by a range
regulators are listed as contact points for enforce-
of stakeholders, including governments, businesses,
ment agencies in the OECD Task Force on spam.163
telecommunication operators, and academia, to fulfil
As the law enforcement body responsible for spam
various functions.
regulation, ICT regulatory authorities can cooperate
closely with other law enforcement agencies. For
ICT regulators in both developed and developing
instance, there are cooperation agreements be-
countries can be responsible for creating, running and
tween ICT regulators and hi-tech crime police units
supervising national CIRTs. These CIRTs are usually con-
in the Netherlands and Romania.164
sidered the main entities responsible for detecting and
investigating cybercrime incidents at the national level 2) Content regulation is the area where converged
and key participants in enhancing cybercrime coopera- ICT regulators can exercise a mandate in the area of
tion at the international level. law enforcement. For example, ACMA, the Austra-
lian ICT regulator, administers a national regulatory
One of the first CIRTs established as an initiative scheme that includes the investigation of com-
under an ICT regulator was the Finnish national Com- plaints about prohibited online content and mobile
puter Emergency Response Team, launched in January phone content. ACMA has the power to direct the
2002 under the auspices of the Finnish Communica- content service provider to remove or prevent ac-
tions Regulatory Authority (FICORA).161 Today, more ICT cess to the content hosted in Australia165.
regulators have created CIRTs with national responsibil- 3) Some ICT regulators consider the power to impose
ity for monitoring and detecting cyberthreats, reacting and monitor cybersecurity requirements within the
to cybercrime and cybersecurity incidents and investi- industry as a future mandate for implementing
gating them. (See Box 6.6.) and enforcing co-regulatory measures. For exam-
ple, the Korea Communications Commission (KCC),
Degree of involvement: the broadcasting and telecommunications regula-
tor, and the Korea Internet and Security Agency
If the decision to create a CIRT under the umbrella (KISA) were planning to have ISPs monitor the se-
of the ICT regulator has been taken, the regulator could curity levels of the computers and other devices
exercise this mandate by maintaining the activities of used by customers. The suggested solution was to
CIRT and collaborating with other stakeholders in this limit or cut the Internet connectivity of users with
area. less-than-required software protection to force
them to upgrade their existing programs or install
6.6.5 Role of the ICT regulator in law new ones.166
enforcement
In a similar way, ZICTA announced that it is taking
The involvement of the ICT regulator in the en- measures to punish ISPs that continually fail to provide
forcement of laws related to cybercrime requires a security measures for their Internet services after Zam-
clear legal mandate granted to the regulator to exercise net's operations were paralyzed by hackers. In 2009,
and enforce particular legal provisions. While in some ZICTA was considering reviewing licence conditions for
countries government departments or agencies dealing all ISPs in order to ensure that they are effectively pre-
with traditional criminal offenders were assigned the pared to protect their customers.167
lead role in dealing with cyberthreats such as online
fraud, identity related crimes and child pornography,
220 Chapter 6
Box 6.7: Inbound and outbound traffic monitoring: The Mauritian Experience
Mauritius is exploring adding a new regulatory measure called “defense-in-depth” to the existing cybersecurity regulatory
tools that the new measure will not only focus on inbound traffic, but also consider the outbound traffic.
In Mauritius, curtailing illegal and harmful content on the Internet falls within the mandate of the ICT regulator, the Informa-
tion and Communication Technologies Authority (ICTA). To carry out its task, ICTA opted for an incremental approach. As a
first phase, the regulator developed a centralized content filtering solution to cut, at the national level, access to child por-
nography sites for end users in Mauritius. The advantages offered by this centralized system managed by the regulator are
twofold: on one hand, ISPs can share the security infrastructure, and on the other hand the quality of service and speed of
Internet are not affected by the filtering. The filtering servers don’t sit behind the ISP infrastructure and the system doesn’t
use proxy based filtering. Instead, it uses a hybrid Border Gateway Protocol (BGP) routing and URL filtering that filters only
traffic related to blacklisted URLs.
For the next phase, ICTA is exploring ways to scale up this centralized system to also include real-time malware filtering (i.e.,
malicious software such as viruses, worms, spyware, trojans, etc). The purpose of this kind of filtering is to block malware
before they infect computers or networks using identification and malware real-time blocking technologies. ISPs are mainly
concerned with protecting their own networks from external attacks and therefore are predominantly concerned with in-
bound traffic monitoring. The focus of “defense-in-depth” is, however, on outbound traffic monitoring, an area that ISPs
have no economic incentive to control as the potential damage in this case is done to other networks. By monitoring out-
bound traffic, the regulator can ensure that ISPs are supplying their customers with an Internet connection which is clean
from illegal web content and malware, while shifting some of the burden of security from end users to ISPs.
Source: ICTA, Mauritius
The degree of intervention by the ICT regu- stakeholders all share responsibility for network protec-
lator in law enforcement can only be determined at the tion. In this regard, care should be taken to avoid tar-
higher decision-making level of the national govern- geting ISPs alone with strict obligations related to
ment. The challenge for ICT regulators is to strike the network protection.
right balance in maintaining the idea that ICT sector
Box 6.8: The ICT regulator as a law enforcement body: Spam regulation and malware
Australia
The Australian Communications and Media Authority (ACMA) is responsible for enforcing the 2003 Spam Act which prohibits
the sending of ‘unsolicited commercial electronic messages’ with an ‘Australian link’. A message is seen as having an ‘Austra-
lian link’ if it originates or was commissioned in Australia or originates overseas but was sent to an address accessed in Aus-
tralia. In the case of a breach of the Spam Act, ACMA can take any of the following enforcement actions:168
• Issue a formal warning.
• Accept an enforceable undertaking from a person or company. Undertakings usually contain a formal commitment
to comply with the requirements of the Spam Act that ACMA has found person or company has breached. A failure
to abide by an undertaking can lead to the ACMA applying for an order in the Federal Court.
• Issue infringement notices.
• Seek an injunction from the Federal Court to stop a person sending spam.
• Prosecute a person in the Federal Court.
The Netherlands
In addition to being the enforcement agency for addressing spam, the Dutch Independent Post and Telecommunications
Authority (OPTA) is the designated enforcer of a malware ban in the Netherlands.169 OPTA imposes fines in the case of mal-
ware and spyware dissemination. For instance, in 2007 OPTA imposed a fine totalling 1 million Euro on three Dutch enter-
prises operating under the name of the biggest spyware distributors in the world for illegally installing spyware and adware
on more than 22 million computers in the Netherlands and elsewhere.170
Chapter 6 221
Degree of involvement: initiatives such as the Child Online Protection (COP) ini-
tiative launched by the ITU in order to address legal,
Regulators should bear in mind that it is better to technical, organizational and procedural issues and to
avoid over-regulation in fields where less enforcement engage in capacity building and international coopera-
would suffice and should also to try to find the areas for tion.174
shared responsibility for cybersecurity rather than im-
pose and enforce strict requirements on a narrow set of ITU’s call for action for all stakeholders (policy mak-
actors. ers, regulators, operators and industry) to promote the
adoption of policies and strategies that will protect
6.6.6 Role of the regulator in facilitating children in cyberspace and promote their safe access to
national coordination online resources, at the 2009 World Telecommunica-
tion and Information Society Day made under the COP
If the ICT regulator has developed mechanisms for initiative, exemplifies how the ICT regulator can help to
cooperating with industry players, it can play a lead role coordinate national stakeholders’ efforts in child online
in organizing various forms of partnerships between protection:175
public agencies and private actors to deal with cyber-
• Creation of public awareness on the issues related
crime.
to protecting children in cyberspace, identification
of policies, best practices, tools and resources for
Efforts by ICT regulatory bodies to facilitate national
adaptation/use on national level.
coordination and cooperation on cybercrime-related
issues may focus on specific cyberthreats. For example, • Support for ongoing work aimed at developing
in 2008 the Japanese multi-sector Ministry, the Ministry guidelines on protecting children online for policy
of Internal Affairs and Communications (MIC), launched makers and regulators.
an Anti-Bot Project in collaboration with Ministry of • Identification of risks to and vulnerabilities of chil-
Economy, Trade and Industry (METI) to promote a dren in cyberspace as the Internet and other online
prompt and effective approach to stopping cyber at- resources continue to expand.
tacks by bot-program-infected computers.171 The Cyber
Clean Centre (CCC), the operating body established for • Build resource repositories for common use.
the project, analyzes the characteristics of bots and • Promote capacity building aimed at strengthening
provides information on the disinfestations of bots global response in protecting children as they ven-
from users' computers. In addition, the Cyber Clean ture into cyberspace.
Centre is the main organization responsible for promot-
ing bot cleaning and preventing the re-infection of us- The experience gained by the ICT regulator from
ers' computers. This work is done in cooperation with participating in such initiatives (see Box 6.9) can further
ISPs.172 When the ICT regulator can identify its capabil- be leveraged in other areas of collaboration at the na-
ity and has interest in addressing specific problem, such tional level.
ad-hoc partnerships can be established in the any area
of regulator’s competence. Though the coordination of national stakeholders is
usually undertaken by governmental institutions at a
When the responsibility for facilitating national co- higher level of decision-making, there are instances
ordination has not yet been delegated to one specific when the ICT regulator is the only body at the national
national body, the ICT regulator can support the wide level that can initiate, facilitate, and coordinate the na-
range of the efforts undertaken at the national level. tional initiatives. Even when such initiatives are started
For example, since NWG’s creation in 2008, ZICTA acts from scratch and are eventually taken over by another
as a coordinator of different efforts to fight cybercrime entity, the ICT regulator would still be likely to have a
at the national level. It has coordinated stakeholders on solid contributory role in national coordination.
national level for a range of different actions to address
cybercrime – from capacity building to implementation Degree of involvement:
of legal frameworks.173
When the ICT regulator can coordinate national ef-
In the capacity as mediator between government forts on specific issues related to cybercrime such as
agencies and industry players, the ICT regulator can spam and child online protection, this effort should be
play a significant role in coordinating child protection encouraged.
222 Chapter 6
Box 6.9: Child Online Protection: Example of how national efforts are coordinated to contribute to a global
appeal
Australia – ACMA Cybersafety Program includes:
• An 'Internet Safety Awareness' presentation on the risks faced by children online and effective strategies for helping
to keep young people safe online;
• 'Professional Development Programs for Teachers' on how children use technology, digital literacy, cyberbullying,
identity protection, and the legal responsibility of schools to minimise risk; and
• 'Cybersmart Detectives' events for primary school age children.
Indonesia – Activities of the Directorate General of Posts and Telecommunications, Ministry of Communications and Infor-
mation technology include:
• Conducting socialization in schools and workshops featuring the theme of applying healthy, safe and wise internet;
• Internet publications on the theme of 2009 WTISD Protecting children in cyberspace; and
• Gathering around 500 representatives of regulators, telecommunication operators and other actors in telecommu-
nication community, as well as concerned society for WTISD 2009 on 17 May 2009 to demonstrate the using of
healthy and safe Internet for children.
Suriname - Activities of the Telecommunications Authority Suriname (TAS) include:
• Participation in an annual 4 day walk through the streets of Paramaribo promoting the theme;
• A 15 minute film to alert the youth of the possible dangers on the Internet; and
• Administering the course: "Diploma Veilig Internet" (Diploma Safe Internet).
Source: ITU WTISD 2009: Worldwide Initiatives176
6.6.7 Role of the regulator in facilitating

• Cooperate on the international level in some cy-
international cooperation
bercrime related fields in the exercise of their own
mandates, such as consumer protection or spam
ICT regulators have a long record of being involved
legislation enforcement (such as activities sup-
in a range of activities at the international level,177 es-
ported by the London Action Plan, a platform es-
pecially with regard to the ITU standardisation efforts178
tablished in 2004 for international public-private
and also through the activities of regional organisations
cooperation on spam enforcement and addressing
such as the European Commission, APEC179, the BEREC
spam-related problem182) or
(formerly the European Regulatory Group)180, and the
Arab ICT Organisation181. • Facilitate regional and global efforts for addressing
cyberthreats by being involved in different groups
Such ongoing involvement and familiarity with the that take part in international cooperation. Exam-
process of cooperation at different levels – national, ples include the collaboration among Kenya, Tanza-
regional and global – provides the ICT regulator with nia and Uganda within East Africa Communications
valuable experience to contribute to the process of re- Organization (EACO, formerly EAPRTO) (See
sponding to the truly international nature of cyber- Box 6.11).
crime. In facilitating international cooperation, ICT regu-
lators can either:
Box 6.10: International cooperation on cybersecurity and cybercrime: APEC

APEC is an inter-governmental, non-binding organization consisting of 21 Member States in the Asia-Pacific. Since the devel-
opment of the APEC Cybersecurity Strategy in 2002, the Telecommunication Working Group (APEC-TEL) has focused on ful-
filling the strategy’s goals on combating cybercrime and maintaining cybersecurity.183
As a part of strategic cooperation, APEC also pursues collaboration on cybersecurity and cybercrime issues with other inter-
national and regional organizations such as ITU, OECD, and ASEAN.184 Due to the involvement of regional ICT regulators,
APEC can be considered to be a prospective platform for regional cooperation that gives ICT regulators a more evolving role
in addressing cybercrime.
Chapter 6 223
Box 6.11: Harmonisation of cybercrime efforts in the East African region: EACO
Kenya, Tanzania and Uganda collaborate within EAPRTO, the East Africa Regulatory, Postal and Telecommunications Organi-
zation (now East Africa Communications Organization (EACO)).185 This organization aims to promote confidence and security
in the use of cyberspace in the East Africa (EA) region186 through collaboration amongst all the stakeholders, including ICT
regulators, by facilitating regional coordination, implementing the appropriate cybercrime legislation, developing and har-
monizing cybercrime legislation on East Africa regional level, and establishing National CERTs; regional and international
partnerships.
The EACO Cybersecurity Taskforce can be considered to be an inter-regional platform for collaboration as it cooperates with
EU countries. For example, in December 2009 members from Kenya and Tanzania participated in benchmarking visits to
CERT-FI and CERT-Hungary in order to share experience and in an effort to develop relevant frameworks for the establish-
ment of national CERTs.
As international (e.g., ITU) and regional (see 6.6.8 The role of the regulator in building
Box 6.10) organizations are increasingly turning their capacity to address cyberthreats within
attention to the issue of cybercrime, it is very likely that the ICT industry and among end ICT-
ICT regulators will start becoming directly involved in users
international cooperation in this field. ICT regulators
can also raise the problem of cyberthreats through ex- As one of the key actors in the ICT industry, the
isting mechanisms for international cooperation within regulator can focus some of its efforts on building ca-
the ICT industry such as the Independent Regulator’s pacity and raising awareness on cyberthreats among
Group (IRG)’s Informal working group for IT security end-users and ICT industry players. Raising awareness
that listed cybersecurity as a priority issue at the sug- among end-users flows naturally from the consumer
gestion of Danish ICT regulatory authority in April protection mandate of ICT regulators. Extending the
2004.187 This group is also cooperating and exchanging regulator’s mandate to include raising awareness about
experiences with ENISA and other international organi- cyberthreats leverages some of the regulator’s core
sations.188 This creates the platform for further interna- competencies and eventually allows these competen-
tional collaboration – both within the ICT sector and on cies to be mobilized in the fight against cybercrime. Ef-
the cross-sector level. forts to raise awareness may include organizing various
campaigns and distributing useful consumer informa-
As mentioned above, a platform for global cooper- tion through different channels. In order to optimize
ation is provided by the ITU Global Cybersecurity Agen- the outcome of awareness-raising campaigns, it is im-
da189, which is designed to enhance cooperation and portant that the ICT regulator has the means to receive
efficiency based on existing initiatives to avoid duplicat- end-users’ feedback. The ability to receive such feed-
ing efforts. It has already fostered projects such as the back allows to monitor how effectively information
Child Online Protection initiative and, with the support about cybersecurity and cybercrime is received and
of leading global players, is currently deploying cyber- understood by the general public, as well as to identify
security solutions to countries around the world.190 areas where more efforts to educate the public are re-
quired.
Degree of involvement:
Many regulators already have undertaken respon-
The increasing participation of ICT regulators in dif- sibility for building user awareness about cybercrime.
ferent international initiatives is likely to develop fur- Awareness-raising activities are largely focused on pro-
ther in the future. This suggests an evolving role for ICT viding customers with guidelines and tips to help them
regulators in addressing cybersecurity and managing avoid becoming victims of cybercriminals. In addition,
cyberthreats on an international basis. International regulators can provide timely warnings about new and
organizations increasingly offer opportunities for ICT emerging threats, such as viruses, malware, and other
regulators to contribute to and facilitate international vulnerabilities of the end-user. Examples of how regula-
cooperation regionally and globally. tors are engaged in providing such warnings to the pub-
lic as part of their responsibility to build awareness of
cybercrime-related issues among the public include:
224 Chapter 6
• In Finland, CERT-FI, which functions as the national (SOCA), and private sector sponsors from the retail,
Finnish Computer Emergency Response Team un- technology and finance sectors.194 Its role in Get-
der the Finnish Communications Regulatory Au- SafeOnline.org forms part of Ofcom’s wider media
thority (FICORA), publishes warnings about literacy strategy designed to provide citizens with
cybercrime threats aimed at increasing awareness confidence to use communications technologies ef-
among Internet users. One example of CERT-FI’s ac- fectively and safely.195
tivities is the CERT-FICORA memorandum on data-
stealing malware, which was issued in 2010. This The ICT regulator’s ability to dialog with industry
memorandum includes general guidelines on the players makes it also well-suited to undertaking capac-
procedures users may apply in order to prevent ity building within the ICT industry. In this role, the
data theft and procedures for data theft victims; regulator can encourage private sector stakeholders to
the memorandum aims to increase the overall implement measures to protect industry itself and con-
awareness of users about cybercrime and to share sumers against cybercrime. This could include encour-
information on useful tools with stakeholders.191 aging industry players to establish voluntary codes of
conduct (see Box 6.11) or to adopt technical require-
• The Belgian ICT regulator BIPT provides consumers
ments that help preventing cybercrime. It may also in-
with information and alerts on the latest viruses
clude promoting the adoption of best practices and
and critical vulnerabilities.192 In addition, it has also
international security standards.
come out with “general public" user guidelines in-
tended to describe some of the IT risks, possible
Degree of involvement:
remedies and preventive measures that users can
adopt to avoid becoming victims of cybercrimi-
As the responsibilities for awareness raising and
nals.193
capacity building fall under the general domain of con-
• In 2009, the United Kingdom’s ICT regulator Ofcom sumer protection, if these responsibilities are not al-
became one of the sponsors of the cross-sector ready assigned to another national player, there are
online safety initiative, GetSafeOnline.org. This ini- benefits to assigning these responsibilities to the ICT
tiative was established to provide a source of unbi- regulator. Of course, the degree of intervention and/or
ased, user-friendly advice about online safety to UK participation will vary, depending on the ability to lev-
consumers and small businesses. Since its inception, erage core regulatory competencies to the cybercrime
it has operated as a joint initiative between the issues.
government, the Serious Organised Crime Agency
Box 6.12: User awareness and capacity building in Australia

ACMA, the Australian ICT Regulator, is involved in several initiatives aimed at raising awareness and building capacity among
different stakeholder groups:
1. The ‘Cybersmart’ initiative196: a national cyber-safety education program managed by ACMA, as part of the Austra-
lian government’s commitment to promoting online safety for children and young people.
2. Australian voluntary E-Security Code of Practice197: the Code has been developed by Internet Industry Association
(IIA) with input from the ACMA and the Department of Broadband, Communications and the Digital Economy. The
E-Security Code of Practice is intended to provide guidelines for ISPs related to the delivery of consistent messages
to their customers when ISPs receive compromise reports from ACMA and to adopting consistent approaches to
customers who do not take remedial action when they are notified of a compromise.
3. Australian Internet Security Initiative (AISI)198: this initiative was launched to help address the emerging e-security
threat posed by networks of ‘zombie’ computers. ACMA developed the AISI software and obtained the support of
ISPs to enable its operation. AISI helps fight against spam and related e-security threats and provides information to
participating Australian ISPs about ‘compromised’ computers residing on their networks.
Chapter 6 225
6.7 Summary of findings and As noted in this chapter, in addition to general tele-
conclusions1 communication/ICT laws and other sector-specific legis-
lation, ideally a legal framework for fighting cybercrime
6.7.1 Maintaining a balanced approach to ICT should include updated criminal legislation, criminal
regulation procedural legislation, legislation for international co-
operation, and specific legislation to deal with cyber-
While it is generally recognized that ICT regulators crime-related issues, such as data protection legislation,
should maintain a balanced approach to regulation to ISP liability legislation, at a minimum. It should be
ensure sound development of the sector and to meet noted that although criminal law is an essential com-
social goals, in practice, this is never an easy task. This is ponent of legal frameworks aimed at fighting cyber-
especially true when it come to devising a sound strat- crime, these frameworks are not limited to
egy and national approach to fight the growing number criminalization. Some forms of cybercrime can be ad-
of offenses in cyberspace. The battle against all forms dressed effectively through use of non-criminal legal
of cybercrime requires immediate attention from all and regulatory sanctions, such as the deactivation of
relevant actors in the cybercrime ecosystem, including domain names used by a botnet.
the ICT regulator, and close collaboration and coordina-
tion among relevant parties. Analysis shows that inno- Regardless of the approach adopted to creating a
vative approaches to fighting cybercrime adopted by legal and regulatory framework to respond to cyber-
the ICT regulator can have a positive impact on end- crime, the challenge will remain the same. These
users’ trust and confidence, which underpins the de- frameworks must be flexible and forward-looking so
velopment of today's digital society and economy. Giv- that they do not quickly become outdated by the rapid
en the potential implications of cybercrime and threats pace of change in the sector. At the same time, they
to cybersecurity for the uptake of ICT services by citi- should offer sufficient structure and certainty in how
zens, businesses, and governments in developing coun- offences and sanctions are defined to enable effective
tries, ICT regulators can be a key stakeholder in investigations, prosecutions, and conviction of cyber
developing and implementing national strategies to re- criminals. Of course, telecommunication/ICT regulators
spond to cybercrime. have always had to strike such delicate balances. Regu-
lators must provide the sector with certainty without
Looking back some ten years, cybercrime was rare- inhibiting growth and innovation; they must protect
ly addressed in the legal and regulatory frameworks go- and encourage investment in the sector while simulta-
verning the ICT sector. Integrating cybercrime-related neously protecting consumers and ensuring that ICTs
offenses into either telecommunication/ICT legislation serve a multitude of socially desirable ends. At the
or national criminal laws is thus a fairly recent practice. present, the task of the ICT regulator is to strike these
Implementation mechanisms, including the assignment delicate balances in a nimble way given the rapid pace
of clear roles and responsibilities to the different stake- of technological innovation and the exponential growth
holders involved, would surely facilitate the work that of the variety, sophistication, and impact of offenses in
countries must undertake to fight against cybercrime. cyberspace. In this regard, ICT regulators have recourse
There is no one model for developing a legal and regu- to a variety of tools and mechanisms that can be used
latory cybercrime framework. While countries have be- alone or in combination to address this issue. Not the
gun to respond to cybercrime, insufficient time has least of these tools and mechanisms is the involvement
elapsed to assess the relative strengths and weak- of industry itself, as well as end-users and other stake-
nesses of various approaches. In the past, important holders, to play central roles in the cybercrime regula-
reforms in the telecommunication sector have been tory framework. In the cybercrime ecosystem,
introduced through piecemeal legislative amendments maintaining a balanced approach to ICT regulation in-
over a period of time and through major reforms of the creasingly involves balancing interest among the actors
telecommunication regulatory framework that featured who are engaged in the battle against cybercrime. As
the introduction of entire new pieces of legislation. The this chapter has argued, ICT regulators are well-placed
latter, more radical approach may prove to be the most to actively contribute to efforts to bring stakeholders
practical for responding to cybercrime since it would together in cooperative and coordinated responses to
allow for a common, coherent approach to the full cyberthreats.
range of current issues facing the sector today and a
single, consistent legal point of reference with regards
to available means and tools for regulating the sector.
226 Chapter 6
6.7.2 Future challenges and future roles for has several important roles to play in an environment
ICT regulators that is prepared to deal with cybercrime and that has
harmonised cybercrime legislation, trained police and
This chapter concludes by outlining some of the law enforcement officials, a national computer incident
challenges facing ICT regulators and the roles that these response team, and a well coordinated national strat-
challenges may create for regulators. These challenges egy. However, in countries where this capacity has not
can broadly be grouped into the following categories: yet been developed, the ICT regulator has a role to play
general challenges related to the nature of cybercrime; to help the country develop and put in place the re-
the existence of “safe havens” for cybercriminals; con- quired capabilities to begin to respond to cybercrime.
tent regulation; inter-agency cooperation and concur- The regulator can leverage its technical knowledge of
rent jurisdiction over the Internet; degree of regulatory the ICT sector, its connections with industry stake-
intervention; and maintaining the separation of powers holders, its experience in dealing with other govern-
and regulatory independence. ment agencies, and its regional and international ties to
facilitate the development and implementation of a na-
One of the biggest issues for ICT regulators and tional strategy that is coordinated and harmonized with
other stakeholders involved in responding to different regional and international approaches.
kinds of offenses and threats in cyberspace is the rapid
pace of change in the ICT sector and in technology itself. Convergence has already forced ICT regulators to
The types of cyber offences and the manner in which begin to grapple with content regulation, which has
cybercrime is perpetrated continues to evolve rapidly. lead to the establishment of a number of converged
Moreover, as noted above, cyberthreats are growing in regulators in all regions. Cybercrime presents regulators
variety, sophistication, and so is their impact. The Inter- with a new dimension of content regulation: the exis-
net itself has grown significantly in importance over the tence of harmful or offensive content on the Internet.
past ten years and its importance is unlikely to diminish The establishment of a converged ICT regulator can
going forward. In this environment, the role of ICT regu- help to avoid unequal intervention in regulating con-
lators evolve and their involvement should respond to tent delivered over various platforms. Moreover, a con-
the specific needs of the national ICT ecosystem, and verged regulator combines expertise in content with
especially of users and the industry. ICT regulators often expertise in carriage of such content. In this regard, the
share the heavy responsibility of ensuring the reliability converged regulator is well-placed to tackle cybercrime
of the Internet and avoiding disruptions to its current related to harmful content and can prevent the duplica-
and future uses by consumers, businesses and govern- tion of efforts related to protecting consumers and
ments that may result in significant loss to the commu- fighting illegal or harmful content.
nity and/or economy. Discharging this responsibility
requires the ICT regulator to be capable of acting The cybercrime ecosystem is complex and often in-
quickly to respond to cyberthreats and suggests that volves overlapping mandates of various regulatory
there is a high value to adopting preventative measures. agencies. Moreover, as discussed above, there is a
As the ICT regulator’s mandate continues to evolve, it pressing need to engage a variety of stakeholders, from
will be crucial to ensure that the regulator is equipped industry to end-users to academia to government, in
with the tools and resources necessary to detect cyber- coordinated and cooperative efforts to fight cybercrime.
threats, to engage in awareness raising among all In this context, questions arise about how to manage
stakeholders, to mobilize particular stakeholders to play overlapping mandates and which agencies should take
their roles in fighting cybercrime, to coordinate its re- the lead in regulating various aspects of the Internet
sponses with authorities from the public and private and online activities. For example, one should ask
sector, and to contribute to fostering cooperation and which agency or agencies (ICT regulator, financial regu-
coordination between countries and across regions. lator, data protection agencies, general consumer pro-
tection agency, privacy commissioners, and so forth)
The general challenges associated with cybercrime should regulate services such as e-commerce,
are compounded by the existence of “safe havens” for e-learning, mobile- and e-banking, as well as how they
cyber criminals. The international nature of cybercrime could do undertake these responsibilities, and whether
allows cyber criminals to exploit the existence of coun- or not there is a need for cross-sector regulation. Since
tries that do not have the necessary regulatory frame- ICT regulators have jurisdiction over electronic commu-
works, laws, and related enforcement capability in nications networks, they will almost certainly be in-
place to police cybercrime effectively. The ICT regulator volved in one way or another in any national strategy to
Chapter 6 227
respond to cyberthreats. ICT regulators must work to the separation of power and undermine regulatory in-
ensure that they coordinate their efforts with other dependence by bringing the regulator closer to either
agencies and may even take the lead in shaping cross- the government or industry. This issue is especially
sectoral cybercrime strategies. relevant where the mandates of other stakeholders in
this area have not yet been clearly defined or when the
Issues surrounding concurrent jurisdiction raise im- ICT regulator is involved as a leading actor in cybersecu-
portant questions about the degree of regulatory inter- rity policy making, the development of cybercrime leg-
vention in the ICT sector. Concerns arise when two islation, or law enforcement. However, the analysis of
areas of regulation – one with less intervention and an- practices in such countries as Finland suggests that
other which is more heavily regulated – are merged once a general strategy to fight cybercrime has been
since the outcome may be that both areas are ulti- developed and once ICT regulator’s mandate within
mately regulated more strictly. This can happen even that strategy is established, a separation of power can
where the underlying intention was to decrease the still be maintained and regulatory independence safe-
level of intervention, as was the case with the transfer guarded. Nonetheless, this issue should be always
of existing telecommunication regulation to the Inter- taken into account when assessing the responsibilities
net arena.199 In the context of responding to cybercrime, of ICT regulator in fighting cybercrime.
there is a risk that cross-sectoral and coordinated re-
sponses to cybercrime will ultimately result in a much A credible ICT regulatory framework that protects
higher level of regulation over the Internet than is ideal consumer interests, but also those of the public and
for promoting ongoing investment and innovation in investors, operators, and service providers, remains a
the ICT sector. Despite ongoing discussions about the key requirement going forward. Regulators must grap-
necessity of self-regulation and co-regulation, some ple with crumbling consumers trust in ICTs and tele-
fields tend to be regulated with the maximum degree communication services due to concerns about privacy,
of intervention because of the criminal component of security, and fraud, as well as industry players that are
cybercrime. A future challenge will be to maintain bal- occupied with attempting to make convergence in the
ance in regulation, as the development of smart regula- market place work for them. At the same time, gov-
tory approaches will determine areas where it is ernments are seeking to engage public and private
reasonable to make regulation stricter while avoiding stakeholders in close partnerships to respond to grow-
overregulation and unnecessary intervention in other ing ICT needs and expectations amongst consumers
areas. and businesses. In this context, the need both for func-
tioning regulatory institutions and viable cooperation
There are also concerns that a leading role for the among stakeholders has never been stronger.
ICT regulator in the fight against cybercrime may undo
1
Sections 6.1, 6.5 and 6.7 of this chapter were written by Christine Sund and Youlia Lozanova, BDT/ITU.
2
This chapter intends to provide ICT stakeholders with a greater understanding of the evolving cyberthreats and criminal of-
fences in cyberspace. It builds on a GSR09 background paper on “Cybersecurity: The Role and Responsibilities of an Effective
Regulator”, available at:
3
Sections 6.2 and 6.3 of this chapter were written by Dr. Marco Gercke, Cybercrime Research Institute.
228 Chapter 6
4
ITU-T Recommendation X.1205, “Overview of Cybersecurity”. Also see ITU, List of Security-Related Terms and Definitions, on-
line: www.itu.int/dms_pub/itu-t/oth/0A/0D/T0A0D00000A0002MSWE.doc.
5
See e.g. ITU WTSA Resolution 50: Cybersecurity (Rev. Johannesburg, 2008), online:
www.itu.int/dms_pub/itu-t/opb/res/T-RES-T.50-2008-PDF-E.pdf; ITU WTSA Resolution 52: Countering and combating spam
(Rev. Johannesburg, 2008), online: www.itu.int/dms_pub/itu-t/opb/res/T-RES-T.52-2008-PDF-E.pdf; ITU WTDC Resolution 45:
Mechanism for enhancing cooperation on cybersecurity, including countering and combating spam (Rev. Hyderabad, 2010), on-
line: www.itu.int/publ/D-TDC-WTDC-2010/en; European Union Communication, “Towards a General Policy on the Fight Against
Cyber Crime” (2007), online: http://eur-lex.europa.eu/LexUriServ/site/en/com/2007/com2007_0267en01.pdf; National Science
and Technology Council, President’s Information Technology Advisory Committee (U.S.), “Cyber Security: A Crisis of Prioritization”
(2005), online: www.nitrd.gov/pitac/reports/20050301_cybersecurity/cybersecurity.pdf.
6
See Heise News, 04.01.2005, available at: www.heise.de/newsticker/meldung/54746; BBC News, Sasser net worm affects mil-
lions, 04.05.2004, available at: http://news.bbc.co.uk/1/hi/technology/3682537.stm.
7
Yeo, Lack of cybercrime laws impedes Asia's cross-border efforts?, available at:
www.zdnetasia.com/lack-of-cybercrime-laws-impedes-asia-s-cross-border-efforts-62040170.htm.
8
ITU, Cybersecurity Guide for Developing Countries. ITU, 2009, available at:
www.itu.int/ITU-D/cyb/publications/2009/cgdc-2009-e.pdf.
9
ITU, Cybersecurity Guide for Developing Countries. ITU, 2009, available at:
10
ITU, Cybersecurity Guide for Developing Countries, Edition 2007; Cieslikowski, Key Trends in ICT Development; Hafkin, Gender
Issues in ICT Policy in Developing Countries: An Overview
http://old.apc.org/english/capacity/policy/mmtk_gender_ictpol_hafkin.pdf
11
Schjølberg/Ghernaouti‐Hélie, A Global Protocol on Cybersecurity and Cybercrime – An initiative for peace and security in cyber-
space. Cybercrimedata, 2009; ITU, Cybersecurity Guide for Developing Countries. ITU, 2009, available at:
12
This is however a broad definition. There is no single definition of cybercrime. For an overview of the various offences that fall
within the definition of “cybercrime”, see Box.1.
13
ITU, Cybersecurity Guide for Developing Countries. ITU, 2009.
14
For more information on the ITU Global Cybersecurity Agenda (GCA), see: www.itu.int/cybersecurity/gca/.
15
The seven goals of the GCA are: 1) Elaboration of strategies for the development of a model cybercrime legislation that is global-
ly applicable and interoperable with existing national and regional legislative measures. 2) 2Elaboration of global strategies for
the creation of appropriate national and regional organizational structures and policies on cybercrime. 3) Development of a
strategy for the establishment of globally accepted minimum security criteria and accreditation schemes for hardware and
software applications and systems. 4) Development of strategies for the creation of a global framework for watch, warning and
incident response to ensure cross-border coordination between new and existing initiatives. 5) Development of global strategies
for the creation and endorsement of a generic and universal digital identity system and the necessary organizational structures
to ensure the recognition of digital credentials across geographical boundaries. 6) Development of a global strategy to facilitate
human and institutional capacity building to enhance knowledge and know-how across sectors and in all the above-mentioned
areas. 7) Proposals on a framework for a global multi-stakeholder strategy for international cooperation, dialogue and coordina-
tion in all the above-mentioned areas.
16
For more information see: www.itu.int/osg/csd/cybersecurity/gca/pillars-goals/index.html.
17
Gercke, The Slow Wake of a Global Approach Against Cybercrime, Computer Law Review International 2006, page 141, for an
overview on the most important substantive criminal law provisions.
18
Sieber, Cybercrime, The Problem behind the term, DSWR 1974, 245 et. Seqq.
Chapter 6 229
19
For example, to use the anonymous communication services. See: Claessens/Preneel/Vandewalle, Solutions for Anonymous
Communication on the Internet, 1999; Regarding the technical discussion about traceability and anonymity, see: CERT Research
2006 Annual Report, page 7 et seqq., available at: www.cert.org/archive/pdf/cert_rsch_annual_rpt_2006.pdf.
20
Keyser, The Council of Europe Convention on Cybercrime, Journal of Transnational Law & Policy, Vol. 12, Nr. 2, page 289, availa-
ble at: www.law.fsu.edu/journals/transnational/vol12_2/keyser.pdf; Sofaer/Goodman, Cyber Crime and Security – The Transna-
tional Dimension - in Sofaer/Goodman, The Transnational Dimension of Cyber Crime and Terrorism, 2001, page 1 et seq.,
available at: http://media.hoover.org/documents/0817999825_1.pdf.
21
Sussmann, The Critical Challenges from International High-Tech and Computer-related Crime at the Millennium, Duke Journal of
Comparative & International Law, 1999, Vol 9, page 451 et seq., available at:
www.g7.utoronto.ca/scholar/sussmann/duke_article_pdf.pdf.
22
Gercke, The Slow Wake of a Global Approach against Cybercrime, Computer Law Review International 2006, 141.
23
Bruce, at al. TNO Report. International Policy Framework for Protecting Critical Information Infrastructure: A Discussion Paper
Outlining Key Policy Issues. 2005.
24
See more about consumer protection as an ICT regulatory concern: Trends in Telecommunication Reform 2009. Hands-On or
Hands-Off? Stimulating Industry Growth through Effective ICT Regulation. Summary, 2009, available at:
www.itu.int/dms_pub/itu-d/opb/reg/D-REG-TTR.11-2009-SUM-PDF-E.pdf.
25
See more about this trend: Macmillian, Connectivity, Openness and Vulnerability: Challenges Facing Regulators. GSR Discussion
Paper 2009, available at:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR09/doc/GSR09_Challenges-regulators_Macmillan.pdf; Stevens, Consumer
Protection: Meeting the expectation of connected Consumer. GSR Discussion Paper 2009, available at:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR09/doc/GSR09_Consumer-protection_Stevens.pdf.
26
ITU Cybersecurity Gateway. Civil Society, available at: http://groups.itu.int/Default.aspx?tabid=933&language=fr-FR.
27
Regarding approaches to define and categorise cybercrime see for example: Cybercrime, Definition and General Information,
Australian Institute for Criminology, available at: www.aic.gov.au/topics/cybercrime/definitions.html; Explanatory Report to the
Convention on Cybercrime, No. 8. Gordon/Ford, On the Definition and Classification of Cybercrime, Journal in Computer Virolo-
gy, Vol. 2, No. 1, 2006, page 13-20; Wilson, Botnets, Cybercrime, and Cyberterrorism: Vulnerabilities and Policy Issues for Con-
gress, 2007, page 4, available at: www.fas.org/sgp/crs/terror/RL32114.pdf.
28
Levy, Hackers, 1984; Hacking Offences, Australian Institute of Criminology, 2005, available at:
www.aic.gov.au/publications/htcb/htcb005.pdf.; Taylor, Hacktivism: In Search of lost ethics? in Wall, Crime and the Internet,
2001, page 61.
29
According to HackerWatch statistics, on the 23rd of April, 2010, 195,000,000 incidents were reported for the last 30 days. Source:
www.hackerwatch.org.
30
Annual Report to Congress on Foreign Economic Collection and Industrial Espionage – 2003, page 1, available at:
www.ncix.gov/publications/reports/fecie_all/fecie_2003/fecie_2003.pdf.
31
Botnets is a short term for a group of compromised computers running programmes that are under external control. For more
details, see Wilson, Botnets, Cybercrime, and Cyberterrorism: Vulnerabilities and Policy Issues for Congress, 2007, page 4, avail-
able at: www.fas.org/sgp/crs/terror/RL32114.pdf.
32
The Messaging Anti-Abuse Working Group reported in 2005 that up to 85 per cent of all e-mails were spam. See:
www.maawg.org/about/FINAL_4Q2005_Metrics_Report.pdf.
33
Johnson/McGuire/Willey, Why File-Sharing Networks Are Dangerous, 2007, available at:
http://oversight.house.gov/documents/20070724140635.pdf.
34
Javelin Strategy & Research 2006 Identity Fraud Survey, Consumer Report, available at:
www.javelinstrategy.com/products/99DEBA/27/delivery.pdf. For further information on other surveys see Chawki/Abdel Wa‐
hab, Identity Theft in Cyberspace: Issues and Solutions, page 9, Lex Electronica, Vol. 11, No. 1, 2006, available at:
www.lex-electronica.org/articles/v11-1/ chawki_abdel-wahab.pdf.
230 Chapter 6
35
Stevens, Rosalind, Consumer Protection: Meeting the expectation of connected Consumer. GSR Discussion Paper 2009, available
at: www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR09/doc/GSR09_Consumer-protection_Stevens.pdf.
36
See OPTA. Joint ruling of the CBP (Dutch Data Protection Authority) and OPTA (Independent Post and Telecommunications Au-
thority) concerning “tell-a-friend systems” on websites. 2004.
37
ITU WSIS Thematic meeting on countering spam. Spam in the Information Society: Building frameworks for international coop-
eration.
38
OECD, Spam Issues in developing countries. 2005.
39
ITU WSIS Thematic Meeting on Countering Spam CICG, Geneva, 7–9 July 2004.
40
ITU WSIS Thematic Meeting on Countering Spam CICG, Geneva, 7–9 July 2004.
41
ITU ICT Eye, at: www.itu.int/ITU-D/icteye/.
42
See Development Gateway’s Special Report, Information Society – Next Steps?, 2005, available at:
http://topics.developmentgateway.org/special/informationsociety.
43
See, e.g. Rash, et al. Crime Online. Cybercrime and Illegal Innovation. NESTA. Research Report. July, 2009.
44
Ealy, A New Evolution in Hack Attacks: A General Overview of Types, Methods, Tools, and Prevention, page 9.
45
In order to limit the availability of such tools, some countries criminalise the production and offer of such tools. An example of
such a provision can be found in Art. 6 of the European Convention on Cybercrime.
46
Long/Skoudis/van Eijkelenborg, Google Hacking for Penetration Testers, 2005; Dornfest/Bausch/Calishain, Google Hacks: Tips &
Tools for Finding and Using the World’s Information, 2006.
47
ITU/Gercke, Understanding Cybercrime: A Guide for Developing Countries, ITU 2009, page 75.
48
For a brief history of the Internet, including its military origins, see: Leiner/Cerf/Clark/Kahn/Kleinrock/Lynch/Postel/
Roberts/Wolff, A Brief History of the Internet, available at: www.isoc.org/internet/history/brief.shtml.
49
Lipson, Tracking and Tracing Cyber-Attacks: Technical Challenges and Global Policy Issues.
50
Regarding filter obligations/approaches see: Zittrain/Edelman, “Documentation of Internet Filtering Worldwide”, available at:
http://cyber.law.harvard.edu/filtering/, and Reidenberg, “States and Internet Enforcement” (2004) 1 University of Ottawa Law
& Technology Journal, Vol. 1, No. 213, 2004, page 213 et. Seq.
51
National Sovereignty is a fundamental principle in International Law. See Roth, State Sovereignty, International Legality, and
Moral Disagreement, 2005, page 1.
52
Putnam/Elliott, International Responses to Cyber Crime, in Sofaer/Goodman, Transnational Dimension of Cyber Crime and Ter-
rorism, 2001, page 35 et seq; Sofaer/Goodman, Cyber Crime and Security – The Transnational Dimension in Sofaer/Goodman,
The Transnational Dimension of Cyber Crime and Terrorism, 2001, page 1 et seq.
53
See Gercke, The Slow Wake of A Global Approach Against Cybercrime, Computer Law Review International 2006, 142. For ex-
amples, see Sofaer/Goodman, Cyber Crime and Security – The Transnational Dimension, in Sofaer/Goodman, The Transnational
Dimension of Cyber Crime and Terrorism, 2001, page 16.
54
See: Lewis, Computer Espionage, Titan Rain and China, page 1, available at:
www.csis.org/media/csis/pubs/051214_china_titan_rain.pdf.
55
56
ITU. Cybersecurity Guide for Developing Countries. ITU, 2009. Page 5.
57
This issue was addressed by a number of international organisations. The UN General Assembly Resolution 55/63 points out:
“States should ensure that their laws and practice eliminate safe havens for those who criminally misuse information technolo-
Chapter 6 231
gies”. The full text of the Resolution is available at: www.unodc.org/pdf/crime/a_res_55/res5563e.pdf. The G8 10 Point Action
plan highlights: “There must be no safe havens for those who abuse information technologies”.
58
Ealy, A New Evolution in Hack Attacks: A General Overview of Types, Methods, Tools, and Prevention, page 9 et seqq., available
at: www.212cafe.com/download/e-book/A.pdf.
59
The Online-Community HackerWatch publishes regular reports on hacking attacks. Based on their sources, more than 250 mil-
lion incidents were reported in only one month (August 2007). Source: www.hackerwatch.org.
60
Nearly 50% of all fraud complains reported to the United States Federal Trade Commission are related to a amount paid be-
tween 0 and 25 USD. See Consumer Fraud and Identity Theft Complain Data – January – December 2006, Federal Trade Com-
mission, available at: www.consumer.gov/sentinel/pubs/Top10Fraud2006.pdf.
61
Regarding the attacks, see: Lewis, Cyber Attacks Explained, 2007, A cyber-riot, The Economist, 10.05.2007, available at:
www.economist.com/world/europe/PrinterFriendly.cfm?story_id=9163598; Digital Fears Emerge After Data Siege in Estonia,
The New York Times, 29.05.2007.
62
See: Toth, Estonia under cyber attack, www.cert.hu/dmdocuments/Estonia_attack2.pdf; Ianelli/Hackworth, Botnets as a Vehicle
for Online Crime, 2005, page 3.
63
See Emerging Cybersecurity Issues Threaten Federal Information Systems, GAO, 2005, available at:
www.gao.gov/new.items/d05231.pdf.
64
Keizer, Duch “Botnet Suspects Ran 1.5 Million Machines”, TechWeb, 21.10.2005.
65
Whether a particular ICT regulator will have responsibility for cyber security and consumer protection depends on the legislative
framework governing the ICT regulator in the country in question. Most ICT regulators have been assigned responsibility for
these matters.
66
Regarding the impact on computer forensic and criminal investigations, see: See Huebner/Bem/Bem, Computer Forensics – Past,
Present And Future, No.6.
67
Singh; The Code Book: The Science of Secrecy from Ancient Egypt to Quantum Cryptography, 2006; D’Agapeyen, Codes and Ci-
phers – A History of Cryptography, 2006; An Overview of the History of Cryptology.
68
Zanini/Edwards, The Networking of Terror in the Information Age, in Arquilla/Ronfeldt, Networks and Netwars: The Future of
Terror, Crime, and Militancy, page 37Flamm, Cyber Terrorism and Information Warfare: Academic Perspectives: Cryptography,
available at: www.terrorismcentral.com/Library/Teasers/Flamm.html.
69
74 per cent of respondents of the 2006 E-Crime Watch Survey mentioned encryption technology as one of the most efficient
e-crime fight technologies. For more information, see: 2006 E-Crime Watch Survey, page 1.
70
Sections 6.4 and 6.6 were written by Tatiana Tropina, Cybercrime Research institute.
71
WGIG Report, 2005, available at: www.wgig.org/docs/WGIGREPORT.pdf.
72
The importance of roles of all stakeholder mentioned here is especially highlighted in WSIS Declaration of Principles, 2003, avail-
able at: www.itu.int/wsis/docs/geneva/official/dop.html.
73
See e.g. ENISA country reports, available at: www.enisa.europa.eu/.
74
The World Bank Group. Global ICT Department. Cybersecurity: A New Model for Protecting the Network, available at:
http://mba.tuck.dartmouth.edu/digital/Research/ResearchProjects/CyberSecurity.pdf
75
See WGIG Report, 2005, available at: www.wgig.org/docs/WGIGREPORT.pdf and Lie/ Macmillan, Cybersecurity: the Role and
Responsibilities of an Effective Regulator. Draft Background Paper. 9th ITU Global Symposium for Regulators. 2009, available at:
76
WGIG Report, 2005, available at: www.wgig.org/docs/WGIGREPORT.pdf.
77
Sieber, Internet Crimes – Annex 1 to the Questionnaire for the 18th International Congress of the IACL. 2009.
232 Chapter 6
78
See: Marsden at al, Options for an Effectiveness of Internet Self- and Co-Regulation. Phase 1 Report: Mapping Existing Co- and
Self-Regulatory Institutions on the Internet. RAND Europe, 2007; Sahel, A new policy-making paradigm for the Information So-
ciety, TPRC conference, 2006, available at: http://web.si.umich.edu/tprc/papers/2006/635/NewParadigmInfoSociety.pdf.
79
Vogel, Towards a Global Convention against Cybercrime. World Conference on Penal Law, Guadalajara, Mexico, 2007, available
at: www.penal.org/IMG/Guadalajara-Vogel.pdf.
80
For details of the discussion on loosing governmental control on ICT sector see: Sahel, A new policy-making paradigm for the In-
formation Society, TPRC conference, 2006, available at:
http://web.si.umich.edu/tprc/papers/2006/635/NewParadigmInfoSociety.pdf, See also ITU Cybersecurity Gateway , available at:
www.itu.int/cybersecurity/gateway/.
81
See e.g. Guillaume, Fighting Cybercrime: Technical, Juridical and ethical Challenges. Virus Bulletin Conference, September, 2009.
Page 69.
82
83
84
In February, 2010 Microsoft Corp won a U.S. court approval of deactivation of global network of computers that the company
accused of spreading spam and harmful computer codes. Microsoft request to deactivate 277 Internet domains, which the
software maker said is linked to a "botnet," was granted by a federal judge in Alexandria, Virginia. See details: Microsoft Wins
Court Approval to Topple "Botnet": Report. NY Times, 25th February, 2010, available at:
www.nytimes.com/reuters/2010/02/25/technology/tech-us-microsoft.html.
85
86
The use of self-regulation and co-regulation as a tool for responding to cybercrime is discussed in more detail below, in Sec-
tion 3.2.1.2(c).
87
Marsden at al, Options for an Effectiveness of Internet Self- and Co-Regulation. Phase 1 Report: Mapping Existing Co- and Self-
Regulatory Institutions on the Internet. RAND Europe, 2007.
88
The Attorney-General’s Department Submission Parliamentary Joint Committee on the Australian Crime Commission Inquiry in-
to Cybercrime, 2003.
89
See Sieber, Legal Regulation, Law Enforcement and Self-regulation, Protecting Our Children on the Internet, J.Watermann, M.
Machill (eds.), 2000, pp. 319-399.; Sieber, Internet Crimes – Annex 1 to the Questionnaire for the 18th International Congress of
the IACL, 2009.
90
Brousseau, Internet Regulation: Does Self-Regulation Require an Institutional Framework, DRUID Summer Conference on "In-
dustrial Dynamics of the New and Old Economy - who is embracing whom?" Copenhagen/Elsinore 6-8 June 2002, Page 1.
91
ITU Global Cybersecurity Agenda. HLEG Global Strategic Report, ITU, 2008.
92
Rash et al. Crime Online. Cybercrime and Illegal Innovation. NESTA. Research Report. July, 2009.
93
Callanan /Jones, Co-operation between LE, Industry and Academia to deliver long term sustainable training to key cybercrime
personnel, 2009, available at:
www.coe.int/t/dghl/cooperation/economiccrime/cybercrime/cy%20activity%20interface%202009/if_2009_presentations/LEA-
ISP%20Training%20Strategy%20v1.0.pdf.
94
Sieber, Internet Crimes – Annex 1 to the Questionnaire for the 18th International Congress of the IACL, 2009.
95
See information on the High-Level Experts Group on Cybersecurity (HLEG), available at:
www.itu.int/osg/csd/cybersecurity/gca/hleg/index.html.
Chapter 6 233
96
97
Rash et al., Crime Online. Cybercrime and Illegal Innovation. NESTA. Research Report. July, 2009.
98
Brenner/Clarke, Distributed Security: a New Model of Law enforcement, 2005, available at: http://ssrn.com/abstract=845085.
99
The guide is available at: www.itu.int/ITU-D/cyb/cybersecurity/projects/crimeguide.html.
100
ITU Telecommunication Regulatory Database, available at: www.itu.int/icteye/.
101
An in-depth analysis of the impact of broadband on the economy and the related policy and regulatory issues can be found in
the GSR10 discussion paper on the topic, available at:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/documents/documents.html.
102
ITU-infoDev ICT Regulation Toolkit, available at: www.ictregulationtoolkit.org.
103
104
ITU World Telecommunication Regulatory Database, available at: www.itu.int/icteye/.
105
Gercke, The Slow Wake of a Global Approach Against Cybercrime, Computer Law Review International 2006, page 141.
106
ITU/Gercke, Understanding Cybercrime: A Guide for Developing Countries. ITU, 2009, page 85.
107
The value of co-regulation and self-regulation was discussed above in Sections 4 and 5.
108
ITU Trends in Telecommunication Reform 2006, Regulating in the Broadband World.
109
110
111
112
See for example MAAWG’s industry-wide codes of conduct, available at: www.maawg.org/about/.
113
Regulating Utilities: Contracting out Regulatory Functions, infoDev 2006, available at:
www.ictregulationtoolkit.org/en/Publication.2352.html.
114
In general, in common law countries, a regulatory agency must have the authority to seek the assistance of the court in enforc-
ing an order or determining a matter, etc. It is an important issue since a court may not have jurisdiction to hear a matter if
there is not legislation that establishes this jurisdiction. This is not a matter that should normally be left to administrative type
procedures; it should be set out in legislation (either that of the regulator or that of the court or both). The administrative pro-
cedures typically address how a matter may be referred to a court by the regulator.
115
116
117
OPTA, NMa Cooperation Protocol, available at: www.globalcompetitionforum.org/regions/europe/Netherlands/OPTA.PDF.
118
NCC, Memorandum of Understanding between Consumer Protection Council and the Nigerian Communications Commission,
available at: www.ncc.gov.ng/RegulatorFramework/MOU%20BETWEEN%20NCC%20AND%20CPC.pdf.
119
ITU Global Cybersecurity Agenda (GCA), available at: www.itu.int/cybersecurity/gca/.
120
WSIS, Tunis Agenda for the Infromation Society, available at: www.itu.int/wsis/documents/doc_multi.asp?lang=en&id=2267|0.
121
ITU Global Cybersecurity Agenda (GCA), High-Level Experts Group, Global Strategic Report (2008) at
www.cybersecurity-gateway.org/.
122
Council of Europe, Convention on Cybercrime, Budapest (Nov. 23, 2001, entry into force July 1, 2004), available at
http://conventions.coe.int/Treaty/en/Treaties/Html/185.htm.
234 Chapter 6
123
Council of Europe, Convention on Cybercrime, Budapest (Nov. 23, 2001, entry into force July 1, 2004).
124
ITU Global Cybersecurity Agenda (GCA), High-Level Experts Group, Global Strategic Report, ITU, 2008.
125
12th UN Congress on Crime Prevention and Criminal Justice, Delegates Consider Best Response to Cybercrime as Congress
Committee Takes Up Dark Side of Advances in Information Technology, UNIS/CP/605E, Brazil (13 Apr. 2010) at
www.un.org/en/conf/crimecongress2010/pdf/pr100413-1.pdf.
126
ITU/Gercke, Understanding Cybercrime: A Guide for Developing Countries, ITU, 2009.
127
ITU-T Study Group 17 is the lead ITU Study Group on telecommunications security and identity management. It is responsible
for studies relating to security, including cybersecurity, countering spam and identity management and handles security guid-
ance and the coordination of security related work across all ITU-T study groups. More information can be found at:
www.itu.int/ITU-T/studygroups/com17/index.asp.
128
ITU World Telecommunication Regulatory Database, available at: www.itu.int/icteye.
129
Macmillian, Connectivity, Openness and Vulnerability: Challenges Facing Regulators. GSR Discussion Paper 2009, available at:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR09/doc/GSR09_Challenges-regulators_Macmillan.pdf.
130
e.g. Korea Communications Commission established in February, 2008 (formed after consolidating the former Ministry of In-
formation and Communication and the Korean Broadcasting Commission) announced among other core regulatory duties pro-
tection of Internet users from harmful or illegal content. Korea Communications Commission: http://eng.kcc.go.kr.
131
e.g. Swedish ICT Regulator PTS addresses cyberthreats and cybercrime under user protection mandate and network security
mandate. See: PTS. Secure communications, available at
www.pts.se/en-gb/About-PTS/Operations/Secure%20communications/.
132
Trends in Telecommunication Reform 2009. Hands-On or Hands-Off? Stimulating Industry Growth through Effective ICT Regula-
tion (Summary), 2009, page 11, available at: www.itu.int/dms_pub/itu-d/opb/reg/D-REG-TTR.11-2009-SUM-PDF-E.pdf.
133
OPTA. Regulatory areas, available at: www.opta.nl/en/about-opta/regulatory-areas/.
134
OPTA Reaction on the Consultation Concerning the Future of ENISA, 14/01/2009, available at:
http://ec.europa.eu/information_society/policy/nis/docs/pub_consult_nis_2009/public_bodies/OPTA.pdf.
135
See: MCMC, What do we Do. Information Network Security, available at: www.skmm.gov.my/what_we_do/ins/feb_06.asp.
136
Korea Communications Commission: Important Issues, available at: http://eng.kcc.go.kr.
137
Lie/Macmillan, Cybersecurity: the Role and Responsibilities of an Effective Regulator. Draft Background Paper. 9th ITU Global
Symposium for Regulators. 2009, available at:
138
ITU-infoDev ICT Regulation Toolkit - Public Consultation Processes, available at:
www.ictregulationtoolkit.org/En/PracticeNote.756.html; Labelle, ICT Policy Formulation and e-strategy development, 2005,
available at: www.apdip.net/publications/ict4d/ict4dlabelle.pdf.
139
140
ITU-infoDev ICT Regulation Toolkit, available at: www.ictregulationtoolkit.org/en/Section.2033.html.
141
ITU-infoDev ICT Regulation Toolkit, available at: www.ictregulationtoolkit.org/en/Section.2033.html.
142
ITU-infoDev ICT Regulation Toolkit - Converged Regulator, available at: www.ictregulationtoolkit.org/en/PracticeNote.2557.html.
143
Henten. at al. The Next Step for Telecom Regulation: ICT Convergence Regulation or Multisector Utilities Regulation?
144
ITU-infoDev ICT Regulation Toolkit. Section 6.3. 6.3 Separation of Power and Relationship of Regulator with Other Entities, avail-
able at: www.ictregulationtoolkit.org/en/Section.1269.html.
Chapter 6 235
145
ITU-infoDev ICT Regulation Toolkit - Public Consultation Processes, available at:
www.ictregulationtoolkit.org/En/PracticeNote.756.html; Labelle, ICT Policy Formulation and e-strategy development, 2005,
available at: www.apdip.net/publications/ict4d/ict4dlabelle.pdf.
146
For example, Botswana Telecommunications Authority is imposed to provide the input to government efforts of policy making.
See: Case Study Single Sector Regulator: Botswana Telecommunications Authority (BTA). ITU-infoDev ICT Regulation Toolkit,
available at: www.ictregulationtoolkit.org/en/PracticeNote.2031.html.
147
International CIIP Handbook 2008/2009, Center for Security Studies, ETH, Zurich, 2009, available at:
www.crn.ethz.ch/publications/crn_team/detail.cfm?id=90663, page 133.
148
National Information Security Strategy Proposal, November, 2002, available at:
www.mintc.fi/fileserver/national_information_security_strategy_proposal.pdf.
149
Ministry of Transport and Communications, Finland. Government resolution on National Information Security Strategy. Helsinki,
4 September 2003, available at: www.oecd.org/dataoecd/38/0/36406236.pdf.
150
151
See, e.g. Report of the Second EAC Regional Taskforce Meeting on Cyber Laws. June, 2008, Kampala, Uganda, available at:
http://r0.unctad.org/ecommerce/event_docs/kampala_eac_2008_report.pdf.
152
Mukelabai, Cybersecurity Efforts in Zambia. Presentation at ITU Regional Cybersecurity Forum for Africa and Arab States
4-5 June 2009 Tunis , Tunisia, available at:
www.itu.int/ITU-D/cyb/events/2008/lusaka/docs/mukelabai-caz-zambia-lusaka-aug-08.pdf.
153
Hatyoka, ZICTA Corner - Defining ZICTA’s new mandate. Times of Zambia, 2009, available at:
www.times.co.zm/news/viewnews.cgi?category=12&id=1262768483.
154
Zambia Electronic Communications and Transactions Act 2009, available at:
www.caz.zm/index.php?option=com_docman&Itemid=75; see also ZICTA. Cybercrime Penalties (Part 1), available at:
www.caz.zm/index.php?option=com_content&view=article&id=76:cyber-crime-penalties-part-1&catid=34:column&Itemid=38.
155
Maska, Building National Cybersecurity Capacity in Nigeria. Presentation to the ITU Regional Cybersecurity Forum for Africa and
Arab States, Tunis 2009, available at www.itu.int/ITU-D/cyb/events/2009/tunis/docs/maska-nigeria-cybersecurity-june-09.pdf.
156
Annual report 2008 Belgian Institute for postal service and telecommunication, BIPT, 2009, available at:
http://bipt.be/GetDocument.aspx?forObjectID=3091&lang=en.
157
See: PTS. Secure communications, available at: www.pts.se/en-gb/About-PTS/Operations/Secure%20communications/.
158
Bazargan, A National Cybersecurity Strategy aeCERT Roadmap. Presentation at Regional Workshop on Frameworks for Cyberse-
curity and CIIP 18 – 21 Feb 2008 Doha, Qatar, available at:
www.itu.int/ITU-D/cyb/events/2008/doha/docs/bazargan-national-strategy-aeCERT-doha-feb-08.pdf.
159
Mukelabai, Cybersecurity Efforts in Zambia. Presentation at ITU Regional Cybersecurity Forum for Africa and Arab States 4th –
5th June 2009 Tunis , Tunisia, available at:
160
Lewis, Q-CERT. National Cybersecurity Strategy Qatar, available at:
www.itu.int/ITU-D/cyb/events/2008/brisbane/docs/lewis-Q-CERT-incident-management-brisbane-july-08.pdf.
161
FICORA, www.ficora.fi/.
162
Time.lex. Study on activities undertaken to address threats that undermine confidence in the Information Society, such as spam,
spyware and malicious software. SMART 2008/ 0013, available at:
http://ec.europa.eu/information_society/policy/ecomm/doc/library/ext_studies/privacy_trust_policies/spam_spyware_legal_s
tudy2009final.pdf. Page 21.
236 Chapter 6
163
E.g. ICT regulators are involved in law enforcement efforts with regard to combating spam in the following countries: Australia,
Finland, Greece, Hungary, Japan, Malaysia, Mexico, Netherlands, Portugal, Turkey. See: OECD Task Force on SPAM. Enforcement
authorities contact list, available at: www.oecd-antispam.org/countrycontacts.php3.
164
Time.lex. Study on activities undertaken to address threats that undermine confidence in the Information Society, such as spam,
spyware and malicious software. SMART 2008/ 0013, available at:
http://ec.europa.eu/information_society/policy/ecomm/doc/library/ext_studies/privacy_trust_policies/spam_spyware_legal_s
tudy2009final.pdf. Page 21.
165
ACMA,Regulating on-line content, available at: www.acma.gov.au.
166
167
Malakata, Zambia authorities crack down after Zamnet hack
www.computerworld.co.ke/articles/2009/01/23/zambia-authorities-crack-down-after-zamnet-hack.
168
ACMA, How the ACMA fighting SPAM. Legislation & Enforcement, available at:
www.acma.gov.au/WEB/STANDARD..PC/pc=PC_310309.
169
OPTA Reaction on the Consultation Concerning the Future of ENISA, 14/01/2009, available at:
http://ec.europa.eu/information_society/policy/nis/docs/pub_consult_nis_2009/public_bodies/OPTA.pdf.
170
Commission welcomes fast and effective intervention by Dutch regulator OPTA against spyware and malware placed on 22 mil-
lion computers. Europa Press Releases Rapid. 20/12/2007, available at:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/1971.
171
MIC, Anti-Bot Presentation for ISP is to be Held. Press release Telecom, July, 17, 2008, available at:
www.soumu.go.jp/main_sosiki/joho_tsusin/eng/Releases/Telecommunications/news080717_1.html.
172
What is Cyber Clean Center?, available at: https://www.ccc.go.jp/en_ccc/index.html.
173
See: Mukelabai, Cybersecurity Efforts in Zambia. Presentation at ITU Regional Cybersecurity Forum for Africa and Arab States
4th – 5th June 2009 Tunis , Tunisia, available at:
174
ITU Child Online Protection (COP) Initiative, available at: www.itu.int/osg/csd/cybersecurity/gca/cop/so-whats-cop.html.
175
See: WTISD-2009. Call for action, available at: www.itu.int/wtisd/2009/call-for-action.html.
176
WTISD 2009: Worldwide Initiatives, available at: www.itu.int/wtisd/2009/initiatives.html.
177
178
See ITU-T, available at: www.itu.int/net/ITU-T/info/Default.aspx.
179
Working Group APEC-TEL, available at: www.apectelwg.org/.
180
European Regulatory Group, available at: http://egr.eu.int.
181
Arab ICT Organisation, available at: www.aicto.org/.
182
The London Action Plan serves as a network of national spam enforcement agencies (including ICT regulators, Data Protection
Agencies, Consumer Protection Agencies) and promotes the effective coordination of public and private efforts on combating
spam by including ICT industry. The London Action Plan involves ICT regulators from Australia, Japan, Lithuania, Malaysia, Mex-
ico, Taiwan, the Netherlands, United Kingdom (ICT regulator OFCOM participates with observer status). See: London Action Plan,
available at: www.londonactionplan.com/?q=node/1.
Chapter 6 237
183
See: APEC TEL Working Group, available at: www.apectelwg.org/, APEC Telecommunication and Information Working Group,
available atwww.apec-ecba.org/english/info/Article_New.jsp?a_no=4280&col_no=43&dir=200710&siteid=english.
184
APEC TEL Working Group, available at: www.apectelwg.org/.
185
See: East Africa Regulatory, Postal and Telecommunications Organization (EARPTO), available at: www.cck.go.ke/earpto_issues/.
186
Njiraini, Report on Recommendations for an Effective Regulatory Framework for Cybersecurity in Kenya, 2010, page 6, available
at:
www.commonwealthigf.org/cms/images/pdf/mwende_njiraini_recommendations_regulatory_framework_cybersecurity_keny
a.pdf.
187
Weiss, Sicherheit im Netz –Was kann der Gesetzgeber tun? Europäische Ansichten und Aussichten, available at:
http://subs.emis.de/LNI/Proceedings/Proceedings17/GI-Proceedings.17-2.pdf.
188
National IT and Telecom Agency Denmark. International collaboration, available at:
http://en.itst.dk/it-security/international-collaboration.
189
ITU Global Cybersecurity Agenda, available at: www.itu.int/osg/csd/cybersecurity/gca/.
190
ITU Global Cybersecurity Agenda (GCA), available at: www.itu.int/osg/csd/cybersecurity/gca/.
191
FICORA. News 29/01/2010. Memorandum on Data Stealing Malware is Published, available at:
www.ficora.fi/en/index/viestintavirasto/uutiset/2010/P_6.html.
192
See BIPT. Warning. Viruses, available at: www.bipt.be/en/13/VirusAlertLast/Last_warning/Last_virus_alert.aspx.
193
See BIPT. Some Advice, available at: www.bipt.be/en/16/ShowContent/1584/Some_advice/Introduction.aspx.
194
Ofcom joins GetSafeOnLine, 2009, available at: www.getsafeonline.org/nqcontent.cfm?a_id=1500.
195
See: Ofcom. Media Literacy, available at: www.ofcom.org.uk/advice/media_literacy/.
196
ACMA. Cybersmart Program, available at: www.acma.gov.au/WEB/STANDARD/1001/pc=INT_PUB_CONTENT_PARENTS.
197
The ACMA plays a leading role in E-Security Code of Practice, available at:
www.acma.gov.au/WEB/STANDARD/1001/pc=PC_311830.
198
Improving e-security for Australian internet users, available at: www.acma.gov.au/WEB/STANDARD/pc=PC_310225#4.
199
ITU-infoDev ICT Regulation Toolkit. 3.5.2. Organisational Issues.
238 Chapter 6
7 CLIMATE CHANGE, ICTS AND REGULATION

Author: Stephen Young, Founder, ICT and Climate Change
7.1 Executive Summary imposed obligations, legislation, and/or the impact

of increasing costs (especially long run fuel costs).
7.1.1 Introduction1
• ICTs have the potential to reduce GHGs created by
other sectors (as evidenced in studies by Accen-
This chapter discusses the relationship between
ture/Vodafone, Association of European Telecoms
climate change and the ICT sector, with a specific focus
Network Operators (ETNO), Global eSustainability
on telecommunications. The chapter considers the spe-
Initiative (GeSI), ITU4 , Telstra and the European
cial relationship between ICTs and climate change as
Commission 5 ). These changes can come about
the context for exploring whether the nature of the re-
from the wider diffusion and penetration of ICTs as
lationship ought to include a special role for regulators.
a result of changes to industrial processes and
Specifically, the chapter considers whether the nature
changes to behaviour.
of the special position between ICT players and climate
change suggests that ICT sector regulators, specifically • Some estimates reckon that the impact of ICTs on
those in charge of regulating telecommunications ser- other sectors could mean that, by 2020, ICT-
vice providers (TSPs), should have a more active role in enabled GHG reductions will be six times the size of
environmental protection and should consider climate GHGs produced by ICTs.6
change issues when making decisions concerning TSPs. • Reducing GHGs from other sectors is “business un-
The status quo ante represents the converse position, usual,” and represents a massive opportunity for
namely that decisions relating to climate change should ICT players. Deloitte estimates that by 2020, the
be left to general laws and regulations that apply to overall market for environmental products and ser-
other companies, organizations and individuals. vices will be worth USD 2.7 trillion.7 In order to un-
lock new sources of revenues, TSPs will need to
7.1.2 Main assumptions capitalize on opportunities to help other industries
meet the demand for such services, including those
The following assumptions underlie this chapter that relate to reducing GHGs.
and form the context for considering sector regulation
relating to climate change: • Disruptive changes to markets and technologies in
recent years have caused ICT sector regulators to
• Like most industries, the ICT sector produces green focus their efforts on liberalizing markets, prevent-
house gases (GHGs),2 but the ICT sector produces ing the abuse of dominance, and ensuring effective
significantly less GHGs than many other sectors, and economically efficient relationships between
and the levels of GHGs produced by the ICT sector service providers while protecting consumer inter-
represent a bargain in terms of tonnes of CO2 per ests.
USD of GDP.
• At present, except in a few limited cases, the objec-
• GHGs from ICTs are growing3 and are likely to con- tives for ICT sector regulators do not include con-
tinue to grow for the foreseeable future, as devices siderations relating to the environment in general,
and networks become ubiquitous and the applica- or climate change in particular.
tions and services based on ICTs continue to grow.
• ICT GHGs can be viewed as “business as usual” a 7.1.3 Main questions
natural consequence of the growth of the ICT in-
dustry worldwide – and like most other sectors, will The overlap between climate change, ICTs, and sec-
need to be reduced, either as a result of self- tor regulators is a hitherto unexplored area. In order to
Chapter 7 239
develop discussion of this overlap, the chapter 7.1.4 Methodology

throughout poses a number of questions. These ques-
tions are typically found at the end of each section and This chapter was developed using a flexible metho-
are organized as regulator’s checklists. An integrated dology, combining qualitative research based on pub-
checklist is available at the end of the chapter (in An- lished resources, cross-cutting analysis, and synthesis of
nex 7.2). the two main topics (ICT regulation and climate change).
This was augmented by informal discussions with some
The type of questions that are considered include: interested observers. The methodology used in this
chapter is based on defining the issues of relevance for
• What is the relationship between ICTs and climate
the core topics and organizing them in a structured dis-
change?
cussion in order to focus on the contact points between
• What is the role of ICT service providers, particular- them. This provides the basis for illustrating how con-
ly, Telecommunication Service Providers (TSPs), in crete climate change concerns could be integrated into
producing GHGs? ICT regulatory work, with the goal of stimulating envi-
• Given the potential for ICT service providers, par- ronment-friendly industry practices and models of con-
ticularly TSPs, to reduce their own climate- sumer behaviour.
changing GHG emissions, should the GHG produc-
tion of TSPs be subjected to ICT sector regulation? The analysis has been used to build thematic
checklists for regulators to help them position them-
• Given the potential for ICT service providers, par- selves vis-à-vis the emergence of regulatory issues re-
ticularly TSPs, to reduce climate-changing GHG lating to climate change and improved sustainability of
emissions in other sectors, are specific forms of ICT energy use. The checklists indicate a priority rank of
regulatory intervention that relate to TSPs’ ability those issues and the degree of regulatory involvement.
to facilitate the reduction of GHGs necessary? The checklists also allow the identification of discrete
• Should the responsibilities of ICT sector regulators areas of action within regulatory practice and can serve
be broadened to encompass environmental objec- as a tool in the decision-making process. Most of the
tives, particularly policies and interventions that re- questions in the checklists can be answered in multiple
late to climate change? ways: the possible ways forward are not limited to a
predefined choice and can be tuned according to the
• Which modes of regulation might be employed to regulator’s status and circumstances.
bring about the desired outcomes?
• Should GHG reduction measures be incorporated The final goal of this exercise is not to provide a
into existing regulatory mechanisms, or is there a single solution to the issues identified, but rather to
need to devise specific regulatory interventions? generate debate, raise awareness and commence a col-
laborative regulatory effort to curb carbon emissions in
• Should sector regulators have a role in encouraging the ICT sector.
ICTs using their networks and services to reduce
GHGs in other sectors? It may (accurately) be noted that this chapter has a
• If sector regulators are to have a role in policies Euro/U.S.-centric orientation. This reflects the informa-
that relate to climate change, how can these poli- tion that is currently available: there is some informa-
cies be designed so that they do not to stifle the tion about the impacts of climate change in, e.g.,
processes of liberalization, increasing efficiency, developing countries; there are also examples of inno-
and continuous innovation?8 vative solutions to provide off-grid power to mobile
base stations, typically in developing countries. In a sign
• How can ICT sector regulators ensure that any ac- that the balance is beginning to be redressed, in June
tions which take account of environmental policies 2010, China Mobile and the World Wildlife Fund (WWF)
in general, and climate change interventions in par- published a paper on the scope for low carbon tele-
ticular, are effectively coordinated with other agen- communications to reduce current and future emis-
cies and policy-making bodies? sions in China.9 But the China Mobile-WWF paper is
currently an exception: to date, most of the thinking
This chapter is a discussion document. As a rela- and publishing by ICT players on climate change has
tively new and under-explored area, the objective is not happened in the “more developed" countries, and this
to set out policy prescriptions, but to consider themes chapter reflects that situation.
and raise questions as the prelude to a wider discussion.
240 Chapter 7
7.1.5 Scope and focus of the analysis Using the model of the ICT ecosystem shown above,
almost all of the entities depicted would be subject to
This is not a chapter about the totality of the rela- TSP regulation, with the exception of service providers
tionship between the ICT sector and the natural envi- whose business is not primarily telecommunications
ronment. There are many points of contact between and end users. But there are many players that are not
the ICT sector and the environment, which means that covered in the scope of this chapter notwithstanding
a chapter on ICTs and the environment could result in a the fact that they are part of the ICT ecosystem and de-
massive exercise. Instead, Table 7.1 sets out the actual spite convergence in ICT technologies and markets. This
coverage of this chapter, which deals principally with chapter focuses on TSPs.
TSPs and their impacts – both positive and negative –
on climate changing GHGs. TSPs, whatever their individual differences, are
more like each other than they are like the other organ-
The reasons for this segmentation are set out be- isms in the ICT ecosystem. It would be difficult to pro-
low. vide sufficient focus in a report of this kind without
concentrating on a particular type of ICT player. For ex-
7.1.5.1 Which market players? ample, there are currently concerns about the energy
used by computer data centres, which have demanding
ICT has been described as “A fluid and ever chang- requirements for air-conditioning, electricity supply,
ing ecosystem, (which includes) individuals….fixed and and back-up. 11 Although data centres are now an
mobile network operators, Internet service providers, integral part of TSP infrastructure, many data centres
chipset design firms, device manufacturers, application are provided by non-regulated market players for the
developers, content owners and infrastructure provid- provision of competitive services ranging from corpo-
ers.”10 To this description, it is necessary to add broad- rate back-up, disaster recovery, hosting and internet
casters and satellite providers as well as government, search. While the providers and users of data centres
businesses, and customers as additional key stakehold- are subject to the general laws and rules, such as com-
ers. petition law, that apply to all companies within a par-
ticular country or region, they are unlikely to be the
specific focus of an ICT regulator.
Table 7.1: Discussion paper on ICTs, climate change and regulation: scope and focus
Market Players Regulatory coverage Energy use Environmental scope
Telecommunication Service Sector specific regula- Energy consumed in the GHG emissions, mainly
Providers, or TSPs operating tion – agencies whose provision of networks and CO2s, produced as a result
under general or specific regulatory remit covers services by TSPs and their of energy used to provide
authorizations – excludes Telecommunication customers TSP networks and services
service providers that use Service Providers oper-
TSP networks, facilities or ating under general or
services, but are not primari- specific authorizations
ly engaged in providing tele-
communications services.
Examples Examples Examples Examples
BT, DTAG, France Telecom, FCC (US), OFCOM (UK), Electricity consumed by GHGs produced as a result
O2, Telkom South Africa, OPTA (Hong Kong, Chi- TSPs to power fixed and of activities of TSPs and
Vodafone na) mobile Telecommunication their customers.
networks. Energy used by
TSP customers to power
handsets, phones, broad-
band routers.
Chapter 7 241
Figure 7.1: The ICT ecosystem
End users
Content/ applications/ niche providers +

MVNOs/VNOs + aggregators/ SIs
Fixed
incumbent
MNOs
(Could Service providers
include fixed
incumbent-
owned)
Core network providers
Mobile (CA TV, FWA, Ubiquitous

access MAN and CAP) access
Indicates a commercial
relationship
Key: CAP: Competitive Access Provider

CATV Cable TV Operator
FWA Fixed Wireless Access
MNO Mobile Network Operator
MNVO Mobile Virtual Network Operator
SI Systems Integrators
VNO Virtual Network Operator
Source: Ovum
This chapter is concerned with the players that op- While companies such as Microsoft or Google are
erate under specific operating licences, or general au- not only larger than many regulated TSPs, they may be
thorizations, under the overview of an ICT sector- more significant in terms of energy use, hence GHG
specific regulator. Licensing and general authorization emissions.14 Although these relative newcomers may
regimes have historically emerged as part of the libera- provide similar services as TSPs, they emerged from
lization and privatization of the telecommunication sec- and exist in a competitive environment. As such, they
tor. 12 The transition to an effective competitive are subject to general competition law or anti-trust leg-
environment in the ICT sector requires a regulatory islation, unlike the TSPs which are regulated under tele-
framework that is able to “resolve disputes, address an- communication-specific measures.
ticompetitive abuses, protect consumers, and attain na-
tional goals such as universal access, industrial The result is that sector players that provide similar
competitiveness or economic productivity and services can be subject to different regulatory regimes.
growth.”13 Such differences normally result from differences in the
heritage, resource endowment, and market power of
Thus, one of the main reasons that network-based the players concerned. Players that are deemed to be
TSPs are subject to the oversight of telecommunica- dominant or that enjoy significant market power are
tion/ICT regulators is their market power: they are do- generally subject to specific licence terms and condi-
minant in their markets (and thus enjoy significant tions, while non-dominant TSPs are likely to operate
market power) or they control access to essential facili- under fewer licence conditions or under a form of gen-
ties such as local loops (normally needed by competi- eral authorization. The former tend to be facilities-
tors to gain access to customers). based while the latter often operate on a resale basis.
242 Chapter 7
If obligations to reduce GHG emissions were to be Embedded energy used in manufacturing ICT
included in the licences or general terms and conditions equipment, whether fibre optic cables, servers, mobile
of dominant TSPs whilst not being similarly imposed on phones or chargers, is important. It can also produce
non-dominant players, such measures would no doubt contradictory outcomes: increasing churn rates of new
be resisted by the dominant players. end-user mobile devices due to technical advance will
result in more cumulative embedded energy usage, but
7.1.5.2 Which regulators? could produce lower consumption of energy in use, as
new, more energy-efficient devices come to market. It
The ICT sector is undergoing convergence, but con- is not possible to consider such issues in this chapter for
verged regulation remains relatively rare The ITU has two reasons, which are related to problems of mea-
found that a number of regulatory authorities have “re- surement and of jurisdiction:
vised their organizational structures, expanded their
• the manufacture and sale of ICT equipment is a
staffs and developed new skills.” 15 But this does not
global industry; measuring and specifying embed-
mean that most ITU stakeholders with the responsibili-
ded energy for this type of manufacturing is ex-
ty for regulating TSPs have become converged ICT sec-
tremely complex and uncertain;
tor regulators. The ITU goes on to note, “The
liberalization of ICT markets has stimulated a global • the products involved are internationally traded. It
marketplace of interacting innovations in products, ser- is therefore likely that sector regulators, which op-
vices and applications. Old distinctions among different erate within national jurisdictions, will have limited
industries are blurring, as platforms, products and ser- scope to intervene. Furthermore, intervention in
vices converge in an IP or Net-centric world.” 16 the market for internationally traded goods and
services would likely conflict with world trade regu-
Despite these developments, driven by markets lations (i.e., WTO18). Discussions about issues that
and by technology, government in general, and ICT reg- are related to world trade would therefore need to
ulators in particular, remain important players in the ICT take place at a supra-national level. In addition,
sector. Whilst privatization and liberalization have trans- there could be possible measures at the national
formed the ICT ecosystem, the transition to a fully level as well – for example, countries may intro-
competitive environment is not guaranteed. As long as duce higher duty or quotas on ICT products. Again,
TSPs continue to enjoy dominance in their markets, the these would need to be aligned with the require-
need for regulatory oversight will continue. This means ments of international trade agreements.
a continuing role for ICT regulators, opening up the
scope for the inclusion of environmental considerations Finally, consumption of energy in use overshadows
in such regulation. that of embedded energy for most elements of the tel-
ecommunications system. For example, information
7.1.5.3 Which type of energy consumption: from Nokia Siemens Networks indicates that about
life cycle or in use? 90 per cent of their equipment’s CO2 footprint comes
from their equipment when it is in use.19
GHGs arising from the activities of telecommunica-
tion players are produced both by: 7.1.5.4 Which environmental impacts?
• the energy embedded17 in the physical elements
The activities of TSPs have many effects on the en-
used to provide telecommunication networks and
vironment, ranging from resource depletion to waste
services, and
generation.20 Most of these activities, whilst important,
• the energy used to operate networks and provide are outside the scope of this report. This chapter deals
services. solely with the relationship between TSPs and their cus-
tomers in terms of climate-changing GHGs, the most
This chapter deals with the second type of energy, significant form of which is Carbon Dioxide, or CO2 (see
notably where “use” refers to the TSPs and the cus- Box 7.1). CO2 is one of the main products when fossil
tomers that are connected to their networks and that fuels undergo conversion, whether to power engines or
use their services. to provide electricity. The electricity used by the ICT
sector is its most significant contribution to GHGs.
Chapter 7 243
Box 7.1: CO2: The Main Greenhouse Gas

Carbon dioxide (CO2), a gas at standard temperature and pressure, is probably the most important of the greenhouse gases
as it accounts for the largest proportion of the 'trace gases' and is currently responsible for 60% of the 'enhanced green-
house effect'. CO2 is thought to have been in the atmosphere for over 4 billion of the Earth's 4.6 billion year geological histo-
ry. The amount of carbon dioxide taken out of the atmosphere by plants is almost perfectly balanced with the amount put
back into the atmosphere by respiration and decay, so small changes as a result of human activities can have a large impact
on this delicate balance. Burning fossil fuels releases the carbon dioxide stored millions of years ago.
The concentration of carbon dioxide in the atmosphere has increased more in the northern hemisphere where more fossil
fuel burning occurs at higher levels. Since the Industrial Revolution the global concentration of CO2 has increased by about
40%, and at March 2010 CO2 in the Earth’s atmosphere was at a concentration of 391 parts per million (ppm) by volume21
or even more (see also Box 7.2)
7.1.5.5 Defining the scope and focus of analysis specific regulatory agencies. The chapter considers, un-
der a number of headings, the existence of, need for,
Drawing together the discussion above, it should and scope for, sector-specific regulatory interventions
be now be clear that the focus of this chapter is on: aimed at:
• Telecommunication Service Providers (TSPs) • curbing GHG emissions from TSPs, and
• facilitating the ability of TSPs to curb emissions
• The agencies which regulate TSPs (referred herein
from other industry sectors
as ICT regulators)
• The energy used by TSPs in providing networks and 7.2 What is climate change?
services, and the dedicated devices which are at-
tached to them “The Earth’s climate is changing. In most places,
• The greenhouse gas emissions generated by TSPs average temperatures are rising. Scientists have ob-
and their customers (including both resellers and served a warming trend beginning around the late
end users) in using their services 1800s. The most rapid warming has occurred in recent
decades. Most of this recent warming is very likely the
The chapter covers the GHG-producing activities of result of human activities.”
network-related ICT players that operate under specific United States Environmental Protection Agency 22
or general authorizations, under the purview of sector-
Box 7.2: CO2, “Simple Physics” and Human Activity

Lord Rees, President of the Royal Society, said in March 2010, “As regards the evidence, and the reason why we should be
concerned… the most important evidence is uncontroversial, and that’s that the carbon dioxide concentration in the atmos-
phere is going up at a rate that’s unprecedented in the last half million years and that’s due to the burning of fossil fuels. That
fact alone plus very simple physics is, in my view, enough to motivate some kind of concern and action…”. 23
The Stern Review on the Economics of Climate Change stated this point more formally, “The current level or stock of green-
house gases in the atmosphere is equivalent to around 430 parts per million (ppm) CO2, compared with only 280ppm before
the Industrial Revolution. These concentrations have already caused the world to warm by more than half a degree Celsius
and will lead to at least a further half degree warming over the next few decades, because of the inertia in the climate sys-
tem.” 24
As to whether these changes have been produced by human activity, a meta review of 1,372 climate researchers and their
publication and citation data published by the National Academy of Sciences of the United States of America in June 2010
showed that 97–98% of the climate researchers most actively publishing in the field support the tenets of Anthropogenic
(man-made) Climate Change outlined by the Intergovernmental Panel on Climate Change (IPCC).25
244 Chapter 7
Box 7.3: Weather vs Climate

Changes noted in the review26 published by the Met Office include:
• Temperature increase – global temperatures have increased by about 0.75 °C over the past century and 2000-2009
was the warmest decade on record. Human influence has been detected on every continent.
• Changes in rainfall patterns – wetter regions of the world (mid to high latitudes in the northern hemisphere and
tropical regions) are generally getting increasing rainfall, and drier regions less rainfall.
• Humidity – surface and satellite observations show moisture in the atmosphere has increased over the last 20-30
years. This increases the amount of water that can fall in extreme rainfall, posing flooding risks.
• Warming oceans – temperature increases have been observed over the last 50 years in the Atlantic, Pacific and In-
dian Ocean basins. These cannot be attributed to changes in solar activity, volcanic eruptions or variations in ocean
currents, such as El Niño.
• Salinity – the Atlantic Ocean is becoming saltier in sub-tropical latitudes. This is because of increasing ocean evapo-
ration due to increased temperatures. In the long-term, ocean regions at higher latitudes are expected to become
less salty due to melting of glaciers, ice sheets and increased rainfall.
• Sea-ice – summer minimum of Arctic sea-ice is declining at a rate of 600,000 km² per decade, an area approximately
the size of Madagascar. While there has been variation from year to year, a long-term trend has been observed that
can only be explained by human influences.
• Antarctic – there has been a small increase in Antarctic sea ice extent since the satellite record began in 1978. (al-
though the increase in Antarctic sea ice is much smaller that the decrease of Arctic sea ice).This small change is con-
sistent with the combined effects of GHG increases and reductions in the ozone layer which cause increases in
some regions, such as the Ross Sea, and decreases in others, such as the Amundsen-Bellingshausen Sea.
7.2.1 Climate change: the causes mate research. The review studied developments in
climate science since the last IPCC report (AR4) was
The subject of climate change, and the role of hu- published in 200730. The Met Office used ‘detection
man beings in causing it, remains controversial, despite and attribution’ methods to identify long-term
the fact that, as Rajendra Pachauri, Chairman of the changes in the climate, confirming that the planet is
Intergovernmental Panel on Climate Change (IPCC) has changing rapidly and that man-made GHG emissions
written, “the reality is that our understanding of cli- are very likely to be the cause. The Met Office study
mate change is based on a vast and remarkably sound noted that long-term changes in the climate system
body of science…” 27 have been observed across the globe, from shifts in
rainfall patterns to a decline in Arctic sea-ice. These
Greenhouse gas (GHG) emissions have been iden- changes follow the pattern of expected climate change
tified as a major driver of changes to the climate, and and bear the ‘fingerprint’ of human influence, provid-
human activity has been identified as the probable ing the clearest evidence yet that human activity is im-
cause of rising GHG emissions, particularly carbon di- pacting the climate.
oxide (CO2) emissions. If climate change results from
rising greenhouse gas emissions that are mostly attrib- 7.2.2 Climate change: the consequences
utable to human activity, then cutting greenhouse gas
emissions will require that humans make changes to The overall phenomena associated with climate
these activities. 28 change, as described above, may appear to be incre-
mental and manageable, but events resulting from
The ultimate effects of a drastically changing cli- climate change are as likely to be severe, extreme and
mate are not known, but are likely to include loss of unpredictable. David Easterling from US National Cli-
species, loss of habitat, and more violent extremes of matic Data observes,
unpredictable weather. Climate change is a serious
threat to most species on earth, particularly humans. “Weather and climate extremes are major drivers
of change in both natural and socioeconomic systems.
Of course, the climate itself is indifferent to the Evidence points to substantial changes in many ex-
controversy: it just keeps changing. In March 2010, the tremes with a warming world. These include increases
UK’s Met Office published a review29 of the latest cli- in heat waves, droughts, warm days and nights. These
Chapter 7 245
increases in warm extremes have been and will be ac- role for ICTs in reducing energy use, both within the
companied by decreases in cold extremes such as cold ICT sector itself and within those sectors that touch,
waves. Similarly changes in precipitation include in- and are touched by, ICTs – and it is becoming increa-
creases in heavy precipitation events in many areas.” 31 singly difficult to find any sector that now falls outside
this category.
In addition, the effects of climate change vary
across different geographies. The UK’s Royal Society 7.3 Points of contact: where ICTs
noted that effective adaptation policy must be rein- meet climate change
forced by a continuing effort in monitoring and under-
standing climate change in order to reduce 7.3.1 Climate change and ICTs
uncertainty, particularly with respect to climate
change.32 Climate change affects commerce and industry in
general, and the ICT sector is no exception. But whilst
The World Bank has commented that not only are some effects are common to all sectors, others are
the effects of climate change uneven, but developing unique to ICTs, particularly Telecommunication Service
countries are more exposed and less resilient to cli- Providers (TSPs):
mate hazards. It notes that the consequences of cli-
1. Like other industries, particularly those that rely
mate change will fall disproportionately on developing
extensively on physical infrastructure, TSPs are
countries.33
likely to be adversely affected by the increasing
number of severe weather events. Like other in-
There is consensus among scientists that emis-
dustries, TSPs are significant producers of climate
sions from fossil fuels are changing the climate. The
changing emissions. Although generally consi-
biggest contributor to climate change is the increasing
dered “carbon-light” relative to their contribution
greenhouse effect created by carbon dioxide emissions,
to gross domestic product (GDP), TSPs are often
mostly from burning fossil fuels. The main reason for
among the largest electricity consumers in a coun-
burning fossil fuels is to obtain energy. Accordingly,
try. Furthermore, their absolute energy consump-
slowing the pace of climate change means either re-
tion is rising (see figure 7.2). The Smart2020 study
ducing energy use or developing new ways of produc-
for Global eSustainability Initiative (GeSI), for ex-
ing energy.
ample, showed that the sector’s current contribu-
tion to GHG emissions of around 2 per cent of the
Information and Communication Technologies
global total is set to double (from 0.83 Gigatonnes
(ICTs) are unlikely to be of much use for the latter (al-
of CO2 equivalent (Gte) to 1.4 Gte).34
though ICTs are a component of the “smart grid” ap-
proach to distributed generation often based on
renewable energy sources). But there is a significant
Figure 7.2: CO2 emissions from telecom infrastructure and devices, 2002 and projected in 2020
Telecoms Infrastructure and devices 2002 Telecoms Infrastructure and devices 2020
(100% = 151 Mn Tn of CO2) (100% = 349 Mn Tn of CO2)
3% 14%
12%
Mobile Networks Mobile Networks
43% Fixed Narrowband 15% Fixed Narrowband
Telecom devices 51% Telecom devices
Fixed Broadband Fixed Broadband
42% 20%
66 Mn Tn 179 Mn Tn
Source: McKinsey and the Climate Change Group
246 Chapter 7
Box 7.4: Tracking and Responding to Climate Change with ICTs

Climate change tracking and responding services can represent a major business opportunity. ICTs are used in weather and
climate change monitoring, for instance in predicting, detecting and mitigating the effects of typhoons, thunderstorms,
earthquakes, tsunamis, etc. This includes radio technologies and equipment such as active and passive satellite-based sen-
sors) for prediction, detection and mitigation of effects of hurricanes, typhoons, thunderstorms, climate changes, earth-
quakes, tsunamis, man-made disasters, etc. weather satellites that track the progress of hurricanes and typhoons; weather
radars that track the progress of tornadoes, thunderstorms, and the effluent from volcanoes and major forest fires; radio-
based meteorological aid systems that collect and process weather data, and broadcast sound and television systems and
different mobile radiocommunication systems that warn the public of dangerous weather events, such as storms and turbu-
lence; satellite systems that are used for dissemination of information concerning different natural and man-made disasters.
Examples include the World Meteorological Organization’s (WMO) World Weather Watch (WWW), composed of three inte-
grated core system components, with all three layers based on the use of different ICT components and applications:
– The Global Observing System, which provides observations of the atmosphere and the earth’s surface (including the
surface of the oceans) from all parts of the globe and from outer space, acting as a relay for remote sensing equip-
ment placed on satellites, aircrafts, radiosondes (a type of weather probe), as well as meteorological radars on the
earth and at sea.
– The Global Telecommunication System (GTS) which combines radio and telecommunication equipment capable of
providing real time exchange of a huge volume of meteorological data and related information between interna-
tional and national meteorological and hydrological centres.
– The Global Data Processing System (GDPS), based on thousands of linked mini, micro and supercomputers, which
processes meteorological observational data and generates meteorological products such as analysis, warnings and
forecasts.
– The ITU/WMO Handbook “Use of Radio Spectrum for Meteorology: Weather, Water and Climate Monitoring and
Prediction”.
As the steward of the global framework for spectrum, ITU provides for the necessary radio-frequency spectrum and orbit
resources for the operation without interference of radiocommunication systems for climate monitoring, weather forecast-
ing, remote sensing and disaster prediction and detection. ITU-R Study Group 7 (Science Services, online: www.itu.int/ITU-
R/index.asp?category=study-groups&link=rsg7&lang=en) develops and approves standards applied for development and
use of such systems.
Information from: ITU, ICTs and Climate Change: ITU background report, ITU/MIC Japan Symposium on ICTs and Climate Change, Kyoto, 15-
16 April 2008, online: www.itu.int/dms_pub/itu-t/oth/06/0F/T060F0000070001PDFE.pdf.
2. Unlike most other sectors, ICTs are in the unusual to adapt to climate change by predicting the nega-
position of being able to do something to help re- tive effects of natural disasters caused by climate
duce GHGs. ICT products and services can contri- change, which in turn, allows countries to take
bute to displacement or rationalisation of the measures to mitigate these negative effects.37
movement of goods and reduction of travel; pro-
mote the development of more energy efficient ICTs have the potential to make a positive contri-
devices, applications and networks; and encourage bution to reducing the levels of GHGs; at the same
environmentally friendly design, to give just a few time, ICTs could materially increase the rate of climate
examples. The aforementioned GeSI study showed change, thereby contributing to the degradation of the
that enabling reductions in other sectors could cut natural environment. The potential of ICTs both to en-
7.8 Gigatonnes (Gt) out of 52 Gt compared with hance and to hinder efforts to reduce GHGs and cli-
business as usual in 2020 – 15 per cent of total mate change is reflected in a report published by
emissions.35 Forum for the Future in 2008. “If we develop and apply
ICT badly, it could add to the world’s problems. It could
3. ICT plays a unique role in climate monitoring and
devour energy and accelerate climate change, worsen
climate change forecasting systems (see Box 7.4).
inequality for those who do not have access and in-
Radio-based remote sensing applications (terre-
crease pollution and resource use by encouraging ever
strial and satellite) and the related telecommuni-
more frenetic consumerism. If we apply ICT well, the
cation infrastructure form the backbone of the
rewards could be enormous. It could help to enhance
Global Climate Observing System or GCOS.36 GCOS
creativity and innovation to solve our problems, build
helps all countries, especially developing countries,
Chapter 7 247
communities, give more people access to goods and 7.3.3 First, Second and Third Order effects
services and use precious resources much more effi-
ciently. We have the capacity – through our decisions Most academic research40 on climate change re-
on how we produce, buy, use and apply ICT – to secure fers to three orders of climate-changing effects result-
enormous social and economic benefits.”38 ing from the implementation and use of ICTs. Some
effects are negative, some positive, but ICT is unusual
Whilst there is growing interest in applying ICTs to among industry sectors in that it has the potential to
reduce GHGs, the role of regulators in facilitating, generate more positive effects than other sectors. The
enabling and promoting measures that would capital- three orders of climate change effects are:
ize on ICTs’ ability to reduce GHGs is comparatively un-
• First Order: effects arising from the physical exis-
explored.
tence of ICT. These effects are normally negative
and are caused by the manufacturing, assembly,
7.3.2 Existing and potential points of contact
installation, operation and disposal of a telecom-
munication system.
There are three existing points of contact between
climate change and TSPs: • Second Order: effects arising from the potential of
ICT to change processes in other sectors (e.g.
• Adaptation: the impact of climate change on TSPs
transport), resulting in changes to the environ-
as well as the changes in processes, practices, and
mental impacts related to those processes. These
structures to moderate potential damages or to
effects could be positive or negative.
benefit from opportunities associated with climate
change39; • Third Order: effects arising due to collective me-
dium or longer-term adaptation of behaviour (e.g.
• Mitigation: the contribution of TSP emissions to
consumption patterns) or economic structures.
climate change; and
Again, these effects could be positive or negative.
• Transformation: the role of TSPs in helping other
sectors to reduce GHGs. Second and Third Order categories also include
‘indirect’ effects that arise from the influence that a
There is also one other, a potential point of contact, telecommunication system may have on other applica-
notably regulation. The main purpose of this chapter is tions, processes or behaviours. These effects can be
to ask whether regulation should be the fourth point positive or negative and depend on complex sociologi-
of contact. The method of doing so is by asking a host cal interactions. It is therefore difficult to identify
of subsidiary questions in order to provide a check list Second and Third Order effects because they can in-
for regulators to assess their role. The purpose is not to volve changes to processes in other sectors. Perhaps
provide answers but to raise awareness of and draw even more importantly, Second and Third Order effects
attention to such questions. also depend on changes to human behaviour. This is
covered in more detail below.
Thus, the large question is: should there be a
fourth point of contact between ICTs and climate Coverage of the First, Second and Third order ef-
change, notably, regulation? The subsidiary questions fects in this report is set out as shown in Table 7.2.
all fall under the three points of contact set out above.
These questions are set out at the end of the relevant The following table indicates the order of magni-
section throughout the rest of the chapter. This section tude of TSP emissions, using data reported by some of
begins with a definition of First, Second and Third Or- the leading telecommunication operators. Although
der effects. (7.3.3). These terms are then used these are not based on the same definitions and are,
throughout the chapter. Each of the points of contact is mostly, unaudited, the totals are shown in Table 7.3.
considered in turn, starting with the potential point of Note that the inconsistencies in the data mean that
contact (regulation) in section 7.4, followed by the ac- the relative performances of operators cannot be de-
tual points of contact (adaptation, mitigation and rived from the table.41
transformation), in sections 7.5, 7.6 and 7.7.
In total the emissions shown above represent less
than one fifth of the figure suggested by GeSI for the
emissions of the global telecommunication industry.
248 Chapter 7
Table 7.2: First, Second and Third Order effects: coverage

Section Title Coverage of effects
3 Regulation First, Second and Third Order effects

4 Adaptation N/A (although, see box 7.3)
5 Mitigation First Order effects
6 and Annex 1 Transformation Second Order effects
Third Order effects
Table 7.3: Total emissions stated by operators in 2007 (tonnes of CO2 equivalent)
Operator Stated emissions
AT&T California 108,760
BT 680,000
Cable & Wireless 113,157
China Mobile 7,000,000
Deutsche Telekom 1,885,318
Korea Telekom 714,869
NTT 3,776,000
Optus 257,075
SK Telecom 358,097
Telenor 604,767
Telstra 1,390,306
Verizon 7,600,000
Vodafone 1,350,000
Total 25,838,349
Source: ITU TSB Standardization Policy Division, ICT Corporate Statements on GHGs and recycling, 24 February 2009
7.4 Regulation: A Potential Point questions for discussion regarding the form, substance
of Contact? and content of such potential regulation.
7.4.1 Introduction 7.4.2 Which ICT players are regulated?
Sections 7.5, 7.6 and 7.7 of this chapter address the It is estimated that since the late 1990s close to 200
phenomena of adaptation, mitigation and transforma- new infrastructure sector regulators (including all net-
tion, respectively. All are de facto points of contact be- work-based utilities, including energy, water, rail and
tween climate change and the ICT sector, arising from telecommunications) have been created around the
the interaction between: world.42 In 2010, the figure is closer to 250 infrastruc-
ture regulators worldwide. The proliferation of regula-
• the activities of ICT players as they provide services
tors was the response of governments to far-reaching
to their customers, and
market reforms that saw the privatization of network
• the natural laws that underlie the fluctuations of utilities that had hitherto been vertically- and horizon-
the climate. tally-integrated state monopolies under ministerial con-
trol. As part of this trend, countries introduced
The same cannot be said about regulation. This competition wherever possible and established utility
section considers whether there should be a fourth regulators to enforce concession or licensing agree-
point of contact, one that is not yet in place and that ments and to regulate prices.43
would require active intervention to put into effect: ICT
regulation, specifically regulation of TSPs relating to In the ICT sector, as of end of 2010, 157 countries
climate change. The section ends with a number of had created a national regulatory authority.44 These
Chapter 7 249
regulators are primarily focused on sector players that Moreover, the fact that a company has become
enjoy market dominance. These are the TSPs, normally large, as measured by turnover, number of users or in-
former monopoly enterprises, that, in most countries, ternet hits, does not automatically bring it within the
had been the sole providers of services, which they de- jurisdiction of sector regulators. Although such factors
livered using their own infrastructures. Such dominance might render large companies liable to interventions by
created the need for regulation in order to: general competition regulators and the requirements of
48
anti-trust law , this does not bring them within the
• prevent the abuse of dominance;
scope of TSP regulation. Normally, ICT companies only
• ensure a level playing field for new market en- fall within the scope of sector-specific regulation if they
trants; and control access to essential facilities (the American ap-
• increase the likelihood that competition would proach) or need to be subjected to measures that pre-
flourish. vent the abuse of dominance that arises from their
market power (the European approach). At present, in
TSPs are regulated in order to generate outcomes many countries, there is no legal basis for ICT regulators
that mirror those that would be produced in a competi- to regulate the activities of the new type of ICT compa-
tive market, together with promoting public policy ob- nies, whether software companies, application and ser-
jectives that would likely not be met in a competitive vice providers, or equipment manufacturers. Although
market, such as universal access. The objective is to equipment manufacturing has long been subject to
change the behaviour of the regulated entities so that regulation through type approval, in some cases this is
they not only compete fairly but also advance desig- overseen by ICT regulators, whereas in other cases, a
nated public policy objectives (or support behaviour different agency or Ministry has authority over this
that is already producing these desired objectives). matter. (In some countries (typically developing coun-
tries), ICT regulators do have authority over application
This approach to regulating TSPs collides with an providers).
inconvenient truth when we consider the overall rela-
tionship between the ICT sector and its carbon foot- Smartphones and Mobile Internet Devices that use
print: many of the energy-intensive services and a 3G connection place heavier demands on their bat-
applications that are emerging in the new telecosm are tery than previous mobile technologies. This is com-
not owned and operated by the regulated TSPs. In fact, pounded by the rapidly growing market for applications
these services and applications are mostly “outside” and services: devices like Apple’s iPhone or those based
the scope of current telecommunication regulation, on Google’s Android operating system also have a sig-
other than technical and commercial requirements that nificant impact on bandwidth requirements, hence
apply to any customer that is connected to a telecom- energy demand. For example, in April 2010, Apple an-
munication network. Although these players are part of nounced that it had sold 50 million iPhones and 35 mil-
the telecosm, and require telecommunication connec- lion iPod Touch players (which include WiFi
tivity so that their customers can access the desired functionality), with shipments due to reach 100 million
functionality, they are not captured by telecommunica- by summer 2010. It also announced that more than 4
49
tion regulation. For example, as mentioned above, billion applications had been downloaded. As one
50
players like Google and YouTube are among the most study has pointed out, 3G services such as those pro-
significant energy users in the ICT sector, yet they are vided on Apple’s iPhone “greatly reduce battery time,
not typically subject to the jurisdiction of ICT regulators. by 43 per cent for the iPhone 3G and 60 per cent for the
iPhone 3GS.”
Some argue that the new ICT players should be
subject to regulation comparable to that of TSPs. For It is true that Apple and other providers have been
example Google’s Gmail has 175 million active users,45 adapting the firmware so as to improve energy efficien-
and the Financial Times has posed the question “Is cy, providing energy saving by better software design.
Google now a monopoly?”46 But technology and mar- And there are applications that will help customers use
kets move rapidly in ICT. Soon after the Financial Times their smartphones in a more energy-efficient manner.51
posed the “monopoly” question, the Guardian re- But the trends are clear: GHG emissions will increase
ported that, for the first time, Facebook had passed due to increasing power consumption of devices, more
Google as the most-viewed US site during one week.47 frequent recharging (4 per cent of total mobile emis-
sions) and more use of networks, data centres, and
other key infrastructure (71 per cent of mobile emis-
250 Chapter 7
sions).52 Such concerns would not generally be ad- Many regulators have responsibilities that go
dressed by regulations that relate to network operators beyond merely maximizing the economic efficiency of
and service providers. Addressing these concerns the sector. Examples include the delivery of universal
would mean regulating the manufacturers of such de- service, the notion of any-to-any interconnection for
vices: this may be possible for some regulators, who do companies offering service to the public, and network
have the authority to regulate type approval, but it will coverage and quality of service obligations, which are
not be an option for many sector regulators. frequently set out in the terms and conditions of li-
cences or authorizations.
To continue with the example of Apple, the com-
pany has risen from 71st place on the Fortune 500 list to The prospect of extending regulatory responsibili-
56th, it has a current market value in excess of ties to capture wider public policy goals – which might
USD 200 billion53, and it is now a significant player in include policy for ICTs relating to climate change – was
the telecosm. But Apple does not, and is unlikely to be, also recognized by all ITU Elected officials (the General
the subject of TSP regulation. Thus, measures that are Secretary and the Deputy-Secretary General, and the
designed to affect the climate-changing activities of re- Directors of ITU Radiocommunication (BR), Telecom-
gulated TSPs would not apply to Apple, despite Apple’s munication Standardization (TSB) and Telecommunica-
contribution to such climate-changing activities. tion Development (BDT) Bureaus). For example, the
BDT Director, noted the need to provide “regulators
7.4.2.1 Questions and policy makers with the insights and guidance they
need to make key decisions for the constituencies they
• Given the twin forces of liberalization and technol-
serve including proper consideration of challenges re-
ogical innovation, and the consequent proliferation
lated to issues such as privacy, online protection and
of new services and applications, which elements
climate change.” 54
of the ICT sector should be subject to climate
change related regulation?
Such “key decisions” would be designed to factor in
• How do sector regulators ensure that a level play- all the social costs and benefits of transactions within
ing field is maintained between their traditional the sector. Many social costs and benefits are not cap-
subjects of regulation (fixed and mobile network tured in market prices, resulting in market failure. The
operators) and new ICT service providers, which consequences of market failure can range from relative
may be responsible for more significant GHG emis- trivialities like the annoyance caused by a ringing mo-
sions? bile phone in a cinema to the disastrous, such as the
effects of the Bhopal chemical plant explosion.
7.4.3 Which ICT activities are regulated?
Considering such externalities is a reminder that
The core activities of ICT regulators typically focus ICT sector regulators are tasked with serving a wider
on ensuring fair market entry and competition, promot- public purpose than the simple focus on economic effi-
ing investment and universal access to ICT services, and ciency. Policy makers may decide that ICT regulators
protecting customers. Regulators seek to provide a bal- should serve wider public policy goals, including poli-
ance of incentives and sanctions to bring about the de- cies relating to climate change. Thus, the question aris-
sired outcomes without becoming involved in the es, should the mandate of ICT regulators include objec-
micro-management of the sector. Some regulators are objectives relating to climate change?
also concerned with shaping behaviours of sector ac-
tors, which may go beyond the regulated players to in-
clude their customers or their customer’s customers.
Box 7.5: Mobile: Absolutes and Relatives

According to mobile operators, the overall energy consumption of mobile networks is decreasing due to technological inno-
vation and network optimisation, such that in recent years, the energy efficiency of mobile network equipment has im-
proved markedly. The GSMA quotes figures from Ericsson that show that annual carbon dioxide equivalent (CO2e) emissions
per subscriber have declined over the past 20 years, at the same time as the data throughput of mobile communication
technologies has increased dramatically.
Source: GSMA, in collaboration with The Climate Group, Mobile’s Green Manifesto, November 2009, online:
www.gsmworld.com/documents/mobiles_green_manifesto_11_09.pdf.
Chapter 7 251
To take one example, regulators typically require It is hard to find examples of sector regulators or
competing infrastructures as a way to increase eco- associations of regulators with a mandate that explicitly
nomic efficiency among TSPs. In the mobile sector, poli- includes climate change. For example, the successor to
cies such as active infrastructure sharing55 have often the European Regulators Group (ERG), the Body of Eu-
been restricted, “out of concern that it could enable an- ropean Sector Regulators for Electronic Communica-
ti-competitive conduct, such as collusion on prices or tions (BEREC), was set up in 2009. BEREC includes the
service offerings eliminating consumer choice. These telecommunication sector regulators of the 27 EU
concerns remain valid, but have to be balanced with countries, and was established following the adoption
advances in technology and applications that enable by the European Council and European Parliament of
service providers to distinguish their offerings.”56 As this the new EU Electronic Communications rules in De-
author continues, the result of such policies in the case cember 2009.
of some “remote and hard to reach areas, having fewer
consumer choices can be balanced against the choice of BEREC’s role is to ensure consistent regulation
having no services at all, to at least allow active infra- across Europe, and its main job has been described as
structure sharing for a limited time until demand for ICT “to help ensure fair competition in the single telecom-
services grow to support multiple network operators..” munication market.” But it is notable that when BEREC
Added to this, there are reduced environmental im- published its proposed work programme in January
pacts from infrastructure sharing, potentially including 2010, the list did not include any initiatives related to
reduced energy consumption, hence lower GHGs. In- the role of TSPs in the environment or GHGs in particu-
deed, the combination of the global financial crisis plus lar.58 A similar point could be made about practically
the results of regulatory measures related to promoting every other sector regulator; there seem to be few, if
and increasingly mandating some aspects of infrastruc- any, precedents for the involvement of sector regula-
ture sharing over the past 5 years means that regulators in activities relating to climate change. Accordingly,
tors have realized the importance of creating stimuli there is no ready-made blueprint or manual that could
designed to drive consumer benefits from service- serve as a best practice benchmark to be applied across
based competition. Whilst redundant capacity is re- markets and jurisdictions.
quired for effective competition to occur, in rural, re-
mote, low-income areas business models based on Similarly, when UK regulator OFCOM consulted on
sharing are more likely to be successful. NGN policy in 200659, it noted that the main challenges
for public policy could be divided into two main areas,
7.4.4 Should ICT regulators have notably: identification and realization of external social
responsibilities related to climate benefits arising from next generation access deploy-
change? ments, and the emergence of a digital divide in next
generation access availability. There was no mention of
“Climate change……the largest market failure of all environmental issues, which is ironic given the substan-
time.”57 tial contribution that NGNs could make to reduction of
Nicholas Stern TSP GHGs: one ITU report has identified possible sav-
ings of up to 40 per cent in the migration to NGNs.60
Box 7.6: Active and Passive Infrastructure Sharing

There are two levels of infrastructure sharing: passive and active. Passive sharing involves components such as the tower
mast or pylons, cables, physical site or rooftop, shelter cabinets, power supply, air conditioning, alarm systems, etc. Active
sharing includes antennas, antenna systems, backhaul transmission systems and the BTS equipment itself. Passive sharing is
becoming increasingly common and reduces the environmental footprint of mobile networks by cutting the number of BTS
sites required by each company. In March 2009, Telefonica and Vodafone announced that they would share network infra-
structure in Germany, Spain, Ireland and the UK. Active sharing, which shares the site electronics, can have a much larger
impact on the networks’ carbon footprints, but it has only been implemented in a few mature markets to date. Active shar-
ing agreements include T-Mobile and 3 Group in the UK, Telstra and 3 Group, as well as Vodafone and Optus, in Australia,
Tele2 and Telia, as well as Tre and Telenor, in Sweden. In the Republic of Korea, all three operators KT, SK Telecom and LGT
invested in KRTnet Corporation in 1996 to construct and manage base station sites jointly used by all operators, leading to
co-location of sites and tower sharing.
252 Chapter 7
7.4.4.1 Questions • Would such policies require changes to the primary

duties/enabling legislation of ICT regulators?
• Given the potential for ICT to have a beneficial im-
pact on GHGs, is it appropriate for regulators to be • How should policy makers ensure that economic
given additional duties concerned with environ- players are able to plan effectively for the integra-
mental matters, particularly those relating to cli- tion of environmental considerations into ICT sec-
mate change? tor policies?
• Should ICT regulators now consider the potential • How can ICT regulators develop more effective co-
for GHG reductions when making regulatory deci- ordination with other regulators and policy makers
sions?61 to ensure that decisions relating to ICTs recognize
any potential GHG implications, whether negative
• ICT regulators have previously focused on market
or positive?
failure related to the telecommunication sector. If
the responsibilities of ICT regulators are now to en- • Which other sectors, such as energy, transport, and
compass measures relating to climate change, how health, offer the greatest scope for the beneficial
should such interventions be implemented, such linkages between ICTs and reduced GHGs to be
that the chosen measures do not add further bur- brought about?
dens to the sector?
• How should ICT regulators factor GHG reduction
• Given the general consensus about the threat measures into their existing portfolio of policies
posed by climate change, and the potential of the and regulatory responsibilities?
ICT industry in general, and TSPs in particular, to fa-
cilitate the reduction of GHGs, should ICT regula- 7.4.5 What is the appropriate form for
tors develop and advocate policies that address climate change measures in TSP
climate change? regulation?
• If the regulator’s core mandate does not include
With the increasing awareness of climate change
environmental considerations,62 how should such
related issues as well as the general framework of laws
considerations be incorporated into regulatory pol-
that apply to all organizations, there will be specific
icy, particularly where regulatory decisions may re-
laws that relate to particular sectors, such as TSPs.
sult in environmental consequences?
There are then likely to be operating licences or general
• What role should ICT regulators play with regard to authorizations that set out the conditions to which the
environment-related measures: facilitator, enabler, regulated entities are required to adhere. These will be
promoter, awareness raiser? set out by sector specific regulators.
• Should the ongoing United Nations Framework
Convention on Climate Change (UNFCCC) negotia- All regulation is ultimately about behaviour. Some
tion process make the link between climate change regulation focuses on changing behaviour to bring
and regulation of the ICT sector? about the desired objectives, while other regulation
aims at reinforcing existing behaviour if the desired ob-
• How should sector regulators consider policy areas jectives are already being met. But the methods that
that affect environmental outcomes, such as can be employed to bring about the desired objectives
through beneficial effects on power usage and take many forms, with varying degrees of formality and
GHGs? Should regulators factor potential environ- legal enforceability. Measures can also be supported
mental outcomes into their decision making when with a range of different incentives, penalties, and
it comes to policy matters such as the deployment sanctions to further reinforce the desired behaviours.
of NGNs, migration from analogue to digital net- Typically, these measures fall on a spectrum from for-
works, migration from 2G to 3G and beyond63, and mal to informal modes of regulation.
infrastructure sharing?
• What should be the scope and extent of regulatory 7.4.5.1 Formal regulation
interventions which are designed to bring about
reduced GHG emissions by ICTs? Regulation can be highly formal, such as when it is
based on statute. This type of measure normally re-
• What is the legal basis for ICT regulators to become quires the approval of legislators. It is frequently used
involved in the pursuit of policies to reduce GHGs? to establish the overall framework within which TSPs
and their regulators operate. Pursuant to general prin-
Chapter 7 253
ciples set out in law, TSPs are often granted operating enforcement powers over TSPs and can prove to be
licences or general authorizations, which set out the key stakeholders in such discussions?
rights and obligations enjoyed by these market players.
• Should ICT regulators require that TSPs include
If this formal route was to be used as the basis for in-
emissions targets in company performance targets
cluding climate change measures in TSP regulation, it
such as KPIs?
would likely take the form of specified conditions in
such operating licences or general authorizations. • How should sector regulators support the industry
However the legislation governing TSPs would likely in developing codes of conduct, best practice etc
have to specify that climate change-related conditions on reducing their GHGs?
could be included as a condition of licence or general
authorization. This would be needed to give regulators 7.4.6 Should regulators do more to change
the authority to take climate change-related matters individual behaviour?
into consideration in regulatory decisions. So imple-
menting measures aimed at reducing GHGs would likely “Little things can make a big difference.”
have to be formalized in the general legislation govern- Malcolm Gladwell 64
ing the ICT sector.
There is a (perhaps understandable) tendency in
7.4.5.2 Informal regulation the ICT sector to assume that the way to solve most
problems – including GHG reduction – is with a tech-
Informal measures can also be used to achieve nological fix. However, installed technology often does
regulatory objectives. Many such measures are based not work in line with the intentions of the designer, re-
on voluntary compliance. These measures can take sulting in higher than anticipated energy use (hence
many forms: GHGs). This underlines the importance of human beha-
viour when using ICTs, a subject that tends to be over-
• Codes of practice and codes of conduct;
looked.
• Key Performance Indicators (KPIs);
There is also an assumption is that, as GHGs are
• Targets;
linked to energy use, and energy use is expensive, we
• Voluntary agreements; can leave it to customers to make their own decisions
• Guidelines; about how they use ICTs in the most energy-effficient
manner. The World Bank points out that, “The debate
• Industry labels ( ); about changing individual behaviour has focused on
• Best practice information; and market mechanisms. Better pricing of energy and cost-
ing of scarce resources can steer individuals away from
• Public consultation, publication, information and carbon-intensive consumption and encourage them to
education. preserve endangered habitats and manage ecosystems
better. But the drivers of consumption by individuals
These less formal measures can be implemented and groups go beyond prices. Many cost-effective ener-
and monitored in a variety of ways, for example, gy-efficient technologies have been available for
through websites, blogs and forms of communication years….So, why haven’t they been adopted? Because
such as social media. Such informal measures serve to concern does not mean understanding, and under-
steer TSPs and their customers towards more energy standing does not necessarily lead to action.” 65
efficient (and GHG-reducing) types of behaviour, as
considered in the following sections. To redress the balance, the following section con-
siders the importance of individual behaviour change.
7.4.5.3 Questions For, as Rajendra Pachauri, Chairman of the IPCC has
• If ICT regulators are to have an active role relating suggested, the time has come, “to start looking at the
to climate change, is the most appropriate way to social-science aspects” of climate change. 66 This is a far
implement this role via more formal or less formal from straightforward activity, since, according to An-
measures? thony Leiserowitz, Director of the Yale Project on Cli-
mate Change “Human beings’ decision-making
• Should regulators increase their involvement in processes, as individuals and collectively, are probably
formal processes related to climate change with at least as complicated as the climate system itself.” 67
national policy-makers, given that regulators have
254 Chapter 7
Angel Gurría, the OECD’s Secretary-General,68 has said 7.4.7 Why should regulators attempt to
that, “We need to start producing, transporting, con- change individual behaviour?
suming, regulating, governing, even thinking, different-
ly; starting today. Climate change means cultural ‘It would be easy to give the public information and
change.” hope they change behaviour but we know that
doesn’t work very satisfactorily. Otherwise none of
Such comments add up to the following notion: all us would be obese, none of us would smoke and
of the innovative ICT that is now available, and which none of us would drive like lunatics.’
will emerge in the future, is not going to help, and may Ian Potter, Director, New Zealand Health Sponsor-
hinder, the process of reducing GHGs unless people al- ship Council, New Zealand Herald, June 2007
so change their behaviour in the right way.
It is true that “Everything that happens in the econ-
7.4.6.1 Questions omy happens as the result of an action by some individ-
ual,”69 and the same applies to our activities relating to
• What role is there for ICT regulators in persuading
climate change. The IPCC’s report on climate change
the public to behave differently so as to reduce the
mitigation to 2030 notes, “changes in lifestyle and be-
GHGs produced by individuals through the use of
haviour patterns can contribute to climate change miti-
energy-saving and clean-energy ICT services and
gation across all sectors,”70 and in its 2010 report on
applications?
Development and Climate Change,71 the World Bank
• Is there a role for regulators to become more in- notes the importance of considering individual beha-
volved in promoting responsible consumer behaviours when addressing climate change (see box 7.7).
viour such as turning off equipment when not in
use, not replacing devices as frequently, and using
less bandwidth?
Box 7.7: Insight in the impact of behavioural change on mitigating climate change
A recent report on this topic notes that:
“First, myriad private acts of consumption are at the root of climate change. As consumers, individuals hold a reservoir of mi-
tigation capacity. A large share of emissions in developed countries results directly from decisions by individuals – for travel,
heating, food purchases. U.S. households account for roughly 33% of the nation’s carbon dioxide (CO2) emissions – more than
U.S. industry and any other country bar China…. If fully adopted, existing efficiency measures for households and motor ve-
hicles could produce energy savings of almost 30% – 10% of total U.S. consumption. Second, individuals drive the larger
processes of change in organizations and political systems. Particularly in democratic countries, much government action is
the result of citizen and voter pressures to act. Third, when designing and implementing policy, decision makers apply the
same mental processes as other individuals.”
The report goes on to consider the difficulty of addressing individual behaviours – whether individuals in their roles as con-
sumers, businesses, governments or citizens – in relation to climate change. It points out that understanding the drivers of
human behaviour is essential for what it calls “climate-smart development policy. But because human behaviour is complex
and often unpredictable, there are many different models of why humans do what they do.72 There are thus big challenges
inherent in attempts to change behaviour.
As one commentator notes, “The challenge of trying to stimulate behaviour in desired directions can hardly be overesti-
mated. Decades of academic research has sought to explain how policy makers and firms can engage with individuals’ moti-
vations in the interests of environmental, social or economic goals. Conventional approaches tend to rely on the provision of
digestible, compelling information and appeals to rational decision-making. Such techniques have been fundamental in the
design of public policy campaigns for years. Yet research from diverse disciplines within psychology, sociology, biology and
medical science highlights the limited scope of these approaches to promote real change. The belief that consumers will
change their behaviour on the basis of rational deliberation alone – for instance, by absorbing more and more information
about the causes and impacts of climate change – seems unrealistic. Incentives and penalties often fail to achieve expected
outcomes and research suggests such appeals to consumer rationales are limited…..” 73
Source: World Bank, Development and Climate Change Report 2010.
Chapter 7 255
Disciplines such as social marketing74 and beha- • In what ways can ICT regulators use new forms of
vioural economics75 are increasingly being used to pro- ICT services in attempting to change behaviours?
vide insights into human behaviour and how to change
it in a positive direction, with applications from health 7.4.8 Which new ICT services can regulators
promotion to environmental protection. Perhaps it is use to help change individual behaviour?
now time for ICT regulators to consider using such
techniques with regard to changing consumer beha- “The Medium is the Message.”
viour to reduce GHGs. Marshall McLuhan
7.4.7.1 Questions “Mobile phones…have become a must carry item.”

Rashid, Coulton & Bird 77
• Is there a role for ICT regulators to address not just
the TSPs, but the end users of the services provided
7.4.8.1 Social media, Web 2.0 and new ICT
by TSPs?
services
• Should regulators be involved in attempting to
change individual behaviours as part of the drive to Social networking, driven by increasingly pervasive
cut GHGs? ICT services and applications, is becoming an integral
• Should regulators develop programmes to build part of contemporary culture. A Nielsen survey in June
consumer awareness and education about the im- 2010 noted that “three of the world’s most popular
pact of usage patterns in ICTs on the environment? brands online are social-media related (Facebook, You-
Tube and Wikipedia) and the world now spends over
• Do ICT regulators have a role to play in helping 110 billion minutes on social networks and blog sites.
overcome barriers to behavioural change? This equates to 22 per cent of all time online or one in
• Should ICT regulators incorporate insights from dis- every four and half minutes. For the first time ever, so-
ciplines like social marketing and behavioural eco- cial network or blog sites are visited by three quarters of
nomics into their attempts to modify the GHG- global consumers who go online, after the numbers of
related behaviours of individuals? people visiting these sites increased by 24 per cent over
last year. The average visitor spends 66 per cent more
• What is the role for mechanisms such as choice ar- time on these sites than a year ago, almost 6 hours in
chitecture, defaults, commitment devices and 78
April 2010 versus 3 hours, 31 minutes last year.”
Nudge, based on the findings of social marketing
and behavioural economics?76 One of the reasons for such an explosive growth is
• Should ICT regulators provide information about the move from per-hour billing for Internet access to-
the energy consumption of ICT devices? wards flat rates and unlimited packages. It may seem a
long way from climate change to the competition which
• Is there a role for ICT regulators in producing case has led to changes in tariffing for internet access, but
studies and similar examples to raise the level of this could be seen as a classic example of the Law of
understanding and help kick-start the debate about Unintended Consequences.
GHGs and ICTs?
Box 7.8: Changing Behaviour with Social Marketing and Behavioural Economics
Social marketing is defined by the UK’s National Social Marketing Centre79 as “an approach used to achieve and sustain be-
haviour goals on a range of social issues” by using “a range of marketing techniques and approaches (a marketing mix).
Behavioural economics differs from conventional economics as it recognizes that, as one unknown source put it, “There is
only one way for people to reach the optimal outcome identified by the classical economic models, but a thousand ways to
miss that outcome.” Hence, relying on people’s economic rationality (e.g., cutting your carbon footprint can save you mon-
ey) does not always work. Behavioural economics “increases the explanatory power of economics by providing it with more
realistic psychological foundations.” 80
Social marketing and behavioural economics can provide insights into the barriers to behavioural change,81 and are increa-
singly being used by regulators of financial services82 and in other sectors.
256 Chapter 7
This section considers two aspects of social net- news. Social networking has been described as one of
working and new ICT services. The first concerns the the ten inventions that changed the world,83 and au-
rising energy use associated with the new ICT services; thor B.J. Fogg has commented on the rise of a new
the second considers how such services might be used form of persuasion, which he calls mass interpersonal
to reduce the energy consumed by customers. persuasion (MIP).84
7.4.8.2 Energy use and new ICT services Perhaps the most celebrated recent example of the
use of such new ICT services and applications to bring
Separating out the energy consumption of new ICT about behavioural change was the campaign for Barack
services such as social media and social networking is Obama to win the Democratic nomination and then the
complex. It is difficult to disaggregate the bandwidth Presidency of the United States. This campaign has
used in telecommunications networks by such services, been described in one study85 as having relevance for
and similarly difficult to net out the data centre energy “conducting and building communities around public
requirements. Many of the main players in the sector health campaigns,” but the subject could just as well be
do not disclose energy use data, which makes such cal- climate change. The authors of this study show how
culation even more difficult. This difficulty has been new media were used to energize the public in the Ob-
compounded by the rise of so-called “cloud compu- ama campaign, with particular reference to four differ-
ting”, whereby the internet has facilitated the sharing ent ICT areas: 1) the campaign website; 2) the
of resources, software and information, which are typi- campaign TV channel; 3) social networking sites; and 4)
cally provided to computers and other devices on- mobile phones. The authors add a fifth, the campaign
demand. In its report on cloud computing, which uses materials created by supporters who made use of new
the Smart 2020 Report as its starting point, Greenpeace media.
International has calculated the figures set out below.
Clearly, these figures are not based solely on new ICT ICT-enabled social media are increasingly being
services, and the data may require some caution. The used in other campaigns to change behaviour. Some
figures indicate that the electricity consumption of tele- recent examples in the UK have included: quitting
communications and The Cloud will more than double smoking;86 persuading unregistered voters to register
by 2020, as will the accompanying CO2 emissions. before the 20 April deadline in the UK 2010 General
Election;87 and a Facebook application run by the Food
7.4.8.3 Behaviour change and new ICT services Standards Agency to promote healthier eating to 13-16
year olds.88 Campaigns such as these have been added
Social networking, whether Facebook, MySpace or to the toolkits of those wishing to change behaviour
Twitter, is changing how we interact and with whom we because, with three quarters of the world, or 5 billion
interact. Millions of people now communicate details of people, having a mobile phone subscription,89 “Mobile
their professional and personal lives by poking, twitter- phones are the most pervasive technology on the pla-
ing and posting as a way to create, grow and maintain net….they have become a must carry item along with
personal contacts, share ideas and keep up with the money and keys.” 90
Table 7.4: Measuring GHGs from The Cloud

Derived electricity Forecast electricity Δ increase Conversion to Derived electricity
consumption consumption 2007-2020 energy use emissions
Billion kWh Billion kWh Billion kWh gCO2e/kWh MtCO2e
2007 2020 2020 CAIT e factor 2020
Data centres 330 1012.02 307% 526.6 533

Telecoms 293 951.72 325% 526.6 501
Total Cloud 623 1,963.74 315% 1034
Source: Greenpeace International, Make IT Green: Cloud Computing and its Contribution to Climate Change (Amsterdam: Greenpeace,
2010). Online: www.greenpeace.org/international/en/publications/reports/make-it-green-cloud-computin/
Chapter 7 257
Mobile phone applications are now able to collect organizations (corporate, government and SMEs) or
information about a person’s overall energy usage and individual consumers?
present this information back to the user. Still to be de-
• What is the role for ICT regulators in developing
cided is what should happen to such information.
measures to influence the levels of GHGs produced
by the end users of TSPs’ services?
7.4.8.4 Questions
• If individual behaviour change is desirable, should
• Should ICT regulators use new forms of ICT services,
TSPs and regulators act as facilitators and enablers,
including social media, in the attempt to change
focused on the customers of TSPs?
individual behaviours and promote energy efficien-
cy and the use of clean energy sources in ICT? • What form should regulatory interventions take,
and should they be primarily based on persuasive
• Should ICT regulators use new ICT products, servic-
rather than coercive measures?
es and applications to facilitate behaviour changes
relating to climate change generally?
7.4.9 Should ICT regulators act as climate
• Should regulators assume that innovation and mar- change exemplars regarding their own
ket forces, which drive the development of applica- behaviours?
tions for ICT devices (e.g., applications that reduce
smartphone energy consumption91), will result in One of the themes in this chapter is the need for
GHG reduction? ICTs in general and TSPs in particular to show that they
have “clean hands” when it comes to GHGs. In this vein,
• Should regulators be addressing not just the TSPs –
some governments have set out how they intend to act
the usual focus of their regulatory interventions –
as exemplars, by reducing their own GHG emissions.92
but also the end users of TSPs’ services, whether
Should ICT regulators follow suit, with benchmarks and
publication of their own GHG-related behaviours?
Figure 7.3: DEFRA and the 4E’s Model
• Remove barriers
Approach evolves • Give information
• Provide facilities
as attitude and • Provide viable alternatives
behaviours change • Educate/train/provide skills
over time • Provide capacity
Enable
• Community action
• Tax system • Co-production
• Expenditure - grants • Deliberative fora
• Reward schemes • Personal contacts/
• Recognition/ Encourage Engage enthusiasts
Catalyse • Media campaigns/
social pressure -
Is the package enough opinion formers
league tables
to break a habit and
• Penalties, fines & • Use Networks
kick start change?
enforcement action
Exemplify
• Leading by example
• Achieving consistency
in policies
Source: DEFRA, A Framework for Pro-environmental behaviours (London: DEFRA, 2008) , online:
www.defra.gov.uk/evidence/social/behaviour/documents/behaviours-jan08-report.pdf
258 Chapter 7
One way to approach this matter is the “4Es” policy side and outside the ICT sector to find innovative ways
framework, which was originally developed by the UK’s to curb GHGs. ICT companies are unusual insofar as
Department for Environment, Food and Rural Affairs these developments will encourage increased take up
(DEFRA). The 4Es are four actions that should underpin of their services. But will leaving it to the market pro-
the government’s attempts to change behaviour: Ena- vide sufficient incentives? As Greenpeace International
ble, Encourage, Engage and Exemplify.93 notes in its report on Cloud Computing, “because of the
unique opportunities provided to the ICT sector in a
Some ICT regulators already record their plans for carbon-constrained world, the industry as a whole
environmental protection and periodically report on should be advocating for strong policies that result in
their actions. It is important that, in conducting their economy-wide emissions reductions.”95 One such policy
own activities, sector regulators set a good example in would be to set an appropriate price for carbon. As the
seeking to manage their GHG production. Regulators OECD notes,
might undertake this management through their use of
buildings and travel; through their use of ICT products “OECD analysis shows that large reductions in GHG
and services to substitute for GHG producing activities emissions are achievable at relatively low costs, if the
where possible; and by measuring their GHG footprint. right policies are put in place. This includes strong use of
OFCOM, the UK ICT regulator, has commissioned and market-based instruments worldwide to develop a
published research on its own environmental footprint, global price for GHG emissions, ”96
which may be considered a precedent for such activi-
ties.94 Figure 7.4 sets out the rationale for green taxes and
the link to low carbon industries of the future.
7.4.9.1 Questions
There are a variety of different measures and fiscal
• Should we expect regulators to act as exemplars of
instruments that can be employed in order to reduce
good behaviour regarding their GHG-creating activ-
carbon emissions.97 Whichever instrument is chosen,
ities?
the OECD notes the need for “….a strong and consistent
• Should sector regulators, at the national, regional price signal across all GHG-emitting activities. Develop-
and international level, exemplify good practice by ing a global carbon price not only reduces the total
developing policies that curb their own GHGs? costs of reducing GHG emissions, but also helps to level
• How should ICT regulators go about this task? the playing field between countries, thus addressing
concerns about the potential effects on competitiveness
• Should regulators be required to subject their own of climate change policies….(carbon) taxes can be a
GHG-producing activities to a higher degree of particularly cost-effective approach to reducing GHG
scrutiny, with a requirement for greater transpa- emissions.” 98 Carbon taxes also help to speed technol-
rency? ogical innovation and diffusion.99 Setting a higher price
• Should ICT regulators be required to set out their for carbon (probably around USD 100 per ton of CO2)
own GHG mitigation policies, establish targets, and will encourage increased take up of ICT services and
publish results? speed the transition to low carbon economy.100
• Should there be a role for ICT regulators in ensuring This means that a measure such as a carbon tax is
that information about best practices is diffused in the direct business interests of the ICT sector: it will
across all relevant regulators (perhaps a task for increase the demand for, and the value of, the use of
ITU)? ICTs to substitute for carbon-generating activities. Until
now, the lobbying of the ICT sector has been low in re-
7.4.10 Should ICT regulators lobby for more lation to the economic importance of the sector, par-
effective carbon pricing? ticularly when compared with the fossil fuel sector.101 Is
it now time to overcome this reticence to lobby, and
ICTs can be seen as having “clean hands” relative to should regulators develop their own position on the
many other sectors of comparable economic impor- question?
tance. The rising price of energy and more rigorous
emissions controls will incentivize companies both in-
Chapter 7 259
Figure 7.4: The Rationale for Environmental Taxation
Key messages
Environmental taxes work: numerous studies, including those of the Green Fiscal Commission, have
shown that green taxes are effective in reducing the environmental impact on which they are tar-
geted.
Environmental taxes are efficient: there are good reasons why environmental taxes in many situa-
tions will achieve environmental improvement at lower cost than other instruments.
Environmental taxes can raise stable revenues: some environmental taxes, like fuel duty, have been
raising sizeable revenues for years. Raising them significantly would therefore both achieve environ-
mental improvements and allow other taxes to be lower than they would otherwise need to be.
The public can be won round to green fiscal reform: a number of polls show majority public support
for a green tax shift, which increases when people are persuaded that the green taxes really will be in-
stead of other taxes.
The UK’s 2020 greenhouse gas targets could be met through green fiscal reform: the economic im-
plications of doing so would be broadly neutral, and the green fiscal reform policy approach would in-
crease employment.
Green fiscal reform would stimulate investment in the low-carbon industries of the future: investing
a small proportion of the revenues from green fiscal reform in energy-efficient homes and vehicles,
and in renewable energy development, would accelerate the growth of new low-carbon industries
with real export potential, as well as increasing the environmental benefits of green fiscal reform.
Source: UK Green Fiscal Commission, The Case for Green Fiscal Reform, London: Green Fiscal Commission, c/o Policy Studies Institute, 2009.
Online:www.greenfiscalcommission.org.uk
7.4.10.1 Questions that would favour the ICT sector and speed the
transition to low carbon economy?
• Given the apparent speed of climate change and
the unique possibilities for carbon reduction pre- • Is there a role for ICT regulators to champion the
sented by ICTs, has the time come for ICT regula- ICT sector in calling for an appropriate price for
tors to support fiscal incentives that will help speed carbon – e.g., through a carbon tax – as a way to
the transition to a low carbon economy? mobilize arguments which incentivize companies to
cut GHGs by using innovative ICT solutions?
• Do ICT regulators have a specific role to play in
supporting activities such as GeSI’s commitment
7.4.11 Overall questions
no 5, “Work with public policy makers to ensure
that the right regulatory and fiscal frameworks are
This section poses overall questions about the po-
in place” 102 in order to move the sector in the right
tential role for regulators relating to ICTs and climate
direction?
change:
• Should ICT regulators now join forces with the ICT
• Should ICT regulators be involved in encouraging
sector in order to lobby/lend support for policies
and facilitating the ongoing activities of organiza-
such as a carbon tax?
tions such as GeSI (and vice versa)?
• Should TSPs join any efforts by the ICT sector to
• Is there a role for ICT regulators in emphasizing cli-
lobby for a carbon tax, and should ICT regulators
mate change issues in the industry’s supply chain
support a carbon tax?
work and in influencing the end-to-end manufac-
• Should ICT regulators use their special relationship turing process for electronic equipment?
with government to influence public policy in a way
260 Chapter 7
• How do ICT regulators ensure that energy and cli- nesses, the consequences will flow both from climate
mate change matters are fully considered by the change and from the policies that seek to address it.
organizations that set the technical standards for Businesses face regulatory exposure, physical exposure,
the ICT industry? competitive exposure, and reputational, including litiga-
tional, exposure. Physical risks such as more frequent
• Should ICT regulators be involved in the formula-
and more serious storms, floods, droughts, strong
tion of national policies on climate change?
winds, heat waves and forest fires pose an obvious
• How do ICT regulators create a policy framework to threat to the sector. Other risks include water shortages,
reduce the ICT sector’s own carbon footprint and increased rainfall, and rising sea levels. Any industry
to embrace environment-friendly technologies and that relies on a physical infrastructure, particularly one
processes in ICT development (e.g., Green IT initia- that is widely distributed, is vulnerable to the effects of
tive in Japan, etc.)? climate change. Climate change means an increased
risk of service disruption to all network infrastructures,
This section has been a (necessarily hypothetical) including energy, transport and telecommunications
discussion about a potential point of contact between (and these effects are also inter-related, given, for ex-
ICT regulators and climate change. The following sec- ample, the dependence of the telecommunications
tions consider three existing points of contact between sector on electrical power). Climate change will likely
ICTs/TSPs and climate change. As before, each section impact the design of the networks, raising the need for
comprises analysis and discussion, followed by a num- more robust infrastructures, greater technical know-
ber of questions that relate to the role of regulators. ledge, and enhanced engineering capabilities.105
7.5 Adaptation: 7.5.3 What are the consequences of climate

A Current Point of Contact change for ICTs?
"It is not the strongest of the species that survives, Many TSPs are network-based. As with other net-
or the most intelligent; it is the one most capable of work-based enterprises, TSPs are vulnerable to the im-
change." pact of climate change in general and extreme weather
Attributed to Charles Darwin events in particular. This is because networks rely on
physical equipment, some of which is likely to be si-
7.5.1 What is Adaptation? tuated in locations that are subject to climate-change
induced extremes of weather.
“….a process by which strategies to moderate, cope
with and take advantage of the consequences of climat- In a 2008 survey of climate change risks to busi-
ic events are enhanced, developed, and imple- ness, KPMG106 found that six major industry sectors
mented.”103 were in particular danger: aviation, healthcare, tourism,
transport, oil and gas and the financial services sector.
There are many definitions of adaptation as it re- All were in KPMG’s "danger zone" – highly scored on
lates to climate change.104 The one chosen here is par- the risks, yet poorly scored in terms of their prepared-
ticularly appropriate to the ICT sector since it includes ness to face these risks. Although KPMG found that the
the possibility that such adaptation might include tak- physical risks to the telecommunication sector were
ing advantage of the consequences of climate change. relatively low, the study found that of the 18 sectors
This aspect of climate change will be considered in sec- included in the report, even the three deemed to be in
tion 7.7 on Transformation. the "safe area", which included telecommunications,
were not sufficiently prepared to deal with the new
First, we consider how climate change will affect risks associated with climate change. It is also worth
the ICT sector and how ICTs will seek to cope with the noting that “low risk” is not the same as “no risk.”
impact of climatic events.
The fact that TSPs are in the “low risk” zone does
7.5.2 What are the general consequences of not mean that they are not subject to an absolute
climate change? downside from climate change; it just means that they
are likely to suffer relatively less than some other indus-
Not only countries, but also companies, face in- try sectors. This will offer scant comfort to TSP manag-
creased risks as a result of climate change. For busi-
Chapter 7 261
ers when climate change events result in the loss of example, when Hurricane Ivan hit the Caribbean in
connectivity or unusable exchanges. 2004, it caused exceptional operating costs of £18m
relating to business and network restoration, plus a
Such TSP managers might feel that, in fact, tele- £3m fixed asset write-down for the TSP Cable & Wire-
communications companies are significantly exposed to less. British Telecom (BT) has said that severe weather
physical risks since extreme weather conditions could systems resulting from climate change have already
result in network damage and rising insurance costs. caused substantial damage to BT's UK operations and
TSPs may have to consider protecting or relocating cost the company money, with the situation only set to
elements of their network that could become exposed get worse. BT chief executive Ben Verwaayen said in
to damage from severe weather conditions. This is par- June 2005, 'The gales last winter followed Scotland's
ticularly true in the case of remote sites, especially in wettest summer on record. This meant we experienced
developing countries, where road access to the sites is numerous cable faults, overhead cables down and a
needed for access and often for providing energy sup- whole car park full of vehicles ruined by floods'. In 2006,
plies. TeliaSonera’s fixed network sustained damage costs
equivalent to 2 per cent of sales as a result of storms in
Such concerns are not hypothetical. Many TSPs are southern Sweden. BellSouth estimated that Hurricane
already suffering the effects of climate change, ex- Katrina resulted in USD400m worth of network dam-
pressed in more frequent severe weather effects. For age.
Figure 7.5: Climate Change Risk Chart

relatively low
KPMG’s risk preparedness framework

Transport
Tourism
Health care
Manufacturing Aviation
Preparedness per sector
Building & Financial sector

Retail
real estate
Telecommunications Pharmaceuticals
Automotive
Food & beverages
Insurance
Oil & gas
Construction &
materials
Mining & metals
relatively high
Chemicals
Utilities
relatively high relatively high
Perceived level of risk per sector
Source: KPMG Climate Changes Your Business (2008), online:

www.kpmg.co.uk/news/docs/chart%20for%20climate%20change%20press%20release.pdf
262 Chapter 7
Operators have already begun thinking about cli- 7.5.3.1 Questions

mate change when planning the location of new nodes
• Is there a need for new rules that would require
for next generation networks. Wireless technologies
TSPs to prepare for the weather shocks that will re-
may be seen as more resilient, and could fare better
sult from climate change?
than fixed networks when climate-related events strike.
As the ITU has noted, “In many cases, when disaster • Conversely, are existing measures relating to net-
strikes the "wired" telecommunication infrastructure is work and service resilience, disaster recovery, busi-
significantly or completely destroyed and only radi- ness continuity, quality of service, availability of
ocommunication services can be employed for disaster service etc, likely to be sufficient to cover the con-
relief operation (especially radio amateurs and satellite tingencies imposed by climate change?
systems).”107 Although not related to climate change, • Should regulators include criteria relating to flood
the earthquake disaster which struck Haiti in January risk and other natural disasters that are likely to be
2010 shows what could occur. The massive earthquake exacerbated by climate change in the requirements
killed around a quarter of a million people, made over for building and locating network infrastructure
one million people homeless, and significantly dam- such as mobile towers and landing stations?
aged infrastructure and the broader economy. As one
commentator notes, “The mobile networks all suffered 7.6 Mitigation:
damage from the earthquake, and the market leader A Current Point of Contact
Digicel lost approximately 30 per cent of its cell sites.
Haitel was largely spared as it utilizes large cell towers “The world we have created today as a result of our
built to withstand hurricanes and earthquakes. Comcel’s thinking thus far has problems which cannot be
network was at least 70 per cent operational within solved by thinking the way we thought when we
two days following the quake.” 108 created them.”
Albert Einstein
Other consequences of climate change include in-
creases in operators’ energy demands, as higher tem- 7.6.1 What is “Mitigation”?
peratures will, under current running temperatures,
require more air conditioning in the exchanges. Net- Climate change mitigation refers to measures or ac-
work damage will require trucks to be used for repairs, tions to decrease the intensity of radiative forcing109 in
with implications for fuel use. And operators are likely order to reduce global warming. Mitigation is different
to have to run more back-up generators in areas expe- from adaptation (section 7.5 above) in that the latter
riencing extreme weather conditions. involves acting to minimize the effects of global warm-
ing. Mitigation is about reducing GHG emissions at
Were sea levels to rise materially, network opera- source or increasing their sinks. (A sink is a natural or
tors would be likely to have to move or to replace a sig- artificial reservoir that accumulates and stores carbon-
nificant amount of network equipment. For example, containing chemical compounds. Forests and oceans
equipment positioned in sites at risk of flooding would are the best known examples of sinks.) Formally, miti-
need repositioning, and displaced populations would gation is an activity that contributes to the “stabilization
likely require new networks to be built. In countries like of GHG concentrations in the atmosphere at a level that
Bangladesh, more than a fifth of the territory could be would prevent dangerous anthropogenic interference
under water with a 1m rise in sea levels, highlighting with the climate system.”110
the risk to telecommunication companies in such re-
gions. In other words, it is likely that the consequences 7.6.2 What is the contribution of ICTs to
of climate change will be very different for TSPs in dif- climate change?
ferent regions, and that the requirements for adapta-
tion will, as a consequence, also be different. “ICTs are far from innocent in the matter of climate
change”
TSPs, like other network-based industries, are likely ITU111
to be adversely affected by climate change. In some
cases, climate-change related weather events could re- ICTs in total currently contribute an estimated
sult in an inability to provide service to significant num- 2-3 per cent of global GHG emissions (see figure 7.6).112
bers of customers.
Chapter 7 263
The ITU spells out the main causes: estimated Internet users grew from 50 million to
1.1 billion. In 1996, virtually all residential Internet
• The proliferation of user devices, all of which need
users were using dial-up whereas by 2006 a majori-
power and radiate heat. For instance, in the decade
ty had always-on broadband connections, further
between 1996 and 2006, the number of mobile
increasing power use. Today, only five years later,
phones rose from 145 million to 2.7 billion (al-
almost a third of the world population are Internet
though Ericsson has estimated that 0.13 per cent of
users114, meaning that power consumption is not
global carbon-dioxide emissions are specifically at-
likely to decline. Figure 7.7 illustrates the continu-
tributable to mobile, compared with 100 times that
ing growth in average broadband speeds.
amount from transport113). Over the same period,
Figure 7.6: The ICT Carbon Bill
Telecoms infrastructure and devices Servers

2002 Data Centres and data
PCs, peripherals and printers centres
15%
2007 TVs and
peripherals
46%
2020
PCs and
peripherals
0.0 200.0 400.0 600.0 800.0 1000.0 1200.0 1400.0 1600.0 22%
CO2 emissions (Mn Tn)
Note to right chart: Covers greenhouse gas emissions during production and use phases of the ICT product life cycle.
Source: McKinsey and the Climate Group and OECD (2010), “Greener and Smarter: ICTs, the environment and climate change”, online:
Figure 7.7: The Continuing Growth in Average Broadband Speeds
15 14.4
12.0
10 9.1
Mbps
6.0
5 4.4
3.5
0
2009 2010 2011 2012 2013 2014
Source: CISCO, Hyperconnectivity and the Approaching Zettabyte Era, CISCO White Paper, 2 June 2010 at 7.
264 Chapter 7
• The increasing power and bandwidth requirements ate at higher frequencies than 2G ones, need more
from devices which are able to access more servic- power than 2G mobile phones (for instance, for In-
es and applications, particularly mobile devices. ternet access, digital signal processing, polyphonic
Figure 7.8, from CISCO, illustrates this point. ringtones, etc). More power is therefore required
to keep 3G mobile phones operating.
• The fact that each individual user is now likely to
own more devices. This is more pronounced in the
However, geographical development of ICT markets
field of consumer electronics, where a typical fami-
is uneven. Many developed markets are at or ap-
ly in a developed country might own multiple tele-
proaching maturity, having followed a deployment path
vision sets, mobile phones, iPods/MP3 players, as
that began with fixed telephony and then moved on to
well as a digital cinema, video-recorder, a DVD
mobile networks and services. In the developing world,
player, a hard-drive recorder, one or more set-top
mobile penetration rates have frequently leapfrogged
box decoders etc, many of which (or their chargers)
the fixed networks. ICT products and services are be-
are routinely left on standby overnight.115 But this
coming more widely available in all markets: broadband
also applies to multiple ownership and use of net-
is being rolled out in fixed and mobile networks, bring-
work-enabled ICT devices, from PCs to mobile
ing increasing penetration and greater use of connectiv-
phone handsets, which is often the case in devel-
ity. Other things being equal, this deployment of more
oping countries.
devices, growth of services, and increased use of
• Rising requirements for power and for cooling as a broadband will lead to higher power consumption for
result of increasing processing power. For instance, ICTs in use.
third generation (3G) mobile phones, which oper-
Figure 7.8: High-End Handsets, Laptops, and Data Traffic
E-Reader
Smartphone
Digital Photo Frame
Video Camera
Mobile Phone
Projector
Laptop
* Monthly Basic Mobile Phone Traffic
Source: CISCO, Hyperconnectivity and the Approaching Zettabyte Era, CISCO White Paper, 2 June 2010.
Chapter 7 265
Even if, as section 7.6 will show, ICT companies A benchmarking process relating to all sectors was
produce products and services that can be used to re- developed by the Greenhouse Gas Protocol Corporate
duce GHGs, ICT firms still have a responsibility to man- Accounting and Reporting Standard (the WRI Account-
age and reduce their own direct emissions. As has been ing and Reporting Standard) of the World Resources
noted, “a company's direct footprint does not include its Institute.119 This process helps companies and other
customers' footprint.”116 Though ICT may be helping to organizations to identify, calculate, and report GHG
reduce the carbon footprint of its customers, the ICT emissions. The WRI Accounting and Reporting Standard
provider itself cannot “offset” such reductions against is designed to provide a standard for accurate, com-
its own GHG emissions. ICT providers need to look at plete, consistent, relevant, and transparent accounting
ways to reduce, or mitigate, their own GHG emissions. and reporting of GHG emissions by companies and or-
ganizations, including information on setting organiza-
7.6.3 Accounting and reporting ICT GHGs tional and operational boundaries, tracking emissions
over time, and reporting emissions. It also provides
What is the carbon footprint of an ICT provider? guidance on GHG accounting and reporting principles,
Accounting for and reporting GHG emissions raise diffi- business goals and inventory design, managing invento-
cult questions relating to boundaries. In the modern ICT ry quality, accounting for GHG reductions, verification
eco-system, many functions will be outsourced to other of GHG emissions, and setting a GHG target.
providers, from back office functions to the network
itself. To which entity should GHGs arising from such The WRI Accounting and Reporting Standard de-
outsourced functions be attributed? If we are consider- fines three 'scopes' to help delineate direct and indirect
ing a Virtual Network Operator (VNO), how much of the emissions sources, improve transparency, and provide
host network’s carbon footprint should be attributed to utility for different types of organization and different
the VNO? Similar considerations apply to wholesale types of climate policies and business goals:
services provided by underlying facilities-based opera-
• Scope 1: Direct GHG emissions which occur from
tors, but that form components of the service provided
sources that are owned or controlled by the com-
by other entities to their end customers. Is it acceptable
pany. Examples include emissions from combustion
for companies to reduce their carbon footprints by
in owned or controlled boilers, furnaces, vehicles,
means of such outsourcing?117 Identifying these effects
etc and emissions from chemical production in
is complex. Current challenges include the lack of a
owned or controlled process equipment. This
common system for measuring GHGs, which makes it
source of emissions is likely to be relatively low for
difficult to benchmark TSP A versus TSP B. The ITU -T
most ICT companies compared with high emission
Study Group 5 “Environment and climate change”
industries.
Q18/5 is currently working on a methodology for envi-
ronmental impact assessment of ICT.118 (See Box 7.9)
Box 7.9: Counting ICT GHGs

It is currently difficult to compare greenhouse gas emissions of ICT players due to incompatible methods of measuring and
accounting for GHGs. The ITU is currently addressing this issue with ITU-T Study Group 5, which has five work areas, includ-
ing the development of a common methodology for measuring the carbon footprint of the ICT sector. Without such a me-
thodology, the ITU believes it is impossible to provide meaningful comparisons, or establish the business case to go green.
ITU aims to arrive at an internationally accepted common methodology for measuring the following impacts of ICTs on cli-
mate change:
• Reduction of ICT’s own emissions over their entire lifecycle (direct impact) via power reduction methods
• Mitigation that follows through the adoption of ICTs in other sectors (indirect impact) via CO2 saving calculation
methods
An overview of methodologies is due at end 2010, and is expected to cover:
• a definition of ICT sector boundaries and an evaluation of ICT sector impact general principles
• in a first step, on energy and GHG emissions.
Source: ITU, ICTs and Climate Change, presentation to GeSI Assembly, 14-16 June 2010.
266 Chapter 7
• Scope 2: Electricity indirect GHG emissions, result- counting and Reporting ICT GHGs, it is clear that the
ing from the generation of purchased electricity main sources of ICT GHGs are First Order, Scope 2 ef-
consumed by the company. Purchased electricity is fects. For ICTs, these sources mainly relate to GHGs
defined as electricity that is purchased or other- emitted as a result of the electricity purchased by ICT
wise brought into the organizational boundary of firms to operate their systems. How significant are such
the company. These emissions physically occur at emissions?
the facility where electricity is generated. Given the
importance of electricity supplies for powering digi- The report prepared by McKinsey for the Climate
tal facilities and the services which sit upon them, Group and the Global eSustainability Initiative (GeSI),
Scope 2 emissions are the most important source shows that the ICT sector itself contributes between 2-
of GHGs arising from the activities of the ICT sec- 2.5 per cent of global GHGs, at just under 1 Gigatonne
tor.120 of carbon dioxide equivalent (CO2e). The main contri-
butor (40 per cent) to this CO2e is the energy require-
• Scope 3: Other indirect GHG emissions, a conse-
ments of PCs and data monitors, with data centres
quence of the activities of the company, but which
contributing a further 23 per cent. Fixed and mobile
occur from sources not owned or controlled by the
telecommunications contribute an estimated
company. Examples of Scope 3 activities include ex-
24 per cent of the total. As the ICT industry is growing
traction and production of purchased materials;
faster than the rest of the economy, this share is likely
transportation of purchased fuels; and use of sold
to increase over time. ICT’s share of global GHG emis-
products and services.121 For ICT, this would cover
sions (2.5 per cent) is much smaller than its share of
items such as employee travel, whether business-
gross domestic product (e.g., around 8 per cent of US
related or for journeys to work.
GDP).122 Thus, the good news is that, for TSPs, power
consumption (hence GHG emissions) related to tele-
Table 7.5 shows how these scopes are manifested
communications connectivity is a relatively small part
in the case of a fixed line TSP, in this case, BT.
of the ICT sector’s overall carbon footprint.123
7.6.4 First Order Scope 2 effects: GHGs
Figure 7.9 shows the sources of emissions in the
produced by ICTs
mobile sector.
By combining the taxonomies of Section 7.3.2: First,
Second and Third Order effects and Section 7.5.3: Ac-
Table 7.5: Scoping BT’s GHG emissions

Change Change
CO2e tonnes Base year
2010 2009 2008 2009 to 1997 to
(thousands) 1997
2010 2010
Scope 1 212 249 256 414 –15% –49%

Scope 2 (gross) 1,419 1,448 1,407 1,156 –2% 23%
Sub Total 1,631 1,698 1,663 1,569 –4% 4%
Scope 3 51 73 79 58 –30% –11%
Total emissions (gross) 1,682 1,771 1,742 1,627 –5% 3%
Less purchase of:
Renewable electricity 572 591 516 – –3% –
CHP low carbon electricity 310 319 337 – –3% –
Total emissions (net) 801 860 888 1,627 –7% –51%
Source: Briefing to analysts by Chris Tuppen, BT’s Chief Sustainability Officer, London, 24 June, 2010.
Chapter 7 267
Figure 7.9: Mobile CO2 emissions
Direct emissions of the mobile industry

2009, %, Total = 245 Mt CO2 Device
embedded
12% Device
consumption
4%
Network
embedded
13%
Network
consumption
71%
Source: GSMA, in collaboration with The Climate Group, Mobile’s Green Manifesto, November 2009 at 10, online:
www.gsmworld.com/documents/mobiles_green_manifesto_11_09.pdf.
TSPs are carbon-light relative to their contribution 7.6.5 What is “The Paradox of ICT”?
to GDP.124 However, TSPs are often among the largest
electricity consumers in their countries. For instance, BT At the heart of the story of ICT and climate change
estimates that it accounts for 2 per cent of the electrici- lies a paradox. On the positive side is a story of rapid
ty consumed by UK businesses. It is impossible to pro- technological transformation, with all that this implies
vide a general statement of how such figures translate for reduced power consumption per unit of output and,
into overall TSP GHG emissions since these percentages in consequence, proportionate reductions in GHGs per
depend on the generating mix in each country, notably, unit of output; on the negative side is continuing mar-
the proportionate contribution of fossil fuels, nuclear ket growth that is driving absolute power consumption
and renewable generation to the supply of electricity. ever higher and thus creating more GHGs.
Not only can this vary from country to country, but it
can also vary from one electricity supplier to another, The way in which these contradictory trends will
with some suppliers providing only electricity generat- play out in terms of future GHGs will depend on three
ed by renewable methods. In fact, TSPs might be able principal factors: improvements in energy efficiency
to source a significant proportion of their electricity driven by technological development; the market ex-
supply from renewable energy sources. pansion driven by the emerging technologies; and the
sources of the electricity used to provide the services.
For example, 90 per cent of the energy consumed The following sections will consider:
by T-mobile Netherlands is green, as is 80 per cent of
• The positives: mostly technology;
Orange UK. A contract signed by BT was the largest sin-
gle purchase of renewable electricity in the UK. But • The negatives: mostly markets;
there is currently a shortage of green energy in some • Global market trends; and
countries, which will limit the potential for this form of
GHG emissions reduction by TSPs. • Weighing the balance.
268 Chapter 7
7.6.6 What are the positives? • Caching and content distribution networks, which
place content closer to the end user;
7.6.6.1 Technological developments: from NGNs,
• Continuous improvement in router efficiency;127
LTE and WiMAX to The Green Touch
Consortium • Raising the operating temperatures of equip-
ment128.
Technological transformation in ICTs is creating the
opportunity for improved efficiency in electronic and For example, Long Term Evolution (LTE) is one
photonic devices, the rise of low-energy switching technology choice as networks evolve towards 4G.
techniques, improved architectures, new protocols, and Sweden was the first country with commercial LTE ser-
developments such as photonics. Many of these devel- vices, offered in two cities in 2009, and Japan’s NTT Do-
opments are reflected in the emergence of Next Gen- CoMo has announced the world’s first commercial LTE
eration Networks (NGNs) as the telecommunications network for consumers in 2010, with Verizon in the US
industry migrates from today’s separate networks (for spearheading the global LTE rollout. LTE is designed as a
voice, mobile, data etc) to a single, unified IP-based flat network architecture, meaning that every device on
next-generation network. Since NGNs are considered the network can communicate with every other device
more energy-efficient compared to traditional PSTN without going through intermediary equipment such as
networks125, there is a case for advocating more rapid a router.
migration to NGNs in order to reduce GHGs. Power sav-
ings from this transformation in technology can be This architecture has several benefits for networks
achieved in a number of ways, as reflected in and consumers, including:
Box 7.10.126 • Controlling Reduced latency, due to less equipment
for data to pass through. LTE is expected to reduce
Other measures to curb rising energy use by net- latency, which is very important for voice commu-
works may include: nications and video streaming.
• Controlling energy in the access network (e.g. sleep • Controlling LTE is optimized for IP traffic. Unlike the
mode in modems); complex systems in 2G and 3G networks, which
• Reducing the hop count (i.e. “agile” optical bypass), feature a separate, circuit-switched voice network,
thereby reducing the number of routers that are LTE is designed specifically for data traffic.
used;
Box 7.10: Saving Energy with NGNs

The ICT industry is currently undergoing a revolution as it migrates from today’s separate networks (for voice, mobile, data
etc) to a single, unified IP-based next-generation network (NGN). Energy savings will be achieved in a number of ways, in-
cluding:
• A significant decrease in the number of switching centres required. For instance, BT’s 21st Century Network (21CN)
will require only 100-120 metropolitan nodes compared with its current 3,000 locations;
• Use of routers with higher capacity and higher transmission rates;
• More tolerant temperature specifications for NGN equipment, resulting in switching sites that can be fresh-air
cooled in most countries rather than requiring special air conditioning. Alternatively, ICT companies are seeking to
locate in cooler climes to reduce cooling-costs: Telus has been reported as considering Quebec for free-cooling 8
months each year.
• NGNs can use more recent standards, such as VDSL2 (ITU-T G.993.2), which specifies three power modes (full, low-
power and sleep), compared with, e.g., VDSL with only a single power mode (full power).
Source: ITU, ITU-T Technology Watch Report: “NGNs and Energy Efficiency,” August 2008, online:www.itu.int/oth/T2301000007/en. See also
www.thegreengrid.org/ and ITU Symposium on ICTs and Climate Change: ITU Background Report, Quito, Ecuador, 8-10 July 2009, online:
Chapter 7 269
Since it offers easier upgrades from 3G and High 7.6.6.2 Infrastructure sharing
Speed Downlink Packet Access (HSDPA), with an evolu-
tionary path from legacy mobile radio systems (GSM), One example of reducing environmental impacts
LTE can utilize much of the 3G network infrastructure and, potentially, energy consumption is by sharing TSP
and can work alongside existing 3GPP networks. By infrastructure, either in the form of passive or active
squeezing more data into the same amount of band- sharing. As one author explains, “Passive infrastructure
width or radio spectrum, LTE is expected to offer more sharing involves operators sharing the non-electrical,
capacity and increased data speeds. However, since this civil engineering elements of telecommunications net-
technology is still being trialled, caution needs to be ex- works. This might include rights of way/easements,
ercised about such claims. ducts, pylons, masts, trenches, towers, poles, equip-
ment rooms and their related power supply, air condi-
In theory, LTE should contribute to the move to- tioning, and security. Active infrastructure sharing
wards more energy-efficient network architecture. But involves operators sharing the active network elements
as LTE enables new types of communication, such as or the intelligence in the network, e.g., base stations
increased mobile-to-mobile, always-on connectivity, and Node Bs for mobile networks and access node
and greater data throughput, it will enable new band- switches and management systems for fibre net-
width-hungry applications. This could either increase or works.”132
reduce GHGs within the ICT sector and in upstream and
downstream industries.129 Module 2, sections 7.2.3. and 7.5.1 of the ITU
Regulatory Toolkit 133 provides further information
Another 4G technology, which has seen commer- about forms of infrastructure sharing , and the Euro-
130
cial (although not nationwide) deployments in more pean Union’s Framework Directive134 includes, as con-
than 100 countries, is WiMax, which could also lead to sideration 23, the following,
energy saving, although the relative energy efficiency of
131
WiMax versus LTE is contentious. “Facility sharing can be of benefit for town planning,
public health or environmental reasons, and should be
Given the activities taking place within the sector encouraged by national regulatory authorities on the
and under the aegis of bodies like the Green Touch basis of voluntary agreements. In cases where under-
Consortium (see Box 7.11), it is clear that the GHG- takings are deprived of access to viable alternatives,
reducing benefits from the type of technological devel- compulsory facility or property sharing may be appro-
opments described above still have a long way to go priate. It covers inter alia: physical collocation and duct,
before these benefits are fully realized. building, mast, antenna or antenna system sharing.
Compulsory facility or property sharing should be im-
posed on undertakings only after full public consulta-
tion.”
Box 7.11: The Green Touch Consortium: Reducing ICT Energy Use to 1000th
The Green Touch Consortium (GTC),135 which launched in January 2010, comprises a host of ICT companies, and is aimed at
creating the technologies needed “to reduce energy consumption in worldwide ICT networks by a factor of 1000.” Such a re-
duction is roughly equivalent to being able to power the world’s communications networks, including the Internet, for three
years using the same amount of energy that it currently takes to run them for a single day. Such a reduction equates to “7.8
GigaTonnes of CO2, or 15% of the total world emissions predicted by 2020," according to Vicente San Miguel, CTO of Tele-
fónica at the launch. In order to achieve the required reductions in energy consumption both by individuals and in aggre-
gate, the Green Touch Consortium aims to deliver, within five years, a reference architecture, specifications, technology
development roadmap and demonstrations of key components needed to realize a fundamental re-design of networks (in-
cluding the introduction of entirely new technologies).
GTC members include TSPs like AT&T, China Mobile, Portugal Telecom, Swisscom and Telefonica; manufacturers such as Al-
catel-Lucent (and now Huawei); academic research labs including the Massachusetts Institute of Technology's Research
Laboratory for Electronics (RLE), Stanford University's Wireless Systems Lab (WSL) and the University of Melbourne's Insti-
tute for a Broadband-Enabled Society (IBES); as well as industrial labs such as Bell Labs, the Samsung Advanced Institute of
Technology (SAIT), and Freescale Semiconductor. Other members include a number of non-profits.
270 Chapter 7
In addition to helping to address environmental can be saved when operators share electrical power,
concerns, sharing also offers a way of recycling of his- which is often in limited supply in developing coun-
toric sites and minimizing the built-out of new external tries 137 . Today’s standard 3G equipment consumes
structures such as mobile towers. Strategies such as about 4,000 KWh of Grey energy per year per node,
tower sharing and collocation help to manage the coex- which corresponds to 2.5 tons of CO2, or the equivalent
istence of modern communications infrastructure and need of 120 trees per node to compensate for the envi-
historic sites. In the United States, for example, the ronmental effect. In a developing country with no or
Federal Communications Commission, the National little alternative/green energy, network sharing can sig-
Conference of State Historic Preservation Officers, and nificantly reduce the environmental impact.
the Advisory Council on Historic Preservation devel-
oped an agreement aimed at preventing the construc- 7.6.6.3 Technical standards
tion of unnecessary new communications towers by
mandating collocation136. Site sharing can limit poten- As well as the advances described above, there is
tial negative effects, since it limits the number of sites also a role for technical standards to bring about reduc-
while achieving the required coverage. Another benefi- tions in GHGs from ICT networks and services. Boxes
cial aspect of site sharing is the amount of energy that 7.13 and 7.14 set out some examples.
Box 7.12: Alternative power consumption strategies by mobile operators

In 2008, Vodafone Group announced that by 2020 it will reduce its CO2 emissions by 50% against its 2006/7 baseline of
1.23 million tons (this includes all operating companies based in countries obligated under the Kyoto protocol). Vodafone is
developing energy intensity targets as a first step for newly acquired companies to take into account the rapid growth of the
networks in emerging markets. The main focus is on cutting energy use in base stations, working with suppliers to improve
energy efficiency of new network equipment and trialing renewable alternatives. The Group is also developing products and
services that can enable a low carbon economy by helping customers reduce their emissions. This target will be achieved
principally by improvements in energy efficiency and increased use of renewable energy.
Some of the concrete options and technologies Vodafone looks at to run radio networks more efficiently are:
• Using Remote Radio Heads (RRH) as a standard deployment solution at the base stations: RRH requires network
upgrade programs in yielding successful carbon footprint reduction (eg: +20%ofreduction on avg CO2emission/BTS
in 2years in VF Spain(*)).
why we like RRH so much?
Measured Power Consumption (w)
900
800
Indoor Node B
700
RRH
600
500
400
300
200
100
0
• Single RAN (radio access network): 2G, 3G and eventually LTE simultaneous deployment & operation in a single box,
or simply put: single RAN is used to deliver 2G and 3G with the same infrastructure/base station, and thereby re-
ducing consumption).
• Network sharing:
– Passive network sharing agreements in 17 national markets;
– Vodafone Spain has developed in 07/08 the UTRAN sharing agreement with Orange enabling a 40% reduction
in the number of required Node Bs for these areas.
Source: Vodafone Group CSR Report August 2008 and VF Spain CSR Report 07/08
Chapter 7 271
Box 7.13: Universal Charger for Mobiles

In October 2009, the ITU endorsed a Universal Charging Solution (UCS) for mobile phones which enables the same charger
to be used for all future handsets, regardless of make and model. In addition to dramatically cutting the number of chargers
produced, shipped and subsequently discarded as new models become available, the new standard will mean users world-
wide will be able to charge their mobiles anywhere from any available charger, while also reducing the energy consumed
while charging. The new UCS standard was based on input from the GSMA, which predicts a 50% reduction in standby en-
ergy consumption, elimination of 51,000 tonnes of redundant chargers, and a subsequent reduction of 13.6 million tonnes
in greenhouse gas emissions each year. ITU Study Group 5 – Environment and Climate Change worked on the necessary
standardization, which is based on the Micro-USB interface. UCS chargers will also include a 4-star or higher efficiency rating
– up to three times more energy-efficient than an unrated charger.
Source: ITU Press Release, “Universal phone charger standard approved” (22 October, 2009), online:
www.itu.int/newsroom/press_releases/2009/49.html.
Box 7.14: Cutting GHGs from routers, servers and switches

Alongside the widespread growth of the Internet, a great deal of ICT equipment, such as routers, servers, and switches, has
been installed in telecommunication centres to enable high-speed and large-scale broadband services. A DC power feeding
system is commonly used inside a telecommunication centre or a data centre because the power efficiency is higher than
that for an AC power feeding system due fewer converters. The power consumption per rack of conventional (legacy-type)
equipment such as exchanges or transmission devices is about 2 kW. On the other hand, the power consumption for ICT
equipment, such as routers and servers has reached over 7 kW. Therefore, the feeding current is over a hundred amperes
using a 48Vdc power feeding system to supply power to ICT equipment. Since power feeding systems in such telecommuni-
cation centres are not specified in International standards, the ITU has established a working group to consider this issue, in
the attempt to make data centres used in telecommunications more energy-efficient.
For more information on the ITU’s efforts to make power feeding systems more efficient, see:
www.itu.int/ITU-T/studygroups/com05/sg5-q19.html
Furthermore, switching from analogue to digital Continuing growth in ICT markets is leading to phe-
broadcasting is likely to result in significant reduction of nomena such as:
energy consumption and, as the result, CO2 emission
• the proliferation of users and services – commer-
reduction. The ITU Regional Radicommunication Confe-
cially attractive, but environmentally problematic,
rence 2006 (RRC-06) developed and approved Digital since this means more networks and devices, more
Broadcasting Plan for 120 countries and decided to power consumption and the generation of more
switch off analogue broadcasting in these countries in heat, which in turn requires more cooling – all of
2015 (2020 for some developing countries). The which generates more GHGs.
process is based on ITU-R Study Group Recommenda-
tions (international standards) BT.1306, BS.1114 and • Rising power consumption due to new services and
P.1546 providing for a reduction of transmitters’ power applications in broadband, many of which require
by almost 10 times and CO2 emissions – by hundreds of more processing power.
thousands of broadcasting transmitters. • More use of applications such as Internet search
engines, although the GHG implications of such
7.6.7 What are the negatives? applications are contentious.138
The impact of ICTs on the environment is growing The Law of Unintended Consequences applies
and will continue to grow. However, compared to other again in this context. Markets are regulated to drive the
sectors, its negative impact is growing much more slow- availability of service to as many people as possible, giv-
ly and its GHG emissions may even decrease in relative ing users access to advanced and powerful ICTs; how-
terms compared to the total emissions from all sectors ever, the resulting proliferation of users and devices has
in the coming decade. negative effects on the environment.
272 Chapter 7
To take the example of developing countries, GHGs The data centres, server farms and telecommunica-
emitted from increased ICT use might appear trivial in tion hotels that have become an essential part of the
comparison to growth in emissions from developments ICT eco-system have very demanding requirements for
such as increased car ownership. ICT market growth in electricity and air-conditioning.140 Such facilities have
developing countries, however spectacular, will pro- become essential for the delivery of many telecommu-
duce GHGs emissions that are relatively trivial com- nications-based services and applications. Jonathan
pared with GHGs produced by phenomena like the Koomey’s 2007 report 141 showed that computer-
growth in car ownership and use. The ITU notes that, servers in US data centres and their associated air con-
“The average 2G handset user accounts for approx- ditioners and backup power systems consumed just
imately 25 kilograms (Kg) of CO2 emission per year, or over 1 per cent of US electricity consumption in 2005 –
30 Kg for a 3G user. This adds up to an estimated 93 twice as much consumption than in 2000. This increase
Megatonnes of carbon produced by all mobile users in resulted from the growth in the number of servers,
the world. The reality behind these figures has driven which went from 5.6 million servers to 10 million over
the growth of environmentally friendly handsets, the period. According to figures from the European Un-
spearheaded by consumer demand as opposed to initi- ion, data centres (which include all buildings and facili-
atives taken by phone manufacturers (see ties which contain enterprise servers and related server
139
box 7.15).” In the meantime, mobile operators are communication equipment to provide some form of
also looking into alternatives to expand the market data service) account for around 18 per cent of the ICT
beyond the power grid, thus opening way to sustained sector's energy consumption. Across Europe, they con-
growth in the overall volume of GHG emissions (see sume about 56 TWh of electricity per year.142
box 7.16).
Box 7.15: Eco-friendly ICT devices

ICT equipment manufacturers have been among the first ICT sector players to join the trend towards eco-friendly industry
practices and consumer goods.
Here below are some recent examples of such eco-friendly devices:
• The Asus notebook’s case which is covered in bamboo, and all the plastic inside it is recyclable. There is no paint, no
spray, or electroplating uses on its components, and lines with cardboard.
• Sony Ericsson GreenHeartTM generation of mobile phones made of recycled plastics, with an energy-efficient display
and waterborne paint allowing for 15 per cent decrease in overall CO2 emissions.
• Samsung Blue Earth Phone, a solar powered touchscreen phone competing for less energy cost and manufacturing
waste. It has a durable body constructed out of recycled water bottles. A single charge to the battery could last for
days due to the passive solar charging. The phone also has a pedometer mode that will encourage you to walk, and
while you are walking it will compute your CO2 emissions that you are saving.
• Of 140 million cell phones sold in the US in 2007, only 10% were recycled, according to the US Environmental Pro-
tection Agency. Offering a solution to the mounting pile of e-waste is EcoATM, first installed in Omaha, Nebraska in
2009. ECOATM is an automated reuse-and-recycle machine that makes it easy and financially rewarding for con-
sumers to offload their abandoned electronics. The process is simple: a customer feeds the machine an old mobile
phone and it analyses the device and assigns it a value. If the phone has a resale value, the customer receives store
credit, or can donate the amount to charity. If there's no resale value, customers can choose to have the handset
recycled.
Source: Adapted from scienceray.com, sonyericsson.com/greenheart, samsung.com, springwise.com.
Picture source: Asus Bamboo Ecobook
Chapter 7 273
Box 7.16: Off-Grid Charging Solutions for Mobile Phones

Mobile networks are increasingly being deployed in rural areas of emerging markets, where consumer access to the grid is at
best limited and unreliable and in many cases non-existent. It is estimated that there are some 485 million mobile users
without access to the electricity grid, a factor which severely limits usage opportunities. Usage will in large be dependent on
consumers being able to charge the handset through alternative methods, and solar-powered chargers in particular could
become a key means of facilitating reliable access to mobile services in these markets. Fortunately, today operators are able
to provide people in off-grid areas with solutions to power mobile phones, as this will not only improve quality of life and
access to information but can also act as a significant opportunity to fuel economic growth. It is interesting to note that such
initiatives are being undertaken on a voluntary basis, without the intervention of the ICT or other regulatory authority.
Recent research has found that there is significant interest in off grid solutions – 60 per cent of mobile operators interviewed
already have or are exploring off-grid charging initiatives – but there is currently only limited understanding about the full
scope of options and the associated social and business benefits. Pioneers Digicel and Safaricom, however, have demon-
strated how the consumer, the environment and the mobile operator can reap the benefits of off-grid charging solutions. A
range of charging choices are available that, if implemented effectively, will extend service availability and could boost aver-
age revenues per user by 10-14%. According to some estimates, the opportunity for mobile operators through the provision
of off-grid charging solutions such as solar phones or external solar chargers in emerging markets can reach USD 2.3 billion*.
Thus, commercial incentives rime with self-regulatory industry approach for the benefit of both TSPs and consumers.
Note: * The market opportunity is calculated by taking the 485 million people, at an average ARPU of USD 4 (GSMA estimate, based on Wire-
less Intelligence data) and an increase of 10%, on annual basis.
Source: Adapted from GSMA, Charging Choices, www.gsmworld.com/documents/charging_choices
The energy consumption of data centres are ex- The contribution of individual’s telecommunication
pected to grow faster than any other ICT technology. equipment to the problem of GHGs might be seen as
Forecasts for growth in the number of servers include a trivial to some experts (see Box 7.17), but with latest
McKinsey study which states that “the world’s 44 mil- figures expected to show 5 billion subscriptions by the
lion servers consume 0.5 per cent of all electricity, with end of 2010, recharging of handsets is set to become
data center emissions now approaching those of coun- non-trivial in terms of energy consumption.
tries such as Argentina or the Netherlands.” 143 The
study notes that without efforts to curb demand, cur- The key point that emerges from these differing
rent projections show worldwide carbon emissions perspectives is that, when looking at GHGs, we need to
from data centres will quadruple by 2020. According to consider aggregates rather than individuals: the atmos-
McKinsey, “By 2020 the carbon footprint of the com- phere is indifferent to the sources of CO2. Another kilo
puters that run the Internet would be larger than that or another tonne, from whatever source, adds to the
of air travel.” Such growth is being by the increasing quantum of GHGs, raising the PPM figure.
availability of bandwidth and the explosion of band-
width-hungry (hence energy-hungry) applications like
YouTube.
Box 7.17: Individual ICT Users: Bailing the Titanic?

There is a view, expressed by David MacKay, that the contribution of individual’s telecommunication equipment to the prob-
lem of GHGs is trivial. As he states, “Modern phone chargers, when left plugged in with no phone attached, use about half a
watt….this is a power consumption of about 0.01 kWh per day. For anyone whose consumption stack is over 100 kWh per
day, the BBC’s advice, always unplug the phone charger, could potentially reduce their energy consumption by one hun-
dredth of one percent…... Obsessively switching off the phone-charger is like bailing the Titanic with a teaspoon. Do switch it
off, but please be aware how tiny a gesture it is…All the energy saved in switching off your charger for one day is used up in
one second of car-driving. The energy saved in switching off the charger for one year is equal to the energy in a single hot
bath.”144
274 Chapter 7
There is a theoretical basis for considering the envi- 7.6.7.1 Global Market Trends
ronmental consequences of technology, population,
and market size. This was set out in an axiom put for- The global demographics and market develop-
ward by Paul Ehrlich and John Holdren in 1968 and ments for ICTs are undergoing dramatic changes. The
cited by Tim Jackson in 2008 and 2009 (see Figure 7.10: following table summarizes trends in more developed
The Arithmetic of Growth).145 This axiom says that the and less developed countries. Whilst more developed
environmental impact of human activity is a combina- countries are seeing markets at or approaching satura-
tion of: (P) the number of people on the planet, (A) the tion, markets in less developed countries continue to
level of affluence of the population, and (T) the tech- expand.
nology associated with each dollar (USD) we spend. Us-
ing this arithmetic and applying it to the ICT sector, it The main ICT trends relevant to climate change
seems clear that projected growth levels will produce a continue to be the sustained growth in development,
significant aggregate impact on the sector’s GHG emis- adoption and penetration of ICT technologies, and the
sions. substitution of early Internet technologies by broad-
band, and increasingly by mobile broadband. These de-
velopments are combining to produce a growth in ICT-
sector GHG emissions.
Figure 7.10: The Arithmetic of Growth
The Ehrlich equation states that environmental impact (I) is a product of population (P) times affluence
or income level (A) times the technological intensity (T) of economic output.
I=PxAxT
For carbon dioxide emissions from fuel combustion, for example, the total emissions are given by the
product of population (P) times income (measured as USD of GDP/person) times the carbon intensity of
economic activity (measured as gCO2/$)
C = P x $/person x gCO2/$
Using this arithmetic for year 2007, when the global population was about 6.6 billion, the average in-
come level in constant 2000 USD (at market prices) was $5’900, and the carbon intensity was 760
gCO2/$, we find that the total carbon dioxide emissions (C) were:
6.6 c 5.9 x 0.77 = 30 billion tones of CO2.
In 1990, when the population was only 5.3 billion and the average income was $4’700 but carbon inten-
sity was 860 gCO2/$, total carbon dioxide emissions (C) were given by:
5.3 x 4.7 x 0.87 = 21.7 billion tones of CO2.
These numbers are confirmed against those reported in the Energy Information Administration’s Inter-
national Energy Annual. The cumulative growth in emissions between 1990 (the Kyoto base year) and
2007 was 39 per cent (30/21.7 = 1.39) with an average growth rate in emissions (rI) of almost 2 per cent
(rI = (1.39)1/17 – 1 = 1.96%)
Source: Tim Jackson, Prosperity Without Growth? The Transition to a Sustainable Economy. (London: Sustainable Development Commission,
2009) at 54, online: www.sd-commission.org.uk/publications/downloads/prosperity_without_growth_report.pdf.
Table 7.6: ICT Trends in More Developed and Less Developed Countries
UN classification “more developed” UN classification “less developed”
• Population = 1.2bn • Population = 5.5bn

• Higher per capita GDP • Lower per capita GDP
• High penetration of fixed broadband • Low penetration of fixed broadband
• Rapid growth in mobile broadband (3G networks) • Mobile broadband overtakes fixed broadband
• Markets becoming mature • Markets still expanding
Chapter 7 275
Figure 7.11: Global ICT development, 2000-2010
100
90 Mobile cellular telephone
subscriptions
80 Internet users
76.2
Fixed telephone lines
70
Per 100 inhabitants
Mobile broadband
60 subscriptions
50
40
30.1
30
20 17.3
13.6
10
8.0
0
2000 01 02 03 04 05 06 07 08 09 2010*
* Estimates
Source: ITU World Telecommunication/ICT Indicators Database.
7.6.8 The paradox of ICT: Weighing the 7.6.9.1 Why do TSPs mitigate their GHGs?
balance
Reasons why TSPs are already mitigating their
When it comes to the overall impact of ICT GHGs, GHGs, and can be expected to continue to do so, in-
the aggregate effect of these technology positives and clude:
market negatives is extremely difficult to predict. The
• to reduce energy costs;
combination of technological innovation and market
liberalization is a recipe for disruption, and the attempt • to meet increasingly stringent emission controls;
to predict outcomes is equally subject to this disruption. • to deliver corporate social responsibility (and brand
In the light of such uncertainty, it is only possible to de- reputation146);
pict some scenarios, based on currently foreseen tech-
• to extend market penetration by delivering tele-
nologies, likely market developments, and the potential
communication services to more customers; and
impacts on energy use. Given the number of variables,
it is currently impossible to weigh the balance. Table 7.7 • to differentiate service offers and reach out to
depicts some possible developments driven by the inte- niche markets such as consumers with green affilia-
raction of technologies and markets. tion, etc.
7.6.9 TSP motives and methods for mitigating 7.6.9.2 Reducing energy costs
GHGs
Energy costs are one of the largest operating ex-
ICTs in general, and TSPs in particular, are already penses borne by TSPs, whether fixed or mobile. Nokia
making efforts to mitigate their own GHGs. This could Siemens Networks (NSN) notes that 80 per cent of
be seen as a form of self-regulation, although it is energy in a mobile network is used by the base sta-
equally the case that many such initiatives are being tions, and energy is the third-largest part of a mobile
undertaken because they help to deliver the business operator’s OPEX. NSN claims the possibility of savings in
goals of the TSP. Some of these motives are explored in energy costs as follows: radio access networks – up to
the next section. 35-40 per cent in existing networks and up to
65-70 per cent in a new installation. Energy savings can
also be obtained from optimizing the entire mobile
network through comprehensive network planning,
remote optimization and maintenance.147
276 Chapter 7
Table 7.7: ICT technology scenarios: some possible outcomes for energy use
Impact on energy use:
+ve (positive) – reduces en-
Technology Markets ergy use and GHGs
-ve (negative) – increases
energy use and GHGs
NGN core networks drive down Increasing demand for NGN-based services pro- +ve
energy consumption per unit of out- duces rapid growth in demand
put
Higher bandwidth for fixed and mo- Higher demand for bandwidth (and energy) inten- -ve
bile broadband services sive services
LTE and WiMax Higher penetration of fixed and mobile broad- +ve or –ve
band generates more services, more applications,
more demand
Green Grid Consortium outputs +ve
New services and applications for Dematerialization and decoupling of energy from +ve
other sectors industrial sectors, as take up of ICT services leads
to substitution of atoms by bits
Cloud computing148 using ubiquitous Boost of trend towards dematerialization and de- +ve or –ve
network connectivity to access scal- coupling of energy from industrial sectors. But
able computing and storage re- applications that have been implemented on leg-
sources, online. Enabled by acy systems will migrate to cloud systems under
combining existing technologies such the paradigm shift from “owning” to “leasing” IT.
as virtualization and high-bandwidth If each single system is to provide a highly reliable
internet connectivity system on a continuous basis, it must have high
redundancy, which may require higher energy
consumption.149
The GHG impact of cloud computing depends on
its energy efficiency, its impact on overall de-
mand, and the degree to cloud computing is po-
wered by renewables.
Internet of things150 – integration of Provides options for controlling power consump- +ve
sensors, RFID chips using low- or tion and optimizing resource use across networks.
very-low-power devices into enter- In addition, embedded intelligence in the things
prise and consumer systems themselves can further enhance the power of the
network by devolving information processing ca-
pabilities to the edges of the network.
Fully-networked car151 Fully networked car could be either: another trivi- +ve or –ve
al device, or a potential GHG saver due to effi-
ciency and convenience of real-time traffic
information and management, increased fuel effi-
ciency, providing information such as parking
availability or public transport schedules and ap-
plications with precise and reliable information.
Overall Impact Technological develop-
ments = potentially +ve,
but outcomes depend on
consequential changes in
behaviours
Chapter 7 277
Box 7.18: Mobileone (M1) – Energy Saving Programme

Singapore mobile operator MobileOne (M1) expects to achieve up to a 35% reduction of its telecommunication networks’
carbon footprint by early 2011. M1 is using Nokia Siemens Networks Flexi Multiradio base stations, and the vendor is mod-
ernizing M1’s 2G network to prepare it for a smooth transition to Long Term Evolution (LTE). In addition, M1 started an LTE
trial in February 2010, in collaboration with Nokia Siemens Networks. M1 says that the trial marks another step in M1’s
commitment to deliver an energy efficient, high-speed mobile broadband service to its subscribers.
Source: Nokia Siemens Networks, “M1 looks at 35% reduction in carbon footprint in Singapore; LTE trial in February” (18 January, 2010),
online: www.nokiasiemensnetworks.com/press/press-releases/m1-looks-35-reduction-carbon-footprint-singapore-lte-trial-february.
7.6.9.3 Meeting emission controls standing how a business impacts on the wider world. It
means taking a responsible attitude to all the stake-
TSPs are subject to emissions controls like any oth- holders of a business, going beyond the minimum legal
er entity. However, most of the GHGs associated with requirements, and following a set of principles that can
ICTs result from their electricity consumption (Scope 2 also help to support brand and that may contribute to
effects). This means that existing emission controls will the bottom line. Many ICT companies, including TSPs,
not bear down significantly on the ICTs themselves. have well-developed CSR policies, which often include
However, TSPs are normally significant purchasers of sustainability targets and commitments to CO2 reduc-
electricity in their geographies. They can influence the tions.
emissions of their bought-in electricity by making deals
with providers of “green” electricity, i.e. electricity 7.6.9.5 Extending markets
based on renewable sources. Some TSPs have already
concluded such contracts, but the regulatory regime There are around 700 million people152 who do not
that affects such purchases is the regulation of the elec- have access to ICT services, primarily due to the lack of
tricity market, not the regulation of ICTs. an electrical grid that can power network infrastructure.
In the past, establishing a wireless network in remote
Table 7.8 illustrates the voluntary emission reduc- locations has been expensive, and has typically re-
tion commitments made by various TSPs. quired relying on diesel generator powered stations
that are costly to maintain and that produce high levels
7.6.9.4 Corporate social responsibility of GHGs. A cost-effective wireless base station that can
run on efficient, renewable energy sources such as
Like other businesses, ICT companies do not exist in wind and solar power could open up these potential
isolation. As well as the shareholders, to whom compa- markets. As Alcatel notes, “developments in alternative
nies have a primary financial responsibility, businesses energy technology are creating solutions that meet the
also have responsibilities to employees, customers, needs of remote, rural communities in developing coun-
suppliers, and the local community. A company’s prod- tries and also provide network operators in more estab-
ucts and services, and the way it produces and distri- lished markets with the ability to reduce their energy
butes them, have an impact on the environment. costs and carbon footprint.”
Corporate social responsibility (CSR) is about under-
Box 7.19: Internode – Carbon Neutral ISP with Green Electricity And Renewables
Australian ISP Internode has been carbon-neutral since 2008. The ISP has over 170,000 subscribers Australia-wide and
sources 100% of its electricity needs from renewable energy. Internode has orientated its equipment upgrade purchasing
decisions towards energy efficiency and sustainability. The company has started to invest in its own renewable energy infra-
structure, running a number of remote sites via solar cells. With operators forced to pay a premium for piping power to re-
mote areas and to provide expensive, long-lasting battery backups, it is becoming cost-competitive to run such sites on solar.
The company has also spent around A$500,000 on a Cisco telepresence system to obviate the need for travel between the
business hubs of the Australian telecommunication industry in Sydney and Melbourne, hundreds of kilometres from Inter-
node's Adelaide head office.
Source: Dylan Bushell-Embling, “Australian ISP goes carbon neutral”, Telecomasia (16 Nov., 2009), online:
www.telecomasia.net/content/australian-isp-goes-carbon-neutral?page=0%2C0 and the related case study on Internode published by Car-
bon Planet, online: www.carbonplanet.com/downloads/Case_Study_Internode.pdf.
278 Chapter 7
Table 7.8: Voluntary Emission Reduction Commitments of Various TSPs

Company Target Baseline Target Date Comment
Reduction %
Alcatel-Lucent 10 2007 2010 CO2 emissions of facilities

Bell Canada 15 Not given 2012 GHG emissions
British Telecommunications 80 1996 2020 CO2 emissions
Deutsche Telekom 20 2006 2020 CO2 emissions
Ericsson 15-20 2006 2008 Energy efficiency
France Telecom 20 2006 2020 CO2 emissions
Motorola 6 2000 2010 CO2 emissions
Nokia 18 2006 2010 CO2 emissions
Nokia Siemens Networks 20-49 2007 2009-2010 Energy consumption of products
Sony Ericsson 20 Not given 2015 CO2 emissions
Telecom Italia 30 2007 2008 Eco-efficiency indicator
Telenor 40 2008 2017 CO2 emission efficiency
Vodafone 50 2006/7 2020 Co2 emissions
Source: based on EU data from 2009, as compiled by GSMA, in collaboration with The Climate Group, Mobile’s Green Manifesto, November
2009 at 21, online: www.gsmworld.com/documents/mobiles_green_manifesto_11_09.pdf
Box 7.20: BT – Carbon Reduction Programme

BT has reduced carbon emissions by 60% since 1996 and intends to reduce its absolute carbon footprint by 80% by 2016, in
comparison to 1997 levels. BT is working towards this target by increasing its reliance on teleworking and making more
flexible arrangements for its employees to reduce travel costs, according to a BT spokesperson.
BT also has a target of an 80% reduction in its global carbon intensity (a measure which relates emissions to money-value
contribution to GDP developed specially for BT) by 2020 compared to a 1997 baseline. This measure, the Carbon Stabilisa-
tion Intensity Target, was developed specially for BT, and was announced in June 2008.
Source: BT.
Box 7.21: Nokia Siemens Networks Off-Grid Renewables

Nokia Siemens Networks (NSN) has set a target: to make renewable energy the primary choice for powering remote base
station sites by 2011. At present, most of these sites are powered by diesel generators.
Nokia Siemens Networks has set concrete targets based on energy savings in watts:
• GSM/EDGE BTS 650W in 2010 (800W in 2007)
• WCDMA BTS 300W in 2010 (500W in 2007)
• Mobile WiMAX BTS 700W in 2010 (1130W in 2007)
• Power reduction VDSL in 2009 49% (compared to 2007)
Source: Nokia Siemens Networks, White Paper: Good Green Business Sense (2008), online:
http://w3.nokiasiemensnetworks.com/NR/rdonlyres/13368E3E-58C4-4BF7-882F-4FE0F5D4C24F/0/Sustainability.pdf.
Chapter 7 279
7.6.9.6 How do TSPs mitigate their GHGs? hottest periods of the year for the biggest ex-
changes and is strictly monitored.
Given the existing incentives to cut GHGs, as set
• The Green Grid Consortium referenced above in-
out above, many TSPs are already engaged in policies
cludes various projects to reduce power consump-
and processes to reduce their impact on the climate.
tion by data centres.
These policies and processes can be classified as being
designed to reduce: First Order, Scope 2 effects and
Other examples of TSPs moving to reduce their
First Order, Scope 3 effects.
Scope 2 emissions include:
First Order, Scope 2 effects • Migrating to Next Generation Networks – see
Box 7.10, and
For TSPs, First Order, Scope 2 effects mainly relate • Infrastructure sharing – see Box 7.6.
to GHGs emitted as a result of the electricity TSPs pur-
chase in order to operate their systems. These include First Order, Scope 3 effects
examples such as:
• Generating renewable energy on their own sites For ICTs, Scope 3 effects relate to indirect GHG
using technologies such as wind power or solar emissions arising from the activities of the company,
energy for cell phone masts. France Telecom and covering things such as employee travel, whether busi-
Vodafone are using solar energy in some of their ness related or for journeys to work. Examples of initia-
exchanges and base stations, for example. tives to reduce these effects include:
• Running data centres at higher temperatures. BT’s • Using vehicles that rely on alternative fuel technol-
exchanges have been redesigned to withstand ogies. For example, Deutsche Telekom and BT are
higher temperatures, up to 30°C. Air-conditioning introducing natural gas vehicles. This will help to
has been replaced by fresh air coolers which pump partially offset the impact of higher energy costs.
outside air to the heart of the exchange. Ozone However, given the scale of energy consumed by
depleting air-conditioning is only needed in the the sector, it is unlikely to offset the total energy
demand completely.
Box 7.22: The Solar Cyber Café

Computer Aid International is a UK registered charity that aims to reduce poverty through IT solutions. The charity has
shipped over 160,000 ex-corporate refurbished computers to developing countries. These computers are then used by edu-
cational, health and not-for-profit organisations for communities in remote locations where the technology is most lacking.
Many of the rural African communities that most need the services provided by Computer Aid often have no electricity sup-
ply or an underdeveloped grid system, meaning that electricity supply is often ‘down’ for hours each day. Some rural towns
use diesel generators, but fuel supply difficulty again means that supply is inconsistent. Computer Aid International came up
with the idea of developing a self-contained ‘cyber café’ that produced its own energy.
Firefly Solar, which designs, hires and sells portable solar generators, worked with Computer Aid to develop the idea of a
solar powered Internet café and conduct a feasibility study. As a result, Firefly were awarded the contract to design and
build a series of converted shipping containers into fully furbished Solar Cyber Cafes providing a consistent electrical supply.
The shipping containers are fully insulated and include electric lighting, desks, chairs and an eleven user computer network
based on thin client technology, using a fraction of the power needed by conventional PCs. The systems are able to link in to
Africa’s Largest WiFi network, or the containers own satellite uplink.
These systems are solely powered by the integral off grid solar generator designed and built by Firefly. The system will oper-
ate all year round in high and low seasons in a number of African countries.
The first Solar Cyber Café has been shipped out to Macha in Zambia and is located 70km away from the nearest tarmac
road. The second has been shipped to Kenya and the 3rd is already on its way to Zambia. Firefly hopes that many more con-
tainers will be converted in the future offering internet to thousands of individuals across the continent.
Source: Firefly Solar, at www.fireflysolar.co.uk/content/computer-aid-international-solar-cyber-cafe-project
280 Chapter 7
• Reducing truck rolls and vehicle fleet mileage. For • Should ICT regulators consider compensating TSPs
example BT in London is minimizing truck-roll for activities that reduce GHGs as part of their poli-
through van sharing initiatives, considering phasing cy and regulatory decisions? For example, is there a
new hybrid technology vehicles into its fleet, role for ICT regulators in giving regulatory relief for
championing BT Group policy on car clubs and fos- investment decisions such as earlier migration to
tering environmentally-friendly driving by em- NGNs, if such moves result in reduced GHGs?
ployees
• Should ICT regulators create concrete incentives for
environment-friendly practices in ICT development
7.6.9.7 Questions
(e.g., subsidies through Universal Service Funds for
network deployments using renewable energy or
Set out below are some questions regarding the
incentives for sharing rather than duplicating infra-
potential involvement of ICT regulators in activities un-
structure)?
dertaken by TSPs to mitigate their own GHGs:
• What is the justification for ICT regulators to pro-
• Is there a role for ICT regulators in developing and
vide relief for measures such as earlier moves to
deploying measures that affect the GHGs produced
NGNs, if such measures provide commercial bene-
by TSPs?
fits to TSPs such as lower energy costs and hence
• If TSPs are already taking action to mitigate their lower OPEX?
own GHGs to meet their business goals, notably,
• Should regulators intervene to create industry
saving costs, extending markets, complying with
players that focus exclusively on the provision of in-
emission controls, and meeting CSR objectives,
frastructure, in order to prevent duplication and
what is the role for regulation?
reduce GHGs? For example, some countries (e.g.
• If there are GHG-curbing activities that TSPs could India and Pakistan) now licence or register “infra-
undertake but that do not meet business goals, and structure providers” such as tower companies,
are therefore not being implemented, should TSPs whose sole purpose is to provide certain kinds of
be compelled to do so by ICT regulators? infrastructure such as towers and masts.
• If there is a conflict between increased CAPEX152 • Should regulators mandate infrastructure sharing
which will result in reduced GHGs (and, usually, re- and prohibit the construction of new infrastructure?
duced OPEX), is it appropriate that regulators be- (unless sharing is not possible).155
come involved in such business decisions?
• Should ICT regulators be more involved in develop-
• If TSPs are required to meet mitigation require- ing standards for energy efficiency in ICT equip-
ments, should this be left to general pollution con- ment, namely by participating in the work of
trol laws and regulation that affect players in all standard-setting organizations such as the ITU, ETSI
markets rather than ICT regulators? and ISO?156
• Should there be more collaboration between in- • Should ICT regulators be pressing for advanced im-
dustry regulators and sector-specific regulators plementation of emissions-reducing technology in
concerning the reduction of GHGs? ICTs?
• Is there a need for a generally accepted, ICT indus- • Is there a role for regulators in supporting the de-
try-wide methodology for the carbon footprinting velopment of Codes of Practice/Codes of Conduct
of ICT products and services or does this fall within for industry players, such as the European Commis-
the scope of existing schemes such as the Carbon sion Codes of Conduct (see box 7.23)
Disclosure Project?153
• What form should GHG mitigation policies take, if
7.7 Transformation: A Current and
the chosen measures are not to add further bur-
Future Point of Contact
dens to the sector?
“Low carbon economy will transform world like the
• Should regulators be encouraging and facilitating first industrial revolution.”
voluntary measures like that in the computer in- Headline, The Guardian, 2 July 2009
dustry, such as the Climate Savers Computing Initia-
tive (CSCI)154?
Chapter 7 281
7.7.1 What is ‘transformation’? contribution to the world’s carbon footprint (around

2 per cent to 2.5 per cent of global GHGs and growing),
Curbing dangerous GHG emissions requires us to ICTs can also play a major role in reducing the world's
move to a low carbon economy. This move will produce carbon footprint. The services sector, of which ICTs are
winners and losers. One report from McKinsey notes a part, is, in principle, less energy-intensive than many
that, “the outcome may be as unambiguous as it was industrial sectors (with exceptions such as transport-
when the industrial revolution shifted business from intensive fields) and thus well-placed to help reduce
manual labour to energy-intensive factories.”157 The re- GHGs.
port notes that companies in all sectors will need to de-
velop a strategic response to three major Figure 7.12 shows BT’s vision of a future ICT-
developments that will occur during the transformation enabled Smart Community.
to a low carbon economy:
7.7.2 How can ICT transform other sectors?
• efforts to optimize the carbon efficiency of existing
assets and products, from infrastructure to supply
TSPs can help players in other sectors to become
chains and finished goods;
aware of their own GHGs through techniques to moni-
• growing demand for new low-carbon solutions; tor carbon production and energy consumption. But
and TSPs can also develop, and help others develop, innova-
• public policy and the widespread belief of long tive products, services and business models that reduce
term higher energy prices. GHGs across the economy, particularly by substituting
ICT for more energy intensive modes of business and
The report goes on to advocate that firms adopt communication.
the following strategic response to these developments:
Other than ICT, no other sector can achieve such
• raise the carbon productivity of existing assets; enabling effects, which fall into these two categories:
• pursue new business growth and sow the seeds for • Second Order effects: arising from the potential of
future expansion; and ICT to change processes in other sectors, and
• develop a regulatory strategy that helps to shape • Third Order effects: resulting from collective me-
public policies that benefit the environment and dium or longer-term adaptation of behaviour (e.g.
business alike. consumption patterns) or economic structures.
All these strategic responses are relevant to ICTs in

general and TSPs in particular. While ICT makes its own
Box 7.23: Codes of Conduct

EU Code of Conduct on Broadband
Broadband equipment accounts for around 15% of the ICT sector's overall energy consumption, or about 47 TWh in 2010 in
the EU, hence the Code of Conduct on Broadband, which has existed since 2007. The Code sets maximum power consump-
tion, (in consumer premises and telecom operators' substations) for broadband equipment such as modems, switches,
routers and home gateways. Energy savings are achieved through the mandatory use of the best available low energy com-
ponents.
This Code (plus another on Data Centres), provides a platform which brings together European stakeholders to discuss and
agree voluntary actions to improve energy efficiency. In addition to these two Codes, there are three other codes relating to
digital TV services, efficiency of external power supplies and AC uninterruptible power systems.
These Codes are managed and produced by the European Commission's Joint Research Centre, and are aimed at informing
and stimulating the ICT industry to reduce energy consumption in a cost-effective manner without hampering the critical
function of the facility or the equipment. By signing the codes of conduct, the individual companies voluntarily commit
themselves to reducing energy consumption by an agreed amount in a pre-defined time scale through the adoption of best
practices.
Source: www.alphagalileo.org/ViewItem.aspx?ItemId=86177&CultureCode=en
282 Chapter 7
Figure 7.12: ICT services in SMART Communities
Energy Mobility Buildings Health Waste Water

OEM & Meters, sensors BMS providers, Collection, Meters,
software Meters, sensors Medical
and software home working domotics1, meters equipment re-cycling & sensors and
providers and software and sensor disposal software
manufacturers manufacturers
manufacturers manufacturers manufacturers manufacturers
Comms Computing
Customer Retail
Customer Customer Last mile services/ Comms Centralised Services Systems Installation Maintenance Customer
ICT facing facing comms Network backbone application (Hardware integration field force field force tech /citizen customer
services applications technology & OS) support portal services
Integration
Utilities,
distribution
Service networks and
providers metering Transport Facilities
businesses authorities (for management
public transport), Healthcare Local authorities,
organisations providers and Environmental Water
vehicle landlords,
manufacturers, healthcare services companies
residential service control companies
home working & management
specialised service systems
Energy retailers platforms
Retailer providers
End user
1 Home automation equipment
Source: BT. Briefing to analysts by Chris Tuppen, BT’s Chief Sustainability Officer, London, 24 June, 2010.
Box 7.24: The e-Environment Toolkit

The ITU Telecommunication Development Sector (ITU-D) has developed an E-Environment Toolkit that provides policymak-
ers with principles and guidelines for the development and deployment of electronic applications and services in the area of
the environment. The objective of the first module of the Toolkit is to help countries to assess the potential contribution that
ICTs can make to reduce energy consumption and green house gas (GHG) emissions and to support Member States in the
evaluation of their current capacities and the identification of needs and definition of priorities, as a basis for the develop-
ment of national e-Environment and e-sustainability strategies and action plan for climate change and sustainable develop-
ment. A core practical tool in this Toolkit is the e-Environment Readiness Index (EERI). The EERI can be used both as a tool
for evaluating the e-Environment readiness of a country to use ICTs for mitigating and adjusting to the impacts of climate
change, as well as a process for establishing baseline knowledge about the potential use and impact of ICT systems with re-
spect to the environment.”
See: www.itu.int/ITU-D/cyb/app/e-env.html
The strategic use of ICTs can contribute significantly Examples of how ICTs can enable other sectors to
to energy efficiency and sustainable economic growth. reduce their GHGs include:
ICTs can enable other sectors to reduce GHGs through
• ICTs can reduce the need for travel and transporta-
phenomena such as teleworking and teleconferencing,
tion of goods by bridging distance, through online
various services and applications, smart grids, sustaina-
retailing and by the use of “smart inventory” sys-
ble networks, energy-efficient data centres, intelligent
tems and “just in time” delivery.
cars, smart buildings, and energy-efficient workspaces.
ICTs thus have the potential to transform other sectors, • ICTs can increase efficiency and innovation by al-
and to decouple economic growth from environmental lowing people to work and learn (and to teach) in
impacts, with reductions in GHGs as a result of process more flexible ways (see Box 7.25).
changes, de-materialization and virtualization.
Chapter 7 283
• ICTs can shift productive focus from products to • ICTs can work as enablers for increased productivity
services and allow for dematerialization across the in other sectors, through the use of information
economy (see Box 7.26).158 systems and/or automation in processes; the bene-
fits also include the optimization of energy and
• ICTs can increase efficiency and convenience of
human resources needed. (See also sections 7.7.2
government and business services, saving travel
and 7.7.3.)
and waiting time and cost for customers/citizens
(e.g., through e-government services, online order-
ing, mobile payments, etc.).
Box 7.25: Comparison between videoconferencing and business trips in terms of energy use
Video conference held between Tokyo and Video conference held between Tokyo and
Yokohama, once a week (48 times / year), Yokohama, every working day (240 times /
one hour each time, involving two people year), eight hours each time, involving two
from each office people from each office
Evaluation Result Evaluation Result

Energy Consumption GJ/year)
Energy Consumption GJ/year)
4.5 25
4.0 Reduction of 53% Reduction of 52%
3.5 20
Disposal Disposal
3.0 Use Use
15
2.5
Production Production
2.0
10
1.5
1.0 5
0.5
0.0 0
Conference on a trip Video conference Conference on a trip Video conference
Source: www.itu.int/ITU-T/climatechange
Box 7.26: Comparison of GHG emissions of postal mail and e-mail services
150kt-CO2
160
140
CO2 emission (kt-CO2)
120 PC
100 NW usage
98.5% DC
80
reduction Postal service
60
Printer
40 Paper
2kt-CO2
20
0
Postal direct Direct e-mail
mail
Source: www.itu.int/ITU-T/climatechange
284 Chapter 7
Some studies have estimated that by deploying a world, there is massive scope for reduced GHGs
ICTs in strategic areas, GHG reductions of over through lower demand for carbon-intensive goods and
40 per cent could be achieved by 2050 – five times services, as well as the development of low-carbon
more than the estimated GHGs emitted by ICTs in that technologies.
year. One of the first studies to consider this was pub-
lished by the Association of European Telecoms Net- 7.7.3 Where will ICTs be transformative?
work Operators (ETNO). ETNO noted, “By 2020, a
better integration of broadband-enabled applications in GeSI has developed a taxonomy to consider the
all sectors of the economy, such as the building, trans- impact of smart use of ICTs in a number of areas. GeSI
portation and energy distribution, could help saving up shows that ICTs can drive down GHGs by supporting the
to 15 per cent of global CO2 emissions.” 159 deployment of developments such as:
• Smart grid
ETNO’s work has since been joined by a number of
other studies, which have demonstrated the ways in • Smart buildings
which ICTs can reduce GHGs. These studies used differ- • Smart logistics
ent methodologies, applied across different geographic
and different sectors, so it is not possible to make direct • Smart motor systems
comparisons between them. However, the following • Dematerialisation
table gives a flavour of potential GHG reductions that
can be achieved by implementing additional ICT-based The technical and market potential for ICTs in sup-
solutions. porting such deployments is described in Annex 1. The
rest of this section considers some of the complexities
Whatever the scope may be in future for such GHG of the transformation to a low carbon economy, and
reductions using ICTs, people and businesses are cur- the potential for regulatory involvement.
rently taking advantage of just a fraction of the services
that could be available via the Internet. In his book The 7.7.4 What are the unintended consequences
World is Flat, Thomas Friedman notes, “Globalization of energy efficiency?
3.0… particularly the combination of the PC, the micro-
processor, the internet and fiber optics…is a work in 7.7.4.1 Absolute and relative decoupling
progress,”160 a work that has been enabled by, and has
the potential to be transformed by, the products and Between 1990 and 2000 the carbon intensity of the
services made available in the new ICT ecosystem. US economy declined by 17 per cent yet total emissions
increased by 14 per cent162. As Tim Jackson has pointed
Globalization 3.0 also brings significant opportuni- out163, it is vital to distinguish between ‘relative’ and
ties for ICT players to develop and market innovative ‘absolute’ decoupling. (See Box 7.27)
products and services. As identified above by McKinsey,
these ICT products and services can reduce depen- 7.7.4.2 Carbon shifting
dence on, for example, carbon-intensive travel (espe-
cially as travel becomes more expensive). The Saving energy is normally viewed as beneficial in
deployment of digital processing widely into the envi- and of itself. However, this is not without its challenges.
ronment – what is variously called ambient intelligence, For example, dematerialization may be another form of
ubiquitous computing, the Internet of things, or just carbon shifting – moving the source of GHGs from the
‘smart’ technology, is still at the early stages. Wider desktop to the data centre. Replacing memory on hard
deployment and penetration of high speed broadband drives with data saved “in the cloud” means that indi-
on fixed and mobile networks, the impact of Moore’s vidual users have achieved dematerialization. But the
Law and economies of scale mean that ICT is becoming huge data centres supporting the cloud are far from be-
both pervasive and cheaper. More widespread use of ing non-material. It may be that the attractiveness of
information management technologies, developments the concept of dematerialization bumps into one of the
like RFID and beyond, where everything is tagged, truths of Newtonian physics, that nothing that is lost in
coupled with developments such as data mining, agent- nature is still valid.
based software and talk-to technology mean that we
are only at the beginning of what is possible.161 In such
Chapter 7 285
Table 7.9: Scope for ICTs to reduce GHGs: Selected examples

Operator Estimated reduction in GHGs Study
China Mobile Estimates direct CO2 emissions savings China Mobile and WWF, Low Carbon Telecommunication
from low carbon telecom solutions pro- Solutions in China: Current Reductions and Future Potential
vided by China Mobile in 2008 at 48.5 (Beijing: WWF, 2010), online:
million tonnes (just over six times the wwf.panda.org/?193193/China-study-shows-huge-
company’s own emissions). For 2009, potential--of-low-carbon-telecom-solutions
the savings were 58.2 million tonnes [China Mobile/WWF, Low Carbon Telecommunication So-
(almost six and a half times company lutions in China, 2010].
emissions).
GeSI Estimated emission savings of 15%, i.e. The Climate Group, on behalf of the Global e-Sustainability
7.8 GtCO2e – of global “Business As Initiative (GeSI), Smart 2020, Enabling the low carbon
Usual” emissions in 2020. economy in the information age, (2008), online:
www.smart2020.org/_assets/files/02_Smart2020Report.p
df [GeSI, Smart 2020].
Telstra Identifies seven opportunities for Aus- Telstra, Towards A High Bandwidth, Low Carbon Future:
tralia to reduce or avoid the release of Telecommunications-based Opportunities to Reduce
carbon emissions into the atmosphere Greenhouse Gas Emissions (2007), online:
by 2015, totalling almost 5%, or around www.telstra.com.au/abouttelstra/download/document/te
27 million carbon tonnes per year. lecommunications-climate-change-blueprint-in-brief.pdf
Vodafone Identifies 13 specific opportunities, sup- Accenture and Vodafone, Carbon Connections: Quantifying
ported by mobile services, that could, by mobile’s role in tackling climate change, July 2009, online:
2020 save 2.4% of expected EU emis- www.vodafone.com/etc/medialib/cr_09/carbon.Par.76396
sions – 113 million tonnes of CO2e. .File.tmp/carbon_web_2009.pdf
Box 7.27: Absolute and relative decoupling

“Relative decoupling refers to a situation where resource impacts decline relative to GDP. Impacts may still rise, but they do
so more slowly than the GDP. The situation in which resource impacts decline in absolute terms is called ‘absolute decoup-
ling’. Needless to say, this latter situation is essential if economic activity is to remain within ecological limits. Evidence for
declining resource intensities (relative decoupling) is relatively easy to identify. The energy required to produce a unit of eco-
nomic output declined by a third in the last thirty years, for instance. Global carbon intensity fell from around one kilo per dol-
lar of economic activity to just under 770 grams per dollar. Evidence for overall reductions in resource throughput (absolute
decoupling) is much harder to find. The improvements in energy (and carbon) intensity noted above were offset by increases
in the scale of economic activity over the same period. Global carbon emissions from energy use have increased by 40% since
only 1990 (the Kyoto base year).”
Source: Tim Jackson, Prosperity Without Growth? The Transition to a Sustainable Economy, (London: Sustainable Development Commission,
2009), online: www.sd-commission.org.uk/publications/downloads/prosperity_without_growth_report.pdf
7.7.4.3 Third order effects energy intensive processes. The net result is that
overall energy consumption is reduced less than
Third order GHG effects enabled by ICTs may be might be expected and may even increase.
ambiguous and may eventually result in either positive
• The Rebound Effect165 occurs when new activities
or negative changes when they bump into the realities
(and therefore additional environmental impacts)
of human behaviour. There are two possible effects of
arise as a result of behavioural influences. For ex-
increases in energy efficiency, notably the Khazzoom-
ample, a better-insulated house needs less fuel to
Brookes postulate and the Rebound Effect.164 Each is
maintain a given temperature, but as their fuel
considered below:
costs decline, people tend to turn up the thermos-
• The Khazzoom-Brookes postulate states that when tat. In fact, average domestic temperatures are es-
money is saved through energy efficiency, that sav- timated to have increased from 16ºC in 1990 to
ing is often subsequently spent on other, more 19ºC in 2002. While the Rebound Effect may result
286 Chapter 7
in lower energy reductions than expected, it is un- For example, the monolithic model of electricity
likely to result in an overall increase in consump- generation using vertically integrated suppliers is giving
tion. way to the possibilities of distributed generation
enabled by smart grids (see Annex). Such smart grids
7.7.5 What is the role for standardisation, are heavily dependent on ICTs to ensure their effective
monitoring, accounting, rethinking and operation. ICT standardization bodies can become
transforming? more involved in such cross-sectoral developments, as
Box 7.28 illustrates.
The ICT sector is characterized by a mix of open
and proprietary standards. In the telecommunication 7.7.5.1 Regulation and Transformation
sector, there has long been an emphasis on the stan-
dards needed to underpin effective interconnection of For some initiatives relating to ICTs and CO2 reduc-
networks and equipment, whether at the national, re- tion, self-regulation may work well. For others, it may
gional or international level. Such standardization work be necessary to modify existing ICT regulatory regimes
continues today, and may be one of the more effective to create incentives to reduce GHGs. Beyond such ICT
ways for regulators and quasi-regulatory bodies to be- regulatory incentives, it is likely that there will be a
come involved in the acceleration of the transition to a need for greater cross-sectoral regulation and coopera-
low carbon economy driven by ICTs. tion among regulators both within and beyond the ICT
sector.
Box 7.28: ITU Smart Grid standards initiative

A new ITU group has been established to identifyistandards for new Smart Grid deployments. ”There was a need to engage
with a wider community,” according to Malcolm Johnson, Director of ITU’s Telecommunication Standardization Bureau. "In
this case, the Focus Group allows access to all stakeholders and in particular a key part of the Smart Grid equation — the
electricity companies themselves.” The new Focus Group aims to bring all players together in an environment where they
can create global specifications for the service-aware utilities network of tomorrow. Smart Grid will consist of solutions
based on both current and future telecommunication technologies for command and control, metering, and charging. ITU’s
new Focus Group will explore these requirements and corresponding standardization needs. Further, the idea that Smart
Grid principles could apply to the telecommunication system itself could be a topic for discussion.
Many governments have earmarked significant portions of their stimulus packages for Smart Grids. In the United States, for
example, the American Reinvestment and Recovery Act has allocated USD 4.5 billion for investments in the Smart Grid. In
Europe, the European Parliament has approved an agreement reached by the EU Institutions on a package of legislation to
liberalize energy markets, including electricity and gas directives, which require EU member states to ‘ensure the implemen-
tation of intelligent metering systems’.
The Focus Group on Smart Grid will survey existing national standards initiatives to see whether these can be adopted at an
international level, and will also perform a gap analysis to identify new standardization requirements that will then be taken
forward by relevant ITU-T Study Groups. This exploratory phase will be relatively short before work starts on the develop-
ment of the standards necessary to support the global rollout of Smart Grid technologies.
In the field of Smart Grids, ITU experts have already agreed on specifications for Smart Grid products for home networks.
The specifications include a ‘low complexity’ profile that will allow multiple manufacturers to develop products that deliver
the low power consumption, low cost, performance, reliability, and security that is required for Smart Grid and other lower
bit rate applications.
Members of HomeGrid Forum, an independent body set up to promote ITU-T’s home networking standard, G.hn, are active
participants in Smart Grid standardization efforts worldwide, including those led by NIST, IEEE, ISO/IEC, and SAE. In 2009,
HomeGrid Forum formed a Smart Grid initiative group, which will help to bring a range of G.hn-based devices to the Smart
Grid market and home energy management applications.
Source: ITU Press Release, “ITU introduces Smart Grid standards initiative” (May 12, 2010), online:
www.itu.int/net/pressoffice/press_releases/2010/21.aspx.
Chapter 7 287
Some examples of how greater cross-sectoral regu- • Is there a role for regulators to assist ICTs to reduce
lation might be achieved are provided in Box 7.30, as GHGs in other sectors, and if so, how far should
set out by the GSMA. such a role extend?
• Should ICT regulators pick up the themes identified
In summary, self-regulation and regulatory incen-
in the GeSI Smart 2020 report and should they be-
tives may be appropriate for some ICT activities relating
come more involved in cross-sectoral activities?166
to climate change. As a first step, it would be appropri-
ate for investigation to begin on the scope for co- • Does climate change mitigation suggest that ICT
operation among regulators both within and beyond regulators should adopt more horizontal policies
the ICT sector. that engage all relevant partners, including busi-
nesses and residential users, and that involve a va-
7.7.5.2 Questions riety of measures, including fiscal incentives, to
prefer low-carbon solutions to traditional ones?
• Where is the boundary line between measures that
affect all sectors and measures that are ICT-specific? • Should there be light touch regulation in some
areas to recognize the positive externalities created
• Is there scope for a more active role for policymak-
by the ICT sector when it assists other sectors to
ers and ICT regulators to encourage, facilitate and
reduce their energy consumption?
incentivize the processes of transformation?
• What is the role of ICT regulators in working to en-
• Should the reduction of energy intensity across the
sure ubiquitous high-capacity connectivity to ena-
economy be seen as a market-driven process of
ble teleworking and increased productivities in
evolution using services and solutions from ICT
other sectors?
players, or should it be driven by a more active role
for ICT regulators?
Box 7.29: Smart 2020: A Role for ICT Regulators?

Some of the main themes from GeSI’s Smart2020 Report are set out below, including possible modes of regulatory involve-
ment:
Standardise167 (i) Direct action: develop protocols to enable smart systems to interact. Following its symposia on “ICTs and
Climate Change”, the ITU has established a Focus Group within its Telecommunication Standardization Sector (ITU-T) to
study how to reduce ICT equipment emissions, and how ICTs can assist in cutting emissions in other infrastructure sectors
such as energy, transportation and buildings.168.
Examples include the UN initiative in Africa to team up with mobile phone companies and other partners to install 5,000
new weather stations, the World Telecommunication Standardization Assembly 2008 (WTSA-08) on ICT standardization re-
quirements for combating climate change, etc; Ensure energy standards are included in technological standards develop-
ment. (ii) Enabling action: develop ways for devices “outside” the ICT sector to message about energy consumption. Sector
regulators could impose certain requirements on mobile handsets such as smart phones, type approval measures (certifica-
tion of equipment) general terms and conditions can encourage providers to use energy efficient technology.
Monitor to make energy and carbon emissions visible: (i) Direct action: Monitor energy consumption of ICT products and
networks. (ii) Enabling action: ICT can incorporate monitoring information into the design and control of energy use.
Account, by linking monitoring with accountability: (i) Direct action: Make energy use transparent throughout the supply
chain by reporting and labelling. (ii) Enabling action: ICT can provide the software tools and platforms to improve account-
ability of energy and carbon throughout service and product life cycles.
Rethink: Optimise for energy efficiency, and find alternatives to high-carbon development (i) Direct action: Optimise its own
products and services and continue to deliver radical product innovation. (ii) Enabling action: ICT can offer new innovations
that, if considered during the design phase of buildings, roads and other infrastructure can change our current ways of living.
Transform, by implementing smart low carbon infrastructure at scale (i) Direct action: Make the ICT sector an exemplar of
low carbon technologies (ii) Enabling action: ICT can apply smart and integrated approaches to energy management of sys-
tems and processes, incorporating system-wide benefits from both automation and behaviour change.
288 Chapter 7
• What is the role of ICT regulators in creating an happen without imposing unnecessary financial
enabling environment for the development of new burdens on market players and consumers?
ICT services and applications that are potentially
• Should ICT regulators become more closely in-
GHG reducing?
volved in climate change issues in other sectors, for
• Should ICT regulators be developing targeted poli- example, by encouraging the provision of services
cies and regulations in key areas such as promoting (including e-government, etc.) that use telecom-
renewable energy sources and reducing power munications to reduce travel, thus reducing GHGs?
consumption (or the use of energy efficient tech-
• Is there a need for ICT regulators to increase their
nologies and equipment such as NGNs)?
focus on consumer protection and consumer em-
• How can ICT regulators help to formulate and dis- powerment in order to ensure consumers are able
seminate best practice guidelines on integrating a to make informed decisions?
stronger environmental focus into their activities?
• Do ICT regulators have a role in helping overcome
• Do ICT regulators have a role in stimulating de- barriers to behavioural change in order to stimulate
mand for “environmentally-conscious” ICT services take up of ICTs in the attempt to mitigate GHGs
and devices? from activities in other sectors?
• If there is a view that ICT regulators should have a • Do ICT regulators need to reinvent regulatory mod-
role in promoting the positive effect of introducing els and transit towards “distributed models” for
new “green” ICT technologies, how should this regulation and decision support?
Box 7.30: GSMA policy for government and regulatory support to assist mobile industry to reduce its emis-
sions
The initiatives of the mobile industry to reduce its direct emissions rely on the development of an enabling regulatory
framework and the creation of tax or other economic incentives to support the business case. Necessary policy support
measures include:
• Facilitating the development of a common framework to measure the mobile industry’s energy and environmental
performance, and that of other sectors, for example by aligning national and regional methodologies with those be-
ing developed by ETSI and ITU in conjunction with the mobile industry and other private sector players. With such
measurement standards in place, encourage further innovation among suppliers of mobile communications net-
work equipment towards energy efficiency.
• Fostering innovation in low GHG footprint handset manufacturing, e.g., by reducing tax or providing tax incentives
on handsets with low GHG footprints or with a high share of recyclable materials.
• Supporting investment in GHG emission-reducing technologies and processes by mobile operators, including an-
tennas with reduced manufacturing GHG footprint and more energy efficient radio equipment for base-stations.
This can be achieved, for example, by enabling some form of carbon credit, tax incentive or low interest financing to
help incentivise capital investment in energy efficient and low GHG equipment.
• Supporting the current efforts of the mobile industry to reduce its emissions by sharing infrastructure. Active shar-
ing of site electronics, which will reduce the number of sites required by each company, is currently not possible in
many countries given competition rules.
• Ensuring spectrum availability, especially making harmonised low-frequency spectrum available to reduce the need
for densely-constructed mobile networks. For example, it takes three times as many base stations to build a 3G
network using the 2100 MHz spectrum band as it does using 850 MHz. It should be noted, however, that the use of
lower frequencies also implies the lower data transmission rate.
• Supporting broadband infrastructure deployment by supporting the roll out of energy efficient networks through
streamlining planning approval and providing investment incentives.
• Protecting the intellectual property rights of technology owners, in order to sustain and broaden investments in
clean technology innovation and efficiency improvements.
• Supporting pilots of renewables-powered base stations in geographies where it makes sense by offering operators
power utility status to allow for local small scale power generation in communities where such activity is beneficial,
and consider using development funds to reach Project viability as needed. Development of local skills in green
technologies could provide significant local and national benefits in countries where such initiatives are launched.
Source: GSMA, in collaboration with The Climate Group, Mobile’s Green Manifesto
Chapter 7 289
7.8 Going Forward As part of this process, this chapter has been pre-
pared as a contribution to the Global Symposium for
The ITU has run a number of special events, pro- Regulators, to take place in Dakar, Senegal in November
duced several publications, and is now actively consi- 2010. It is intended as a contribution to a debate that is
dering the relationships between ICTs and climate only starting. Climate change is a contentious subject.
change. These activities have prompted Sami Al Ba- The possibility that ICT regulators should have some
sheer Al Morshid, Director of ITU Telecommunication specific involvement relating to climate change is
Development Bureau to note that “we intend to be a bound to be controversial.
mirror for the social and economic effects of ICT trends
as they develop, providing regulators and policy makers
with the insights and guidance they need to make key
decisions for the constituencies they serve including
proper consideration of challenges related to issues
such as privacy, online protection and climate
change.”169
290 Chapter 7
Annex 7.1: Smart Grid, which is heavily reliant on ICTs for monitor-
ing, management, and control of previously integrated
The transformative potential of ICTs
electricity supply and distribution systems, could be
particularly important for developing countries, where
This Annex uses the GeSI taxonomy to consider the
the lack of ICTs is often directly related to the lack of
impact of the smart use of ICTs to drive down GHGs in
electricity.
other sectors, what the McKinsey Institute has de-
scribed as “wiring for a sustainable world” based on
One component of the Smart Grid may be smart
“the Internet of Things”.170 Issues for regulators that
metering173 at the consumer premises, moving away
emerge from this analysis are covered in the main
from the traditional electro-mechanical meters which
chapter. GeSI particularly considers the transformation-
have been used in many countries for over a century.
al potential of deploying ICTs in the following areas:
According to a 2006 report, smart meters can per-
• Smart grid; form a large variety of functions, from remote meter
• Smart buildings; reading to offering real-time tariff information to the
consumer. Key capabilities are: measuring energy con-
• Smart logistics; and sumed, both in terms of quantity and when (i.e. on a
• Smart motor systems. time-interval basis); two-way communication; storing
interval-data and transferring it remotely to a data col-
A.7.1 What is the “smart grid”? lector/utility; and displaying consumption, tariff, and
other information. The authors describe such advanced
According to the UK’s Department for Energy and metering technology not so much as an end in itself but
Climate Change, “The transition to a low carbon econ- as “an important gateway,” part of the Smart Grid that
omy will involve major changes to the way we supply enables energy suppliers to improve market operation
and use energy; transforming our electricity system lies through better energy management and through the
at the heart of these changes. Integral to this transfor- discovery of new retail opportunities. Smart metering
mation will be an electricity grid that is fitted with more also enables small and medium enterprises (SMEs) and
information and communications technology progres- households to achieve energy savings through im-
sively over time. The result will be a ‘smarter’ grid, that proved feedback on energy consumption and expendi-
gives a better understanding of variations in power ture, as well as enabling the development of demand-
generation and demand, and allows us to use that in- response at an individual level and providing new scope
formation in a dynamic and interactive way to get more for micro-generation.174
out of the system.”171
The actual energy saving (hence GHG-reducing)
What is the technology which underlies the Smart impact of smart meters has not yet been subject to
Grid? One US expert has described it as “An enabling proper testing since energy savings has not been the
platform that integrates the latest digital and informa- motivation for transitioning to smart metering up to
tion technologies into the nation’s electric delivery now. A 2008 study175 considered smart meter trials in
network for enhanced operational intelligence and selected countries found varying outcomes: in Ontario,
connectivity throughout all application areas.”172 Some a smart metering trial resulted in a 6.0 per cent average
models place a pervasive broadband network at the conservation effect across all customers (results varied
heart of the Smart Grid, enabling it to play a transfor- according to the type of metering and tariffing in-
mative role in meeting energy, environmental, and volved). However, a trial run in France (Tempo Tariff,
transport goals, including energy independence, re- EdF) found no impact on overall consumption.176
duced GHGs, and clean energy generation. Whatever
the technological variant, the Smart Grid uses new (and Of course, another dimension of Smart Metering is
existing) ICT systems and processes to provide more that it removes the need for travel by meter-readers,
information on demand flows and allows intermittent who would hitherto carry out their duties by using
power, from wind, or inflexible power from nuclear, to some form of GHG-emitting road transport.
be more easily integrated into the wider electricity sys-
tem. Smart Grids represent a move away from the A.7.2 What are “smart buildings”?
more monolithic, utility-style operations of existing
energy networks. Current and emerging ICT systems According to Deutsche Bank177, existing buildings
are the mechanism that will enable this to happen. The and their heating account for about 8 per cent of global
Chapter 7 291
GHGs. There is scope for huge reductions in this figure of GHGs, but the effect of such measures may be coun-
by smart use of ICTs, as confirmed in a study178 pub- teracted by growth in the sector. The challenge then, is
lished in 2009 by the European Commission’s Directo- to deliver transport or its alternatives in a way that is
rate-General for Information Society and Media. The sustainable, robust and safe and bring about reductions
report notes that more than 40 per cent of energy con- in annual vehicle mileage.
sumption in Europe is attributable to heating and light-
ing in buildings and that buildings are the largest source Selecting from those options that have an ICT com-
of CO2 emissions in the EU15 (including their electric ponent, the IPCC180 highlights the following:
power consumption). Most of this energy consumption
• Improved vehicle efficiency measures, leading to
is due to space and water heating. As the EC points out,
fuel savings, in many cases have net benefits (at
“Buildings can be considered as energy intensive sys-
least for light-duty vehicles). However, as the IPCC
tems through their whole life cycle…..the building oper-
notes, “the market potential is much lower than the
ation phase accounts for 85 per cent of the total energy
economic potential due to the influence of other
consumption.”
consumer considerations, such as performance and
size.” (These considerations are less applicable to
The study focuses on ICTs as a support to energy ef-
businesses than to personal motorists. For example,
ficiency in so-called smart buildings. A “smart building”
retailer TK Maxx is introducing new telematics
is defined as the building itself, including equipment
equipment in all its vehicles, limiting speeds to just
and devices, the envelope, and the potential connec-
over 50mph and monitoring driving efficiency,
tion with the outside (e.g. electric grids). As the study
while inaugurating a delivery share scheme with
notes, “It is clear that if “green buildings” are to be-
other retailers).
come commonplace, that this can only be facilitated by
ICT.” Some examples cited in the report are: • Modal shifts from road to rail and to inland and
coastal shipping and from low-occupancy to high-
• New ICT based Neighbourhood Management Sys-
occupancy passenger transportation, as well as
tems to allow peer-to-peer sharing of energy pro-
land-use, urban planning and non-motorized
duced through renewable schemes;
transport, which offer opportunities for GHG miti-
• New ICT based meters that will allow households gation, depending on local conditions and policies.
not only to buy but also to sell energy; and
• Medium term mitigation potential for CO2 emis-
• ICT will allow information on energy consumption sions from the aviation sector can come from im-
of every energy-consuming appliance in a home or proved fuel efficiency, which can be achieved
a building to be provided in real-time, in a user through a variety of means, including technology,
friendly way, thereby empowering citizens to take operations, and air traffic management. However,
decisions that lead to energy savings. such improvements are expected to only partially
offset the growth of aviation emissions. Total miti-
A.7.3 What are “smart logistics”? gation potential in the sector would also need to
account for non-CO2 climate impacts of aviation
Fourteen per cent of the world’s GHG emissions emissions.
stems from transport, of which private cars account for
a large share. In the U.S. and in the European Union, As the IPCC goes on to note, reducing GHGs in the
emissions from transport account for 25 per cent and transport sector is often a co-benefit of addressing traf-
19 per cent of total GHG emission respectively.179 The fic congestion, air quality, and energy security.
transport sector thus offers scope for major mitigation
Box 7.31: Intelligent Transport

The ITU has carried out some work on intelligent transport systems (see related ITU-T technology watch report and ITU-R
Land Mobile Handbook (including Wireless Access) – Volume 4: Intelligent Transport Systems) and their impact on the envi-
ronment, and electric vehicles (session 5, 2010 FNC workshop)
Online: http://www.itu.int/ITU-T/worksem/ict-auto/201003/ and
http://www.itu.int/publ/R-HDB/publications.aspx?lang=en&parent=R-HDB-49
292 Chapter 7
One of the more thorough analyses of the potential requirement for revenue funding was seen as a further
contribution of ICTs to GHG reduction in the transport challenge to increasing use of ICTs: initial capital in-
sector is Smarter Moves, published by The Sustainable vestment for ICT interventions may be relatively small
Development Commission.181 The study examined the but ICT systems require funding for software and hard-
scope for achieving a major cut in carbon emissions ware support and maintenance, running costs, regular
from land-based personal mobility using ‘in-reach’ software updates, computer hardware updates, and
technologies. ICT was highlighted as turning the vision roadside hardware replacement. Whereas a typical
for convenient, joined up, multimodal sustainable mo- computer’s working lifetime may be five to ten years,
bility into reality. The study explored the scope for ICTs roadside hardware may have a lifetime of 10-20 years.
to:
In addition, public transport service information
• Reduce the need for travel;
was found to be not always available and not accessible
• Influence travel mode choice; in a form which can be utilised by third parties to pro-
• Change driver behaviour; vide accurate travel tools and assist people in making
convenient, joined-up, door-to-door journeys. There is
• Change vehicle behaviour; a need for government to take the lead in ensuring that
• Increase vehicle loading factor; and such information is freely available and accessible. The
report also highlighted the need to ensure that increas-
• Improve the efficiency of transport networks. ing the use of ICTs does not lead to increased inequali-
ties in the UK transport system, given the number of
The key findings were that ICTs could support a households that do not have internet access or own a
range of ways to make mobility and our lifestyles more mobile phone.
sustainable. ICTs can allow people to work without
commuting, hold international meetings without flying, Following up the theme of reducing congestion, a
and identify the most sustainable way of making a report from the UK employers organization, the CBI, in
journey. ICTs can promote more efficient use of vehicles March 2010182 agrees that ICT has a role to play, but
and make the vehicles themselves more efficient. ICTs that technology alone is not enough, since “an overhaul
can also ensure that the transport networks for those of the way we work is needed. The CBI’s proposals to
vehicles are used as efficiently as possible. The report cut congestion on the roads include road pricing and lift
found that the following applications appeared to have sharing, both of which are more effectively enabled by
the most significant potential for improving overall sus- ICTs183, and universal broadband access to facilitate
tainability: video conferencing and other technologies which can
• enabling home working and travel avoidance; help people to work in novel ways, and at different
times. Similarly, ETNO has considered the role of ICT in
• speed limit enforcement particularly through the enabling home working (teleworking) and teleconfe-
use of intelligent speed adaptation; rencing, hence reducing business travel to meetings.
• delivering congestion charging and road pricing; According to ETNO if one out of every three business
trips was replaced by a video conference, Europe would
• reducing barriers to the use of public transport and realize a 33 million tonne reduction of CO2 emis-
improving the journey experience; and sions.184
• facilitating car sharing, car clubs, and eco-driving.
But as the CBI notes, ICT alone is not enough: there
However, the SDC research also identified a num- is a need for flexible working patterns to bring higher
ber of significant challenges, including a lack of conclu- productivity to firms, help to cut emissions and reduce
sive evidence of ICTs being successfully used to improve congestion as more people work remotely or change
overall sustainability within transport and the fact that the times they travel. More generally, while the tech-
travel behaviours tend to be habitual for the vast ma- nology already exists to deliver many of the required
jority of journeys (84 per cent of trips in the UK are un- solutions, many mitigation options are faced with bar-
der 10 miles and in locations where travellers have riers, especially those that arise from consumer prefe-
already adopted, and become accustomed to, pre- rences and a lack of policy frameworks.
ferred travel modes). In such circumstances the provi-
sion of ICTs to provide journey information is unlikely to One area identified in the SDC report as having po-
significantly improve the sustainability of mobility. The tential were car clubs,185 which replace ownership with
Chapter 7 293
rental as a preferred model for personal mobility. These Business Program, “which states that properly sized,
have undergone rapid growth in recent years. Working energy efficient motors with electronic VSD [Variable
on a Pay-As-You-Go model, charges are based on how Speed Drive, which controls the frequency of electrical
long you have the car and how far you drive. The an- power supplied to a motor] and improved gears, belts,
nual cost of using car club cars is normally dramatically bearings and lubricants use only 40 per cent as much
less than the cost of owning a car and there are major energy as standard systems…”
claims of carbon saving: according to StreetCar UK,
every car-share results, on average, in six private cars A.7.5 What is dematerialisation and
being taken off the road. One reason why such decoupling?
schemes have become more widespread is that they
depend on technologies that have become ubiquitous “We are moving from atoms to bits...we are not
in recent years, like the web, smartcards and telecom- waiting on any invention. It is here. It is now. It is almost
munications. genetic in its nature, in that each generation will be-
come more digital than the preceding one.”
It is also notable that some of the mitigation poli- Nicholas Negroponte187
cies that apply to the transport sector have a major ICT
component – for example, congestion charging. Dematerialization is the process by which concepts
and ideas substitute for physical resources and human
A.7.4 What are “smart motor systems”? brawn in the production of goods and services. Alan
Greenspan, former Chairman of the US Federal Reserve
As the section on Smart Motors in the GeSI report Board said in 1996, “...the weight of current economic
notes, motors can be inefficient as they operate at full output is probably only modestly higher than it was a
capacity, regardless of load: what makes a motor half century ago, value added, adjusted for price
“smart” is when it can be controlled to adjust its power change, has risen well over threefold....Radical trans-
usage to a required output, usually through a VSD and formations in what we produce in the way of goods and
intelligent motor controller (IMC), a piece of hardware services and how we produce them occur perhaps once
controlling the VSD. There is a lack of information about or twice in a century, at most.” Some examples of this
energy consumption in motor systems and where sav- process include: the replacement of vacuum tubes by
ings can be made within a factory. ICT’s main role in the transistors; the replacement of copper wire with fibre
short term is to monitor energy use and provide data to optics; buildings that provide more floor space using
businesses so they can make energy and cost savings by less physical material; word processors mean less effort
changing manufacturing systems. is required to produce a manuscript; steel mills are run
by computers, as are many other industrial processes;
The ICT sector has additional roles to play. Simula- answer phones are replaced by voicemails; CDs (and
tion software is required to help improve plant and DVDs) are replaced by downloads; and downloads are
188
manufacturing process design. Wireless networks that replaced in turn by Spotify .
allow inter-machine and system communication would
improve efficiency across an entire factory. Given that The use of ICTs is one of the ways that this process
much of the growth in industrial energy demand has can be accelerated. But how many standard economic
been in emerging economies, with China alone ac- activities can be made weightless and/or frictionless?
counting for about 80 per cent of the growth in the last Of those that can, which ones will? How will business
25 years, the potential for large-scale utilization of and consumer behaviour change when they do? And
smart motor systems will be greatest there. how will those changes affect energy consumption and
therefore GHG emissions?
The GeSI Report describes the role of ICT in helping
to mitigate global carbon emissions from motor sys- Alongside the process of de-materialization, and
tems and industrial process optimization.186 It refers to accompanying the shift from manufacturing to service-
initiatives such as Energy Smart in Australia, BC Hydro’s based activities in the developed economies, is a de-
Power Smart in Canada and Motor Decisions Matter in coupling of economic growth from energy consumption.
the US as examples of ICTs and other businesses work- In making business more efficient, information tech-
ing to identify optimal use of smart motors in their nology is reducing the energy and materials needed for
processes, producing substantial carbon and economic each USD, £ or EUR of output, and increasing overall
savings. GeSI gives the example of the Energy Smart productivity. A study by the Rand Corporation189 consi-
294 Chapter 7
dered four 20-year scenarios of ICT evolution (2001- Another study found that not only had the Internet
2021) for the US Department of Energy covering impli- revolutionized the relationship between economic
cations for future US electricity requirements; it found growth and the environment, but energy demand
that: growth had slowed substantially since the start of the
Internet boom. The study noted that the idea that,
• Increased power consumption by ICT equipment is
“The Internet is the cause for rising energy demand in
the most direct and visible effect, but not neces-
the US” is a myth: demand would be much higher with-
sarily the most important.
out Internet savings….the internet economy could fun-
• The effects that ICTs have on energy management, damentally and permanently alter the historic
e-commerce, telework, and related trends are likely relationship (between economic growth and energy in-
to be much more consequential. tensity) allowing faster growth and with less energy use
• Even large growth in the deployment and use of than seen in the past…generating both structural and
digital technologies only modestly increases overall efficiency gains.”190 The study found that the reasons
US electricity use in the next two decades. for reduced energy intensity (in the USA) were
33-50 per cent due to structural economic changes (i.e.,
• The biggest energy concern for a digital society is the shift out of energy intensive industries) and
how to provide the higher-quality and more- 50-66 per cent due to increased energy efficiency in
reliable power demanded by ICTs. other sectors.
Chapter 7 295
296
ANNEX 7.2: ITU INTEGRATED CHECKLIST ON REGULATOR’S INVOLVEMENT IN CLIMATE CHANGE ISSUES
Rationale: Arising from the main themes set out in the chapter on ICT regulation and climate change, a number of questions need to be asked and answered. Those have been grouped into
regulatory checklists at the end of each section of this chapter. Here below you will find the full, integrated Regulator’s checklist. The checklist is a tool that ICT regulators may use to eva-
luate the effort needed to get involved in the area of climate change. Completing the checklist helps identify key issues that should be considered during the process of taking on new re-
sponsibilities related to climate change and the development of regulations and other regulatory initiatives in this field, while recognizing the diversity of economic and political
environments and the different scope and nature of regulatory authorities. When thoroughly completed, the checklist creates a framework for decision making that sets out key principles
to guide regulators through the complexity of the design and implementation of high-quality, effective and targeted regulatory response in this area in compliance with international best
practices.

How it works: This checklist is intended to facilitate your analysis of the possible involvement of your institution in the area of climate change and identify the implications such an involve-
ment may have in terms of policy, regulatory mandate and human resources. You do not need to answer questions that are not relevant.
A GENERAL FRAMEWORK FOR REGULATOR’S INVOLVEMENT IN CLIMATE CHANGE ISSUES

A1 How should ICT regulators factor GHG reduction measures into their existing portfolio of policies and regulatory responsibilities?
A2 Which other sectors, such as energy, transport, and health, offer the greatest scope for the beneficial linkages between ICTs and reduced GHGs to be brought about?
A3 How can ICT regulators develop more effective co-ordination with other regulators and policy makers to ensure that decisions relating to ICTs recognize any potential GHG implications,
whether negative or positive?
A4 How should policy makers ensure that economic players are able to plan effectively for the integration of environmental considerations into ICT sector policies?
A5 Would such policies require changes to the primary duties/enabling legislation of ICT regulators?
A6 What is the legal basis for ICT regulators to become involved in the pursuit of policies to reduce GHGs?
A7 What should be the scope and extent of regulatory interventions which are designed to bring about reduced GHG emissions by ICTs?
A8 How should sector regulators consider policy areas that affect environmental outcomes, such as through beneficial effects on power usage and GHGs? Should regulators factor poten-
tial environmental outcomes into their decision making when it comes to policy matters such as the deployment of NGNs, migration from analogue to digital networks, migration from
2G to 3G and beyond , and infrastructure sharing?
A9 Should the ongoing United Nations Framework Convention on Climate Change (UNFCCC) negotiation process make the link between climate change and regulation of the ICT sector?
A10 What role should ICT regulators play with regard to environment-related measures: facilitator, enabler, promoter, awareness raiser?
A11 If the regulator’s core mandate does not include environmental considerations, how should such considerations be incorporated into regulatory policy, particularly where regulatory
decisions may result in environmental consequences?
A12 Given the general consensus about the threat posed by climate change, and the potential of the ICT industry in general, and TSPs in particular, to facilitate the reduction of GHGs,
Chapter 7
should ICT regulators develop and advocate policies that address climate change?
A13 ICT regulators have previously focused on market failure related to the telecommunication sector. If the responsibilities of ICT regulators are now to encompass measures relating to
climate change, how should such interventions be implemented, such that the chosen measures do not add further burdens to the sector?
A14 Should ICT regulators now consider the potential for GHG reductions when making regulatory decisions?
Chapter 7
A15 Given the potential for ICT to have a beneficial impact on GHGs, is it appropriate for regulators to be given additional duties concerned with environmental matters, particularly those
relating to climate change?
B MODALITIES OF REGULATOR’S INVOLVEMENT C ICT REGULATORS AS EXEMPLARS D REGULATORS AS FACILITATORS OF SUSTAINABLE

B1 Is there a role for ICT regulators to address not just the TSPs, but the cus- C1 Should we expect regulators to act as MARKET DEVELOPMENT
tomers of the services provided by TSPs? exemplars of good behaviour regarding D1 Should ICT regulators be involved in encouraging and
B2 Should regulators be involved in attempting to change individual beha- their own GHG-creating activities? facilitating the ongoing activities of organizations such
viours as part of the drive to cut GHGs? C2 Should sector regulators, at the national, as GeSI (and vice versa)?
regional and international level, exempli- D2 Is there a role for ICT regulators in emphasizing cli-

B3 Should regulators develop programmes to build consumer awareness
and education about the impact of usage patterns in ICTs on the envi- fy good practice by developing policies mate change issues in the industry’s supply chain
ronment? that curb their own GHGs? work and in influencing the end-to-end manufacturing
C3 How should ICT regulators go about this process for electronic equipment?
B4 Do ICT regulators have a role to play in helping overcome barriers to be-
havioural change? task? D3 How do ICT regulators ensure that energy and climate
C4 Should regulators be required to subject change matters are fully considered by the organiza-
B5 Should ICT regulators incorporate insights from disciplines like social mar- tions that set the technical standards for the ICT in-
keting and behavioural economics into their attempts to modify the GHG- their own GHG-producing activities to a
higher degree of scrutiny, with a re- dustry?
related behaviours of individuals?
quirement for greater transparency? D4 Should ICT regulators be involved in the formulation
B6 What is the role for mechanisms such as choice architecture, defaults, of national policies on climate change?
commitment devices and Nudge, based on the findings of social market- C5 Should ICT regulators be required to set
ing and behavioural economics? out their own GHG mitigation policies, D5 How do ICT regulators create a policy framework to
establish targets, and publish results? reduce the ICT sector’s own carbon footprint and to
B7 Should ICT regulators provide information about the energy consumption
of ICT devices? C6 Should there be a role for ICT regulators embrace environment-friendly technologies and
in ensuring that information about best processes in ICT development?
B8 Is there a role for ICT regulators in producing case studies and similar ex- practices is diffused across all relevant
amples to raise the level of understanding and help kick-start the debate regulators?
about GHGs and ICTs?
B9 In what ways can ICT regulators use new forms of ICT services in attempt-
ing to change behaviours?
B10 What role is there for ICT regulators in persuading the public to behave
differently so as to reduce the GHGs produced by individuals through the
use of energy-saving and clean-energy ICT services and applications?
B11 Is there a role for regulators to become more involved in promoting re-
sponsible consumer behaviour such as turning off equipment when not in
use, not replacing devices as frequently, and using less bandwidth?
297
1
The author wishes to acknowledge the following for their help with this chapter, and for their personal contributions to his early
thinking, Robert Milne, David Lewin, Ajay Gambhir, Galit Zadok and Richard Cadman; for reading the first draft, Sue Uglow and
Viv Caisey. He wishes to also express his thanks for support from the Brighton Business School at the University of Brighton.
2
Note, however, that ICTs produce GHGs at a lower intensity than most sectors considered, relative to each sector’s contribution
to GDP.
3
Although many ICT products and services are becoming more energy-efficient, such (relative) improvements are typically being
out-run by growth in the (absolute) number of services, devices and users.
4
This chapter cannot provide a definitive answer to that question, but there are many studies that conclude that ICTs are a (rela-
tively) small part of the overall problem, and a (potentially) large part of the overall solution. See, for example:
• ITU Background Paper on ICTs and Climate Change, July 2009, online
www.itu.int/dms_pub/itu-t/oth/06/0F/T060F00600C0004PDFE.pdf
• Accenture and Vodafone, Carbon Connections: Quantifying mobile’s role in tackling climate change, July 2009, online:
www.vodafone.com/etc/medialib/cr_09/carbon.Par.76396.File.tmp/carbon_web_2009.pdf
• China Mobile and WWF, Low Carbon Telecommunication Solutions in China: Current Reductions and Future Potential
(Beijing: WWF, 2010), online:
http://wwf.panda.org/?193193/China-study-shows-huge-potential--of-low-carbon-telecom-solutions [China Mo-
bile/WWF, Low Carbon Telecommunication Solutions in China, 2010].
• Dennis Pamlin & Katalin Szomolányi, Saving the climate @ the speed of light: First roadmap for reduced CO2 emissions in
the EU and beyond (Brussels: WWF/ETNO, undated), online:
www.etno.be/Portals/34/ETNO%20Documents/Sustainability/Climate%20Change%20Road%20Map.pdf.
• ETNO, Background Report: Greenhouse Gas effects of ICTs (2005), online:
www.etno.be/Portals/34/events/VIS2005/projectdocu_Final.pdf.
• Telstra, Towards A High Bandwidth, Low Carbon Future: Telecommunications-based Opportunities to Reduce Greenhouse
Gas Emissions (2007), online: www.telstra.com.au/abouttelstra/csr/reports.cfm.
• The Climate Group, on behalf of the Global e-Sustainability Initiative (GeSI), Smart 2020, Enabling the low carbon econo-
my in the information age, (2008), online:
www.smart2020.org/_assets/files/02_Smart2020Report.pdf [GeSI, Smart 2020].
• Intellect, High Tech, Low Carbon, (London: Intellect UK, 2008), online: www.intellectuk.org/hightechlowcarbon.
• John A. “Skip” Laitner & Karen Ehrhardt-Martinez, Advanced Electronics and Information Technologies: The Innovation-
Led Climate Change (Brussels & Washington: American Council for an Energy-Efficient Economy & AeA Europe, 17 Sep-
tember 2007), online: www.aeanet.org/aeacouncils/AeAEurope_Energy_Efficiency_Report_17Sep07.pdf.
5
Lorenz Erdmann et al., The Future Impact of ICTs on Environmental Sustainability, Institute for Prospective Technological Studies,
August 2004, available online at: www.ictregulationtoolkit.org/en/Publication.3507.html.
6
GeSI, Smart 2020, supra note 3
7
Cited by Total Telecom Executive Insight, After Copenhagen: Tackling Climate Change (2009), online:
http://headley.co.uk/headturner/execinsight.
8
As the ITU has expressed it, “ICT sector regulators need to maintain a delicate balance between a hands-on or hands-off ap-
proach to regulation. This is a critical exercise to ensure a healthy development of the sector, while meeting social goals.” From
Chapter 1 in ITU, Trends in Telecommunication Reform 2009 (ITU: Geneva, 2010).
9
China Mobile/WWF, Low Carbon Telecommunication Solutions in China, 2010, supra note 3.
10
World Economic Forum, ICT for Economic Growth: A Dynamic Ecosystem Driving The Global Recovery (WEF: Davos, 2009) at 2,
online: www.weforum.org/pdf/ict/ICT%20for%20Growth.pdf.
11
See, for example, Parliamentary Office of Science and Technology, Postnote, December 2008, online:
www.parliament.uk/documents/post/postpn319.pdf.
298 Chapter 7
12
For a detailed overview of the history of licensing in the ICT sector, see ITU-infoDev ICT Regulation Toolkit, “Authorizaiton
Trends”, online: www.ictregulationtoolkit.org/en/Section.524.html.
13
ITU-infoDev ICT Regulation Toolkit, “Regulation in Transition to Competitive Market”, online:
www.ictregulationtoolkit.org/en/Section.1686.html.
14
For example, it was reported early in 2010 that Google has been granted a license to trade energy on the US wholesale market,
in an attempt to better manage energy costs. One analyst commented that this would allow Google to supply its “energy hungry
data centers” directly, as well as reduce the risks of time-variable prices. The comment continued to say that, as a global com-
pany, when Google faces peak demand in Europe, demand will be lower in the US. Therefore Google could potentially move its
processing capacity from regions experiencing peak demand to areas in the world where there is either green or simply low-cost
energy readily available. Google could also shape its local demand by spreading its processing resources to other locations, tak-
ing advantage of the market conditions in that particular region. The report noted that it is unlikely that this type of energy load
switching could most likely only be done in such a dynamic and flexible manner if Google supplied itself. Facing rises in energy
prices, this kind of arbitrage could help energy-intensive companies better manage their costs. All of which is by way of pointing
out that non-traditional players like Google are significant consumers of electricity, and hence emitters of GHGs, but would fall
outside the scope of conventional telecommunications regulation.
See David Mayne, Google: managing its energy demand is the key to a low-cost supply, (London: Datamonitor, 2010), online:
http://about.datamonitor.com/media/archives/3784
15
ITU, Trends in Telecommunication Reform 2009 (ITU: Geneva, 2010) at 14.
16
ITU, Trends in Telecommunication Reform 2009 (ITU: Geneva, 2010) at 17
17
As measured under Life Cycle Assessment.
18
For more information about WTO agreements, see www.wto.org/english/docs_e/legal_e/legal_e.htm#agreements.
19
Anne Larilahti, IT can do far more than reduce its own footprint, Nokia Siemens Networks, 9 October, 2008.
20
For more information on the “other” environmental consequences of ICTs, see: Eftec and Plexteck, Understanding the Environ-
mental Impact of Communication Systems: Final Report (London: Ofcom, 2009), online:
www.ofcom.org.uk/research/technology/research/sectorstudies/ [Eftec and Plexteck, Final Report] and Eftec and Plexteck Un-
derstanding The Environmental Impact Of Communication Systems: Appendices, (London: Ofcom, 2009), online:
www.ofcom.org.uk/research/technology/research/sectorstudies/ [Eftec and Plexteck, Appendices].
21
Information derived primarily from BBC Weather Centre on Climate Change, online:
www.bbc.co.uk/climate/evidence/carbon_dioxide.shtml. CO2 ppm data from Earth Systems Research Laboratory
(ESRL)/National Oceanic and Atmospheric Administration (NOAA), as published at http://co2now.org/.
22
United States Environmental Protection Agency, “Frequently Asked Questions About Global Warming and Climate Change: Back
to Basics”, April 2009, online: www.epa.gov/climatechange/downloads/Climate_Basics.pdf
23
Martin Rees, President of the Royal Society, interviewed on BBC Radio 4, 10 March, 2010, podcast available at:
http://downloads.bbc.co.uk/podcasts/radio4/today/rss.xml.
24
Nicholas Stern, Stern Review: The Economics of Climate Change: Executive Summary (2006), online:
www.hm-treasury.gov.uk/d/Executive_Summary.pdf.
25
William R. L. Anderegg, James W. Prall, Jacob Harold & Stephen H. Schneider, Expert credibility in Climate Change, Proceedings
of the National Academy of Sciences of the United States of America, 2010, online:
www.pnas.org/content/early/2010/06/04/1003187107.
26
Peter A. Stott, Nathan P. Gillett, Gabriele C. Hegerl , David J. Karoly, Dáithí A. Stone , Xuebin Zhang, Francis Zwiers (2010) Detec-
tion And Attribution Of Climate Change: A Regional Perspective (March 2010) John Wiley & Sons 2010.
http://www3.interscience.wiley.com/journal/123310513/abstract?CRETRY=1&SRETRY=0
27
Martin Rees, President of the Royal Society, interviewed on BBC Radio 4, 10 March, 2010, podcast available at:
http://downloads.bbc.co.uk/podcasts/radio4/today/rss.xml.
28
“It is now clear that man-made greenhouse gases are causing climate change. The rate of change began as significant, has be-
come alarming and is simply unsustainable in the long-term.” Climate Change,Your Essential Guide. UK Met Office
www.metoffice.gov.uk/climatechange/guide/quick/
29
The press release for the Met Office review noted that the IPCC’s fourth assessment report, published in 2007 came to a more
confident assessment of the causes of global temperature change than previous reports and concluded that it is likely that
Chapter 7 299
there has been significant anthropogenic warming over the past 50 years averaged over each continent except Antarctica .
Since then, warming over Antarctica has also been attributed to human influence, and further evidence has accumulated attri-
buting a much wider range of climate changes to human activities. Such changes are broadly consistent with theoretical under-
standing, and climate model simulations, of how the planet is expected to respond.
See: Met Office, “Climate Change and Human Influence”, Press Release 5 March 2010, online:
www.metoffice.gov.uk/corporate/pressoffice/2010/pr20100305.html.
See also Peter A. Stott, Nathan P. Gillett, Gabriele C. Hegerl , David J. Karoly, Dáithí A. Stone, Xuebin Zhang & Francis Zwiers, De-
tection And Attribution Of Climate Change: A Regional Perspective (2010) 1 Wiley Interdisciplinary Reviews: Climate Change 192
[Stott et al., 2010]. The abstract of this article is available at Wiley Online Library, online:
http://www3.interscience.wiley.com/journal/123310513/abstract?CRETRY=1&SRETRY=0.
30
IPCC, Fourth Assessment Report: Climate Change 2007 (Geneva: IPCC, 2007), online:
www.ipcc.ch/publications_and_data/ar4/syr/en/contents.html.
31
David Easterling, Trends in Climate Related Disasters, Presentation made to IPCC Scoping Meeting, 23-26 March, 2009. For an
abstract of this presentation, see: www.ipcc-wg2.gov/AR5/extremes-sr/ScopingMeeting/extremes_speakers.html.
32
Royal Society, Preventing Dangerous Climate Change: The Need for A Global Agreement (London: Royal Society, 2009), online:
http://royalsociety.org/Preventing-dangerous-climate-change/ .
33
World Bank, World Development Report 2010: Development and Climate Change (Washington, D.C.: The World Bank, 2010), on-
line:
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2010/0,,menuPK:5287748~pagePK:
64167702~piPK:64167676~theSitePK:5287741,00.html.
34
GeSI, Smart 2020, supra note 3.
35
GeSI, Ibid.
36
For information on GCOS, see: www.wmo.int/pages/prog/gcos/.
37
See also: www.itu.int/publications/publications.aspx?lang=en&media=electronic&parent=R-HDB-45-2008 and
38
Peter Madden & Ilka Weißbrod, Connected: ICT and Sustainable Development (2008), online:
www.forumforthefuture.org/files/Connected.pdf.
39
Adapted from the definition of IPCC, online: www.ipcc.ch/ipccreports/tar/wg2/pdf/wg2TARchap18.pdf.
40
See e.g. L. Hilty, P. Arnfalk, L. Erdmann, J. Goodman, M. Lehmann & P Wäger (2006), The relevance of information and commu-
nication technologies for environmental sustainability – A prospective simulation study (2006) 21 Environmental Modelling &
Software1618.
41
As Ovum has noted, “There is much inconsistency in the calculation methodologies for energy use and CO2 emissions used by
telecoms operators
• Not all operators include emissions produced by staff travel
• Some include, and some exclude, the emissions of the vehicle fleet
• There is much confusion over the correct way to treat emissions “saved” by the use of “green tariff” electricity
• Operators use different conversion factors to mediate between energy use and CO2 emissions, making comparisons be-
tween them difficult.”
Jeremy Green and Daniel Subramaniam (2010) Telecoms operators’ green and carbon reduction strategies
42
Jon Stern, “Evaluating Infrastructure Regulators – Developing UK and International Practice,” a CRI Occasional Lecture, Royal So-
ciety, 26 September 2006, online: www.bath.ac.uk/management/cri/pubpdf/Occasional_Lectures/17_stern.pdf.
43
Sophie Trémolet & Diane Binder, Response to “What are the foundations for regulatory activities in infrastructure?”, Regulatory
Challenges Frequently Asked Questions in Body of Knowledge on Infrastructure Regulation, Public-Private Infrastructure Advi-
sory Facility, World Bank & Public Utility Research Center, University of Florida, 2009, online:
www.regulationbodyofknowledge.org/faq/foundHistoric/.
44
ITU Telecommunication/ICT Regulatory Database 2010.
45
Richard Walters, “Antisocial Networking,” Financial Times, 20 February, 2010.
300 Chapter 7
46
Christopher Caldwell, “Is Google now a Monopoly?” Financial Times, 27 Feburary, 2010. According to Caldwell, “Google is to the
21st century what certain railroads were to the late 19th. It creates conditions for economic activity unthinkable before its ad-
vent….Google accounts for 80% of online search revenues in the US and 90% in Europe and the UK”.
47
“Facebook passes Google as most-viewed site in US in past week,” Guardian 15 March, 2010, online:
www.guardian.co.uk/technology/blog/2010/mar/15/facebook-passes-google-share-us.
48
See e.g. the case brought by the EU’s Competition Directorate-General, DGIV v. Microsoft, for abuse of a dominant position un-
der EU competition law.
49
“Apple Updates iPhone Programme, Says 450,000 iPads Sold,” Business Week, 8 April, 2010, online:
www.businessweek.com/news/2010-04-08/apple-unveils-iphone-program-says-450-000-ipads-sold-update1-.html.
50
Galit Zadok & Riikka Puustinen, The Green Switch: Designing for Sustainability in Mobile Computing (2010), online:
www.thegreenswitch.org/wp-content/uploads/2009/12/TheGreenSwitch_publication_Jan2010.pdf.
51
Ibid.
52
Figures from GSMA, in collaboration with The Climate Group, Mobile’s Green Manifesto. (2009), online:
www.gsmworld.com/documents/mobiles_green_manifesto_11_09.pdf
53
The Fortune 500 list ranks American companies in terms of size. As of 26 March 2010, Apple had a market value of close to
$209.4 billion and assets valued at over $53.8 billion. Revenues were up 12.5% on the previous year, at more than $36.5 billion,
and profits up 18% to about $5.7 billion. This information was derived from electronista.com, online:
www.electronista.com/articles/10/04/15/still.well.behind.hp.microsoft.dell/ and Report of Fortune 500 Rankings at CNN Mon-
ey.com http://money.cnn.com/magazines/fortune/fortune500/2010/full_list/.
54
ITU, “Foreword”, Trends in Telecommunication Reform 2009 (ITU: Geneva, 2010).
55
As the GSMA notes, “There are two levels of infrastructure sharing: passive and active. Passive sharing involves components such
as the tower mast or pylons, cables, physical site or rooftop, shelter cabinets, power supply, air conditioning, alarm systems, etc.
Active sharing includes antennas, antenna systems, backhaul transmission systems and the BTS equipment itself. Passive sharing
is becoming increasingly common and reduces the environmental footprint of mobile networks by cutting the number of BTS
sites required by each company. In March 2009, Telefonica and Vodafone announced that they would share network infrastruc-
ture in Germany, Spain, Ireland and the UK. Active sharing, which shares the site electronics, can have a much larger impact on
the networks’ carbon footprints, but it has only been implemented in a few mature markets to date. Active sharing agreements
include T-Mobile and 3 Group in the UK, Telstra and 3 Group, as well as Vodafone and Optus, in Australia, Tele2 and Telia, as well
as Tre and Telenor, in Sweden. In South Korea, all three operators KT, SK Telecom and LGT invested in KRTnet Corporation in
1996 to construct and manage base station sites jointly used by all operators, leading to co-location of sites and tower sharing.”
GSMA/The Climate Group, Mobile’s Green Manifesto, supra note 52.
56
ITU, “Chapter 2: What Do We Mean By 6 Degrees Of Sharing?” in Trends in Telecommunication Reform 2008 (ITU, Geneva,
2008), online: www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR08/discussion_papers/Overview_Final_web.pdf.
57
Stern, supra note 28.
58
BEREC Work Programme 2010, online:
http://erg.eu.int/doc/publications/berec/bor_10_15_berec_wp_2010_consultation_100209.pdf.
59
OFCOM, Regulatory Challenges Posed By Next Generation Access Networks: Public Discussion Document (London: Ofcom, 2006),
online: www.ofcom.org.uk/research/telecoms/reports/nga/nga.pdf.
60
ITU Background Paper on ICTs and Climate Change, July 2009, online
www.itu.int/dms_pub/itu-t/oth/06/0F/T060F00600C0004PDFE.pdf ; see also Dittberner Associates, Prime Prospects – Identifi-
cation and Forecast of Digital Switch Replacements and Augmentations, Research Report (2003), online:
www.dittberner.com/reports/about51.php.
61
Examples of relevant regulatory decisions include: TSP migration from existing networks to NGNs; granting permission for infra-
structure sharing; using alternative energy sources; and providing universal services in off-grid locations.
62
For converged sector regulators, digital broadcasting would be another aspect of policy with potential energy, hence GHG, im-
plications. But this is outside the scope of this report. For more on this, see (i) Eftec and Plexteck, Final Report, supra note 19 and
(ii) Eftec And Plexteck, Appendices, supra note 19.
63
TeliaSonera launched the world’s first 4G service in Stockholm and Oslo in December 2009, according to the Financial Times:
“Huawei contract win is blow to Ericsson”, Financial Times, 18 December, 2009.
Chapter 7 301
64
Malcolm Gladwell, The Tipping Point (London: Abacus, 2000).
65
The World Bank, World Development Report 2010: Development and Climate Change (Washington, D.C.: The World Bank, 2010)
at 322, online:
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2010/0,,menuPK:5287748~pagePK:
64167702~piPK:64167676~theSitePK:5287741,00.html [World Development Report 2010].
66
Cited in David Zax, “The Last Experiment,” SEED Magazine, 22 April 2009, online:
http://seedmagazine.com/content/print/the_last_experiment/.
67
Cited in David Zax, ibid.
68
Angel Gurría, “Towards A Green Economy: Policies to Tackle Climate Change”, Remarks delivered at the National Forum on
Energy, Environment and Climate Change Policy, Mexico City, 25 August 2009, online:
69
S.E.G. Lea, Roger M. Tarpy, & Paul Webley, The Individual in the Economy (2007) Introduction to Part II at 133. Cambridge: Cam-
bridge University Press.
70
The IPCC report goes on to note the following important points:
• Lifestyle changes can reduce GHG emissions. Changes in lifestyles and consumption patterns that emphasize resource
conservation can contribute to developing a low-carbon economy that is both equitable and sustainable.
• Education and training programmes can help overcome barriers to the market acceptance of energy efficiency, particu-
larly in combination with other measures.
• Changes in occupant behaviour, cultural patterns and consumer choice and use of technologies can result in considera-
ble reduction in CO2 emissions related to energy use in buildings.
• Transport Demand Management, which includes urban planning (that can reduce the demand for travel) and provision
of information and educational techniques (that can reduce car usage and lead to an efficient driving style) can support
GHG mitigation.
• In industry, management tools that include staff training, reward systems, regular feedback, documentation of existing
practices can help overcome industrial organization barriers, reduce energy use, and GHG emissions.
B. Metz, O.R. Davidson, P.R. Bosch, R. Dave, L.A. Meyer, eds., “Mitigation in a cross-sectoral perspective: Mitigation in the short
and medium term (until 2030)” in Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental
Panel on Climate Change, 2007 (Cambridge: Cambridge University Press, 2007), online:
www.ipcc.ch/publications_and_data/ar4/wg3/en/spmsspm-c.html [IPCC, “Mitigation in the short and medium term”]
71
World Development Report 2010, supra note 66 at 322.
72
For an overview see: Andrew Darnton, Reference Report: An Overview Of Behaviour Change Models And Their Uses, Govern-
ment Social Research Behaviour Change Knowledge Review, Centre for Sustainable Development, University of Westminster,
2008, online: www.gsr.gov.uk/downloads/resources/behaviour_change_review/reference_report.pdf
73
Sheridan Nye, The Challenge Of Changing Consumer Behaviour For Sustainable Consumption (2007), online:
www.ictandclimatechange.com/page21.htm.
74
See e.g. Gerard Hastings, Social Marketing: Why Should the Devil Have All the Best Tunes? (London: Butterworth-Heinemann,
2007). See also the work of the National Social Marketing Centre at: www.nsms.org.uk.
75
Daniel Kahneman, Maps Of Bounded Rationality: A Perspective On Intuitive Judgment And Choice, Nobel Prize Lecture (Prince-
ton University, Department Of Psychology, 8 December, 2002), online:
http://nobelprize.org/nobel_prizes/economics/laureates/2002/kahnemann-lecture.pdf
76
Richard H Thaler & Cass R Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (Yale: Yale University
Press, 2008).
77
Omer Rashid, Paul Coulton & William Bird, Using NFC to Support and Encourage Green Exercise (2008), online:
http://eprints.lancs.ac.uk/21202/1/getPDF6.pdf
78
“Social Networks/Blogs Now Account for One in every Four and a Half Minutes Online,” 15 June 2010, online:
http://blog.nielsen.com/nielsenwire/online_mobile/social-media-accounts-for-22-percent-of-time-online/.
79
See www.nsmcentre.org.uk/what-is-social-marketing.html
302 Chapter 7
80
Colin Camerer and George Loewenstein, “Behavioural Economics: Past, Present and Future” in C. F. Camerer, G. Loewenstein &
M. Rabin, eds., Advances in Behavioural Economics (Princeton, Princeton University Press, 2004) 3.
81
See, for example: Stephen Young & Viv Caisey, “Mind Shift, Mode Shift. A Lifestyle Approach To Reducing Car Ownership and
Use, based on Behavioural Economics and Social Marketing” in Perspectives in Public Health (London: Royal Society for Public
Health, 2010). For an abstract of this article, see: http://rsh.sagepub.com/cgi/rapidpdf/1757913909354151v1.
82
See, for example: Financial Services Authority, Financial Capability: A Behavioural Economics Perspective (2008), online:
www.fsa.gov.uk/pubs/consumer-research/crpr69.pdf.
83
A panel of 20 scientists from the British Science Association drew up a list of the top 10 things that have changed the world. See
Richard Gray, “Top 10 'inventions' that changed the world,” Daily Telegraph, 13 March 2009, online:
www.telegraph.co.uk/science/4981964/Top-10-inventions-that-changed-the-world.html
84
B.J. Fogg, Mass interpersonal persuasion: An early view of a new phenomenon (in process), Third International Conference on
Persuasive Technology, Persuasive 2008 (Berlin: Springer, 2008). For the latest version, see www.bjfogg.com or
www.bjfogg.com/mip.html.
85
Lorien C. Abroms & R. Craig Lefebvre, “Obama’s Wired Campaign: Lessons for Public Health Communication” (2009) 14 Journal
of Health Communication 415, online:
http://socialmarketing.blogs.com/r_craiig_lefebvres_social/2009/09/free-copy-of-obamas-wired-campaign.html.
Obama had more than 2 million American supporters on Facebook, compared with just over 600,000 for McCain, according to
Matthew Fraser and Soumitra Dutta, cited in the Guardian, 3.5.10.
86
Facebook helps users quit smoking. A Facebook application to help people quit smoking has been launched by a charity. WeQuit
will help people and their friends challenge each other to give up nicotine as well as create rewards for success and forfeits for
failure. Quitters will also be able to raise money for charity and track each other's progress by accessing
www.WeQuit.co.uk/facebook and adding the application to the social networking site. Figures released by the Office of National
Statistics (ONS) show that smoking was most common among 20 to 24-year-olds (30%) in 2008 and least common among those
aged 60 or over (13%).
87
In a tie-up with the Electoral Commission, Facebook users were asked if they have registered to vote. If they say "No" they will
be sent to a page linked to the Electoral Commission that lets them enter details online. They then have to print out this page
and post it to their local council's electoral registration office. The address for this is automatically created on the page once
someone has entered their own location details. The Electoral Commission says applications have to be sent by post, and not
simply via email, because of a legal requirement to prevent electoral fraud. The Electoral Commission estimates 3.5 million
people who were eligible to vote in England and Wales in 2001 were not registered. Electoral Commission spokesman Clinton
Proud said the Facebook exercise was part of the organisation's remit to expand access to the democratic process. "If you're not
registered, you can't vote – it's very simple. By downloading and printing a form through Facebook, users can now make sure
that they are able to have their say on election day," he said. Richard Allan, director of policy at Facebook, said many of the site's
users were traditionally excluded from politics. "One of the strengths we have is to try and capture that group, particularly the
18-24 year-old voters, who have often not turned out to vote, and use the fact that many of the things on Facebook are familiar
to them to get them engaged." See “Facebook and Electoral Commission Launch Voter Push,” BBC News, 9 April, 2010, online:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/uk_politics/election_2010/8610298.stm. A subsequent Guardian report noted that
14,000 voter registration forms were downloaded directly through Facebook, and around 9,000 a day through the About My
Vote site run by the Electoral Commission, the first time it had used the site. Guardian, 3.5.10
88
The application, known as blink, provided lifestyle features and addressed issues that concerned teens, with the theme of heal-
thier eating running throughout in a 'cool' and appealing way. By integrating with their Social Networks, the FSA felt that it could
allow teens to choose information relevant to them, upload their own [moderated] content including articles, real life stories
and Youtube videos. As the site is integrated with the Social Networking sites all activity conducted by teens is seen by their
peers, making it very easy for them to pass on information, raise discussion around healthier eating with their friends and make
healthy eating a status indicator. Through a 'Brand ambassador programme' the site is promoted by teenagers through online
networks, but also out in the playground and other social activities. The aim is to embed all of the communication messages as
long term behaviour changes for the target audience to adopt. Content includes online peer support networks for making beha-
viour change, competitions and quizzes, recipes and a one week challenge which links into the smallsteps4life website currently
under development. The evaluation of the site will be based upon a two phase tracking study and qualitative evidence taken
from the site and users of the site, at http://apps.facebook.com/blink-mag
Source: email to the author from Samantha Montel, Senior Scientific Officer, Food Standards Agency, London
www.food.gov.uk; www.eatwell.gov.uk.
Chapter 7 303
89
“Mobile usage reaches 5bn milestone”, Financial Times, 3.7.10. Also, “Smartphone Business” in Financial Times, Lex Column,
18.9.10, based on research by iSuppli.
90
Omer Rashid, Paul Coulton & William Bird, Using NFC to Support and Encourage Green Exercise (2008), online:
http://eprints.lancs.ac.uk/21202/1/getPDF6.pdf. The ITU estimates that mobile phone subscriptions will reach 5 billion by the
end of 2010. See ITU Press Release, online: www.itu.int/newsroom/press_releases/2010/06.html.
91
Galit Zadok & Riikka Puustinen, The Green Switch: Designing for Sustainability in Mobile Computing (2010), online:
www.thegreenswitch.org/wp-content/uploads/2009/12/TheGreenSwitch_publication_Jan2010.pdf.
92
DEFRA, A Framework for Pro-environmental behaviours (London: DEFRA, 2008) at 53, online:
www.defra.gov.uk/evidence/social/behaviour/documents/behaviours-jan08-report.pdf.
93
Ibid.
94
Xana Villa Garcia, A Carbon Audit and Ecological Footprint of OFCOM (Oxford: Best Foot Forward, 2007), online:
www.ofcom.org.uk/about/accoun/carbonaudit.pdf.
95
Greenpeace International, Make IT Green: Cloud Computing and its Contribution to Climate Change (Amsterdam: Greenpeace
International, 2010), online: www.greenpeace.org/international/en/publications/reports/make-it-green-cloud-computing/.
96
OECD, “Climate Change Policies,” OECD Policy Brief, August 2007, online: www.oecd.org/dataoecd/58/18/39111309.pdf [OECD,
“Climate Change Policies”].
97
For a critical view of one such measure, carbon cap and trade, see Annie Leonard, “The Story of Cap and Trade”, online:
http://storyofstuff.com/capandtrade//?utm_source=Free+Range+Fans&utm_campaign=270115a499-
Story_of_Cap_Trade12_4_2009&utm_medium=email.
98
“Several policy instruments can help put a price on GHG emissions: carbon or energy taxes, the removal of environmentally
harmful subsidies, tradable permit schemes and the project-based flexibility mechanisms of the Kyoto Protocol to the United Na-
tions Framework Convention on Climate Change (UNFCCC)…..a priority is to extend their use and to link them so as to provide a
strong and consistent price signal across all GHG-emitting activities. Developing a global carbon price not only reduces the total
costs of reducing GHG emissions, but also helps to level the playing field between countries, thus addressing concerns about the
potential effects on competitiveness of climate change policies….(carbon) taxes can be a particularly cost-effective approach to
reducing GHG emissions.” OECD, “Climate Change Policies,” OECD Policy Brief, August 2007, online:
www.oecd.org/dataoecd/58/18/39111309.pdf [OECD, “Climate Change Policies”].
99
Ibid.
100
“Although both a tax on emissions and a cap and trade system use the power of markets to achieve their desired results, a tax is
generally the more efficient approach,” according to the Director of the US Congressional Budget Office. See: “Approaches to
Reducing Carbon Dioxide Emissions” ,CBO Testimony, Statement of Peter R Orszag before the Committee on the Budget, U.S.
House of Representatives, 1 November 2007, online: www.cbo.gov/ftpdocs/87xx/doc8769/11-01-CO2Emissions.pdf
A carbon tax has the benefit of being clear, simple and quick to implement. It is cost-effective and easy to understand. It is also
likely to be unpopular, if set at a price that actually changes behaviour to reduce GHGs. David MacKay’s (a Chief Scientific Advi-
sor to the UK Department of Energy and Climate Change) takes the view that the only sure way to reduce GHGs is with a mea-
ningful price for carbon: “The principal problem is that carbon pollution is not priced correctly. …meaning that the price of
emitting carbon dioxide should be big enough such that every running coal power station has carbon capture technology fitted to
it. Solving climate change is a complex topic, but in a single crude brushstroke, here is the solution: the price of carbon dioxide
must be such that people stop burning coal without capture….Experts say that a long-term guaranteed carbon price of some-
thing like $100 per ton of CO2 will do the trick.”
See David MacKay (2009) Sustainable Energy: Without the Hot Air. www.withouthotair.com/.
101
As the Financial Times has noted, “most politicians….have let themselves be intimidated by interests whose vocal but unrepre-
sentative protests against any action on climate change drown out the reasonable majority of companies….If governments dared
to embark on real efforts to limit emissions – be it through carbon taxes or cap-and-trade, as long as it has more than a token
impact – the private sector would take it in its stride. It would even thrive, especially the low-carbon companies and sectors that
would emerge to replace those unable to kick their carbon habit.”
See “A Changing Corporate Climate,” Financial Times, 19 February, 2010, online:
www.ft.com/cms/s/0/430f1aa8-1d8d-11df-a893-00144feab49a.html
102
304 Chapter 7
103
This definition is taken from B. Lim & E. Spanger-Siegfried (eds), I.Burton, E. Malone, S. Huq, Adaptation Policy Frameworks for
Climate Change. Developing Strategies, Policies and Measures (UNDP, 2005), as cited in Ellina Levina & Dennis Tirpak Adaptation
To Climate Change: Key Terms, International Energy Agency/Organisation For Economic Co-Operation And Development, Envi-
ronment Directorate, 2006, COM/ENV/EPOC/IEA/SLT(2006)1, online: www.oecd.org/dataoecd/36/53/36736773.pdf
[Levina & Tirpak, 2006].
104
Three other definitions of adaptation are set out below. All are cited Levina & Tirpak, 2006, ibid.
(i) “Adaptation – Adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects,
which moderates harm or exploits beneficial opportunities. Various types of adaptation can be distinguished, including anticipa-
tory and reactive adaptation, private and public adaptation, and autonomous and planned adaptation.” From IPCC TAR (2001)
Climate Change 2001: Impacts, Adaptation and Vulnerability. IPCC Third Assessment Report, Cambridge University Press.
(ii) “Adaptation – Practical steps to protect countries and communities from the likely disruption and damage that will result
from effects of climate change. For example, flood walls should be built and in numerous cases it is probably advisable to move
human settlements out of flood plains and other low-lying areas…” UNFCCC (1992) United Nations Framework Convention on
Climate Change
(iii) “Adaptation – The process or outcome of a process that leads to a reduction in harm or risk of harm, or realisation of benefits
associated with climate variability and climate change.” UK Climate Impact Programme. UKCIP (2004) Costing the impacts of
climate change in the UK. Oxford: UK
105
World Development Report 2010, supra note 66 at 19.
106
KPMG, Climate Changes Your Business (2008), online:
www.kpmg.co.uk/news/docs/chart%20for%20climate%20change%20press%20release.pdf.
107
ITU “Radiocommunications and Climate Change: Mitigation”
www.itu.int/ITU-R/index.asp?category=information&rlink=climate-change&lang=en
108
“Haiti – Telecoms, Mobile and Broadband,” Budde.com (2010), online:
www.budde.com.au/Research/Haiti-Telecoms-Mobile-and-Broadband.html
109
The IPCC defines radiative forcing as a measure of “the influence a factor has in altering the balance of incoming and outgoing
energy in the Earth-atmosphere system and is an index of the importance of the factor as a potential climate change mechan-
ism.” For more on radiative forcing, see S. Solomon et al., eds. “Technical Summary 2.5: Net Global Radiative Forcing, Global
Warming Potentials and Patterns of Forcing” in Contribution of Working Group I to the Fourth Assessment Report of the Intergo-
vernmental Panel on Climate Change, 2007 (Cambridge: Cambridge University Press, 2007), online:
www.ipcc.ch/publications_and_data/ar4/wg1/en/tssts-2-5.html.
110
OECD Aid Targeting The Objectives Of The Framework Convention On Climate Change Mitigation
www.oecd.org/dataoecd/18/31/44188001.pdf.
111
OECD, Definition of the Rio Marker on Climate Change (Mitigation): “Aid Targeting The Objectives Of The Framework Conven-
tion On Climate Change Mitigation” (undated), online: www.oecd.org/dataoecd/18/31/44188001.pdf.
111
ITU, ICTs and Climate Change, ITU-T Technology Watch Report #3, December 2007, online:
www.itu.int/dms_pub/itu-t/oth/23/01/T23010000030002PDFE.pdf [ITU, ICTs and Climate Change].
112
OECD, “Greener and Smarter: ICTs, the environment and climate change”, 2010, online:
www.oecd.org/document/30/0,3343,en_2649_34223_42906974_1_1_1_1,00.htmlGartner and Press Release, “Gartner Esti-
mates ICT Industry Accounts for 2 Percent of Global CO2 Emissions,” 26 April 2007, online:
www.gartner.com/it/page.jsp?id=503867.
113
Cited in “Rising energy prices add impetus to the greening of the mobile industry” 3G Wireless Broadband, Vol. 10, Issue 15, 3
September, 2008.
114
According to the ITU Telecommunication/ICT Regulatory Database, the estimated number of Internet users by end 2010 is 2.1
billion, www.itu.int/icteye.
115
For more on this, see The Energy Saving Trust,The Ampere Strikes Back (London: The Energy Saving Trust, undated), online:
www.energysavingtrust.org.uk/aboutest/news/ampere/.
116
Robert Webb & Antony Turner What would a genuinely carbon neutral BT look like? (London: Carbonsense and BT, 2006), on-
line: http://carbonsense.com/documents/CarbonSense_whatwouldagenuinelycneutralBTlooklike_000.pdf.
Chapter 7 305
117
A similar concern applies at a global level to dematerialisation, where carbon-intensive production processes are shifted from
developed to developing world locations, reducing the carbon footprint of the developed country at the expense of the devel-
oping. See, for example, New Economics Foundation & Open University, China dependence: the second UK Interdependence re-
port, (London: New Economics Foundation & Open University, 2007) online: www.neweconomics.org/press-
releases/%E2%80%98china-dependence-going-life-uk-world-whole-goes-ecological-debt
118
See: www.itu.int/ITU-T/studygroups/com05/sg5-q18.html.
119
The Greenhouse Gas Protocol, Rev. Ed., World Resources Institute (March 2004), online:
http://pdf.wri.org/ghg_protocol_2004.pdf [Greenhouse Gas Protocol].
120
Scope 2 GHG emissions of this kind were those avoided by BT when it became the UK’s largest buyer of “green” electricity in
2004. See “BT Goes Green,” Guardian (14 November, 2004), online:
www.guardian.co.uk/business/2004/oct/14/ethicalbusiness.utilities
121
Greenhouse Gas Protocol, supra note 119.
122
123
See Eftec and Plexteck, Final Report, supra note 19 and Eftec and Plexteck, Appendices, supra note 19. TSPs also run some very
large vehicle fleets. For example, Deutsche Telekom runs 41,000 vehicles in Germany and BT runs 32,000 vehicles in the UK.
Hence, there is major scope for TSPs to reduce truck rolls and vehicle deployment and mileage, particularly as NGNs reduce the
number of local exchanges.
124
According to the Stern Review, for example, the ICT sector is less energy-intensive than many other industries. The figures for
the UK are that, for telecommunications, 0.82% of total costs stem from energy, while the sector produces 2.29% of total UK
economic output; for electricity production & distribution, 16.07% of total costs are energy and the sector produces 1.08% of UK
economic output. At the other end of the spectrum is the banking and finance sector, where 0.27% of total costs are energy,
while the sector produced 4.05% of UK output (or it did when the figures were compiled, pre-Credit Crunch!) Source: Nicholas
Stern, Stern Review: The Economics of Climate Change: Executive Summary (2006), online:
www.hm-treasury.gov.uk/d/Executive_Summary.pdf.
125
ITU-T’s NGN Global Standards Initiative.
126
ITU-T, NGNs and Energy Efficiency, Technology Watch Report #7, August 2008, online: www.itu.int/oth/T2301000007/en. See
also www.thegreengrid.org/, as cited in Background Report for ITU Symposium on ICTs and Climate Change, hosted by CITIC,
Quito, Ecuador, 8-10 July 2009, online: www.itu.int/dms_pub/itu-t/oth/06/0F/T060F00600C0004PDFE.pdf; and ITU, ICTs and
Climate Change, supra note 112 at 6, Box 2, online: www.itu.int/dms_pub/itu-t/oth/23/01/T23010000030002PDFE.pdf.
127
Taken from Rodney S. Tucker et al., Energy Consumption in IP Networks, presentation at Network Solutions to Reduce the Ener-
gy Footprint of ICT, ECOC, Brussels, 21-25 September, 2008, online:
www.ecoc2008.org/documents/ECOCSymposiumPresentationRTucker.pdf.
For other presentations from this conference, see: Network Solutions to Reduce the Energy Footprint of ICT, ECOC, Brussels, 21-
25 September, 2008, online: www.ecoc2008.org/programme.asp#greenict. See also Symposium on Sustainability of the Inter-
net and ICT, University of Melbourne, 25-26 November, 2008, online: www.ee.unimelb.edu.au/green_internet/.
128
For example, there are millions of mobile base stations deployed worldwide, consuming large amounts of energy. It had been
widely believed that base stations needed to be maintained at 25 degrees Celsius to function, but in fact many will function up
to 40 degrees, producing major energy savings. More savings can come through software-driven efficiencies such that, even
without further technological breakthroughs, the use of more modern equipment from vendors can result in a 70% reduction in
energy consumption. See Larilahti, supra note 18.
129
For more on this, see the Mobile Broadband Blog, online: http://mobilebroadbandblog.co.uk/2009/04/what-is-lte/ and Ericsson
Press Release on LTE agreement for voice and SMS services (4 November, 2009), online:
www.ericsson.com/ericsson/news/archive/2009/091104_one_voice.shtml.
130
www.wimaxmaps.org/
131
Some observers consider that an unoptimized WiMax network needs more power than LTE networks. LTE's access technology
SC-FDMA (uplink) appears less to consume less power than WiMAX's OFDMA, as SC-FDE and LP-OFDMA/SC-FDMA signals have
lower peak-to-average power ratio (PAPR), because of its inherent single carrier structure. LP-OFDMA/SC-FDMA has drawn at-
tention as an attractive alternative to OFDMA, especially in the uplink communications where lower PAPR greatly benefits the
mobile terminal in terms of transmit power efficiency. For more information, see Slide 15 of
www.slideshare.net/marioeguiluz/analysis-wimax-vs-lte.
306 Chapter 7
See also:
www.circleid.com/posts/20090310_wimax_vs_lte/; www.fujitsu.com/downloads/MAG/vol45-4/paper05.pdf;
www.rfdesignline.com/212001568;jsessionid=VT4ABR3WFP05HQE1GHPCKHWATMY32JVN?pgno=1;
www.wimaxforum.org/sites/wimaxforum.org/files/document_library/wimax_hspa+and_lte_111809_final.pdf;
www.gsmworld.com/documents/26022007161857.pdf; and www.circleid.com/posts/20090310_wimax_vs_lte/.
132
Susan Schorr, What Do We Mean By 6 Degrees Of Sharing?, Discussion Paper prepared for the 8th Global Symposium for Regula-
tors, Pattaya, Thailand, 11-13 March, 2008 (Geneva: ITU, 2008), online:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR08/discussion_papers/Overview_Final_web.pdf.
133
www.ictregulationtoolkit.org/en/index.html
134
Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for
electronic communications networks and services (Framework Directive).
135
“Telecoms JV aims to make systems greener,” Financial Times, 11 January, 2010, online:
www.ft.com/cms/s/0/a6201454-fed3-11de-a677-00144feab49a.html.
136
Nationwide Programmatic Agreement for the Collocation of Wireless Antennas, at:
www.achp.gov/docs/PA_FCC_Nationwide.pdf
137
ITU-infoDev ICT Regulation Toolkit, Module 2, Section 7. www.ictregulationtoolkit.org/en/index.html
138
See e.g. the comment at Lessradiation.co.uk regarding the New Scientist article “Search’s Dirty Secret” published 3 April, 2010,
online: www.lessradiation.co.uk/2010/04/. Google states that its own data centres use about half the energy of a typical data
centre and that the energy used per Google search is about 1kJ (0.0003 kWh) of energy to answer the average query, equivalent
to 0.2g of CO2 (0.007 ounces). As Google points out, “Not only is energy use very small, web searches often take the place of
more carbon- and time-intensive activities, such as driving a car to a library or spending hours navigating shopping malls.”
Google goes on to equate the CO2 emissions of an average daily newspaper on 100% recycled paper to 850 of their searches.
See: www.google.com/corporate/green/datacenters/.
139
ITU, Trends in Telecommunication Reform 2009 (ITU: Geneva, 2010) at 11.
140
See, for example: L. Brand et al., Data Centres And Telecoms Hotels: After The Space Race (London: Ovum, 2002) and S. Young et
al., Telecoms Hotels, Co-location And Data Centres (London: Ovum, 2000).
141
Jonathon G. Koomey, Estimating Total Power Consumption By Servers In The US And The World, Final Report (Stanford: Law-
rence Berkeley National Laboratory and Stanford University, 2007), online:
http://enterprise.amd.com/Downloads/svrpwrusecompletefinal.pdf.
142
Source: www.alphagalileo.org/ViewItem.aspx?ItemId=86177&CultureCode=en
143
William Forrest, James M Kaplan & Noah Kindler “Data Centers: How to cut carbon emissions and costs” in McKinsey on Busi-
ness Technology, Winter 2008, online: www.mckinsey.com/clientservice/bto/pointofview/pdf/BT_Data_Center.pdf.
144
David MacKay (2009) Sustainable Energy: Without the Hot Air. pp68-69 www.withouthotair.com/.
145
Tim Jackson, Prosperity Without Growth? The Transition to a Sustainable Economy, (London: Sustainable Development Commis-
sion, 2009), online: www.sd-commission.org.uk/publications/downloads/prosperity_without_growth_report.pdf
146
BP’s experience following the May 2010 blow-out at its well under the Deepwater Horizon rig in the Gulf of Mexico illustrates a
worst case example of the reputational damage that can be caused by environmental mismanagement.
147
Nokia Siemens Networks, White Paper: Good Green Business Sense (2008), online:
http://w3.nokiasiemensnetworks.com/NR/rdonlyres/13368E3E-58C4-4BF7-882F-4FE0F5D4C24F/0/Sustainability.pdf
148
Information from ITU Telecommunication Standardization Sector, Focus Group on Cloud Computing, study period 2009-2012,
Geneva, June 2010.
149
See Greenpeace International, Make IT Green: Cloud Computing and its Contribution to Climate Change (Amsterdam: Green-
peace International, 2010), online:
www.greenpeace.org/international/en/publications/reports/make-it-green-cloud-computing/.
See also related commentary by Vuk Trifkovic: Greenpeace sparks debate on the environmental impact of cloud computing
(London: Ovum, 2010), online: http://about.datamonitor.com/media/archives/4055.
150
For ITU information on the Internet of things, see: http://web.itu.int/dms_pay/itu-s/opb/pol/S-POL-IR.IT-2005-PDF-E.pdf
151
For ITU resources on the fully networked car, see: www.itu.int/ITU-T/worksem/ict-auto/200803/index.html
Chapter 7 307
152
CAPEX refers to capital expenditure, incurred when a business spends money to acquire or upgrade fixed assets such as equip-
ment, property or industrial buildings. OPEX refers to operating expenses, notably the ongoing costs for running a product, busi-
ness, or system.
153
The Carbon Disclosure Project is an independent not-for-profit organization holding the largest database of primary corporate
climate change information in the world, based on information from thousands of organizations across the world. These entities
measure and disclose their greenhouse gas emissions and climate change strategies through CDP. See:
www.cdproject.net/en-US/Pages/HomePage.aspx
154
Climate Savers Computing (CSCI), a nonprofit group of eco‐conscious businesses, conservation organizations and consumers
dedicated to reducing the energy consumption of computers and reducing the environmental impact of new and emerging
technologies. It was started in 2007 by Google and Intel, and aims to help members “increase deployment of high efficiency
computer systems and power management technologies that save money, reduce energy consumption and decrease GHGs. CSCI
membership numbers more than 500 organizations including Dell, Google, HP, Intel, Microsoft and World Wildlife Fund.” CSCI
members commit to choosing systems that meet or exceed the latest ENERGY STAR specification for a majority of their PC and
volume server computer purchases and to using power‐management tools on PCs. CSCI has developed the bronze, sliver, gold
and platinum compliance levels to help identify the highest energy‐efficient products and systems.
See: www.climatesaverscomputing.org/about/faq/#4
155
For example, the most recent allocation of spectrum in Canada also came with a requirement to share infrastructure as a term
of the licence.
156
Such activities are already taking place at the international level with work such as the ITU’s Telecommunication Standardization
Sector (see earlier refernce to NGNs, the work of ITU-T Study Group 5 .) and Radiocommunication Sector (standards on green
wireless systems/applications, including work on international spectrum/satellite orbit regulations, regional agreements).
157
Per-Anders Enkvist, Tomas Nauchler & Jeremy M Oppenheim, “Business Strategies for Climate Change” in The McKinsey Quar-
terly, 2008 No. 2, Confronting Climate Change.
158
See Nicholas Negroponte, Being Digital (1995). London: Vintage Books
159
Pamlin & Szomolányi, supra note 3.
160
Thomas L Friedman, The World is Flat (London: Penguin, 2007) at 207, 210.
161
Bill Sharpe & Tony Hodgson, Intelligent Infrastructure Futures Technology Forward Look: Towards a Cyber-Urban Ecology (Lon-
don: Department of Trade and Industry, 2006), online:
www.foresight.gov.uk/Intelligent%20Infrastructure%20Systems/Technology_Forward_Look.pdf.
162
See Centre for Alternative Technology, zerocarbonbritain: A New Energy Strategy (Machynlleth: Centre for Alternative Technol-
ogy, 2007) at 70, online: www.zerocarbonbritain.com/
163
Jackson, supra note 144 at 8 www.sd-commission.org.uk/publications/downloads/prosperity_without_growth_report.pdf.
164
Extracted from Centre for Alternative Technology, supra note 160 at 71.
165
A 2007 report produced by the Sussex Energy Group reviewed over 500 papers and reports to analyse the nature, operation and
importance of rebound effects. Examples of rebound effects include: a driver who replaces a car with a fuel-efficient model, only
to take advantage of its cheaper running costs to drive further and more often; a family that insulates their loft and puts the
money saved on their heating bill towards an overseas holiday; or a phone call which may replace the need to deliver a message
personally but could equally be used to set up a meeting which requires travel. In addition, ICTs can make it easier to travel (e.g.,
users are able to find out bus schedules more easily, or to better coordinate meetings and other travel related events). Rebound
effects can be both direct (e.g. driving further in a fuel-efficient car) and indirect (e.g. spending the money saved on heating on
an overseas holiday). Evidence from the report is that direct rebound effects are usually fairly small – eg less than 30% for
households. Much less is known about indirect effects, although the study suggests that in some cases, particularly where ener-
gy efficiency significantly decreases the cost of production of energy intensive goods, rebounds may be larger.
See Steve Sorrell, The Rebound Effect Report: An Assessment of the evidence for economy-wide energy savings from improved
energy efficiency (Brighton: Sussex Energy Group, 2007), online:
www.ukerc.ac.uk/Downloads/PDF/07/0710ReboundEffect/0710ReboundEffectReport.pdf
See also: Runar Brannlund, Tarek Ghalwash & Jonas Nordstrom, “Increased energy efficiency and the rebound effect: Effects on
consumption and emissions” (2007) 29:1 Energy Economics, online: www.sciencedirect.com.
166
Pamlin & Szomolányi, supra note 3.
308 Chapter 7
167
“Standards can be defined as technical specifications that may be adhered to by a producer, either tacitly or as a result of a for-
mal agreement. Standards may be developed by national standards bodies, regional bodies such as ETSI and global partnerships
such as 3GPP (which includes ETSI as a member). Standards bodies are not the only source of standards, with market processes
creating de facto standards and proprietary standards…..Standards play a key role in the diffusion and use of ICT, for example
standards underpin the Internet (and increasingly, Internet applications), wireless systems including WiFi and 3G and next gener-
ation fixed core and access technologies including GPON.” Brian Williamson & Philippa Marks Standardisation in ICT: Current
Economic Perspective (Plum Consulting, London, 2009)
168
ITU, Trends in Telecommunication Reform 2008 (Geneva: ITU, 2008). For more information, see
www.itu.int/ITU-T/focusgroups/climate/index.html. See also Dr. Yuji Inoue, “Climate Change and ICT Standardization,” presen-
tation to ITU Kyoto Symposium on ICT & Climate Change, 15 – 16 April, 2008, online:
www.itu.int/dms_pub/itu-t/oth/06/0F/T060F0060080025PDFE.pdf.
169
ITU, “Forward” in Trends in Telecommunication Reform 2009 (ITU: Geneva, 2010).
170
Jacques Bughin, Michael Chui, and James Manyika (2010) Clouds, big data, and smart assets: Ten tech-enabled business trends
to watch. McKinsey Quarterly, August 2010. McKinsey Global Institute.
171
Department of Energy and Climate Change, Smarter Grids: The Opportunity, DECC Discussion Paper (London: Depart-
ment of Energy and Climate Change, 2009), online:
www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/network/smart_grid/smart_grid.aspx.
172
Eric Lightner, “Smart Grid Activities at the Department of Energy,” presentation at National Broadband Plan Workshop: Energy,
Environment, and Transportation Director, Smart Grid Task Force, US Dept of Energy, Office of Electricity Delivery and Energy
Reliability, 25 August, 2009, online: www.broadband.gov/ws_eng_env_trans.html.
173
There is no single definition of smart metering, and smart meters may or not require a telecommunications link, since other
modes of communication can be used. A smart-meter system comprises an electronic box and a communications link. At its
most basic, a smart meter measures electronically how much energy is used, and can communicate this information to another
device. For both electricity and gas, there are two main smart-meter types : AMR – One-Way Communication from the Meter to
the Data Collector – as a minimum enabling Automated Meter Reading; AMM – Two-Way Communication between the Meter
and the Supplier – enabling a wider range of functions known as Automated Meter Management. See: Gill Owen & Judith Ward,
Smart Meters: Commercial, Policy and Regulatory Drivers (London: Sustainability First, 2006), online:
www.sustainabilityfirst.org.uk/docs/2006/smart%20meters%20pdf%20version.pdf.
174
Ibid.
175
The following smart metering trials were reviewed in the 2008 study by Sustainability First: Ontario Energy Board Smart Price Pi-
lot; Country Energy Smart Metering Trial, New South Wales, Australia; Energy Australia Strategic Pricing Study; California State-
wide Pricing Pilot; Norway Trial; Tempo Tariff, EdF France; California Information Display Pilot. See: Sustainability First/Engage
Consulting, International Smart Meter Trials – Selected Case Studies (2008), online:
www.sustainabilityfirst.org.uk/docs/2008/Sustainability%20First%20&%20Engage%20Consulting%20-
%20International%20Trials%20-%20Tariffs%20and%20Consumer%20Stimuli%20-%20Selected%20Case%20Studies%20-
%20May%202008.pdf.
176
According to a study by Sustainability First published in 2006, “The major long term evidence to date on energy-saving is from a
Norwegian study based on ‘informative-billing’ in homes with electric heating – not smart metering – where savings of 4-8%
were achieved. A major UK study suggests 3-5% is possible for homes without electric heating. Short-term results with smart
prepayment meters in Northern Ireland have shown a 3% energy saving. It therefore seems reasonable to estimate energy sav-
ings, on a cautious basis, at around 1-3%. A 3% saving would be £10.50 off an average electricity bill. A 1% saving would equal
8% of the UK’s domestic CO2 target.” Gill Owen and Judith Ward. Smart meters: commercial, regulatory and policy drivers (2006)
www.sustainabilityfirst.org.uk/publications/smartmeters.htm
177
Deutsche Bank, Climate Change and Sectors: Some Like It Hot! (2007), online:
www.dbresearch.com/PROD/CIB_INTERNET_EN-PROD/PROD0000000000212401.pdf
178
European Commission Directorate-General Information Society and Media, ICT for Sustainable Growth Unit, ICT for a Low Car-
bon Economy: Smart Buildings, Findings by the High-Level Advisory Group and the REEB Consortium On the Building and Con-
struction Sector (2009), online:
http://ec.europa.eu/information_society/activities/sustainable_growth/docs/sb_publications/smartbuildings-ld.pdf.
179
Stern, supra note 28.
Chapter 7 309
180
IPCC, “Mitigation in the short and medium term,” supra note 71.
181
Sustainable Development Commission, Smarter Moves: How Information Communications Technology Can Promote Sustainable
Mobility (London: Sustainable Development Commission, 2010), online:
www.sd-commission.org.uk/publications/downloads/SDC_Smarter_Moves_w.pdf. See also Moving Waves, the blog by one of
the paper’s authors, Jeremy Green, about how ICT can help to make personal transport more sustainable,
http://smartermobility.blogspot.com
182
Confederation for British Industry, Tackling Congestion, Driving Growth – A New Approach To Roads Policy (2010), online:
www.cbi.org.uk/ndbs/press.nsf/0363c1f07c6ca12a8025671c00381cc7/ac77d2168797ed7f802576e3004dc9d3/$FILE/Tackling%
20congestion,%20driving%20growth%20-%20A%20new%20approach%20to%20roads%20policy.pdf.
183
For an example of lift sharing using social media technologies (in this case, Facebook), see the service run by Craig Slater at:
www.isanyonegoingto?.com.
184
Dennis Pamlin & Katalin Szomolányi, Saving the climate @ the speed of light: First roadmap for reduced CO2 emissions in the EU
and beyond (Brussels: WWF/ETNO, undated), online:
www.etno.be/Portals/34/ETNO%20Documents/Sustainability/Climate%20Change%20Road%20Map.pdf.
185
For more information on car sharing/car clubs see www.carsharing.net/. Examples at:
www.citycarclub.co.uk/; www.streetcar.co.uk/; and www.ucarshare.com/secure/Home.aspx ;
186
GeSI (2008) Smart 2020, supra note 3 at 3/33.
187
Nicholas Negroponte, Being Digital, 1995. London: Vintage Books.
188
Reducing the amount of carbon-rich ‘product’ made and distributed around the world in planes, trains, and automobiles has
been described as one benefit of Spotify.
189
Walter S. Baer, Scott Hassell, & Ben A. Vollaard, Electricity Requirements for a Digital Society, RAND Corporation (2002), online:
www.rand.org/pubs/monograph_reports/MR1617/.
190
Joseph Romm, The Internet and the New Energy Economy, Center for Energy and Climate Solutions, Global Environment and
Technology Foundation (2010), online: www.rand.org/scitech/stpi/Evision/Supplement/romm.pdf.
310 Chapter 7
8 POSTCARDS FROM THE INFORMATION SOCIETY:

LIVING WITH ALWAYS-ON TECHNOLOGY –
THE GOOD, THE BAD, AND THE JUST PLAIN BAFFLING
Authors: John Alden, Vice-president and
Jay Chauhan, Counsel and Director, Policy Analysis,
Freedom Technologies
8.1 Introduction • Tragically, you are victimized by a financial or sexual

predator, who fraudulently takes advantage of your
For nearly two decades, the world has been await- hopes and dreams and betrays your trust.
ing the arrival of the Information Society. Agencies and
• You log onto your workspace at the website of an
bureaus have been named after it. Programmes have
online university, finding that your "classmate" on
been formed and funded to bring it about. So, how will
another continent has uploaded her part of your
we know when the long-anticipated Information Socie-
group project while you slept, allowing you to con-
ty has arrived? What will it look like when it gets here?
tinue the work where she left off.
The answer is that for many of us, in many ways, it
As it turns out, the Information Society is both
is already here. And the truth is, the Information Socie-
magnificently liberating and calmingly natural – when it
ty is a richer, more varied – and often, more compli-
is not completely terrifying. On the positive side,
cated – experience than we could ever have imagined.
broadband technologies can link people more easily to
How do you know if you are living in the Information
government services and market outlets, increasing
Society?
quality of life and economic productivity. They are also
• You can apply online and fill out forms for routine revolutionizing social relationships and empowering
government permits and fees without ever speak- civil society by linking individuals into social and interest
ing to a government official – saving time and ag- groups. Around the world, they are altering politics,
gravation. educating people in remote towns, and reuniting long-
lost friends.
• You can make hotel reservations, purchase airline
or train tickets, and "check in" while located miles
At the same time, there is a Pandora’s Box of new
away from the airport.
issues: texting while driving; inappropriate content for
• While waiting for your plane, you "participate" vi- minors; identity theft, malware and botnets; online in-
cariously in a young entrepreneur's trans-oceanic vasions of privacy; fraudulent abuse of trust by individ-
staff meeting, carried on at full volume on his open uals and organizations; and even (in rare cases) an
laptop computer. almost pathological tendency to trade real life for a
• You see people strolling down city streets, seeming- richer “cyber” life online. None of this was part of our
ly babbling to themselves – until you get close world even 15 years ago. Our children will never know
enough to see the wireless earphones. any other kind of life. Very rarely do we stop and ask:
what does it all mean for us?
• You are able to order, online, a rare and beautiful
handmade piece of jewelry made by artisans in This chapter examines how the Information Society
your native country halfway around the world. is changing every aspect of our lives. It also tries to pro-
• You become “friends” on social networking sites vide an overview of what the Information Society really
with people you will likely never meet in person. is – what we can expect when we join the online un-
Chapter 8 311
iverse. This chapter describes the underlying technolo- tion 8.3 reviews the underlying technologies – from
gical developments in wireline and wireless networks networks to handheld devices – that increasingly form
and end-user devices. It explores the convergence of the prerequisite for those services. Those sections pro-
previously separate industries and products that is vide an explanatory introduction to Section 8.4, which
changing both government policy and daily lives. And it explores the effect of these "always-on" technologies
probes the roles of policy-makers and regulators, asking and Information Society services and applications on
several basic questions: our daily lives. Finally, Section 8.5 presents the chal-
lenges and some useful approaches for regulators as
• How can regulators ensure that the benefits of the
they attempt to understand and address the new Inter-
new social networking websites and new social
net-infused world in which consumers now live.
technologies are available to everyone – reversing
the digital divide and not exacerbating it?
As Sections 8.4 and 8.5 reveal, many of the issues
• What role do governments have in promoting so- confronting regulators are outside regulators' "comfort
cial networking media or the underlying technology zones." That is, they often raise questions of social well-
and market changes that make them possible? being in addition to economic vitality. Unfortunately,
• Should telecommunication regulators attempt to policy-makers and regulators often do not have the
mitigate the unforeseen aspects of the Information luxury of time in evaluating whether or how to extend
Society, or are areas like computer viruses, data their jurisdictions and rules to cover this new genera-
privacy, and online content beyond the scope of tion of packet-switched networks, services, and media.
their authority? As the broadband revolution sweeps the globe, this
chapter explores how it is changing society, socially and
• How can regulators in different countries cooperate personally, and what regulators are doing (and, con-
to help guide the development of new media that versely, not doing) in response.
clearly have international scope?
• What role is there for industry self-regulation? Can 8.2 The Information Society Is
service providers and consumers send market sig- Here – Or Is It?
nals to determine privacy protection and other
standards? 8.2.1 Worldwide Acceptance
Beyond the above, however, is the basic question: In 2010, ITU estimated that more than 2 billion
how do individuals who are now exposed to and expe- people were using the Internet.1 Worldwide, the num-
riencing the Information Society learn to maximize its ber of fixed broadband subscribers reached 555 million
benefits while managing the immense power that in 2010, and ITU estimates indicated that the number
these new technologies have unleashed? of wireless broadband subscribers reached nearly
940 million. While this marked a coming-of-age for an
This chapter takes an exploratory and critical view essentially new and revolutionary technology, the so-
of the Information Society – not as it was predicted to ber reality was that nearly three-quarters of the world
develop, but as it actually is evolving in many areas of was not using the Internet (see Section 8.2.2).
the world. As individuals, the "residents" of the Infor-
mation Society inevitably experience myriad benefits, Nevertheless, there is evidence that people around
but also frequently find themselves in uncharted terri- the world have accepted the idea that the Internet is
tory. As broadband networks grow (albeit unevenly), not only useful but perhaps even essential. During the
their capacity to carry multimedia content, as well as spring of 2010, the BBC World Service carried out a sur-
voice, is generating an unprecedented number of new vey in 26 countries, asking respondents about their
services and applications. Where the Information Socie- opinions of the importance of the Internet and how it
ty has reached a "critical mass," user demand is driving does or does not empower them (See Box 8.1). The
growth in these new services and applications, often BBC's headline finding was that a full 79 per cent of
pioneering telecommunications into unregulated ter- respondents in these countries regarded Internet
rain. access as a "fundamental right." Crucially, even 71 per
cent of respondents that did not use the Internet (ei-
Section 8.2 of the chapter explores how far the In- ther by choice or lack of access) felt they should have
formation Society has progressed, both geographically the right to access the Web.2 Nearly half of all respon-
and in terms of new types of beneficial services. Sec- dents (44 per cent) in countries around the world ex-
312 Chapter 8
pressed the opinion that they would not be able to e-commerce and innovating new "virtual" compa-
"cope" without having the Internet in their lives.3 nies;
• A whole new universe of social networking, allow-
Clearly, the Internet is providing value or at least an
ing individuals and groups to share information,
attraction. Moreover, that pull can be felt around the
pictures and contacts online; and even
world, by people already experiencing the Information
Society, and, perhaps more importantly, by those who • A growing "networked environment" of appliances,
want to experience it more fully. Increasingly, the In- automobiles and handheld devices that are
formation Society includes an array of the following ca- "aware" of their environs and can adapt their ener-
pabilities: gy usage and other functions accordingly.
• Converged voice and data networks that empower
The following subsections briefly define and ex-
text messaging, email and instant messaging, in-
plore these manifestations of the Information Society,
creasingly with pictures and multimedia content;
using examples from around the world.
• Options for "e-government" services, allowing on-
line public access to government information, pro- 8.2.1.1 Developments in E-Government
grammes and services;
Governments began to make use of the World
• Access to social and educational services, including
Wide Web almost as soon as it entered mainstream use
distance learning, tele-medicine, job training, co-
in the mid-1990s. From almost 50 official government
operative extension and other public benefits;
home pages in 1996, the number of websites ballooned
• A revolution in business and commercial behaviour, over the next five years to approximately 50,000.4
empowering telecommuting, accelerating
Box 8.1: Is Internet Access a "Fundamental Right"?

In the global survey (26 countries) commissioned by the UK's BBC World Service, a full 87 per cent of respondents who use
the Internet said they believe that Internet access should be considered a "fundamental right of all people." Moreover, even
among those who do not use the Internet, 71 per cent agreed with that statement. The countries with the highest percen-
tages of respondents that viewed the Internet as a fundamental right were Republic of Korea (96 per cent), Mexico (94 per
cent), and China (87 per cent).
The survey went further, asking the 27’000 respondents exactly what benefit of the Internet they most valued:
• The ability to find information of all kinds (47 per cent);
• The ability to interact and communicate with people (32 per cent);
• The Internet as a source of entertainment (12 per cent);
• Tools to research, locate and buy products or services (5 per cent); and
• Forums for creating and sharing content (3 per cent).
Not all reviews of the Internet were glowing. The aspects of the Internet that caused the most concern internationally were:
• Fraud (32 per cent);
• Violent and explicit content (27 per cent);
• Threats to privacy (20 per cent);
• State censorship of content (6 per cent); and
• Extent of corporate presence (3 per cent).
Yet when asked whether the Internet should be regulated, more than half of Internet users surveyed (53 per cent) said gov-
ernments should not regulate the Internet at any level. Individuals were surveyed in the following countries: Americas: Can-
ada, USA, Mexico, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Brazil, Chile; Europe: UK, Germany,
France, Spain, Portugal, Turkey; Africa: Egypt, Ghana, Nigeria, Kenya; and Asia-Pacific: Russia, China, Japan, South Korea, Pa-
kistan, India, Thailand, Indonesia, Philippines, and Australia.
Source: "Internet Access Is a `Fundamental Right'" at BBC World Service website, 8 March 2010
http://news.bbc.co.uk/2/hi/technology/8548190.stm
Chapter 8 313
In May 2002, the UN undertook a global survey of Cell phones are used, for example, to provide gov-
its member states to measure the growth of ernment agencies with images or descriptions of
e-government sites and to ascertain how they were be- local environmental conditions and to respond to
ing used. It classified online government sites according social surveys.8"
to levels of service they provided:
Middle-income countries have, in some cases,
• Emerging – mostly information materials (32 coun-
caught up with and exceeded wealthier nations in con-
tries);
necting their government offices and making
• Enhanced – more sites, more dynamic information e-government accessible. The UN report cited Ethiopia,
(65 countries); which in 2005 adopted a national ICT policy, followed a
• Interactive – allowing downloading, emailing and year later by implementation of a five-year ICT action
other features (55 countries); plan designed to boost public sector accountability and
improve education, health, small business develop-
• Transactional – allowing online payments (17 coun- ment and agricultural modernization. According to the
tries); and UN report, "The country has now connected nearly
• Seamless – full integration of e-services across ad- 600 local administrations to regional and federal offices,
ministrative boundaries (0 countries).5 linked 450 secondary schools to a national education
network, and provided some 16,000 villages with
The fact that no government had yet achieved the access to broadband services."9
UN's "gold standard" appeared to reflect a gap be-
tween what governments had envisioned in terms of E-government programmes are increasingly incor-
public services and what they had been able to deliver porating advanced technologies such as GPS (Global
up to that point. The report identified a lack of integra- Positioning System) and GIS (Geospatial Information
tion, or "one-stop shopping", among different agency System) features, allowing users to submit and access
websites, lack of user-friendliness and in many cases, information that is specific in terms of location. Many
lack of transactional capabilities.6 E-government was, of these capabilities include interactive and transac-
the report said, at a "crossroads." tional features that combine location information with
multimedia or graphical content. One such programme
Seven years later, however, significant advances in was launched in Singapore during March 2010. Billed as
e-government have been made. The UN has continued the "first intelligent map information system," the
to survey and monitor the development of OneMap portal features a GIS map of Singapore. Users
e-government trends and services; in its 2010 report, can click on a location and obtain information on gov-
the UN indicated that there had been a major step for- ernment (and private sector) services and facilities at
ward in e-government over the past two years. that location (see Box 8.2: Singapore's OneMap
project).10
"On-demand access to information, services and
social networks on the Internet through a personal Perhaps the common hallmark of recent
computer is no longer considered cutting-edge in e-government initiatives is their emphasis on user ac-
developed regions but a norm that many people cessibility and ease of use. As with other areas of the
take for granted. The same may soon be true of the Information Society, however, e-government remains
more advanced middle-income countries.7 " unevenly applied across the world, reflecting the ongo-
ing digital divide.
The report noted that some governments, aware of
the higher penetration of mobile services, had begun 8.2.1.2 Public Services
tailoring e-government applications to these users:
"For example, alerts sent through short message In addition to open access to government, "neti-
services ("text messages") are being used to notify zens" of the Information Society increasingly benefit
citizens that a request for assistance has been (either directly or indirectly) from the revolutionary use
processed, that a permit needs to be renewed or of ICTs to improve core public and social services. These
that an emergency advisory notice has been issued. include health and medicine, education and training,
Cellular telephones are also being used in a more and agricultural or small business support services.
dynamic fashion to browse public services, author-
ize payments and engage in micro-volunteerism.
314 Chapter 8
Box 8.2: Geospatial Meets E-Government in Singapore

Singapore's government has taken e-government to another level with OneMap, an initiative of the Singapore Land Agency.
Essentially, OneMap is an interactive map portal that uses Geographic Information System (GIS) technologies to provide
access to services and information at a mouse-click. Users view a map of Singapore and can roll over it to locate government
services, information and even non-government offices and services.
Launched on 31 March 2010, OneMap has been described as a "complete, end-to-end geospatial value chain that acts as a
bridge between public agencies and the public." Originally, OneMap brought together information from 16 government
agencies – a number that has since grown to include more than 20 agencies, private and non-profit organizations. Among
the features are locations for museums, food "hawker centres", day care services, parks, and sports centres. One feature
allows users to determine whether their home is within a certain radius of a particular school.
OneMap also allows users to create their own applications based on the OneMap base maps. This allows the sharing of data
through the Internet, for both desktop and mobile accessibility.
Sources: GIS Development: The Global Geospatial Magazine, at www.gisdevelopment.net/magazine/global/2010/july/48-Onemap-One-
stop-geospatial-solution.htm; "Check Out OneMap," The Straits Times, 1 April 2010, at
www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_509240.html; and Singapore Land Authority press release, 31 March 2010,
at www.sla.gov.sg/htm/new/new2010/new3103.htm.
Tele-Medicine and eHealth Online Learning
One of the most promising fields is "eHealth" – the Another field in which the Information Society is
use of ICTs for a range of medical-related clinical and revolutionizing daily life is education. In developed
support services. As the World Health Organisation countries, increasing numbers of students are taking
(WHO) noted in a 2006 report: courses online or receiving online content to augment
classroom education. The U.S. Department of Educa-
"Every day, across the world, people make im-
tion estimated, for example, that the number of prima-
provements in health as a direct benefit of [ICTs].
ry and secondary school pupils receiving online courses
E-health innovations like electronic health records,
grew 65 per cent between 2002 and 2005.14 Based on
computer-assisted prescription systems and clinical
its estimates, the Department determined that more
databases are transforming health today, and hold
than a million American children took online courses
even greater promise for the future. [ICTs] support
during the 2007-2008 school year. Somewhat surpri-
clinical care, provide health information to the gen-
singly, the study found that children who took all or
eral public and scientific information to profession-
part of a class online performed better than other stu-
als. They provide a platform for publishing,
dents who took the same class with only face-to-face
disseminating health alerts and supporting admin-
instruction.15
istrative functions.11"
In a 2002 report on the rapid development of on-
The first reported programmes to provide online
line learning, UNESCO noted the advantages of incor-
health information to the public were in 1990, and by
porating Web-based teaching methods into school
2005, some 80 per cent of governments around the
curriculum – even where so-called distance learning
world were providing public eHealth information ser-
was not required for students to reach far-away schools.
vices.12 That percentage ranged from 60 per cent in
"The Web offers a worldwide forum in which to teach
Africa to up to 95 per cent in Europe. WHO found a
courses that can be radically updated in ways never be-
clear and consistent correlation between eHealth de-
fore possible," the report stated. "Each student has an
velopment and Internet penetration, and between
enormous range of resources available, free from limi-
eHealth development and national income.13 WHO also
tations of time and space."16 Fully realized, the Internet
identified a global shortcoming in eHealth governance,
becomes a medium not simply for the reproduction of
with only about half of its member states having an
print curriculum materials, but for interactive services
eHealth administration or governance structure.
and content that allows students to explore and link
concepts that a single educator would not be able to
provide in a classroom setting.
Chapter 8 315
Box 8.3: Spreading the Word about ICTs and Rural Development
• In Uganda, there is a network of "community knowledge workers" (CKWs) that use mobile applications to give far-
mers a broad range of information, including farming practices, market conditions, pest and disease control and
weather forecasts.
• A service called "Wizzit" in South Africa became the country's first "mobile bank" for residents without access to
banking services, and Celpay's "mobile wallet" initiated an online payment service in the Democratic Republic of
Congo and Zambia.
• In May 2003, French Guiana began installing GPS receivers in ultra-light aircraft to help combat the carambola fruit
fly.
• Traditional hunters and trackers in Botswana now use GPS trackers to gather information about wildlife. That in-
formation goes into a database that can be accessed via a solar-powered PC to provide up-to-date information for
game management programmes.
All of these innovative and practical applications of ICTs for rural development – and many more – are documented and de-
scribed at a single online source: ICT Update. Published in English and French by the Technical Centre for Agricultural and
Rural Cooperation (CTA) in the Netherlands, ICT Update is a bimonthly printed bulletin, a Web-based magazine and an email
newsletter – all devoted to African, Caribbean and Pacific countries. Each issue focuses on a theme relevant to the use of
ICTs for agricultural or rural development; the 50th issue was published in August 2009.
Source: http://ictupdate.cta.int/
The Web becomes an entirely new platform that tion will continue to drive this always-on world. Accord-
features individualized learning and research, collabora- ing to a Ryvasy Report, smart phones have a 25 per
tion among students, mentoring of younger students cent penetration rate in the U.S. marketplace; this fig-
by older ones, and access to remote research resources. ure that is expected to hit 50 per cent within two
years.20 As more consumers have access to faster con-
8.2.1.3 Personal Networking nections and more feature rich smart phones, more us-
ers will be able to take their computer-based usage
Social networking has exploded in the last five wherever they go.
years and is becoming a global phenomenon (see
Box 8.4). Sites such as Facebook and Twitter have Along with the pervasive spread of personal net-
changed the way people use technology, and have fur- working comes the inclusion of data connectivity as a
thered the always-on communication paradigm. In June component in all types of consumer electronics: digital
2010, Facebook reported 400 million active users. A cameras, portable media players, set-top boxes, TVs,
quarter of these users (100 million) access Facebook DVD players, and gaming systems. This allows almost
through their mobile devices, and Facebook mobile de- universal access to content, and the ability to shift and
vice users are twice as active as PC-based users.17 As of share that content across multiple platforms. Devices
April 2010, Twitter had approximately 100 million regis- can connect to your home network, access or store in-
tered users, with 300,000 users signing up per day. Thir- formation in the cloud, and receive software updates to
ty-seven per cent of Twitter’s active users employed improve their capabilities.
their phones to “tweet” or publish messages to their
followers.18 The number of Wi-Fi chips in consumer electronics
goods worldwide, for example, jumped 33 per cent
Mobile device users are using their mobiles increa- from 2008 to 2009 and is expected to continue to
singly within the home. A recent report by the media grow.21 Car makers are putting in data connections into
agency Initiative found that 60 per cent of mobile web its vehicles to provide real-time traffic mapping, web
usage occurred in the home. The report posits that this browsing, data messaging, streaming music, and on-
represents a sign that consumers desire a constant demand video.
connection to their networked life.19 Smartphone adop-
316 Chapter 8
Box 8.4: The Year of Social Networking

In April 2009, social networking reached a new height of media exposure when Hollywood movie star Ashton Kutcher be-
came the first person to reach the 1 million follower mark on the micro-blogging social networking site Twitter. Just a year
later, in August 2010, Kutcher had more than 5 million followers, but he had been far surpassed by others in follower counts.
Truly, 2010 has become the year of social networking. Major news media now post "news" based on the twitter feeds of
athletes, politicians, and entertainment stars on a daily basis. Moreover, Twitter’s reach in 2010 moved beyond the U.S.
From June 2009 to June 2010, Twitter use doubled worldwide, with growth largely fueled by use in Latin America, Asia Pacif-
ic, and the Middle East-Africa. Twitter penetration in Indonesia and Brazil reached 20 per cent, just edging out the figure in
Venezuela (19 per cent) among the over 15 age population.
Visitation to Twitter.com by Global Regions

June 2010 vs. June 2009
Total Audience, Age 15+ - Home & Work Locations*
Source: comScore Media Metrix
Unique Visitors (000)
Jun-09 Jun-10 % Change
Worldwide 44,520 92,874 109

Latin America 3,792 15,377 305
Asia Pacific 7,324 25,121 243
Middle East - Africa 2,058 4,987 142
Europe 10,956 22,519 106
North America 20,390 24,870 22
Meanwhile, Facebook attained more than 500 million active users in 2010,half of whom log on every day. While both Twit-
ter and Facebook started in the U.S., non-U.S. use has greatly expanded; 70 per cent of Facebook users reside outside the
U.S. Facebook reported that its users spent more than 700 billion minutes per month on its website, allowing it to surpass
Google as the most-visited website in the world in March 2010.
Sources: Oprah, Ashton Kutcher mark Twitter 'turning point', CNN.com, April 18, 2009,
www.cnn.com/2009/TECH/04/17/ashton.cnn.twitter.battle/; and - Indonesia, Brazil and Venezuela Lead Global Surge in Twitter Usage,
comScore, 11 August, 2010,
www.comscore.com/Press_Events/Press_Releases/2010/8/Indonesia_Brazil_and_Venezuela_Lead_Global_Surge_in_Twitter_Usage
8.2.1.4 Virtual Business • Virtual Businesses – Companies no longer need to

even maintain offices or facilities, they can simply
Always-on access to the Internet is also revolutio- exist "virtually" in cyberspace, with broadband
nizing the way people and corporations do business. networks connecting their management and em-
The ability to access broadband networks from literally ployees. The individual "co-workers" may never
everywhere through wireless networks is altering the even meet each other in person.
work experience, irrevocably, in the following ways:
• Online Retailing and Marketing – Amazon.com
• Tele-Working – Individual employees no longer popularized the long-standing trend of selling over
have to endure time-consuming, costly, and envi- the Internet, vastly expanding the online "invento-
ronmentally damaging commutes over long dis- ry" available to consumers. Some products and
tances. Using home computers or laptops, they can services are now marketed, sold, and delivered
work from home, from coffee shops, or from pool- with a series of mouse clicks (e.g., music down-
side cabanas (if they want to), increasing their abili- loads, airplane tickets, and hotel bookings).
ty to mesh home and work life and to increase
• Outsourcing – Many large corporations (and small-
overall productivity.
er companies, as well) opt to hire specialized firms
Chapter 8 317
to provide functions such as accounting or service (RFID) technology. GPS-enabled subscription services
support rather than to continue to perform such allow drivers to obtain directions through on-board na-
functions internally; this often results in material vigation systems, receive trouble-shooting diagnostic
cost savings. Many of the "outsourcing" firms that information during breakdowns, and obtain immediate
perform these functions provide their services glo- help when they have an accident. In case of theft, po-
bally, from locations in developing countries or re- lice can recover equipped automobiles through tracking
mote areas with lower labor costs. signals. Manufacturers increasingly place sensors on
vehicles that warn drivers if they are in danger of hitting
• Virtual World Trading – A spin-off from gaming and
a person or object, and some high-end automobiles
personal networking, virtual worlds (e.g., Second
even use such sensors to help drivers parallel park.
Life) are highly articulated online virtual realities
that often engender secondary markets. Users can
The other major market for automated systems is
buy and sell real estate, durable goods (e.g., boats
the home. Machine-to-machine (M2M) technology can
and cars) in these online environments using real
be used to remotely monitor and adjust home heating
currency. This has led to virtual "entrepreneurs"
or cooling systems, allowing power companies to cope
that buy and sell fictitious goods and services and
with peak electrical demand or simply letting home-
collect real money for them from other players.
owners turn up the heat as they return from a ski trip.
Home security systems are designed to automatically
In addition, of course, much of the world's trade in
signal law enforcement if buildings are broken into.
securities (i.e., stocks, bonds, and derivatives) now
takes place online, at the speed of light. The massive
8.2.2 Where the Info Society Isn't
volumes of transactions and trade defy quantification.
The array of business activity enabled by the Informa-
All of these technologies, and the applications that
tion Society is growing and morphing so rapidly that it
go with them, are increasingly available to consumers.
has become extremely difficult for consumer-
But are they realistically available to everyone, every-
protection or business regulators to monitor or even
where? The answer to that question, unfortunately, is
describe all of the types of transactions. In this "buyer
still "no." Data on the extent of broadband network in-
beware" environment, there is an ever-present danger
frastructure provide clear evidence that the Informa-
of fraud (see Section 8.4.2, and the GSR discussion pa-
tion Society may be just as stratified as "high society"
per entitled, “Addressing Cyberthreats – The Role and
was some 150 years ago. The prevalence of access to
Responsibilities of an Effective ICT Regulator”) and fi-
the Internet is not spread equally around the globe.
nancial mismanagement. Moreover, because these
transactions increasingly involve international data
Internet penetration reached an estimated 71
flows, there is no single regulator anywhere on the pla-
per cent in 2010 in already-developed countries. In de-
net that can act unilaterally to combat abuses or preda-
veloping countries, however, the penetration number
tory practices.
lagged behind at just 21 per cent.23 More to the point,
there continues to be both a regional divide and an
8.2.1.5 Machines That Talk to Each Other
overall lag in the build-out of fixed and mobile broad-
band networks. Broadband access – which empowers
As if the risk of fraud and other forms of cyber-
much of the advanced multimedia and graphically rich
crime was not alarming enough, the machines are now
content that defines the Information Society – remains
talking to each other. Telecommunications is increasing-
largely confined to Internet users in developed coun-
ly automated, with everyday household appliances,
tries in 2010. Fixed broadband Internet access penetra-
energy grids, and automobiles equipped and linked to
tion reached 24.6 per cent in developed countries, but
relay data, including location information determined
only 4.4 per cent in developing economies.
through global radio-determination satellites (e.g., GPS).
Machines can be monitored from half a world away –
There is even greater disparity in mobile broad-
by other machines.
band penetration. While developed countries are look-
ing ahead to 4G technologies such as LTE-Advanced and
Perhaps the most active application of machine-
WiMAX 802.16(m), many countries still have not widely
based telecommunications is in the automobile indus-
implemented 3G networks. In developing countries,
try. 22 Cars can speed through tollbooths, with fees au-
mobile broadband penetration achieved an estimated
tomatically deducted and billed to customers' credit
penetration rate of 5.4 per cent in 2010.24
card accounts, through radio-frequency identification
318 Chapter 8
The implications of stratification in Internet access Any analysis of the Information Society has to in-
are twofold. First, the digital divide between countries clude a component of "where it isn't" in addition to
threatens to widen information and economic dispari- "where it is." But in reality, the Information Society is a
ties between more developed countries (or rapidly de- trans-border phenomenon. In any city in the world,
veloping ones) and economically undeveloped there likely are offices and homes where computers are
countries. Second, the limited availability of broadband never turned off just metres away from pedestrians
access could easily widen disparities between the eco- who have never accessed the Internet even once in
nomically advantaged and disadvantaged populations their lives. The ability to engage and secure information
within countries. Particularly with regard to public ser- and make contact with others is a global ability, but on-
vices and business opportunities, lack of access to the ly when the end user has access to the underlying
Information Society may be a critical "glass ceiling" that technologies that form the foundation of the global in-
impedes economic and social mobility. Among the fo-village. The next section examines those technolo-
causes of the so-called digital divide are: gies as building blocks in that foundation.
• Lack of access to sufficient infrastructure – From a
lack of last-mile access networks to a paucity of
8.3 Underlying Technologies
backbone networks and international gateways,
From the consumer’s perspective, the Information
many countries lack the required network infra-
Society does not necessarily appear to be ground-
structure to support the rollout of broadband ser-
breaking international technological development. It is
vices and applications.
simply the smart phone or computer program they en-
• Cost and pricing – The high cost of building broad- joy using, with all of the attendant applications and ser-
band networks, particularly wireline ones, leads to vices. But to make the consumer’s engagement with
high prices for the services in order to recover the Information Society seamless to the individual user,
these sunk costs. In what becomes a self-defeating of course, there must be a universe of interconnected
cycle, high tariffs suppress demand, which reduces networks, servers, earth stations, international gate-
revenues, further discouraging investment in infra- ways, satellites, netbooks, dongles, and handsets, many
structure. That lack of infrastructure means that of which have been developed and marketed only with-
there are no economies of scale and scope that in the past few years. This section reviews the blistering
would otherwise lower build-out costs. So broad- pace of product research and development that has
band services remain rare, inaccessible, and prohi- now laid the foundation for an “always on” economy
bitively expensive in many areas of the world. and society.
• Lack of end-user devices – The ability to take full
advantage of broadband services depends on the 8.3.1 Broadband Network Technologies
user's access to (or possession of) a terminal or
handset that can turn 1s and 0s into streaming vid- At the most foundational level are the packet-
eo and interactive content. Many populations lack switched networks, both wireline and wireless, that
reliable or routine access to computers or smart provide ever-increasing capacity for massive broadband
phones. In many countries, the solution likely will throughput. These include backhaul and backbone
be to generate business cases that incorporate sub- trunking facilities that serve as the major highways or
sidies for end users to obtain 3G-equipped mobile arteries to circulate data. Through peering or transit ar-
handsets as an entry into the broadband universe. rangements, these facilities are interconnected with the
access networks of smaller ISPs, which provide the last-
• Lack of content – There certainly is no lack of con- mile links through a variety of delivery platforms: tele-
tent available on the Internet, as residents of the phone networks (through digital subscriber line or DSL),
Information Society know. But for much of the cable TV (through coaxial cable), or fibre-to-the-home
world, what is there is irrelevant, culturally alien, or (FTTH) networks. Broadband Wireless Access (BWA)
published in the wrong language. The Internet will networks, such as WiFi, WiMAX or 3G cellular systems,
give you a recipe for stuffed ptarmigan and a con- also provide increasingly high speeds that rival or ex-
tact to buy pet rocks. But for communities in the ceed landline speeds.25
developing world, what they need is detailed
health information in Quechua or expanded dis-
tance learning opportunities in Assamese.
Chapter 8 319
8.3.1.1 NGNs factor of four from 2009 to 2014, approaching 64 ex-

abytes a month. Video content is expected to comprise
Next Generation Network (NGN) is a catch-all term over 91 per cent of that total by 2014 (see Figure 8.1).26
for high-speed, packet-switched networks that promise NGN technologies that provide backbone connectivity
increased uplink and downlink speeds to consumers. are advancing to provide the necessary capacity to last
When implemented, NGNs will provide enough back- mile networks to meet this demand. Equipment manu-
bone and backhaul capacity to enable a whole new facturers and carriers are deploying 40 GB/s architec-
class of applications, such as three-dimensional (3-D) tures, and manufacturers are readying 100 GB/s
television, high-definition video conferencing, and vir- solutions using fibre or Ethernet technologies.27 Terabit
tual-reality type gaming. Fixed broadband NGNs involve networking solutions are being considering for the next
deploying new networking techniques over cable TV, technology iterations. Innovations at the Internet back-
DSL, and FTTH systems, greatly boosting capacity and bone and in last-mile network technologies are poised
speeds. to deliver new higher speeds and meet future Internet
traffic demands.
On the wireless broadband infrastructure side, flat-
IP wireless networking architectures found in WiMAX 8.3.1.2 Wireline Access Platforms
and the 3GPP Long-Term Evolution (LTE) technology are
expected to offer mobile and portable download Advances in cable modem and FTTH networks
speeds that rival those of fixed broadband networks, promise to dramatically increase the speeds businesses
allowing similar kinds of broadband applications, in- and consumers will have to access Internet content and
cluding mobile television and video telephony. applications. The cable TV industry is utilizing
DOCSIS 3.0 to offer theoretical download speeds of up
The forecasted growth of Internet traffic, fueled by to 160 Mbit/s and upload speeds of 120 Mbit/s.28 Some
many of the Information Society services mentioned in U.S. cable operators have already begun offering
Section 8.2, is relentlessly driving technology develop- speeds in excess of 100 Mbit/s to large portions of their
ment. Internet capacity use is predicted to grow by a coverage areas.29
Figure 8.1: Stairway to (Digital) Heaven: The Broadband Usage Forecast
63.9
EB/mo
32
EB/mo
0
2009 2010 2011 2012 2013 2014
Internet Managed IP
Mobile
Note: "Managed IP" refers to enterprise-level private network services.
Source: Cisco, VNI, June 2010.
320 Chapter 8
In Japan and the UK, cable operators have also dep- hand, found that Republic of Korea was the world lead-
loyed DOCSIS 3.0. Japan’s Cablenet is offering a er, with more than 50 per cent of its households sub-
160 Mbit/s service tier,30 and the UK’s Virgin Media is scribing to high-speed access through FTTH broadband
piloting a 200 Mbit/s tier, with an eye toward offering a connections. Japan was second globally, with more
400 Mbit/s tier in the future.31 than 34 per cent penetration, while Hong Kong, China,
was only slightly behind Japan in third place.
Within the telephony industry, FTTH networks are
the current next-generation wireline alternative to 8.3.1.3 Broadband Mobile Services – 3G and 4G
(coaxial) cable-based technologies. Fibre can offer very
high bandwidth to consumers and businesses. Some Wireless access networks based on so-called 3G
FTTH providers are delivering 1 GB/s symmetrical ser- and 4G technologies are expanding the availability of
vice (both uplink/downlink) to residential customers in the Internet to more people, providing the flexibility to
Hong Kong, China; Republic of Korea; Germany; Aus- take one’s broadband connection anywhere. High
tralia; Portugal; Amsterdam; Japan; Sweden; and the Speed Packet Access (HSPA) networks – commonly
U.S.32 The Organization for Economic Cooperation and known as “3.5G” networks – have proliferated in many
Development (OECD) found that in October 2009, the countries. The Global Mobile Suppliers Association
fastest speeds advertised by the incumbent telcos, us- (GSA) released statistics in June 2010 identifying
ing fibre, were in Portugal and Slovakia (see Figure 8.2). 353 HSPA operators in 147 countries, with over
100 more planned by the end of 2010.33 Current HSPA
According to OECD figures, at the end of 2009, networks provide peak downlink speeds of 21 Mbit/s,
54 per cent of Japanese broadband service subscribers with future iterations of the technology able to achieve
were on fibre networks, with Republic of Korea close peak download speeds up to 84 Mbit/s.34
behind at 49 per cent. The FTTH Council, on the other
Figure 8.2: Off to the Races: OECD Countries Add Fibre Throughput
PT and SK to 1,000 Mbit/s (1 Gbit/s)

Slovak Republic
Portugal
Japan
Turkey
Sweden
Korea
Iceland
France
Finland
Austria
Australia
Netherlands
United States
Norway
Denmark
Italy
0 50 100 150 200

Source: OECD
Note: See the OECD broadband portal for information on data sources and notes.
Note: The offers used to calculate the average include all combinations of single, double and triple-play offers in the survey. This is because
some top-speed broadband subscriptions only are available as part of a package.www.oecd.org/sti/ict/broadband
Chapter 8 321
Figure 8.3: Keeping Up with Japan: Broadband Speeds Using All Technologies
Japan 205
Sweden 102
Portugal 102
Korea 102
France 102
Finland 102
Slovak Republic 82
Hungary 82
Netherlands 61
United States 51
Norway 51
Denmark 51
Turkey 31
Iceland 31
Austria 31
Australia 31
Germany 26
New Zealand 25
Greece 25
United Kingdom 20
Switzerland 20
Italy 20
Belgium 18
Czech Republic 16
Canada 16
Luxembourg 15
Spain 10
Ireland 7
Poland 6
Mexico 4
0 50 100 150 200
Note: Includes fibre-to-the-home (FTTH) and fibre-to-the-building (FTTB or apartment LAN) connections. Some countries may have fibre but
have not reported figures so they are not included in the chart. See the OECD broadband portal for information on data sources and notes.
Source: OECD, OECD Broadband statistics [oecd.org/sti/ict/broadband]
Meanwhile, commercial WiMAX networks already 8.3.2 Devices

are deployed in more than 147 countries, covering
620 million people.35 LTE, a technology that often com- Notwithstanding the download speeds available to
petes with WiMAX, also enjoys widespread adoption by consumers, few residents of the Information Society
major carriers, although deployment and operation of are closely counting these speeds by the hour or
networks is well behind WiMAX. At mid-2010, LTE net- minute. What they are looking at – and mesmerized by
works were operating in Norway and Sweden, but – are the gadgets. Whether they are I-phones,
there were 80 more LTE network commitments in G-phones, I-pads or I-pods – or laptops, desktops, net-
33 countries.36 books, or dongles – the devices are the keys to the In-
ternet. They provide the intelligence for otherwise
Backers of both WiMAX and LTE networking tech- largely bent-pipe packet-switched networks. And it is
nologies have applied for ITU’s IMT-Advanced certifica- really these end user devices that offer the online expe-
tion, which requires 100 Mbit/s mobile download and rience.
1 GB/s fixed download speeds. WiMAX-Advanced and
LTE-Advanced, as they are now known37, could be dep- Faster networks have given rise to powerful new
loyed as early as 2012.38 It is these IMT-Advanced sys- devices in many forms, ranging from smart phones
tems that most industry observers now consider true such as Apple Inc.’s iPhone and Google-powered Andro-
4G technologies. id phones, to portable computing devices such as net-
books and smartbooks, to tablet devices such as
Apple’s iPad, to single purpose devices such Amazon’s
Kindle. Advances in chip design, manufacturing, and
cost-reduction have enabled a variety of devices that
bring computing to larger segments of the population.
322 Chapter 8
Figure 8.4: Global FTTH Council Ranking of FTTH Penetration Rates
Economies with the Highest Penetration of Fibre-to-the-Home / Building + LAN

South Korea
Japan
Hong Kong
Taiwan
Lithuania
Sweden
Norway
Slovenia
Estonia
USA
Denmark
(blue) Fibre-to-the-Home subscribers
Singapore
(orange) Fibre-to-the-Building + LAN subscribers
Slovakia
Finland
Netherlands
China
Russia
Italy
Latvia Economies with greater than 1%
France household penetration*
Czech Republic
Portugal
Bulgaria
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55%
Household Penetration
Source: FTTH Council-EU, G20 need to speed up on Fibre to the Home, Press Release, February 26, 2010, at:
www.ftthcouncil.org/en/newsroom/2010/02/26/g-20-need-to-speed-up-on-fiber-to-the-home
8.3.2.1 Smart Phones Are Driving Demand provide handset subsidies to “seed” the growing
broadband wireless market.
Smart phones and netbooks are driving demand
for mobile broadband and WiFi networks. In Asia, A recent study found that wireless broadband ser-
smart phones accounted for one-third of handset sales vice using HSPA or LTE provided connectivity to 17.3 per
in the first quarter of 2010 and this trend was expected cent of PCs in Europe.41 Wireless technology can be the
to continue.39 In other parts of the world, similar rapid Internet on-ramp for billions around the world, particu-
adoption of smart phone devices is expected. In Europe, larly because more people are already using mobile
Gartner Group found that 28 per cent of phones sold in phones as their primary or sole voice communications
2009 were smart phones. It predicted that by 2012, the device.
percentage of smart phones sold would increase to
70 per cent of all phones sold.40 8.3.2.2 Device Convergence
These devices are gradually becoming the primary In the wake of the digital revolution, the most subs-
means for people to get on-line, as consumers cut the titutable part of the communications value chain may
cord and use a wireless broadband connection to con- well be the device used to generate the digital trans-
nect to the Internet. This trend holds much promise for mission. We live in an era when gaming consoles are
developing countries, where many consumers cannot also computers and when computers double as tele-
afford a laptop or personal computer or have no access phones.
to fixed line broadband services. Smart phones operat-
ing on a mobile broadband network can provide access In 2005, the Republic of Korea became the first
to the Internet at a low cost, particularly if operators country in the world where mobile phones could re-
Chapter 8 323
ceive digital television signals. Koreans had bought power and flexibility that advanced handsets can offer
20 million handsets by the second quarter of 2009 – in tandem with high-speed mobile data networks. As of
double the number from the first quarter of 2008 and June 2010, with more than 2 billion downloads and
11 times the number of handsets sold when mobile TV 225,000 applications in its App Store, Apple still led the
was first launched.42 In Korea, free-to-air mobile TV is a way.46 But Google, with its Android smart phone oper-
five-year-old fact of life. According to the country’s ating system and competing Android Market for com-
broadcasters, 27 million people — 56 per cent of the patible applications, was posting dramatic growth over
population — watch regularly.43 While Koreans are the the two years since the first Android device was intro-
world leaders in mobile TV viewing, the technology is duced in 2008. Google’s Android Market has sold more
also catching on in China, Southeast Asia, India, Africa, than 250 million downloads,47 and as of June 2010 had
and Latin America, where 80 million people now have more than 65,000 apps available. Meanwhile, addition-
cell phones that can receive largely analog TV broad- al app stores from manufacturers and operators were
casts.44 being developed, increasing the accessibility of features
for smart phone users.48
In the U.S., over-the-air broadcasters are starting to
trial free mobile TV programming. Broadcasters plan to Mobile applications provide a targeted user expe-
launch regular service in the 2011-2012 timeframe. rience that can simplify access to a whole slew of online
Plans for free, ad-supported mobile service will be first services, such as social networking, mobile banking, en-
to be made available. Paid premium content is ex- tertainment, sports, and health information. These
pected to be offered in the future.45 apps can greatly enhance and ease people’s access to
an unlimited number of services.
8.3.3 There’s An App for That
8.3.3.1 It Knows Where You Are
So, you want to use your phone as a compass or a
personal fireplace? There’s an “app” for that: a soft- The world is still seeing the early days of location-
ware application that usually can be downloaded in based apps, but according to new data from Skyhook,
minutes, purchased and paid for online, and stored on there are now more than 6,000 location-based iPhone
the mobile device for future use (or, often, not). (See apps, 900 Android apps, and 300 BlackBerry apps.49
Box 8.5.) These location-based applications range from social
networking ones like Twitter, Foursquare, or Google
Mobile apps and mobile app stores are a relatively Buzz to child tracking to gaming, to targeted, location-
new phenomenon. In 2007, Apple introduced its based advertising.50 Augmented reality applications are
iPhone and kicked off the mobile app revolution with also generating excitement. These applications use the
its App Store, which made it easy for consumers to find smart phone’s location, mapping, and/or camera func-
and install applications. The smart phone and its ac- tionalities to provide an overlay that gives users data
companying app-store “ecosystem” showcases the about and enhanced views of their surroundings.
Box 8.5: Apps-a-Go-Go: The World of Wild and Wondrous Applications

The explosion of smart phones and "app stores" has brought a wide range of mobile applications to the market, driving cus-
tomers' fascination with their new, high-tech handsets. Many of these apps make use of smart phone cameras, GPS location
capability, and Internet access, resulting in new features that many consumers find irresistibly useful. Other apps, while still
seemingly irresistible, rank a bit lower on the usefulness scale. Many apps could best be described as niche applications.
For example, star navigation map apps allow would-be astronomers to simply point their phones to the night sky and see on
their mobile screens the names of the constellations they are viewing. Augmented-reality apps, meanwhile, allow users to
see "overlay" information relating to restaurants, movie theatres, and other public places caught in the smart phone's cam-
era view. One need only point the mobile phone to unspool real estate listings, menus, parking lot prices, and other data.
Of course, not all apps reach that mind-expanding level. As with any new technology, some apps are of dubious social bene-
fit or even downright silly. One prime example is a popular app called "iFart," which produces noises of a decidedly impolite
nature. Other apps provide visual and audio sound effects mimicking light sabers, cigarette lighters, firearms, and even the
vuvuzela of South African World Cup fame. While the history of smart phone apps is still in its early stages, only time will tell
which apps are true trailblazers and which ones will end up in the dustbin of history.
Source: Authors.
324 Chapter 8
Privacy concerns are one of the growing social sensitive, flat-rated pricing. Customers would pay
harms associated with these applications. The greatest (sometimes) a service-initiation fee, followed by unli-
fears of using location-based apps are (1) revealing mited usage on a monthly payment basis.
where one’s home is, and (2) facilitating stalking beha-
viours, according to Australian respondents to one sur- This can lead, however, to massive imbalances in
vey.51 A study by the U.S. Carnegie Mellon University data downloads by a few customers, straining the ca-
revealed that people also worried about being tracked pacity of even a broadband network. According to U.S.
by the government and do not want to be annoyed by operator AT&T’s head of consumer services, Ralph de la
receiving ads based on their exact locations. 52 One Vega, about 3 per cent of smart phone users are con-
website, dubbed “Please Rob Me,” highlighted the po- suming about 40 per cent of AT&T’s network capacity
tential risks of sharing location-based data by aggregat- (see Box 8.6).56 iPhone users on the AT&T network are
ing publicly shared check-ins of Foursquare users and usually targeted as the culprits. As a result, the U.S.
informing others of the locations of these users. While mobile service market has begun to see tiered wireless
the site stopped its service after a short while, it raised data plans. For example, AT&T’s DataPlus service pro-
awareness of the privacy risks associated with location- vides 200 MB for USD 15 per month, and its DataPro
aware apps.53 offering provides 2 GB for USD 25.
8.3.3.2 Push and Pull Apps In the first quarter of 2010, Nielsen Corp analyzed
60,000 mobile bills in the U.S. and discovered that the
One set of mobile apps push information from a average smart phone mobile data user consumed ap-
server to a mobile device. Another set of mobile apps proximately 300 MB per month.57
are initiated by the mobile device (by user interaction
or automated scheduler) and pull information to it from Metered data pricing that offers lower price points
the web.54 Smart phones take advantage of both types may be fairer to consumers.58 UK telecom operator O2
of applications. Push apps require little user interven- has also moved away from unlimited data plans. Wire-
tion but may be viewed as more invasive, as the user less operators in Sweden, however, are going the other
does not control when they receive app updates. To the way, moving from tiered plans to unlimited usage plans.
user, however, the difference between the two types of 3 Sweden and Tele2 have removed the data caps on
app update is often hard to differentiate. Some email their most expensive plans, noting the reduction in cost
programs like Blackberry and Gmail on the Android OS of adding additional capacity.59 Another potential driver
provide push service, but these devices also are able to for metered data pricing is to provide less-expensive
use pull technology via POP55 to download emails to options to entice mobile customers to purchase a data
the device. plan.
8.3.4 Tariff Trends On the fixed-line side, U.S. cable operator Comcast
has been experimenting with metering data usage
We have established that all the underlying parts of since 2008. It has instituted a 250 GB combined up-
the Information Society are falling into place: we have stream/downstream cap per month. The median Com-
the high-speed, large-capacity backbones, the wireline cast customer averages 2-4 GB/ month and fewer than
and wireless broadband access networks, gadgets and 1 per cent come close to the 250 GB cap, according to
gizmos, the features and applications to make them Comcast officials.60 Internationally, fixed-line operators
sing, and advanced services like mobile TV to provide have been more comfortable instituting bandwidth
content. Just how are we going to pay for all this? caps and have not faced consumer backlash for their
actions. Some critics argue, however, that fixed-line
Leaving aside the question of affordability, what network operators are eager to impose caps to ensure
pricing and metering mechanisms make the most sense? that their own propriety video offerings are not im-
In many areas, the easiest and simplest way to promote pacted if customers choose to drop those subscriptions
take-up of service has been to offer non-usage- and rely on Internet-delivered video programming.61
Chapter 8 325
Box 8.6: U.S. iPhone Capacity Issues – a Sign of Things To Come?

In 2009, Apple iPhone users in the U.S. cities of San Francisco and New York experienced a love-hate relationship with their
devices. They loved their slick, user friendly, state-of-the-art mobiles, but many of them grew increasingly frustrated with
their periodic inability to use them, due to capacity issues experienced by AT&T, the exclusive U.S. provider of iPhone ser-
vice.
While the operator has invested billions of U.S. dollars in upgrading and improving its network, the capacity problems illu-
strate the huge demand new smart phones will place on wireless networks. Smart phone users consume five times the
amount of data capacity that standard mobile phone users do. As more users buy and use smart phones, operators are
struggling to keep up with the huge data capacity demand, and they are attacking the problem on multiple fronts.
One approach is to address their network capabilities. Operators are upgrading copper backhaul connections to fibre, split-
ting cell sites, and adding newer towers in densely populated areas. They are also using additional spectrum resources to
offer greater capacity, investing in WiFi networks, and encouraging users to purchase femtocell devices to off-load traffic
from the operator's network onto the consumers' facilities.
Meanwhile, operators have worked with hardware and software manufacturers to optimize how devices such as the iPhone
and bandwidth-intensive apps such as Internet TV and radio streaming use the network. Operators have also introduced dif-
ferent tariff structures, charging higher prices to customers with high data-rate plans or penalizing customers that exceed
certain data allotments.
Operators are also looking for more spectrum allocations. In the U.S. and Europe, operators have campaigned for more
harmonized spectrum, preferably in contiguous blocks, for next-generation wireless technologies (LTE and WiMAX). In addi-
tion to more spectrum licensing, increasing the availability of unlicensed spectrum might allow for greater opportunities to
off-load operator traffic onto alternate networks. Regulators may also be asked to look at opening access to incumbents'
fibre networks to provide critical backhaul needed to support mobile data traffic.
Source: Authors.
8.4 Impact on Everyday Lives • Instead of liberating us, online services actually
burden us with accumulated passwords, jargon,
It is one thing to say that governments, businesses, and time-intensive monitoring of multiple network-
and organizations are using new networking and pering sites (see Box 8.7, “Is It Okay to Unplug?”); and
sonal computing technologies more than ever before.
The real question is how this may be changing individu- Our children experience too much unfiltered online
al lifestyles and lives. The news media in many devel- media and not enough outdoor activities that used to
oped countries are now sharply attuned to issues of characterize childhood in earlier years.
how the saturation of "always on" media may be affect-
ing society. Along with clear advantages, there is grow- Doubtless, these lifestyle complaints will seem
ing concern that some people may have become so over-wrought to most individuals who are seeking
addicted to constant connectedness that it alters their broadband access to improve their livelihoods, educa-
relationships and capabilities – even their thinking pat- tions, and health. But consider this a fair warning: when
terns – in the "real world". In Canada, for example, a the broadband faucet opens, it can often turn into a
number of provinces have enacted laws that prohibit torrent of unwanted and seemingly uncontrolled con-
drivers from texting while they are driving and from tent, as well as fraud, invasion of privacy, computer vi-
talking on mobiles other than hands-free devices. Simi- ruses, and other unintended consequences. So, for
larly, in the United States, many state legislatures have individuals with broadband access to the world, and for
introduced similar legislation. the regulators who are called upon to protect them, the
Information Society has truly become an environment
Recently published books have posed questions of "the good, the bad, and the baffling." This section
about whether: explores this multi-faceted nature of online culture – a
culture that regulators must decide whether, and how,
• Increased telecommunication connectedness has
to monitor and regulate.
actually made us less social in face-to-face settings;
• Total immersion in online activities may be a form
of escapism that amounts to an addiction;
326 Chapter 8
Box 8.7: Is It OK to Unplug?

In the Information Society, there is no end to the opportunities to get online, through smart phones, netbooks, laptops,
desktops, game consoles, iPads, social networking sites, and so on. All of these devices and applications are meant to make
life easier, but is there a point where it just becomes a burden keeping up with all of it? Do we work for our machines? Is it
OK to unplug once in a while?
Increasing buzz in the media points to a sociological trend in the making: instead of immersing themselves in the always-on
Internet universe, some people are turning that into the almost always-on revolution. In other words, they are making a
point of actually turning their electronics off occasionally, just to de-stress and re-engage with family and friends in person.
Some call it the "digital sabbath." The idea is to take a day, or a weekend, to just rest from the burden of answering texts,
posting Facebook entries and tweeting, if only to put all the information into perspective.
William Powers, the author of a book that explores new media overload, tells of standing on a New York City corner with a
half-dozen other people, all of them were engaged in pecking on their smart phones. Here, amidst one of the liveliest, most
energized cities in the world, people were tuned out: there, but not there. Powers' book, entitled Hamlet's Blackberry: A
Practical Philosophy for Building a Good Life in the Digital Age, tries to help individuals obsessed with digital connectivity re-
draw a balance between life online and life in the actual world around them.
That advice may have come just in time. In a front page article in February 2010, a newspaper in Washington, DC, related,
among other things, reports from marriage counselors in the U.S. that online behaviour is actually threatening marriages in
many cases. That included one instance in which the husband reportedly began surfing the Web on his smart phone – in the
middle of the marriage act itself!
Sources: National Public Radio, " 'Hamlet's Blackberry': To Surf or Not To Surf," 20 July 2010, downloaded from
www.npr.org/templates/story/story.php?storyId=128364111#128364178; and Rosenwald, Michael, "Obsessed with Smartphones, Oblivious
to the Here and Now," Washington Post, 22 February, 2010.
8.4.1 The Good Perhaps the best way to envision the benefits of
the Information Society is to define them in terms of
There is no doubt that broadband networks, smart how they affect individuals' lives. The benefits could be
phones, computers, and the Internet together provide categorized as:
enormous advances in social and personal welfare. For
• Citizenship;
most observers, the positive aspects of the Information
Society more than outweigh the drawbacks. To take the • Consumer Empowerment;
example of the most basic online applications, since the • Communitarian Involvement; and
early 1990s, email and Web browsing have made per-
sonal communications and basic research infinitely • Personal Welfare.
more accessible, affordable, productive and common.
In many primary schools (where computers and broad- 8.4.1.1 Citizenship
band are available) children as young as 5 or 6 are now
being taught how to gather information over the World The growth of e-government services around the
Wide Web and how to present it in graphic and written world has been accompanied by corresponding gains in
formats. openness and transparency of government activities.
Government agencies have increasingly begun to post
Social networking and multimedia content now proposals and decisions on their websites, in the
enrich the online experience of millions of people. The process inviting public consultation and public aware-
very act of shopping for household items has become ness of their activities. Individual citizens often now ex-
computerized, as people go to Internet websites such pect to see notifications of meetings, the texts of
as craigslist to seek out bargains. And yes, even basic judicial and administrative decisions, and other gov-
human relationships have gone cyber with online dat- ernment documents online. Governments have moved
ing sites and chat rooms. In fact, one of the salient as- to online publication, in many cases, to save printing
pects of the Information Society is that it can touch and distribution costs.
every facet of a person's life, depending on how deeply
that individual chooses to immerse himself or herself in Along with access to government, citizens are ob-
the online world. taining enhanced, and often direct, modes of commu-
nication with elected officials. Broadband services can
Chapter 8 327
allow elected representatives to host online chat ses- paign events in those locations. The effect of broad-
sions and "pod-casts" that give them more chance to band technologies on political activity is (1) to decen-
solicit opinions, explain their positions and communi- tralize it, (2) to make it more accessible, often to
cate the progress of legislation. In some countries, legis- previously un-involved individuals, and (3) to capitalize
lators provide phone numbers and email addresses on on the energy generated by rapidly snowballing media
their official web pages, and in some cases, there are momentum.
automatic links that allow constituents to draft and
send messages directly through those websites. The Meanwhile, the Information Society is also rein-
combination of increased information and greater ac- venting the old styles of journalism and commentary.
cessibility to government officials provides everyday The "press" of yesteryear is now a wide-open universe
citizens with unprecedented opportunities to partici- of blogs, online news sites, YouTube clips, and cable TV
pate in the governance and civic life of their countries. commentary, all of which is accelerated into a nearly
instantaneous news cycle. In the Information Society,
Moreover, that increased availability and access the medium is now faster than the message, and the
carries over into political campaigns and movements Internet delivers the news almost as rapidly as it hap-
(see Box 8.8). With access to texting, email, and the In- pens. Again, as with political activity, the impact of al-
ternet, individuals can contribute money and time to ways-on media upon journalism has been hard-hitting
causes and political campaigns more easily. Political and far-reaching. Access to the media has been revolu-
candidates increasingly respond to these opportunities tionized because anyone with a computer (or cell
by starting blogs, sending out Twitter "tweets", and phone) can now "broadcast" or "report" events simply
maintaining Facebook pages. The combination of map- by texting pictures or uploading content to the Internet.
ping software and broadband access, for example, al- For good or ill, the new media environment has rapidly
lows visitors to a campaign web page to call up a map decentralized journalism and turned every computer
of their geographic area and click on various locations into a newsroom.
to see descriptions and schedules of upcoming cam-
Box 8.8: The Information Society: Not Politics As Usual

As access to the Internet spreads and social networks become more prevalent, politics has changed, as well. Politicians and
the public alike are using the new online tools to advance their views on governance.
Heru Sutardi, commissioner of Indonesia's Telecommunications Regulatory Authority, has recognized the growing impor-
tance of social networks, calling them collectively Indonesia’s “fifth estate”, after the legislature, the executive branch, the
judiciary and the traditional media. Sutardi noted how social networking sites are changing how Indonesians interact with
their political leaders and influence policymakers. For example, at the end of 2009, a Facebook group advocated the release
of two leaders of Indonesia’s Corruption Eradication Commission (KPK). Indonesia is not the only country seeing the growing
influence of social networking. In Thailand, Facebook and other sites have become a hotbed of political activism, providing a
way for groups to identify political opponents (in one case, targeting them by name).
The increasing influence of social networking sites on political campaigns was a topic of discussion in 2010. In the Republic of
Korea, the National Election Commission (NEC) restricted the use of Twitter three months prior to elections held on
2 June 2010. The NEC applied the same treatment that it applies to campaign advertising emails, citing an election law that
bans distribution of promotional material 180 days prior to the election. The New Progressive Party (NPP), whose candidate
was one of the most followed politicians on Twitter, was quick to issue a statement against the prohibition, providing evi-
dence of the growing influence of the medium.
Citizen mobilization and political campaigning are not the only examples of the use of social networking. Existing heads of
government can use the technology, as well. In 2010, Venezuelan President Hugo Chavez joined Twitter, and by August of
2010 he had more than 720,000 followers. Chavez encouraged Venezuelan citizens to tweet him with their concerns. His use
of the medium has given Chavez’s popularity a boost and has become a significant communication tool for his administra-
tion.
Sources: Robin Hicks, SOCIAL NETWORKS: INDONESIA'S FIFTH ESTATE?, futuregov, 22 July 2010,
www.futuregov.asia/articles/2010/jul/22/social-networks-indonesias-fifth-estate/;
Simon Montlake, Thailand's red shirts and yellow shirts battle it out on Facebook, Christian Science Monitor, 24 May 2010,
www.csmonitor.com/World/Asia-Pacific/2010/0524/Thailand-s-red-shirts-and-yellow-shirts-battle-it-out-on-Facebook; Kim Tong-hyung,
Crackdown on Twitter Brings Criticism of NEC, The Korea Times, 16 February 2010,
www.koreatimes.co.kr/www/news/biz/2010/02/123_60930.html ; Rory Carroll, Hugo Chávez's Twitter habit proves a popular success, The
Guardian, 10 August 2010, www.guardian.co.uk/world/2010/aug/10/hugo-chavez-twitter-venezuela.
328 Chapter 8
8.4.1.2 Consumer Empowerment the creativity and content that community groups bring
to their online sites.
Much attention has been given to how the Internet
empowers companies to access markets they could Moreover, "communities" can be regional, national
never before reach. This works two ways. Consumers or even global. For example, support groups for indi-
now have the access and the reach they need to pur- viduals stricken with very rare diseases can communi-
chase unique, high-value, and affordable good s and cate with each other and spread information on
services literally anywhere in the world. Broadband treatment options being explored in different parts of
connections allow buyers to see what they are buying the world. Émigrés from a single town in the "old coun-
(often, with views from multiple angles), ask questions try" can continue to share news, pictures, videos, and
or input the various options (color, size, functionality, conversations from places as diverse as Chile, Australia,
etc.), and then, after providing payment authorization, Zimbabwe , and Canada. In the process, they can con-
simply click a button and have that product delivered to tinue to learn about issues and problems in their home
their homes. Online shopping has become so ubiquit- town, and provide support to help their friends and rel-
ous that in many countries it has almost entirely re- atives still living there.
placed human contact in several major industries,
including air travel, entertainment (i.e., the sale of tick- Social networking sites are frequently used, as
ets for concerts or sporting events), and hotel accom- another example, to organize reunions of extended
modations. When online purchasing works (and it families and school classmates. The broad availability
increasingly does work), the benefits are manifest: and public awareness of such services as Facebook
have made it possible to re-establish links with individ-
• The ability to purchase goods and services not
uals that may have been "lost" or out of communica-
available in one's immediate area;
tion for years.
• Savings in time and energy (i.e., petrol) by avoiding
having to travel to find, purchase, and transport an Moreover, the ability to provide a cyber "home"
item to one's home;62 site for individuals with like interests and backgrounds
• Access to multiple choices of suppliers, stimulating can serve as an incubator for the preservation of rare
competition, lowering prices, and causing suppliers and threatened languages, cultural traditions, arts,
to be more efficient; and trades, and musical styles. It may be ironic that a 21st
century technology can help resurrect an ancient art
• Access to an enriched quality and variety of goods form, but the power of broadband interconnection is
and services in national or worldwide markets. that individuals accessing a website can download au-
dio and video and participate in streaming of live per-
There are, however, drawbacks and uncertainties formances and post their own content. Experts,
associated with online consumerism, which will be ad- aficionados, and other performers can then interact
dressed in detail in Section 8.4.2. with it. The result is living cultural experience, not a
static, dead artifact.
8.4.1.3 Communitarian Involvement
8.4.1.4 Personal Welfare
As with increased availability and participation in
government and political life, broadband Internet The improvements to life described in the previous
access provides new avenues for organizing groups to sub-sections are, of course, apt to bring more happi-
fulfill community needs and individual interests. Charity ness and fulfillment to individual lives. But in several
groups, sports leagues, literary clubs, youth groups, re- direct ways, the Information Society provides more op-
ligious gatherings: any routine activity in a community portunity for enhanced personal welfare than perhaps
can be captured and organized on a website. A youth has ever been possible before.
football club, for example, can announce a meeting to
plan a tour in a nearby region, post practice schedules, Through tele-medicine and eHealth services, indi-
itineraries and permission forms, and then post pic- viduals can gain access to services and medical exper-
tures and videos of the matches once the tour is over. tise that would otherwise not have been available to
With web hosting services now widely available and them. Moreover, hospitals, doctors' practices, and oth-
increasing numbers of individuals having learned how er facilities can employ information technologies to di-
to maintain content, there are fewer and fewer limits to gitize medical records, so that they can be rapidly
Chapter 8 329
transferred or called up for use by multiple profession- 8.4.2 The Bad

als. This makes the practice of medicine more efficient
and could improve patient outcomes. It allows greater With all of the avenues open for cultural, political,
sharing of patient data to compare symptoms and con- community, and personal development, it is not hard to
ditions, which could potentially improve medical re- see why the Information Society is a popular destina-
search and lead to advances in treatment. tion for policy-makers and individuals all over the world.
But a funny thing happened on the way to the "global
In addition, individuals will gain access through village": we picked up some unwanted fellow travelers.
broadband services to online education and training As with every technological and sociological revolution,
programmes, books, and libraries. These resources can this one has had some unintended consequences (see
expand personal knowledge and lead to better em- Box 8.9). This section explores the clearly detrimental
ployment and career opportunities. aspects of the Information Society: new facets of living
that perhaps nobody expected and certainly nobody
Moreover, broadband services can put individuals wants. These include:
in touch with personal and family counseling services,
• Computer malware and botnets that sneak in
addiction treatment options, and other social support
through the Internet and hijack control of our
mechanisms. These services can help not only the indi-
computers;
vidual seeking assistance, but members of that person's
family and community, as well. • Identity theft, fraud and invasion of our privacy;
• Content inappropriate for minors or offensive to
Perhaps the most recognized area of personal ben- community standards;
efit is the ability to communicate easily, through voice
and texting, with loved ones, friends and co-workers. • Online "predators" seeking to establish contacts
Always-on communications means that people can with potential victims of their crimes; and
keep up with each others' activities, locations, and even • Unintended environmental and health impacts
feelings. The fact that texting, and now social network- from discarded computer and cell phone compo-
ing, are major drivers of the Information Society tech- nents.
nologies, is a testament to how quickly they meet
individuals' needs and desires for interpersonal connec- In mild form (i.e., email "spam" or even a relatively
tedness. harmless computer virus), some of these negative as-
pects of cyber-life are merely nuisances. On the other
Finally, people can enhance their quality of life extreme, they can be tragic and even fatal for children
through access to entertainment, online books, music, and adults who are not able to detect fraud or protect
and the arts. The Information Society is also inherently themselves from criminals who hide behind the ano-
a portal to culture and diversion, including movies, nymity of the Internet. These are the threats that pose
popular music, and online games. The latter can include a challenge to governments and regulators. How can
alternate cyber "universes" where "avatars" can trade, governments and regulators ensure the benefits of the
build, play, and live vicarious lives. Information Society, outlined in Section 8.4.1, while still
protecting consumers, particularly the most vulnerable
So rich are the varied opportunities for online ex- of individuals, from harm?
perience that some observers question whether the
totality of that experience is altering perceptions of re- As indicated, this section outlines some of the
ality. (See Section 8.4.3.) There is no doubt, however, threats that exist in the online environment of the In-
that access to the Information Society can bring real-life formation Society. For more information about the
improvements in health, education, career develop- challenges posed by malware and botnets for govern-
ment, and other aspects of personal life. ments and regulators, see the chapter in this volume
entitled, “The role of ICT regulation in addressing of-
fenses in cyberspace”.
330 Chapter 8
Box 8.9: The Internet: Innocence Lost?

In May 2010, Sydney, Australia was shocked by the report of an 18-year-old who was lured to her death by an Internet pre-
dator who allegedly set up a false Facebook site, in which he claimed to work for an animal welfare group. Following her
dream of working with animals, the young woman agreed to meet the man in a rural area to help "rescue injured animals."
Her body was found two days later. Australian detectives took the step of publicly warning young people not to be fooled by
the anonymity of social networking sites, saying "you just don't know who you could be talking to."
While such mayhem may be relatively rare, the Internet has empowered new ways of committing crime, including identity
theft, fraud, extortion – even sexual assault and murder. In one reported case in the U.S., a sophisticated hacker was ac-
cused of tapping into peer-to-peer networks and sending files that were disguised as popular songs but that really contained
malware. Once downloaded by unwitting victims, that malware allowed the hacker to take over the victims' computers,
enabling him to search for intimate or sexually explicit images of young women stored on their computers. In several cases,
the hacker actually turned on video cameras remotely, or posed as the womens' boyfriends, asking them via email to send
explicit images or videos. The hacker then threatened to distribute these images and videos widely on the Internet unless
the victims agreed to make more explicit images or to pay money.
In 2009, the amount of malware (of all kinds) in circulation increased 71 per cent over the previous year, according to a sur-
vey conducted by the cybersecurity firm Symantec. The company estimated that nearly 7 million PCs were compromised
and turned into hacker-controlled botnets. Symantec also estimated that 51 per cent of all viruses, Trojans and other mal-
ware it had ever seen were logged just during the year 2009.
For more discussion of cybercrime, see the chapter in this volume entitled “Addressing Cybercrime – The Role and Respon-
sibilities of an Effective ICT Regulator”.
Sources: BBC News, "Shock at Woman's `Facebook Murder,'" 17 May 2010, at http://news.bbc.co.uk/go/pr/fr/-/hi/asia-
pacific/8686417.stm; Sydney Morning Herald website, "Man Accused of Extortion through Hacking," 23 June 2010,
www.smh.com.au/technology; and BBC News, "Web Hit by Hi-Tech Crime Wave," 20 April 2010, http://news.bbc.co.uk/go/pr/fr/-
/2/hi/technology/8630160.stm.
8.4.2.1 Computers Out of Control: Malware and

Botnets The same Microsoft report found that the type of
malware detected varies by country. For instance, in
Today, users of computers, laptops, netbooks, and the second half of 2009, password-stealing programs
now even smart phones are at risk of infection from proliferated in China due to the targeting of online
malware and other unwanted programs. These pro- games. In Brazil, password-stealing programs targeting
grams can be used to track keystrokes, steal passwords, banks were the most common form of infection de-
obtain personal identifying information, and cripple or tected. In Republic of Korea, worms (autonomous pro-
disable devices. Hackers can also install botnet programs that attempt to replicate themselves onto other
grams, allowing an unwanted party to hijack the com- computers) dominated malware infections because
puter to send spam or initiate denial-of-service or other they are spread easily through the popularity of Inter-
coordinated attacks – essentially, creating an unseen net cafes and LAN gaming.
army of computer zombies.
8.4.2.2 Identity Theft, Fraud, and Invasion of
A Microsoft report found that 7 out of every Privacy
1000 computers globally are infected with malware.63
Individual countries had different infection rates, but Identity theft, fraud, and invasion of privacy are
those rates did not correspond to overall economic de- some of the many hazards in the online world. Identity
velopment, for instance, Bangladesh (1.1), Ivory Coast theft can occur through hackers' theft of passwords,
(1.8), Ethiopia (1.1), Brazil (18.1), Korea (16.0), Turkey credit card numbers, or banking information; it allows
(20.0), U.S. (7.8),and Indonesia (3.5). Figure 8.5, shows criminals to use the victims’ accounts to purchase
Microsoft’s “heat map” showing global infection rates goods on an ecommerce site. Fraud is often perpe-
for the second half of 2009. Areas with yellow, orange trated by scam artists via emails seeking payments for a
or red colouring indicate higher frequency of malware share of “tied up funds”64 or to pay off a "hit man" or
detection and generation, while the green areas indi- pay medical expenses. Fraud artists often seek to prey
cate less malware. on the elderly, the disabled, or other vulnerable popu-
lations, particularly because many of those individuals
Chapter 8 331
are not experienced online travelers. Criminals often purses, and other designer items), or to obtain bank or
seek to sell illegal goods (e.g., prescription drugs and credit card information to perpetrate identity theft.
pirated video) or counterfeit goods (e.g., watches,
Figure 8.5: Global Malware Infection Rates
www.microsoft.com/sir
Malware Detections by
Country Region (per 1000)
This map illustrates the relative infection rates of differing

regions based on the number of infected computers discovered
per 1,000 executions of the MSRT. For exemple, a region
colored yellow would have an infection rate of between 7
and 10 computers per 1,000 executions of the MSRT.
Source: microsoft.com
Figure 8.6: Break down of global online threats and fraudulent content, 2009
Software (0.9%)
Stock (1.3%)
Malware (1.8%)
Get Rich Quick (2.1%) Pharmacy -
Phishing (3.0%) Non-Sexual (31.7%)
Financial (3.4%)
Fraudulent
Diplomas (3.5%)
Dating/Sexually
Explicit Material (4.6%)
Gambling (6.0%)
Pharmacy - Sexual (6.4%) Non-Pharmacy

Product Ads (19.3%)
Image Only (7.1%)
419 Scams (9.0%)
Source: Microsoft Security Intelligence Report Volume 8 (July through December 2009).
332 Chapter 8
Privacy protection is another concern of regulators. found that 77 per cent of children have had a negative
Employers, hackers, phishers, and others have been experience, such as receiving inappropriate sexually ex-
known to employ both legal and non-legal means to plicit texts.67 Twenty-four per cent of children Symantec
obtain information for their own purposes. Different interviewed in India expressed regret over some ac-
jurisdictions have varying protections in place to safe- tions they took while online. In Malaysia, Symantec
guard their citizens' personal information. Some coun- found that 87 per cent of children they surveyed had
tries and regions, including Canada, Asia Pacific, and had a negative experience, such as receiving inappro-
Australia have based their privacy laws on the OECD priate content, and 72 per cent had had strangers try to
Guidelines on the Protection of Privacy and Transbord- "friend" them on social networking sites. 68
er Flows of Personal Data.65 The guidelines outline basic
principles for nations to apply when developing their As part of its Global Cybersecurity Agenda (GCA),
own laws regarding privacy. Online privacy protection is the ITU started the Child Online Protection (COP) initia-
continuing to evolve as social networking sites like Fa- tive to foster international cooperation for ensuring a
cebook, Myspace, and Twitter, redefine attitudes to- safe environment for children online. COP has identi-
ward privacy, especially among younger users who fied bullying, violence, racism, pornography, and preda-
have grown accustomed to sharing more of their in- tion as risks that children face while online.69 These
formation online.66 threats confront a growing number of children. As Fig-
ure 8.7 indicates, the proportion of children below age
8.4.2.3. Inappropriate Content and Protection 15 who are Internet users has reached close to 100 per
from Online Predators cent in many developed countries and nearly 40 per
cent in some developing ones. Moreover, the propor-
Children are especially vulnerable to dangers lurk- tion is far higher among older youths, from age 15 to
ing on the Internet. Symantec, makers of the Norton age 24. Universally, the proportion of young people
anti-virus suite of products, conducted studies of mi- who use the Internet exceeds the number of mature
nors' Internet use in India and Malaysia. In India, they adults (i.e., over age 24) in all countries.
Figure 8.7: A Youthful Inheritance: Internet Usage Under Age 24
Proportion of Internet Users, by age and total

(2008)
100
80 Less than 15
15-24
Total
60
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20
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ac Ch
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Source: ITU
Chapter 8 333
8.4.2.4 Potential Health and Safety Hazards 8.4.2.5 Environmental Impact
Rapid proliferation and use of mobile devices has When you “trash” your old computer, who or what
increased potential health hazards. One area of con- is actually trashed? The United Nations Environment
cern is the possible effect of cell phone radiation from Program (UNEP) estimates that, globally, 40 million tons
extended mobile phone use. The specific harm of ex- of waste is discarded annually from personal computers,
tended exposure is a subject of much debate, and the televisions, cell phones, etc.74 In emerging economies
research is contradictory and, so far, inconclusive. Some such as India, South Africa or Kenya, the amount of
studies have suggested a link between long-term use waste from electric and electronic equipment is grow-
(10 years) and cancer, but no conclusive or demon- ing (see Table 8.1). The number of mobile phones and
strated evidence has been produced. Cell phone manu- personal computers sold are rising while the lifespan of
facturers in many countries are required to publish the these items is decreasing. UNEP estimates increases in
specific absorption rate (SAR)70 of a device prior to al- e-waste from a factor of 2 to 20, depending on the level
lowing it be sold.71 of penetration for each of the items and the expected
lifespan of the items. For instance, in Uganda, where PC
Safety effects of another kind are clearer: evidence penetration is low, UNEP predicts a 6-to-8 factor in-
points to a growing problem with individuals who text crease by 2020 in e-waste from personal computers. In
or use their smart phones while they are driving. The India, e-waste from cell phones is predicted to multiply
ensuing distraction leads to heightened risks of traffic 18 times by 2020. In China, e-waste from cell phones is
accidents, resulting in injury and death. In the United estimated to multiply by only seven by 2020. China will
States, 30 of the 50 state governments (plus the District experience proportionally less growth in its e-waste
of Columbia and Guam) have enacted bans on texting from mobile phones as China’s mobile phone market
while driving.72 Many countries have put in place bans has high saturation levels. India’s cell phone market is
on the use of handheld phones while driving (while al- less saturated. As a result, the amount of e-waste from
lowing hands-free voice conversations), and several cell phones in India is expected to grow proportionately
countries (Israel, Japan, Portugal, Singapore and parts much higher.75
of the United States) have banned any use of wireless
communications while driving.73
Table 8.1: Quantity of E-Waste Generated in Metric Tons/Year

Countries South Africa Kenya Uganda Morocco Senegal Peru
Assessment date 2007 2007 2007 2007 2007 2006
PCs 19 400 2 500 1 300 13 500 900 6 000
Printers 4 300 500 250 2 700 180 1 200
Mobile Phones 850 150 40 1 700 100 220
TVs 23 700 2 800 1 900 15 100 1 900 11 500
Countries Colombia Mexico Brazil India China
Assessment date 2006 2006 2005 2007 2007
PCs 6 500 47 500 96 800 56 300 300 000
Printers 1 300 9 500 17 200 4 700 60 000
Mobile Phones 1 200 1 100 2 200 1 700 7 000
TVs 18 300 166 500 137 000 275 000 1 350 000
Source: United Nations Environment Program, RECYCLINGFROM E-WASTE TO RESOURCES, July 2009,
www.rona.unep.org/documents/publications/E-waste_20100222.pdf.
334 Chapter 8
8.4.3 The Just Plain Baffling published a book that exploded like a hand grenade in
the western media. Entitled Bowling Alone: America's
So far, this section has made clear that the Informa- Declining Social Capital76, the book put forward the
tion Society has brought some intended good conse- proposition that as individuals' economic welfare grew
quences and some unintended bad consequences. And during the decades between 1950 and 1990, their par-
then there are some unexpected consequences that, ticipation in civic organizations actually declined. He
well, we have not really figured out yet. Perhaps a bet- used the sport of bowling as an example or metaphor.
ter way to phrase this is that the intensive use of online Traditionally, bowling had been a communal sport, in
services and new forms of social interaction have gen- which adults had joined leagues and played together
erated questions that have never been addressed be- on teams representing their workplaces, local pubs, or
fore. Among the questions that have emerged during community groups. By the 1990s, however, that com-
the past decade's immersion in cyber-mania are: munal tradition had unraveled and had been replaced
by occasional bowling in pairs or small groups. Bowling
• Are online links and relationships crowding out
remained popular and people continued to do it, but
face-to-face interaction?
they were not using it to build the same kinds of links
• Can individuals actually become addicted to online and relationships within their communities.
experiences, to their own detriment?
• Are individuals using the anonymity of the Internet Accordingly the question has arisen: are the groups
to bully, harass, or deceive others? that coalesce around social networking the new "com-
munities" of the 21st century? Do terms like friending,
• Does the hyper-kinetic, multi-tasking nature of liv- followers, and fans have relevance in sociological
ing online lead to a re-ordering of the way we think, terms? Or, as some critics might suggest, are they con-
observe, and make decisions? trived, inferior to face-to-face contact, and inauthentic
• Are the omnipresence and variety of the online ex- – more the example of "bowling alone" than engaging
perience affecting the welfare and development of in a real community? Are Internet interactions replacing
children? real communities, or are they simply adding another
layer of social interaction to existing, face-to-face ones?
• What affect are Internet commentary and political
blogging really having on the level of civil and polit- Internet "Addiction"
ical discourse?
Perhaps the most formidable application driving
Typically, one of the best places to seek out discus- consumer take-up of broadband services is Internet
sion of these issues is the Internet itself. In the mael- gaming. Through gaming consoles with Internet con-
strom of content being pumped onto the Internet daily nections, gamers can engage in real-time with other
(at least in English), nothing escapes becoming a target gamers around the world, often in fantasy-type worlds
of discussion or speculation, even the medium itself. In or alternate-reality landscapes. Once logged on, they
many developed countries, the focus on Internet im- assume the identities of characters or "avatars" and
pacts increasingly features reports (many of them may quickly become lost in the new cyber-reality
shocking or sensational) about Internet addiction, In- created for them. At times, they can become very lost,
ternet stalking, Internet bullying and other newfound to the point where they spend nearly all of their waking
effects of the Information Society. But the process of hours within the game. In the early months of 2010,
systematically studying the nature and frequency of so- several horror stories emerged in the global press:
cial and psychological effects is really only beginning. As
broadband Internet access increases and as children • In Suwon, Republic of Korea, a married
and adults spend more time "inside their monitor couple (who had met through online chatting) was ar-
screens," there will be more serious academic efforts to rested after their three-month-old daughter died, alle-
determine whether or not the cyber revolution is reor- gedly from accumulated neglect and malnutrition. The
dering our psyches and societies. Here are some of the parents had been over-indulging at an Internet café,
areas that will be explored. spending essentially all their time there (they were
both unemployed), while allegedly leaving their infant
8.4.3.1 Does the Internet Make Us Less Social? child mostly unattended (see also Box 8.10).77
In 1995, at the dawn of the Internet age in most

countries, the U.S. political scientist Robert D. Putnam
Chapter 8 335
Box 8.10: Republic of Korea: A Wired Nation Addresses Social Change

Fans by the thousands gather on the beach, paying for tickets to sit in plastic chairs close to the action. The players enter in
uniforms featuring corporate sponsors, embraced by cheers, music and spotlights, and welcomed by over-enthusiastic an-
nouncers. When they win, they jump up and do specialized dance moves as the crowd goes wild.
Beach volleyball in California? Not hardly. Dragon-boat racing in Singapore? Guess again. It's professional video-gaming in
Busan, Republic of Korea, where high school students often spend up to 23 hours a week playing Internet games. In what
many consider to be the most highly wired country in the world, gaming may well have reached the status of a cultural insti-
tution, like football (of all kinds), cricket, or baseball in other countries.
Stung by high-profile cases of "Internet addiction," however, the National Assembly appears to believe the trend has gone
too far. It is debating a bill that would block under-age users' access to online games between midnight and 6 a.m. The on-
line "curfew" proposal follows efforts by the government to educate parents, counsel players and promote alternative activ-
ities. So far, nothing seems to be working.
The Republic of Korea government is not united, however, in viewing Internet gaming as a problem. Officials in the Ministry
of Culture, Sports and Tourism downplay excessive gaming as "Internet over-indulgence," and broadcasters view it as a new
class of "e-sport" to be marketed to fans. Still, Internet de-programming or "rest" camps have begun springing up in several
countries, including Republic of Korea (others reportedly include China and the U.S.), where children are given the opportu-
nity to do alternative activities such as canoeing and berry-picking. No word yet on recidivism rates.
Sources: Harlan, Chico, "South Korean Gamers Now Have Plenty To Cheer About," Washington Post, 18 August 2010; BBC News, "Gaming
Curfew for South Koreans, 12 April 2010, http://news.bbc.co.uk/go/pr/fr/-/2/hi/technology/8617372.stm.
• Around Asia, there have been at least four cases response using "literal terms of addiction." Students
since 2002 of young men dying of exhaustion in In- reporting feeling uncomfortable or agitated, "frantically
ternet cafes after gaming sessions lasting up to 86 craving", and "alone and secluded from my life." The
hours, during which they did not sleep and barely organizers of the study reported that:
ate.78
"The major conclusion of this study is that the por-
• In China, some psychologists have reportedly tability of all that media stuff has changed students’
sought to define Internet addiction as a clinical dis- relationship not just to news and information, but
order, and have set up treatment camps to isolate to family and friends — it has, in other words,
young people from the Internet.79 caused them to make different and distinctive so-
cial, and arguably moral, decisions.82"
• In 2007, a teenager in Ohio reportedly killed his
mother and wounded his father after the parents
In short, the Information Society spent much of
confiscated the boy's game console.80
2010 waking up to the fact that it was now a place in
which smart phone users could download an applica-
Other anecdotal evidence concerns a student at
tion that would show them a view of the street or si-
Harvard University who lost his scholarship because he
dewalk ahead of them. This would allow them to
spent all his time online; a man who spent so many se-
continue texting as they walked, without looking up
dentary hours sitting down that he had to have his leg
and without getting hit by a car or running into a light
amputated due to blood clots; and an 18-year-old who
pole.
literally chose homelessness when his parents told him
to cut back on gaming or move out.
8.4.3.2 Changing Cultural and Psychological
Patterns
Indeed, there are psychologists that deem Internet
or gaming addiction a clinical disorder, although it is not
Given the ubiquity and near complete acceptance
yet universally recognized as such. British psychologists
of new modes of media use, it is no surprise that some
have estimated that between five and 10 per cent of
observers have begun to question what the always-on
online users are Internet addicts.81 A study carried out
media explosion may be doing to basic, bedrock as-
in February and March 2010 at the University of Mary-
sumptions about the way we think and act.
land in the United States found that university students,
after only 24 hours without any media exposure (i.e.,
computers, cell phones, I-Pods, etc.) characterized their
336 Chapter 8
Online Psychology: A New Way of Thinking? identities socially, culturally and politically, there literal-
ly is no one "in charge" of this process. Ultimately, it
There is no doubt that the Internet, as a media, of- may be up to individuals, through personal experience,
fers a more active and interactive experience than was to derive their own answers to questions of validity and
available through print media. This has prompted ques- legitimacy in what they experience online.
tions about whether Internet users, particularly child-
ren, are learning to read and mentally process Children: Pioneers of the Information Society
information in a way that is fundamentally different
from past generations. In a 2009 broadcast, the BBC Perhaps the most profound development, however,
interviewed high school students about their Internet is the extent to which children are on the front lines of
use and how it has affected their reading habits. One this pedagogical and informational paradigm shift.
student noted: These digital natives often get little or no guidance
from their elders – the digital immigrants – on how to
"I know that my reading has changed, the way I
navigate through the online universe.
read books has changed, since I’ve started getting
most of my information from the web. That I tend
In many countries, children have cell phones, Face-
not to have such great concentration. I tend to be
book accounts, and even smart phones by the age of 12.
more distracted when I read books. I don’t sit down
Research in the United States, for example, indicates
with a book for hours at an end as I used to. Now
that as of 2010, 75 per cent of children aged 12 to 17
doesn’t that say something about the impact of the
owned cell phones, up from 45 per cent just six years
Internet on our reading capacity?83"
before.84 Moreover, the study found that fully a third of
all teens were sending more than 100 text messages
Experts, however, differ on whether there is, in fact,
per day, with girls sending on average more than twice
any core difference in learning or thinking in a mind
as many as boys.
molded by Internet multi-tasking. Many point out that
the use of digital media has not replaced interpersonal
Interestingly, the Pew study found that parents
communication or reading and that it is not likely to.
were the largest single source of cell phones in the
Rather, the Internet may simply augment existing me-
United States; fully 70 per cent of teens' mobile phones
dia, much the way that television joined radio, maga-
were bought and paid for by someone else (i.e., a par-
zines, and books as forms of mass communication. It is
ent).85 Parents appeared to value the ability to reach
clear, however, that the more widespread broadband
their children amid busy school and work schedules
media become, the more they are likely to generate
more than they feared the results of giving unlimited
questions, such as:
communications freedom to their minor children. (See
• What is the role of a teacher in an environment in Box 8.11.) Schools in the United States do not share this
which students can access any information they enthusiasm for mobile communications: only 12 per
need, nearly instantly? cent of students reported being permitted to have cell
• If every individual can become a "reporter" and phones with them during class periods, and many stu-
"editor," how will readers be able to judge accuracy dents faced possible confiscation of their phones if they
and detect bias? used them to text during instruction. The most com-
monly experienced negative aspects of mobile phone
• Are newly developing social networking services use faced by US teenagers in 2010 were:
promoting superficiality at the expense of in-depth
contact and the exchange of intellectually challeng- • Receiving spam (54 per cent of teens reported this);
ing ideas? • Talking while driving (52 per cent reported);
• Can one really trust another person known only as • Texting while driving (34 per cent);
an avatar or a chat-room buddy?
• Being bullied or harassed via mobile phone (26 per
cent); and
In other words, the Information Society is, in some
sense, shaking previous conceptions of authority and • Receiving sexually explicit text messages (i.e., "sext-
legitimacy of information. Even as people find their way ing") (15 per cent).
to websites that help them to redefine their personal
Chapter 8 337
Box 8.11: Cyber-Bullying: Reaching Out To Hurt

In January 2010, "cyber-bullying" gained international recognition after a 15-year-old female student in the U.S. state of
Massachusetts committed suicide. The girl, who had immigrated to the U.S. from Ireland, apparently had been the subject
of taunts and harassment over teen dating disagreements and jealousies. What made the bullying newsworthy was that it
played out over text messages and Facebook postings, as well as in school hallways. The incident raised awareness about the
role of social networking technologies, cell phones and online anonymity as pathways for threats and emotional abuse.
The case echoed an earlier public outcry in 2006, when a Missouri mother allegedly created a fake account on MySpace,
masquerading as a teenaged boy, and then reportedly used it to spread false rumors about a 13-year girl who had had a fall-
ing-out with her daughter. The 13-year-old target of this abuse committed suicide, apparently after reading a posting that
suggested that the world would be better off without her.
Dubbed "cyber-bullying," the targeting of individuals, many of them young and psychologically fragile, for online abuse has
become an increasingly common fact of life for many children. One survey indicated that in the U.S., as many as 25 per cent
of children have been a victim of cyber-bullying in one form or another.
Cyber-bullying has presented a grey area for educators, law enforcement, and legislators who are struggling with how to ad-
dress this new form of bullying. For instance, educators in some “cyber-bullying” instances are unsure whether they can in-
tervene if the activity happens off school property and in cyberspace. Cases such as those in Missouri and Massachusetts
have spurred some community and legislative action. Schools are increasingly becoming engaged in educating students
about the consequences of cyber-bullying, in an effort to prevent it from occurring. Legislative bodies in the U.S. have in
some cases outlawed cyber-bullying, a measure that in many cases may be very hard to enforce.
Sources: Kathy McCabe, "Teen’s suicide prompts a look at bullying," Boston Globe, January 24, 2010,
www.boston.com/news/local/massachusetts/articles/2010/01/24/teens_suicide_prompts_a_look_at_bullying/; "Cyberbullying, 'Sexting'
Major Problems for Schoolkids," US News, 20 August 2010, http://health.usnews.com/health-news/managing-your-
healthcare/insurance/articles/2010/08/20/cyberbullying-sexting-major-problems-for-schoolkids.html; Steve Pokin, "No charges to be filed
over Meier suicide," 3 December, 2007,
http://suburbanjournals.stltoday.com/articles/2007/12/03/news/doc47543edb763a7031547461.txt; "Texting and driving, cyberbullying
now illegal in LA," KSLA News 12, 15 August 2010, www.ksla.com/Global/story.asp?S=12981977.
What Happened to Civility? from being posted on a news site or blog. Many sup-
porters of Internet news media believe that it is better
Some observers have noted that, on the way to to "let a thousand flowers bloom" rather than to rein in
making social and political discourse more open and this new venue for political and social expression. But
accessible, the Internet may also have made that dis- as a warning of caveat emptor: many of the "flowers"
course more nasty and intolerant. Depending upon the on news and opinion comment sites are apt to read
website or individual blog, reader comments can be more like weeds.
disturbingly insulting, insensitive, sophomoric, and of-
ten shockingly uninformed. Perhaps what encourages 8.5 Has the Information Society
commenters to "have a go" at each other so publicly is Outrun Regulation?
the anonymity of the Web. On many websites, com-
menters must register in advance, but they do not have At its beginning, this chapter posed some basic
to identify themselves by name or specific location. This questions to regulators:
protects the speakers from retaliation or potential tar-
• How can regulators ensure that the benefits of the
geting, but it also shields them from any accountability
new social networking websites and new social
for what they post.
technologies are available to everyone; that is, how
can regulators reverse the digital divide and not ex-
In periods of significant political churn, rapid social
acerbate it?
change, and economic hardship, the result can be
commentary that is little more than emotional spleen- • What role do governments have in promoting so-
venting, with little regard for fact or taste. As a result, cial networking media or the underlying technology
operators of blogs and news websites have imple- and market changes that make them possible?
mented moderated posting in which reviewers or other • Should telecommunication regulators attempt to
readers weed out the most abusive postings before or mitigate the unforeseen aspects of the Information
after they appear. Of course, the coarseness of the Society, or are areas like computer viruses, data
comment does not, in the minds of many, preclude it
338 Chapter 8
privacy, and online content beyond the scope of The following sub-sections explore several areas of
their authority? regulation that may be impacted by the growth of
broadband networks and services and the new Infor-
• How can regulators in different countries cooperate
mation Society issues that arise.
to help guide the development of new media that
clearly have international scope?
8.5.1.1 Redefining "Telecommunications"
• What role is there for industry self-regulation? Can
service providers and consumers send market sig- At the heart of most regulatory structures is a basic
nals to determine privacy protection and other determination of what constitutes "telecommunica-
standards? tions" and what does not. This provides the basis for a
national regulatory agency’s (NRA’s) jurisdiction or au-
This section attempts to answer these questions di- thority over some services and not others. To oversim-
rectly, but the most fundamental question is whether a plify, this is the reason that regulatory agencies have
state's existing regulatory structure is appropriate to authority over mobile phone networks but not car
deal with the new aspects of living in the Information washes. Furthermore, once jurisdiction is established
Society. After all, it has only been within the past over a certain set of activities and services, the regula-
20 years that many countries have evolved from state- tory structure may then be more explicit about wheth-
owned, monopoly provision of telephone services to er to regulate all such activities and services identically,
competitive markets for mobile services and ISPs. The or to apply different regulatory approaches to different
rapid advent of packet-switched, broadband, digital segments.
networks and ubiquitous access to content are again
posing challenges to regulatory structures that are In many cases, the move to broaden the scope of
themselves still in their infancy. regulatory jurisdiction takes place in the context of dis-
cussions regarding convergence, which have been tak-
8.5.1 The "Regulation Gap" ing place for many years. In Malaysia, for example, the
government acted as early as 1998 to establish the Ma-
Increasingly, governments have been reviewing laysian Communications and Multimedia Commission
their regulatory structures and codes to determine (MCMC) as the sole regulator of telecommunications,
whether and how they should be amended to address broadcasting, and computing industries.
the differences between older, circuit-switched net-
works and newer, packet-switched ones. Existing regu- The Republic of Korea acted in a similar manner in
latory frameworks often do not address newer 2008 when it created the Korea Communications
technologies or maintain outdated categories that do Commission (KCC). The creation of the KCC combined
not account for convergence of platforms to provide the previously separate telecommunication and broad-
similar services. Governments can choose to update casting regulatory entities, the Ministry of Information
their regulatory frameworks to rationalize treatment of and Communications (MIC) and the Korean Broadcast-
different network platforms that provide "substituta- ing Commission (KBC). The new KCC has jurisdiction
ble" services (i.e., ones that provide essentially the over telecommunications, spectrum allocation, and
same value or appeal to the consumer). broadcasting, including content. This will give the new
agency authority over Information Society technologies,
This entails asking some hard questions. For exam- including a rapidly growing shift to Internet Protocol
ple, if a consumer can obtain telephone service just as Television (IPTV). The introduction of IPTV in the Repub-
easily over a broadband Internet access service as he or lic of Korea had been delayed for several years due to
she can using conventional telephony, should the ISP disputes between the MIC and KBC over jurisdiction.
providing VoIP services be regulated in the same way as Within a few months of the KCC’s creation, however,
an incumbent telephone network operator? If so, the converged regulator finalized the rules enabling op-
would such regulation reduce or eliminate the ISP's in- erators to provide IPTV. By the end of 2009, Korea had
centive to build out more broadband infrastructure or over one million IPTV subscribers.86
to provide more attractive multimedia services? If not,
will the broadband ISP bleed off telephone traffic from 8.5.1.2 Adopting a Consumer Focus
the incumbent, leading to stranded investments and
declining revenue bases? As this chapter has indicated, much of what the In-
formation Society brings to our world is experienced
Chapter 8 339
personally. That is, the individual experiences, often • Expanding the "Nanny State" – While many regu-
without any regulatory protection, a whole new un- latory agencies do have mandates to protect con-
iverse of services, interactions, computer viruses, sumers, it is not clear that all consumer behavior
phishers, predators, and applications. Governments online should or could be micro-managed. Some
may come under increasing pressure to enact regula- governments may view online protection as more a
tions to protect individuals from harmful content and to matter for consumer education than for regulation.
hold ISPs responsible for the content delivered over (See Section 8.5.3.)
their networks.
• Eliminating Bureaucratic Overlap – Extending the
telecommunication regulatory agency's authority
In February 2010, for example, an Italian court
over new areas of activity (e.g., content regulation
found three high level Google executives guilty of priva-
of websites) may cause confusion, redundancy, or
cy violations for videos posted on a Google video host-
bureaucratic in-fighting if another ministry or agen-
ing website showing an autistic teenager being bullied.
cy already believes it has authority in that area. Un-
The verdict put into question one of the newer underly-
coordinated forays into new areas of law or
ing principles of the Internet that a company is not re-
regulation might actually result in less effective
sponsible for prescreening the content of its users'
regulation in such cases. One positive approach, as
posts. Google indicated that it would pull out of Italy
the example of the Nigerian MOU indicates, is for
while it appealed the verdict. Italy seemed willing to
agencies or offices or their parent ministries to
pursue similar actions against eBay, Facebook, and Ya-
work out in detail which situations or issues will be
hoo.87 While similar cases are unlikely to arise in other
under the jurisdiction of which entity. This can be
parts of Europe, similar government action could lead
helpful by (1) eliminating waste and redundant use
to a chilling effect where companies refuse to operate
of resources, (b) concentrating appropriate exper-
in certain areas.
tise in a single office, and (3) reducing or eliminat-
ing bureaucratic disputes.
Frequently, governments have multiple agencies,
across different sectors that are responsible for protect- • Regulatory "Forum Shopping" – In cases where
ing consumers. Some of these are specialized consum- the authority of agencies begin to overlap, the re-
er-protection bodies. In Nigeria, one such agency, the gulated companies soon begin to learn which
Consumer Protection Council, signed a memorandum agency, on balance, is more likely to be more
of understanding (MOU) with the Nigerian Communica- friendly or more hostile to their interests. When
tions Commission, setting out a division of labour and that occurs, they are likely to favour having regula-
spelling out a common understanding about which ent- tory authority consolidated in one agency over
ity would oversee which types of market behaviour. another. They may also engage in "forum shop-
While the MOU, signed in 2005, did not directly ad- ping": petitioning the "friendly" agency for redress
dress new media or Information Society services, it on important issues, in an effort "lock up" that
could easily be extended or expanded to do so.88 agency's authority or jurisdiction over those issues.
Over time, this can exacerbate inter-agency riva-
The question remains, however, whether govern- lries as regulated entities "pick sides" in an effort to
ments should intrude into the newly emerging world of win more lenient treatment from their hand-picked
Internet services. Increasing regulatory attention in patrons. The agencies caught up in such rivalries
new areas carries several attendant risks: may lose their independence as they seek to coo-
perate with industry's attempt to bolster their ju-
• "Mission Creep" – Regulatory agencies possess the
risdictional authority. Discipline among
staff experts they need to perform their existing
government agencies can and should be reinforced
tasks, as well as the funding required to do them.
through binding direction from oversight ministries
The expansion of the role of the regulatory agency
or through inter-agency MOUs and other agree-
into new areas will strain existing resources and in-
ments. These documents, if they have the force of
evitably lead to calls for expanded funding and new
administrative law and the support of higher levels
hiring. Governments will have to decide whether
of government, can be effective in barring indus-
the need for expanded oversight or promotion of
try's attempt to "play one agency off against
Information Society technologies justifies adding
another."
those resources.
340 Chapter 8
In light of the above, it is extremely important to effective 1 July 2010. The Finnish government's goal
examine the regulatory and policy treatment of broad- was twofold: (1) to create momentum toward an even-
band services and online content carefully. Regulatory tual goal of providing 100 Mbit/s service by 2015, and
structures and codes should be rationalized holistically (2) to prompt carriers to extend broadband service into
rather than through a case-by-case process in order to rural areas, where availability had lagged behind.89
avoid the kind of regulatory uncertainty that dampens
incentives for investment in new infrastructure and ser- Meanwhile, in May 2010, Brazil completed its Na-
vices. When policies and regulations are promulgated, tional Broadband Plan and announced a USD 6.1 billion
governments need to articulate them exactly and suc- plan to increase access to broadband internet services
cinctly to remove any doubt about where regulatory among its low income households. To accomplish its
and enforcement powers reside while retaining a suffi- plan, Brazil revived its former state telecom monopoly,
cient degree of flexibility in order to respond to tech- Telebras, to handle the build-out of a new fibre net-
nological innovation. Regulatory bodies and the work. The plan calls for Telebras to sell wholesale
regulations they produce should be flexible, not static. access to the new network to support other carriers
As conditions in the market and the world change, who will deliver end-user services unless no current
these living agencies have to change accordingly. But operator is willing to provide service.90 Private telecom
change does not have to equal chaos, and new rules carriers expressed concerns that the plan rolls back pri-
and changes in authority should be carefully planned, vatization efforts Brazil undertook in the late 1990s and
articulated, and implemented to preclude unforeseen that it could negatively impact their businesses.91 Other
outcomes to the extent possible. middle-income countries with active broadband strate-
gies include:
8.5.2 Potential Areas of Regulation
• Chile – The first Latin American country with such
an approach, the Chilean strategy has featured
With those caveats in place, this section explores
WiMAX development, sponsorship of
some of the regulatory areas in which governments are
e-government, and broadband usage by municipal-
expanding, or considering expanding, their role in guid-
ities.
ing the Information Society.
• Turkey – The Information Society Strategy for 2006-
8.5.2.1 Promoting Broadband Build-Out 10 strove to provide broadband to educational in-
stitutions; it also worked to reduce tariffs to rough-
In many countries, the first step in addressing the ly 2 per cent of per capita income.
broadband revolution is making sure that, in fact, they • Malaysia – The MyIMCS strategy in 2006 called for
are having one. The perception that more must be increasing broadband penetration to 25 per cent of
done to provide incentives or direct support for broad- households by the end of 2010; the government is
band build-outs appears to be nearly universal in both now focusing on wireless broadband (WiMAX) and
developed and developing countries alike. In general, fibre-to-the-home (FTTH) development.92
government steps to promote broadband network-
building can be classified as passive or active. Passive Broadband promotion raises a non-trivial issue
support often involves forbearing from regulation or concerning who should administer these active support
withholding regulatory treatment (e.g., class licensing programmes. Typically, any country's national regulato-
or lack of tariff regulations) in an effort to "get out of ry agency for telecommunications is likely to possess
the way" of growth in Internet services. Active support, the most expertise and experience in adjudicating bids
meanwhile, can include awarding direct grants for net- for broadband support. However, active investment of
work projects, including broadband networks in exist- time and money into a project could colour the willing-
ing universal service/access programmes, and funding ness or ability of the regulatory agency to crack down
public-private projects for NGNs. on it in an objective way if regulations are broken. Con-
versely, such an investment might even lead the regula-
In October 2009, for example, Finland became the tory agency to favour its "pet" projects over the
first country to establish broadband Internet access at a operations of competitors. Wherever a communica-
designated speed as a legal right and part of its univer- tions ministry exists alongside an independent regula-
sal service programme. The Ministry of Transport and tory agency, one solution may be to fund any
Communications expanded its definition of universal broadband projects through the ministry, thus allowing
service to include an Internet connection of 1 Mbit/s,
Chapter 8 341
the regulatory agency to remain independent and ob- phony, which was defined as a "telecommunication
jective. service."93 This called into question FCC's ability to im-
plement some elements of its March 2010 National
8.5.2.2 Rationalizing Jurisdiction and Regulatory Broadband Plan – a centerpiece of policy-making in-
Status itiated a year earlier by FCC.
As stated in Section 8.5.1, the first step govern- This raises a set of ongoing and largely unresolved
ments often take is deciding what services constitute questions in many countries: why is it necessary to con-
"telecommunications" for the purposes of regulation. tinue applying different regulatory approaches to ser-
Governments may decide not to regulate newly emerg- vices or networks that provide the identical function to
ing services out of fear that they could squelch innova- consumers? Particularly with regard to content, is it de-
tion or intervene too strongly in a nascent market. fensible or logical to regulate or even censor over-the-
Nevertheless, governments may want to ensure that air broadcasting, but do nothing to influence content
they lay the groundwork for any future regulatory ac- streamed from websites? If an incumbent telephone
tion by spelling out in detail what elements of the In- company's tariffs are regulated, why does the govern-
formation Society come under the jurisdiction/ ment not regulate VoIP providers in the same manner?
authority of which agencies. Some countries simply take the route of banning new
services (e.g., VoIP), perhaps in the hope that they will
In the U.S., the foundational statute governing tele- simply go away. This seems to be an effort to simply fo-
communications regulation remains an amended form restall addressing the changes in the market caused by
of the Communications Act of 1934. Early in 2010, a technological development. In other words, ban it until
Federal appeals court ruled that the Federal Communi- we can figure out how to control it.
cations Commission (FCC) did not have authority under
the pertinent section of that law to establish rules re- When new media and services are allowed into
quiring one of the country's largest ISPs (Comcast) to markets (as they almost inevitably are), the overall
implement net neutrality (see Section 8.5.2.4). While trend toward lesser regulation has meant that older,
the court found that the FCC had jurisdiction over In- traditional voice and subscription television services
ternet services, that jurisdiction was established remain under more stringent regulation. Newer, Inter-
through a different portion of the law (Title I), not the net-based or wireless services, however, are generally
portion that would have allowed the FCC to impose net less regulated. This may well be a conscious effort to
neutrality (Title II). In effect, that meant that the FCC promote the growth of competition by placing a regula-
did not have the same kind of authority over Internet tory "finger" on the scale in favour of new media and
"information services" that it had over standard tele- services.
Box 8.12: The U.S. National Broadband Plan

In February 2009, the U.S. Congress directed the Federal Communications Commission (FCC) to develop a national broad-
band development plan. Like other countries, the U.S. recognized the importance of broadband access to its citizens in edu-
cation, healthcare, energy, public safety, job creation, and economic growth. The goal of the plan was to determine the most
effective ways to ensure access to broadband networks throughout the U.S., to accurately track deployment of broadband
infrastructure, and to develop strategies to provide affordable access to broadband infrastructure and services.
Over the course of a year, an FCC task force carried out 31 public comment proceedings, held 36 public workshops and nine
field hearings, and mounted its own research efforts. In March 2010, the FCC sent the resulting National Broadband Plan to
Congress with recommendations for action by the FCC, Congress, and the Executive Branch agencies. The recommendations
covered a wide range of topics including spectrum, competition policy, broadband adoption, healthcare, education, energy,
economic opportunity, civic engagement, and public safety. The full text of the plan can be found on the FCC's website at
www.broadband.gov/plan/.
The Plan was an attempt by the FCC to set an ambitious agenda for the U.S. to meet future challenges of increased global
competition and to address issues of national importance to the United States. Other countries have developed similar
plans. The need to provide access to ubiquitous and affordable broadband for all of a country’s citizenry will be a challenge
for all nations to meet.
Sources: American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, § 6001(k)(2)(D), 123 Stat. 115, 516 (2009) (Recovery Act); and
"FCC To Send National Broadband Plan To Congress," FCC press release, 15 March 2010.
342 Chapter 8
It may also, however, be a politically expedient way 2. What kind of functionality it provides (i.e., is it in-
to avoid the fairly massive effort to overhaul and up- teractive or one-way, point-to-point or point-to-
date regulatory codes, particularly in the face of mo- multipoint);
neyed interests.
3. Is the service generating content or merely serving
as a conduit or transmission medium; and
There are examples, however, of countries that
have proactively addressed convergence by overhauling 4. Can the service be grouped with other services that
their regulatory regimes. As mentioned earlier, one of are substitutable with each other in terms of defin-
the earliest attempts to revamp legal and jurisdictional ing a single market (e.g., cable modem service and
authority to cope with convergence was Malaysia, xDSL both provide Internet access).
which enacted its Communications and Multimedia Act
(CMA) in 1998. The law, which took effect in April 1999, Regulators will have to decide what classification or
established a new framework to regulate and accom- taxonomy makes the most sense in terms of applying
modate the convergence of telecommunications, consistent regulatory treatment in a way that allows
broadcasting, and computing. One of the more for- competition, provides incentives for investment and
ward-looking elements of the CMA was a requirement does not inadvertently favour one platform over
imposed upon the new Malaysian Communications and another. Some 10 years into the convergence trend,
Multimedia Commission (MCMC) to conduct a review however, many governments continue to overlook the
every three years to determine how rules and regula- glaring inconsistencies in regulatory treatment that
tions can be further revised to cope with ongoing con- they maintain between older technologies and Inter-
vergence.94 net-related ones. It is hard to escape the conclusion
that, for good or ill, the newer technologies are largely
Recently, regulators have begun to confront new unregulated, even as the older ones fade to grey.
services in order to determine how to regulate them.
Internet Protocol Television (IPTV) is one example. IPTV 8.5.2.3 Competition and Tariff Regulation
allows traditional telecommunication operators to offer
managed video services that resemble traditional, over- One of the potential impacts of maintaining imba-
the-air or cable broadcasting. IPTV also can offer en- lanced regulatory treatment of different services is reg-
hanced capabilities such as video on demand, web ulatory arbitrage. 97 In basic terms, arbitrage occurs
browsing, and messaging to subscribers. IPTV is deli- when a market player detects a business advantage
vered over a high-speed data connection, usually fibre that occurs solely through favourable treatment built
to the home. This package of capabilities, however, is into a country's regulations. The company then exploits
ambiguous in a regulatory context. Is it telecommunica- that advantage in order to maximize its interests.
tions, broadcasting, or a value-added information ser- Common arbitrage strategies include:
vice?95 • Grey market strategies – masking the true origina-
tion point of a call in order to charge a lower price
Countries have taken different approaches to regu- but increase traffic volumes;
lating the technology. For example, Republic of Korea,
Singapore, and Pakistan have classified IPTV as a broad- • Leaky PBXs – an enterprise customer with a private
casting service and developed a new category of branch exchange (PBX) can "leak" calls onto local
broadcasting licence to accommodate it. New Zealand exchange lines to avoid long distance costs;
has classified IPTV services based on the degree of inte- • Resale of private lines – resellers can market lower
ractivity the service provides, distinguishing broadcast- consumer rates because they do not have to cover
ing from Video On Demand (VOD) delivery. New the costs of building out the network facilities;
Zealand and the European Union have distinguished
between linear (broadcast) and non-linear (VOD) and • International "call-back" – when a caller places a
have applied different broadcasting and content regula- call, it initiates an automatic "call back" from the
tions accordingly. 96 destination country, or a country with a lower ter-
mination cost with the destination country; either
In light of the above, there may be several different way, the cost is reduced from a normal internation-
ways to classify a service for regulatory purposes: al direct-dial call;
1. What kind of entity provides it (this is essentially • Refiling or re-origination – operators can take ad-
the traditional, pre-convergence model); vantage of large disparities in settlements charges
Chapter 8 343
between various countries by routing calls through relatively little harmonization across the EU in terms of
third countries so as to "re-originate" them on regulations for several key aspects of VoIP:
routes with lower termination costs; and
• Numbering and number portability;
• Routing calls over the Internet – calls routed over
• Access to emergency services;
the Internet may be treated as data transmissions
or otherwise avoid interconnection and local ter- • Interconnection; and
mination charges. • Lawful intercept.99
These arbitrage opportunities can have an effect on Meanwhile, countries have taken one of two main
competition. The truth is, the effect can be a positive approaches to regulating competition on fixed broad-
one, as long as the arbitrage opportunities are open to band access lines. Japan, South Korea, and France re-
all market players. If incumbents control too much of quire state-regulated telecom monopolies to provide
the market, they will have no incentive to operate more competitors wholesale access to their networks. In Ja-
efficiently or lower prices. Competition can stimulate pan and Republic of Korea, the government has pro-
lower prices, which can then stimulate greater demand, vided financial support to the incumbents for building
higher traffic levels, and more economic activity in gen- out their fibre networks in high-cost areas. The model
eral. Just because circuit-switched traffic levels may flat- has promoted faster Internet speeds at lower costs
ten, it does not mean that overall traffic is declining; it than in other countries.100 Japan and Europe largely re-
may simply mean that consumers are finding the least- quire incumbent providers to offer wholesale access to
cost means to meet their needs. broadband lines in exchange for subsidizing a portion of
the cost of build-out to high cost areas.
A knee-jerk reaction banning all forms of arbitrage
may back-fire in the long run. Sophisticated enterprise 8.5.2.4 Open Access and "Net-Neutrality"
customers will simply find new ways to mask their arbi-
trage opportunities, and average consumers will be In the U.S., a hot topic concerns the ability of FCC
stuck paying artificially high prices to incumbents. to regulate Internet service providers' management of
Those incumbents, meanwhile, will be trying to amort- their networks. The debate, dubbed "net-neutrality" is
ize large sunk costs across a declining subscriber base. over ISPs should be prohibited from discriminating
Therefore, it is better to allow all operators to take ad- against traffic sent over their networks by non-affiliated
vantage of newer technologies, such as VoIP, to lower content providers or restricting bandwidth heavy appli-
rates and compete for greater market share. The bot- cations during peak traffic periods. The debate has pit-
tom line is that regulators may opt to "regulate down" ted the powerful incumbent network operators against
by reducing regulatory restrictions on incumbents ra- the equally powerful "upstarts" from Silicon Valley. Op-
ther than "regulate up" by adding restrictions to new erators such as AT&T and Verizon argue that in order to
market players with newer technologies. The result can manage capacity constraints on their backbones, they
be a more competitive market, which in itself forces need the flexibility to charge content providers rates
down prices and leads to innovation and higher quality that reflect the value of an increasingly scarce resource.
services. The regulatory treatment of VoIP services illu- They advocate tiered pricing as a way to provide market
strates this point. signals to content providers and thus control rampant
ballooning of content that threatens to swamp existing
Many countries have decided to bring VoIP "in from capacity.
the cold" as a legitimate form of publicly available voice
service. Hong Kong, China issued a policy statement in The Silicon Valley champions, such as Google and
2006, applying "minimum and appropriate" regulation, Yahoo, see the ability of operators to set preferential
as well as technology neutrality to all public voice ser- treatment and pricing as an assertion of market power
vices.98 One of the regulator's goals was to avoid ham- over the means of content distribution. Under the ban-
pering the development of VoIP as a viable alternative ner of "net neutrality," they have sought to portray the
to traditional, facilities-based telephone services. The issue as one of free access and equal treatment on the
European Union has taken a "light touch" approach to Internet. Politically, this banner was taken up by the
regulation of VoIP, deeming it premature to establish a new leadership of FCC that came into office after the
rigid framework while the service was evolving. A WIK- 2008 presidential election. This further entrenched the
Consult report in 2008 found, however, that there was operators in the old-line opposition.
344 Chapter 8
After a U.S. court struck down the FCC’s authority censed authorizations, operators have in the past held
to mandate net neutrality (see Section 8.5.2.2), the U.S. themselves out as neutral "carriers" of private voice
Congress joined the debate over the power of the regu- communications or (later in the evolution of telecom-
lator. At its root, this really is a debate over the wisdom munications) of third-party media content. Operators
of either the regulator or the legislature acting to de- seldom had the ability or desire to either (a) generate
termine how network operators should manage their their own content on a "broadcasting" model, or (b)
networks. Should the government assert a "light touch” monitor and track the content of voice or third-party
or “heavy hand” in regulating Internet services? Will a communications. As long as operators remained neu-
more assertive government role in maintaining net tral and offered their carrier services, they were regu-
neutrality deter ISPs from investing in network capaci- lated much the way truck drivers or railroad operators
ty?101 were. Just as nobody stops truck drivers and railway
operators to check how fresh the bananas inside the
The outcomes of the U.S. net neutrality debate are trucks and railroad cars are, nobody inspected the con-
being watched closely by international regulators and tent carried by telecommunication operators.
observers and may result in governments taking a more
active role in regulating the Internet in their countries. That "common carriage" construct has now broken
Internet companies such as Google, Yahoo, and Micro- down in the age of blogs, Hulu, and YouTube. As Sec-
soft have been big supporters of net neutrality and tion 8.5.2.7 explores further, there is more pressure on
open Internet principles globally. They have advocated regulators to rein in wild content, and a greater percep-
for it strongly in U.S, Europe, and other parts of the tion that consumers are more at risk from:
world. For instance, in August 2010, Google wrote the
• Fraud;
Telecom Regulatory Authority of India espousing the
virtue of open Internet and net-neutrality principles.102 • Online Predators;
Recently, Chile became the first country to enact legis- • Identity Theft; and
lation to codify the principles of net neutrality.103
• Invasion of privacy.
For more information about net neutrality, see the
recent paper published by the ITU on this subject. What are governments doing to address the “Wild,
Wild West” of Cyberspace? For one thing, they are
8.5.2.5 Consumer Protection and Privacy passing legislation specifically mandating consumer
protection across the board.105 Australia has taken a
As noted in a GSR Discussion paper in 2009, "[t]he proactive role in the area of consumer protection in the
challenge for regulation is to promote favourable mar- Internet Age. The Australian Communications and Me-
ket conditions, in which competition can flourish and dia Authority (ACMA) is tasked with investigating com-
foster innovation, whilst at the same time ensuring that plaints about online content and gambling services. It
consumers' interests are protected."104 The advent of also encourages ISPs to develop codes of conduct and
new forms of media and new Internet applications has monitors compliance. In a role that some governments
only served to make this challenge more complicated, and regulators will find increasingly thrust upon them,
both for regulators and consumers. As the chapter ACMA attempts to educate the public about Internet
went on to point out, regulators can choose to expand safety risks, particularly those threatening children.
forms of consumer-oriented regulation that they pre-
viously employed for traditional telecommunications, At this stage, however, consumer protection in the
including: Information Society appears to be characterized by:
• Quality of Service protections; • "Self-regulation" by industry groups, pursuing vo-
luntary codes of conduct106;
• Tariff regulation;
• An emphasis on education of the consumer, "em-
• Adjudication of complaints; and powering" individuals to make well-informed
• Competition (anti-trust) rules. choices in online behaviours; and
• An emphasis on addressing tariff or marketing
Regulators are often much more reluctant, howev- practices, as opposed to more uniquely new-media
er, to veer into regulatory arenas that are new to them. ills such as malware, online predation, cyber-
The primary example of this reluctance is content regu- bullying or Internet "addiction."
lation. Under the guise of "common carriage" or li-
Chapter 8 345
In other words, where regulators are addressing hlighted growing tension between the Internet’s rapid
consumer issues, they are often doing so in the context growth and government regulation over Internet con-
of economic issues, rather than the social issues that tent. Venezuelan President Hugo Chavez called for new
the Information Society is increasingly raising. One ex- Internet restrictions in response to the matter. Existing
ception has been the attention that many governments Venezuelan law already prohibits online communica-
have devoted to laws protecting the data privacy of in- tions that incite hatred or damage a person’s dignity
dividuals. Many governments, including the EU, Canada, but it was unclear whether these regulations would ap-
Australia, the United States and Argentina, have passed ply in all cases. 111
one or more laws to safeguard individuals' personal
records, sometimes resulting in a patchwork of meas- This event occurred in the backdrop of emerging
ure affecting different types of personal information, opposition voices on Twitter and other social network
such as medical records. This reflects the ease with sites against the Chavez government for limiting free-
which data can be combed, combined, and marketed dom of speech, charges that the government dis-
throughout the Internet. Many websites now have writ- puted. 112 In fact, the rise of Internet usage in the
ten data protection policies, and ISPs have felt pressure country was directly related to policies that the Chavez
to self-regulate in the privacy sphere to avoid mandato- government took over the last decade to increase In-
ry restrictions by governments.107 ternet use. Countries desire to encourage Internet use
and the marketplace for local content providers while
Depending on the situation, governments can ei- regulating how consumers and content providers use it
ther be friendly to privacy interests or hostile to them. without limiting the Internet’s growth or utility.
Take the case of Google, which has run into trouble in
Europe, where residents complained to several gov- In June 2010 a scandal erupted in Indonesia when a
ernments that the company was taking pictures of their sex video with Indonesia’s top singer, his girlfriend, and
homes without their permission to populate its Street another celebrity started making headlines. The singer
View mapping program. Google was forced to allow was charged with violation of Indonesia’s anti-
consumers to request that their residences be blurred pornography law, though prosecution under that law
on Google to protect their privacy.108 Some govern- was in doubt, as the video was stolen from the singer’s
ments also objected to a previous practice (which laptop. In any case, the scandal restarted Internet con-
Google said it had discontinued) of collecting informa- tent regulation efforts, which had previously stalled. In
tion that individuals had sent over unencrypted WiFi the wake of the scandal, a commission appointed by
connections as it collected photos. Indonesia's House of Representatives directed the Min-
istry of Communication and Information Technology to
Meanwhile, for its part, Google has also published resume work on a multimedia content regulation
a "Transparency Report" detailing the requests it has framework. This raised concerns by media groups and
received from governments seeking to (a) obtain others that censorship of web content was around the
records about users, (b) remove content from search corner.113
results or other web domains such as YouTube, and (c)
block access to content from certain jurisdictions.109 One way to encompass all converged platforms is
Google stated that it attempts, on its own volition, to to reform the regulatory regime and create a “con-
eliminate any child pornography, and it explains that verged regulator.” As mentioned earlier, the Republic of
some requests relate to defamation, "impersonation," Korea government created a converged regulator in
hate speech or privacy, along with a few requests relat- 2008, establishing the Korea Communications Commis-
ing to political speech. Separately, it acknowledges that sion (KCC) through a merger of the former Ministry of
some governments restrict access to websites in those Information and Communications (MIC) and Korean
countries. Facing the difficulty of complying with differ- Broadcasting Commission (KBC). This placed the re-
ing rules on content regulation, Google has made the sponsibility for telecommunications and broadcasting
case that these governments are selectively engaging in content in a single regulatory agency. The Republic of
Internet "censorship."110 Korea has in many ways led the world not only in regu-
latory reform but in pioneering adoption of the Infor-
8.5.2.6 Online Content mation Society itself.
In March 2010, false Internet reports of an assassi- Another country to have consolidated its electronic
nation of a Venezuelan government minister hig- communications regulation under one regulator is the
346 Chapter 8
United Kingdom. Its Office of Communications (Ofcom) found that a majority believed that the government
has a mandate to manage all spectrum resources, as should be involved in some form of monitoring of the
well as to regulate telecommunications and broadcast- Internet.116 The poll also found, perhaps not surprisingly,
ing. By the end of 2009, three additional European Un- that the age of the respondent was a factor in that per-
ion countries (Finland, Italy, and Slovenia) had taken son’s view: three-quarters of the Americans over age 70
action to create converged regulatory bodies, with en- favoured Internet content regulation, skewing the
couragement from EU policy-makers.114 Only seven of overall figure higher.
30 OECD members, however, have single regulatory
agencies with jurisdiction over telecommunications, 8.5.2.7 Security Issues
broadcasting carriage, broadcasting spectrum assign-
ment, and content. While it is popular to think of the Information So-
ciety as global and supra-national, the Internet is, in
It may not be enough, however, to simply create a fact, overlaid onto a system of individual nation-states,
unified regulator. As an example, the U.S. FCC (one of with separate governments and interests. Those coun-
the seven OECD countries mentioned in the previous tries are now struggling with how to foster the use of
paragraph) has always had jurisdiction over licensing for new technologies while maintaining important gov-
both telecommunications and broadcasting. But it has ernment functions related to law enforcement and na-
employed vastly different regulatory regimes and ap- tional defense. In part, this is a result of the evolution
proaches: “common carriage” for traditional telephony from circuit-switching, which lent itself fairly easily to
and light content regulation for broadcasting. As newer wiretapping (authorized or otherwise) to packet-
forms of media emerged (e.g., cable TV and direct sa- switching, which complicates the task of monitoring
tellite broadcasting), the FCC enacted a variety of still- communications. Moreover, the market demand for
different rules for those industries. Moreover, the encryption capability has further challenged the ability
Commission’s rules have been directly affected by vari- of governments to safeguard national security.
ous court decisions with narrow impacts on particular
sets of rules. The result has been an array of differing In the summer of 2010, Saudi Arabia nearly banned
regulatory regimes, administered by the same regulato- the use of Research in Motion (RIM)’s Blackberry
ry agency. This points to an overall need for “regulatory phones in the kingdom, due to concerns that terrorists
convergence” that transcends structural issues involv- and criminals could use the devices to communicate
ing the organizational chart of the NRA. without the Saudi government being able to intercept
messages. Negotiations between RIM and the Saudi
In truth, telecommunication regulators are often government led to an agreement, in which the compa-
reluctant to be embroiled in content regulation, seeing ny agreed to place communications servers used to
it as a cultural or political function for which they are ill- route messages within Saudi borders. Meanwhile, the
prepared as engineers and economists. Indeed, gov- United Arab Emirates announced plans for a Blackberry
ernments themselves often view content regulation as ban to take effect in October 2010. Other countries, in-
a sensitive issue that cannot be left to technocrats who cluding Lebanon, India, and Algeria, have expressed
normally evaluate interconnection rules or channel similar concerns about the use of the technology to
plans. The fact that social networking applications and evade law enforcement.117 One analyst pointed to the
YouTube have probably forever muddied the bright line RIM-Saudi Arabia compromise as a development that
between transmission and content does not make it underlined “the growing clout of the local regulator and
any easier for governments to respond by reinventing service providers.”118
regulatory functions whose antecedents have had little
to do with one another. One of the issues undergirding the Blackberry con-
troversy is a perception that RIM made special conces-
As broadband Internet access becomes more pre- sions to countries such as Russia and China to operate
valent, however, it is certain that regulators will be within their borders that allow these governments to
forced to make a key decision. Will they continue to monitor and decrypt secured messages over the RIM
keep their hands off Internet content, or will they re- network – a charge RIM denies.119 This perception,
spond to increasing (if episodic) calls for some kind of however, led other countries to seek similar arrange-
regulation of content that many users will find offen- ments with RIM, such as the Saudi Arabia compromise.
sive.115 Even in the United States, a country with a dis- In the future, handset and other equipment manufac-
tinct Libertarian policy view of the Internet, a 2007 poll turers may have to work with governments to ensure
Chapter 8 347
that lawfully mandated access by security forces can be first spectrum auction for 3G and Broadband Wireless
achieved using consumer or network equipment. Access Spectrum (BWA).121
8.5.2.8 Spectrum The progress of rolling out 3G networks, however,

has been different in the two countries. In China, the
The Information Society has bred a lot of changes operators were quick to deploy and offer 3G services
in the telecommunication regulatory arena. One area soon after the spectrum was made available to them.
that remains contentious, however, is how to regulate In India, the 3G auctions generated USD 15 billion –
among competing demands for the raw resource of twice the amount the Indian government expected.122
mobile services: spectrum. The increasing broadband India’s Telecom Regulatory Authority of India (TRAI),
capabilities of mobile devices and networks are scream- however, enacted additional fees and market restric-
ing out for greater chunks of unencumbered spectrum. tions. It also called for a spectrum cap of 8 MHz or 10
Channel sizes must be larger, guard bands must be in- MHz in all service areas. While demand for wireless and
stalled, and spectrum must either be shared or re- growth prospects are high, some analysts now worry
farmed. Countries that have made way for 2G and 3G, that TRAI's restrictions and the high cost of spectrum
as well as WiMAX, are now bracing for 4G LTE- may lead to less capital spending, reduced coverage
Advanced and WiMAX-Advanced technologies. It is as areas, and reduced network capabilities. 123
though wireless broadband were sweeping like a pla-
gue of locusts through the allocation charts of countries 8.5.3 Education or Regulation?
around the world, consuming vast amounts of spec-
trum below 4 GHz and wanting even more. As regulators consider whether and how to moni-
tor and regulate new Information Society applications,
It began with the WiFi revolution, which has been networks and services, one option to consider is step-
well documented. Millions of devices now contain em- ping up ways for consumers to educate themselves
bedded WiFi chips, including smart phones, mp3 play- about the new technologies. Education has a dual pur-
ers, digital cameras, netbooks, and laptops. WiFi pose:
technology has offered low-cost or free access to
• To learn how to use broadband networks and com-
broadband services to millions of users worldwide.
puters to secure positive benefits from the Internet,
Community or municipal Wi-Fi networks have allowed
and
local governments to deploy broandband infrastructure
and services in a cost-effective manner. In countries • To learn how to avoid the pitfalls of life online, in-
that have allowed unlicensed access to WiFi, WiFi net- cluding cyber-crime, hacking and the potential
works have exploded. dangers for children and other vulnerable popula-
tions.
However, regulations in some countries have li-
mited or hindered the ability of communities to deploy Of course, regulation and education are not mu-
WiFi networks. Some countries require any wireless In- tually exclusive. In fact, education is a first step in em-
ternet service provider to have the blessing of the NRA powering thoughtful and appropriate regulation.
through licensing or registration to operate the network. Consumers who know how to navigate through and
A paper by Van Gorp and Morris found that some coun- avoid negative aspects of the Information Society are
tries impose regulatory burdens on operators that con- also more likely to know when they are being victi-
strain the utility and ability to deploy WiFi networks. mized – and to report it.
Some nations require a spectrum licence to operate
WiFi equipment.120 Such requirements can limit the The U.S. Federal Trade Commission maintains sev-
growth and benefits that these networks provide. eral websites to provide information to consumers on
the Internet. The agency, which is tasked with protect-
On the licensed sides, delays in spectrum auctions ing consumers across multiple industries, maintains a
for 3G and 4G services have been a major cause for op- "Computers & the Internet" portal124 that provides ad-
erators in some countries to deploy faster wireless vice on numerous topics:
networks in emerging markets. China and India provide • Buying a computer and Internet access;
two illustrative examples. In China, after many delays,
3G spectrum was finally assigned in 2009 to the coun- • Entertainment on the Internet;
try’s top three operators. In 2010, India conducted its • Online Shopping and "E-payments";
348 Chapter 8
• Privacy & Security; change; it is more than a matter of plunking down

money for a new phone. It is already clear that the In-
• Spam email; and
formation Society changes the way individuals commu-
• "Web scams" nicate, access entertainment and information , and
even how they figure out where they are located. In
Each topic has its own section of Web pages, with short, the Information Society is changing the way
links to additional, in-depth information on issues such people live, the way they relate to each other and their
as peer-to-peer network vulnerabilities, video game surroundings, and possibly even the way they learn and
ratings, and protecting children from hazards of online think. Experts and observers are now in the throes of
gambling. trying to deconstruct what this always-on revolution
means in psychological, sociological, and economic
In addition to the Fair Trading Office (for consumer terms.
protection), the UK government operates a Child Ex-
ploitation and Online Protection (CEOP) Centre. CEOP is To a very real extent, though, the story of the In-
described as a "multi-agency" effort to coordinate law formation Society still remains the story of the digital
enforcement and intelligence gathering about preda- divide. The Internet is coming to a screen near you –
tors and child exploitation. As part of that effort, CEOP except, of course, if there is no screen near you. In
operates a website (www.thinkuknow.co.uk) that pro- many parts of the world, and even in some parts of de-
vides age-appropriate information to children and tee- veloped countries, there is not sufficient infrastructure
nagers, as well as to parents, caregivers, and teachers to support broadband transmission. Without that un-
about how to safely use the Internet. These websites derlying brick-and-mortar reality, there can be no cy-
represent efforts to use the Internet itself to teach con- ber-world fantasy. Often, the difference between
sumers about how to maximize the benefits of the In- broadband capability and dial-up frustration is a matter
formation "Superhighway" while avoiding the potholes of a few miles, a few city blocks or the adequacy of the
and navigating the hairpin turns. local power grid. But just as often, the difference is a
yawning chasm of income and affordability. Regulators
Singapore has developed "Infocomm Security Mas- and policy-makers often find that the first-order task
terplans" that work to secure the Internet infrastruc- they face is just making the Information Society reach-
ture, to increase the public sector's ability to handle able for their citizens.
security threats, and to increase awareness and adop-
tion of cyber security awareness. Singapore’s Cyber Se- More work awaits those regulators. While the ben-
curity Awareness Alliance was formed to work with efits of the Information Society are manifest, the
improving security in businesses. The Alliance also broadband revolution has opened up a Pandora's Box
partnered with the National Crime Prevention Council of new issues and challenges, from cybercrime to spec-
to form a Virtual Cyber Security Park targeted towards trum management (and everything in between). In
students and allows them to learn about cyber safety most countries, regulators are now fully engaged in ad-
and security educational online games. The Alliance is dressing these challenges. But for now, consumers of all
also using social networking platforms to create groups ages are very much pioneers in the Information Society,
that will share cyber security tips and other best prac- reaping the benefits of their new world, but also incur-
tices.125 ring the risks, without much regulatory protection. It
will be up to policy-makers and regulators to determine
8.6 Conclusion how actively regulators can or should intervene to pro-
tect consumers without squelching the very innovation
Many people around the world are now living in that has revolutionized telecommunications in the 21st
the Information Society. This is not simply a superficial century.
Chapter 8 349
1
See ITU-D, " The World in 2010: ICT Facts and Figures" at: www.itu.int/ITU-D/ict/material/FactsFigures2010.pdf.
2
See "Internet Access Is a `Fundamental Right'" at BBC World Service website, 8 March 2010
http://news.bbc.co.uk/2/hi/technology/8548190.stm.
3
Interestingly, high numbers of respondents who found the Internet indispensable were not confined to highly "mediated" de-
veloped economies, such as Japan (84 per cent) and South Korea (57 per cent), but also developing countries such as Mexico
(81 per cent) and China (63 per cent). Ibid.
4
United Nations Economic and Social Council, "Status of, and Trends in the Development of, E-Government," report of the secre-
tariat, UN Doc E/c.16/2003/2 (April 2003).
5
Ibid.
6
Ibid.
7
United Nations E-Government Survey 2010.
8
Ibid.
9
Ibid.
10
See www.igov.gov.sg and www.ecitizen.gov.sg.
11
World Health Organization, "Building Foundations for eHeatlh: Progress of Member States," a report of the Global Observatory
for eHealth 2006.
12
Ibid.
13
Ibid.
14
U.S. Department of Education, Office of Planning, Evaluation and Policy Development, "Evaulation of Evidence-Based Practices
in Online Learning: A Meta-Analysis and Review of Online Learning Studies," Washington, DC, 2009.
15
ibid.
16
United Nations Educational, Scientific and Cultural Organization (UNESCO), "Open and Distance Learning: Trends, Policy and
Strategy Considerations," Paris, 2002.
17
From Facebook Statistics Page, 22 June 2010 - www.facebook.com/press/info.php?statistics.
18
www.huffingtonpost.com/2010/04/14/twitter-user-statistics-r_n_537992.html.
19
Mark Walsh, Study: Mobile - It's Not Just For Out-Of-Home Anymore, Online Media Daily, 21 June 2010.
www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=130612.
20
Ryvasy Research, Mobile Broadband Capacity Constraints And the Need for Optimization, (Original Release: 16 February 2010
Updated: 24 February 2010), www.rysavy.com/Articles/2010_02_Rysavy_Mobile_Broadband_Capacity_Constraints.pdf.
21
802.11n Will Lead the Wi-Fi Chip Market in 2010, Says ABI Research, ABI Research, 25 January 2010.
22
Ashlee Vance and Matt Richtel, Despite Risks, Internet Creeps Onto Car Dashboards, New York Times (6 January 2010),
www.nytimes.com/2010/01/07/technology/07distracted.html.
23
www.itu.int/ITU-D/ict/material/FactsFigures2010.pdf
24
www.itu.int/ITU-D/ict/statistics/index.html.
25
The ITU’s specifications for IMT-Advanced technologies, which are informally known as “4G” networks, call for download speeds
of as much as 1gigabit per second for a stationary terminal.
26
Cisco VNI Forecast, Visual Networking Index:Introduction,
www.cisco.com/en/US/netsol/ns827/networking_solutions_sub_solution.html#~forecast.
350 Chapter 8
27
Rich Karpinski, Alcatel-Lucent takes 100G coherent plunge, Connected Planet Online, 9 June 2010,
http://connectedplanetonline.com/IP-NGN/news/alu-100g-coherent-060910/.
28
CableLabs, DOCSIS – Project Primer, www.cablelabs.com/cablemodem/primer/.
29
Om Malik, In Long Island, For $99 a Month, 100 Mbit/s Broadband Arrives, GigaOm, 27 April 2009,
http://gigaom.com/2009/04/27/in-long-island-100-Mbit/s-broadband-arrives/; Mike Robuck, Comcast tees up 100 Mbit/s tier
in Augusta, CedMagazine.com, 17 June 2010, www.cedmagazine.com/News-Comcast-100Mbit/s-tier-Augusta-061710.aspx. (By
the end of 2010, US Cable operator Comcast plans to roll out 100 Mbit/s DOCSIS 3.0-enable service tier to 80 per cent of its
footprint).
30
Saul Hansell, World’s Fastest Broadband at $20 Per Home, New York Times, 3 April 2009,
http://bits.blogs.nytimes.com/2009/04/03/the-cost-to-offer-the-worlds-fastest-broadband-20-per-home/.
31
Virgin pilots 200Mbit/s broadband, BBC, 6 May 2009; Patrick Goss, Virgin Media already looking to 400Mbit/s broadband: New
modems will pave way, Tech Radar, 23 June 2010,
www.techradar.com/news/internet/virgin-media-already-looking-to-400Mbit/s-broadband-698361.
32
Om Malik, So Where Else in the World Can You Get 1 Gbps to the Home?, GigaOM, 11 February 2010,
http://gigaom.com/2010/02/11/so-where-else-in-the-world-can-you-get-1-gbps-to-the-home/.
33
Global mobile Suppliers Association, GSM/3G Stats: Fast Facts, 30 June 2010, www.gsacom.com/news/statistics.php4.
34
3G Americas, HSPA Acceleration: HSPA+ at 21, 28, 42 and Now 84 Mbit/s, Press Release, 10 February 2010,
www.marketwire.com/press-release/HSPA-Acceleration-HSPA-at-21-28-42-and-Now-84-Mbit/s-1115293.htm.
35
Larry Dignan, WiMax deployments ramp globally, but U.S. lags, ZDNET, 15 February 2010,
www.zdnet.com/blog/btl/wimax-deployments-ramp-globally-but-us-lags/30781.
36
Source, 30 June 2010 statistics.
37
www.itu.int/net/pressoffice/press_releases/2010/40.aspx
38
WiMAX 2 Networks Ready in 2012, says Intel, WiMAX.com, 9 March 2010,
www.wimax.com/commentary/blog/blog-2010/march-2010/wimax-2-networks-ready-in-2012,-says-intel-0309.
39
Damian Koh, Report: Smartphones account for over one-third of handset sales, cnet Asia, 7 July 2010,
http://asia.cnet.com/2010/07/07/report-smartphones-account-for-over-one-third-of-handset-sales/.
40
Rupert Neate, Smartphones to take '70pc of Europe's mobile market' by 2012, Telegraph UK, 17 August 2009,
www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/6041063/Smartphones-to-take-70pc-of-Europes-
mobile-market-by-2012.html.
41
Berg Insight, HSPA/LTE accounts for 17.3 per cent of all PC broadband connections in Europe, Press Release, 5 July 2010,
www.berginsight.com/News.aspx?m_m=6&s_m=1.
42
Nicolai Hartvig, Changing channels: Who will switch on to mobile TV?, CNN, 25 February 2010,
www.cnn.com/2010/TECH/02/24/mobile.tv/index.html.
43
Kevin J. O'Brien, Mobile TV's Last Frontier: U.S. and Europe, New York Times, 30 May 2010,
www.nytimes.com/2010/05/31/technology/31mobiletv.html?emc=eta1.
44
Kevin J. O'Brien, Mobile TV's Last Frontier: U.S. and Europe, New York Times, 30 May 2010,
www.nytimes.com/2010/05/31/technology/31mobiletv.html?emc=eta1.
45
Lauren Goode and Amy Schatz, Mobile TV Gets Closer As Backers Cut a Path, Wall Street Journal, 3 January 2010,
http://online.wsj.com/article/SB10001424052748703425904574635250854152872.html#ixzz10kYPSG00.
46
www.businessweek.com/news/2010-07-01/verizon-iphone-deal-may-add-1-billion-to-apple-s-app-sales.html.
47
http://thenextweb.com/mobile/2010/03/15/android-market-breaks-250-million-downloads-989-free-apps/.
48
www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/01/BUII1E7AUE.DTL.
Chapter 8 351
49
www.readwriteweb.com/archives/number_of_location-aware_apps_keeps_growing_-_but.php
50
Liz Gannes, Mobilize: The Dawn of Location-Aware Mobile Ads, Gigaom, 10 September 2009,
http://gigaom.com/2009/09/10/mobilize-the-dawn-of-location-aware-mobile-ads/.
51
TNS, Australians fear stalking, badgering from sharing location, Press Release, 4 August 2010,
www.tnsglobal.com/_assets/files/Australians_fear_stalking_badgering_from_sharing_location_amended.pdf.
52
Janice Y. Tsai, Patrick Gage Kelley, Lorrie Faith Cranor, and Norman Sadeh, Location-Sharing Technologies: Privacy Risks and Con-
trols, Carnegie Mellon University, Updated February 2010,
http://cups.cs.cmu.edu/LBSprivacy/files/TsaiKelleyCranorSadeh_2009.pdf.
53
www.networkworld.com/community/node/62552.
54
Categories of Mobile Apps, www.leapforum.org/published/internetworkMobility/split/node108.html.
55
In computing, the Post Office Protocol (POP) is an application-layer Internet standard protocol used by local e-mail clients to re-
trieve e-mail from a remote server over a TCP/IP connection.
56
Geoff Duncan, AT&T Looking to Crack Down on Mobile Bandwidth Hogs, Digital Trends, 9 December 2009,
www.digitaltrends.com/mobile/att-looking-to-crack-down-on-mobile-bandwidth-hogs/.
57
Average smartphone data use triples in one year, Yahoo News, 30 June 2010,
http://news.yahoo.com/s/ytech_gadg/20100630/tc_ytech_gadg/ytech_gadg_tc2979.
58
Roger Entner, Quantifying the Mobile Data Tsunami and its Implications, Nielsen Wire, 30 June 2010,
http://blog.nielsen.com/nielsenwire/online_mobile/quantifying-the-mobile-data-tsunami-and-its-implications/.
59
Mikael Ricknäs, Swedish Operators Go Against the Grain, Remove Data Caps, CIO magazine, 17 June 2010,
www.cio.com/article/597039/Swedish_Operators_Go_Against_the_Grain_Remove_Data_Caps.
60
Kim Hart, Comcast's 'data meter' sparks questions about broadband caps, The Hill, 19 January 2010,
http://thehill.com/blogs/hillicon-valley/technology/76855-comcasts-data-meter-sparks-questions-about-broadband-caps.
61
Om Malik, Comcast Metered Broadband Official — Beware What You Download, GigaOM, 28 August 2008,
http://gigaom.com/2008/08/28/comcast-makes-metered-broadband-official-beware-what-you-download/.
62
Of course, this is partially offset by the cost and energy required to ship the item, often long distances. For further discussion of
how ICTs may reduce energy consumption, see the GSR2010 Discussion Paper entitled “ICTs and Climate Change”.
63
Microsoft Security Intelligence Report Volume 8 (July through December 2009),
http://download.microsoft.com/download/4/3/8/438BE24D-4D58-4D9A-900A-
A1FC58220813/Microsoft_Security_Intelligence_Report%20_volume8_July-Dec2009_English.pdf.
64
“An advance-fee fraud is a common confidence trick in which the sender of a message purports to have a claim on a large sum
of money, but is unable to access it directly for some reason, typically involving bureaucratic red tape or political corruption.”
One investigative firm estimated that 419 scammers collectively took in U.S.$9.3 billion in 2009, nearly 50 per cent more than in
the previous year.” See Microsoft Security Intelligence Report Volume 8 (July through December 2009).
65
OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data,
www.oecd.org/document/18/0,3343,en_2649_34255_1815186_1_1_1_1,00.html.
66
Leigh Phillips, New EU Privacy Laws Could Hit Facebook, Bloomberg Businessweek, 29 January 2010,
www.businessweek.com/globalbiz/content/jan2010/gb20100129_437053.htm.
67
Internet exposes Indian kids to threats on virtual world, The Economic Times, 17 July 2010,
http://economictimes.indiatimes.com/articleshow/6178382.cms?prtpage=1.
68
Cheryl Bates, Norton Online Family Report 2010 Reveals 87 Per cent Of Malaysian Kids Have Had A Negative Online Exp, Max-it
online, 8 July 2010, www.maxit-online.net/news.php?active_page=news_details&news_id=815.
69
ITU, Child Online Protection Brochure, www.itu.int/osg/csd/cybersecurity/gca/cop/brochures/cop-brochure.pdf.
352 Chapter 8
70
According to FCC, the SAR is "a measure of the amount of radio frequency energy absorbed by the body when using a mobile
phone." See www.fcc.gov/cgb/sar/, a website that FCC maintains, including SAR figures reported by various cell phone manufac-
turers. FCC has set limits for SAR, as has the European Union, which follows standards set by the International Electrotechnical
Commission (IEC). In addition, the Cnet website published a listing of SAR levels by cell phone model. The accompanying article
noted, "For a phone to pass FCC certification and be sold in the United States, its maximum SAR level must be less than 1.6
watts per kilogram. In Europe, the level is capped at 2 watts per kilogram while Canada allows a maximum of 1.6 watts per kilo-
gram." See http://reviews.cnet.com/cell-phone-radiation-levels/?tag=nl.e404/.
71
Nicole Lee, Cell phone radiation levels, CNET, Updated 24 June 2010, http://reviews.cnet.com/cell-phone-radiation-levels/.
72
According to the Governors Highway Safety Association, see www.ghsa.org/html/stateinfo/laws/cellphone_laws.html.
73
See http://en.wikipedia.org/wiki/Mobile_phones_and_driving_safety.
74
United Nations Environment Program, RECYCLING FROM E-WASTE TO RESOURCES, July 2009,
www.rona.unep.org/documents/publications/E-waste_20100222.pdf.
75
Ibid.
76
Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2000).
77
Bae Hyun-jung, "Game Addiction Goes Overboard." The Korea Herald/Asia News Network, downloaded 8 March 2010, from
www.asiaone.com.sg at http://digital .asiaone.com/print/Digital/News/Story/A1Story21100305-202607.html.
78
Christine Seib, "Is There Such a Thing as Internet Addiction?" The Times of London, TimesOnline, 8 March 2010, downloaded
from http://women.timesonline.co.uk/tol/life_and_style/women/the_way_we_live/article7052999.
79
Branigan, Tania, "Chinese Province Bans Adults' Looking at Youngsters' Mobiles,"
www.guardian.co.uk/world/2010/jul/26/china-law-checking-childrens-computers.
80
Greg Beato, "Internet Addiction: What Once Was Parody May Soon Be Diagnosis," reason.com (August-September 2010 edition)
http://reason.com/archives/2010/07/26/internet-addiction.
81
"Internet Addiction Should Be Recognized as a Clinical Disorder, Psychiatrict Claims," Daily Mail Online at
www.dailymail.co.uk/news/article-542768/Internet-addiction-recognised-clinical-disorder-psychiatrist-claims.html.
82
"A Day Without Media," report by the International Center for Media and the Public Agenda, University of Maryland, see
http://withoutmedia.wordpress.com/study-conclusions/.
83
http://news.bbc.co.uk/nol/shared/spl/hi/programmes/analysis/transcripts/12_03_09.txt.
84
The Pew Internet and American Life Project, see http://pewinternet.org/Reports/2010/Teens-and-Mobile-Phones.aspx?r=1.
85
Ibid., at http://pewinternet.org/Reports/2010/Teens-and-Mobile-Phones/Chapter-4/Parental-and-institutional-regulation-of-
teen-mobile-phone-use.aspx?r=1.
86
ICT Regulation Toolkit, Module 1, section 2.5 on convergence, at www.ictregulationtoolkit.org/en/section.3110.html.
87
Google bosses convicted in Italy, BBC News, 24 February 2010, http://news.bbc.co.uk/2/hi/technology/8533695.stm.
88
ICT regulation toolkit, reference document, at www.ictregulationtoolkit.org/en/Publication.3909.html.
89
ibid, practice note at www.ictregulationtoolkit.org/en/PracticeNote.3270.html.
90
Alexander Cuadros, Telebras Rises to Two-Month High on Broadband Plan, Bloomberg Businessweek, 5 May 2010,
www.businessweek.com/news/2010-05-05/telebras-rises-to-two-month-high-on-broadband-plan-update4-.html.
91
Telebras surges as Brazil to fund broadband plan, Reuters, 5 May 2010, www.reuters.com/article/idUSN0522046520100505.
92
Kim, Yoongsoo, Tim Kelly and Siddhartha Raja, ""Building Broadband: Strategies and Policies for the Developing World," World
Bank Publication, August 2010, at
http://siteresources.worldbank.org/INFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/Resources/BuildingBroadband_
cover.pdf.
Chapter 8 353
93
Gross, Grant, "FCC To Claim Some Broadband Regulatory Power," 5 May 2010, Computerworld.com, downloaded 12 August
2010 from
www.computerworld.com/s/article/9176367/FCC_to_claim_some_broadband_regulatory_power?taxonomyId=13&pageNumb
er=1.
94
See Malaysia Cast Study at the ICT Regulation Toolkit, under Module 6 (Legal and Institutional Framework), Section 4.5.3 (Im-
pact of Convergence), downloaded at www.ictregulationtoolkit.org/en/Section.2112.html.
95
For a discussion on this topic, please see GSR 2008 Discussion Paper on “IPTV and Mobile TV: New Challenges for Regulators”, at:
www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR08/papers.html
96
See ICT Regulatory Toolkit at www.ictregulationtoolkit.org/en/Section.3423.html
97
ICT Regulation Toolkit, Module 2, Section 4.3.
98
Office of the Telecommunications Authority, "Regulation of Internet Protocol (IP) Telephony," 20 June 2005.
99
See WIK-Consult, "The Regulation of Voice over IP (VoIP) in Europe," final report, 19 March 2008, submitted to the European
Commission. At
http://ec.europa.eu/information_society/policy/ecomm/doc/library/ext_studies/voip_f_f_master_19mar08_fin_vers.pdf.
100
Brad Reed, What the U.S. can learn from international net neutrality, broadband policies, Network World, 12 February 2009,
www.networkworld.com/news/2009/021209-international-net-neutrality.html.
101
Amy Schatz, New U.S. Push to Regulate Internet Access, Wall Street Journal, 5 May 2010,
http://online.wsj.com/article/NA_WSJ_PUB:SB10001424052748703961104575226583645448758.html.
102
Thomas K Thomas, Google pushes Net neutrality in India, The Hindu Business Line, 2 August 2010,
www.thehindubusinessline.com/2010/08/02/stories/2010080250230200.htm.
103
James Lambie, Chile Enshrines Net Neutrality in Law, Internet Revolution, 22 July 2010,
www.internetevolution.com/author.asp?section_id=746&doc_id=194727&f_src=internetevolution_gnews.
104
Stevens, Rosalind, "Consumer Protection: Meeting the Expectations of the Connected Customer," GSR2009 Discussion Paper.
105
Ibid. see Table 1.
106
For more information on industry self-regulation in the context of cybercrime, see the GSR2010 Discussion Paper entitled “Ad-
dressing Cyberthreats”.
107
ICT regulation toolkit www.ictregulationtoolkit.org/en/Section.2107.html. For more information on industry self-regulation in
the context of cybercrime, see the GSR2010 Discussion Paper entitled “Addressing Cyberthreats”.
108
Jeremy Kirk, "Blocked Street Views May Get Published," IDG, as reported by Reuters, 20 August 2010. downloaded at
www.reuters.com/article/idUS24185386820100820. See also Smith, Heather, "Google Street View Car Inspected by French
Regulator," Bloomberg Business Week, 30 August 2010, at www.businessweek.com/news/2010-08-30/google-street-view-car-
inspected-by-french-regulator.html. Google has reportedly faced scrutiny for its Street View practices in South Korea and the
United States, as well as in Europe.
109
See www.google.com/transparencyreport/.
110
Miguel Helft and David Barboza, Google Shuts China Site in Dispute Over Censorship, New York Times, 22 March 2010,
www.nytimes.com/2010/03/23/technology/23google.html.
111
Venezuela debates Internet regulation, CNN, 17 March 2010,
www.cnn.com/2010/WORLD/americas/03/17/venezuela.internet/index.html.
112
Enrique Andres Pretel, Twitter's heady rise has Venezuela's Hugo Chavez in spin, Reuters, 30 March 2010,
www.reuters.com/article/idUSTRE62T0BG20100330.
113
Indonesia's Sexy Video Scandal Grows, Asia Sentinel, Wednesday, 23 June 2010,
www.asiasentinel.com/index.php?option=com_content&task=view&id=2551&Itemid=202.
354 Chapter 8
114
See ICT Regulation Toolkit, Module 1, Section 2.5 www.ictregulationtoolkit.org/en/section.3110.html.
115
For more discussion on this issue, see the GSR2010 Discussion Paper on ICT regulation in the digital economy.
116
Nate Anderson, “Half of All Americans Support Government Regulation of Internet Video,” Ars Technica, 25 October 2007, at
http://arstechnica.com/tech-policy/news/2007/10/half-of-all-americans-support-government-regulation-of-internet-video.ars.
117
Saudi Arabia begins Blackberry ban, users say, BBC News, 6 August 2010, www.bbc.co.uk/news/world-middle-east-10888954.
118
Summer Said, Saudi Arabia, Research In Motion Reach Deal, Wall Street Journal, 8 August 2010,
http://online.wsj.com/article/SB10001424052748704182304575414814113575300.html.
119
Marguerite Reardon, BlackBerry security: Blessing and a curse, CNET, 9 August 2010,
http://news.cnet.com/8301-30686_3-20012981-266.html.
120
Annemijn van Gorp and Chris Morris, "Rural Connectivity Through WiFi: Regulatory Challenges and Opportunities in Southern
Africa", Paper presented at the annual meeting of the International Communication Association, TBA, San Francisco, CA, 23 May
2007, www.allacademic.com/meta/p172363_index.html.
121
See FACTBOX-Quick facts about India's 3G, BWA auctions, Reuters, 7 April 2010,
www.reuters.com/article/idUSSGE63603Z20100407.
122
India's 3G Wireless Play: An Economic Engine – or Out of Bandwidth?, India Knowledge@Wharton, 20 May 2010,
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4480.
123
India's 3G Wireless Play: An Economic Engine – or Out of Bandwidth?, India Knowledge@Wharton, 20 May 2010,
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4480.
124
www.ftc.gov/bcp/menus/consumer/tech.shtm.
125
Mr Lui Tuck Yew, Acting Minister For Information, Communications And The Arts, “Securing Our Cyberspace, A Shared Respon-
sibility”, Delivered Remarks at the Information Security Seminar held in Suntec Singapore, 22 March 2010,
http://app.mica.gov.sg/Default.aspx?tabid=36&ctl=Details&mid=539&ItemID=1126.
Chapter 8 355
9 CONCLUSION
This 11th Edition of Trends in Telecommunication next generation networks. Questions also arise about
Reform has explored one of the most significant and the appropriate role of government and regulators in
important trends of the past ten years: the diffusion of stimulating the demand for broadband and in
ICTs into virtually all aspects of society. From the promoting investment in infrastructure.
perspective of regulating and managing the ICT sector,
two broad themes emerge from the discussions in this Third, the interconnectedness of ICTs is crucial to
Report: first, the ubiquity of ICTs in almost all understanding and managing the impact that ICTs have
dimensions of society and, second, the important role on society. Regulators, government, end users,
of telecom/ICT regulators in the digital information infrastructure providers, access providers, and service
society. and application providers all interact with each other
within the broadband ecosystem, and each stakeholder
This Report underlined the ubiquity of ICTs in impacts and is impacted by the choices of other
society. From climate change to security in the modern stakeholders, both on a domestic and an international
era, discussions of major social issues are not complete scale.
without some consideration of the role of ICTs (both
positive and negative) in creating, managing, and This interconnectedness has both a positive and a
resolving these issues. Three sub-themes merit negative dimension. On the positive side, investment in
particular attention. infrastructure, the development and improvement of
services and applications, and so forth have ripple
First, there appears to be tremendous potential for effects on an exponential scale. The network effects (to
ICTs to make positive contributions to major social use the language of economists) of the broadband
challenges. For example, although ICTs contribute to ecosystem are part of the dynamic that has made ICTs
greenhouse gas emissions, they are also uniquely so integral to society in the first place. However, on the
situated to enable the reduction of such emissions negative side, the interconnectedness of ICTs
overall through the smart use of technology. Moreover, contributes to problems with maintaining cyber
ICTs can facilitate access to health care and education security, protecting privacy, and battling spam and
and are critical for the functioning of the economy. ICTs malware. The interconnectedness of ICTs facilitates the
can help to connect citizens to their governments and distribution of viruses and malware on a global basis
facilitate various forms of civic engagement. They also and makes it easier to perpetrate various forms of
play an important role in stimulating economic growth. cybercrime, while at the same time making it difficult to
ICTs, particularly digital technologies such as broadband, track, investigate, and prosecute cyber criminals. A key
are political, social, and economic assets. question that arises in this context is, what is the role of
the telecom/ICT regulator in the broadband ecosystem
Second, the ever-growing importance of ICTs in all and in the battle against cybercrime? This third sub-
aspects of society underlines the urgency of addressing theme thus leads to the second major theme evident in
the digital divide. Access to broadband technology is this Report: the role of the ICT regulator in the digital
not a luxury, but a necessity that is crucial to cultivating information society.
economic, social, and political development. The
urgency of addressing the digital divide, in turn, As ICTs permeate every aspect of society and as
highlights the need for national broadband planning their importance to social, political and economic
that includes strategic spectrum management, development becomes increasingly pronounced, the
managing the transition from analog to digital role of the ICT regulator must be critically assessed.
transmission, and laying a foundation for the rollout of Four issues are particularly relevant to this discussion:
Conclusion 357
regulatory priorities in the digital, information society; Third, this Report has drawn attention to a variety
new issues for regulators; regulatory complexities in the of complexities related to regulating ICTs in an
integrated digital age; and charting a course forward. integrated information society. The diffusion of ICTs into
virtually all aspects of society has increased the number
First, each period in the history of a country’s ICT of stakeholders in any debate relating to ICTs. Managing
regulatory development has its own priorities. For the policy issues surrounding ICTs and building
example, in the early stages of liberalization, rate stakeholder consensus has grown more difficult as a
rebalancing and rate setting methodologies were result. Moreover, the interconnectedness and
central to the telecommunication regulator’s mandate. integration of the digital information society has given
Licensing, interconnection, access to network facilities, rise to issues that are cross-sectorial in nature. Dealing
and regulating operators with significant market power with cyberthreats illustrates how the ICT regulator’s
also emerged as crucial regulatory issues. The mandate may intersect with government, other
emergence of the information age has not necessarily regulators, and various state agencies. It is also clear
obviated the need for regulation over market entry, that an effective response to cybercrime requires not
interconnection, access, rates, and the abuse of only national cross-sectorial coordination, but
dominance. Nevertheless, it has brought new issues to international cooperation and coordination, as well.
the forefront of the regulator’s mandate. Universal
access to digital technology, the transition from analog The information society will feature multiple
to digital transmission and the digital dividend, agency collaboration out of necessity. Protocols for
convergence of networks and services, the rollout of inter-agency cooperation are likely to have great value
broadband, and next generation networks have in facilitating coordinated responses to complex issues
become prominent regulatory priorities as countries in the integrated and interconnected digital information
around the world transform themselves into society.
information societies.
Some challenges facing ICT regulators are not new
Second, in addition to the aforementioned per se, but have ongoing relevance as regulators seek to
regulatory priorities, new issues have become or may exercise their authority appropriately in the
soon become part of the ICT regulator’s mandate. information age. One such challenge is the need to
Some of these issues already form part of most ICT strike the right balance between using regulatory
regulators’ official mandates, although the integration intervention to manage the ICT sector and relying on
of ICTs into all aspects of society are transforming the the market to discipline infrastructure and service
nature of these issues. For example, many ICT providers and to create incentives for innovation. The
regulators have some degree of responsibility for importance of the ICT sector has increased the stakes in
consumer protection. But what used to involve this debate.
protecting consumer interests in rates and quality of
service from monopoly service providers is being Resolving disputes expeditiously in a competitive,
transformed into protecting consumers’ privacy, complex and converged environment is another
safeguarding the integrity of the Internet from viruses challenge for regulators. Regulators need to also strike
and cyber-attacks, and preventing the dissemination of a balance between regulation and dispute resolution,
spam and malware. Consumer protection in the digital providing ICT players with greater control over their
information society is a much broader and complex own disputes, whether through arbitration and other
task than ever before. alternative dispute resolution methods (ADR), and
assess when official intervention is required.
Other issues are novel, and the ICT regulator’s role
in addressing them is yet to be defined. In the area of Finally, core competencies of ICT regulators make
climate change, there are various ways in which ICT them well-suited to certain tasks in the digital
regulators could potentially become involved, notably information society. Many ICT regulators are skilled at
by using ICTs to fight climate change. However, the coordinating the actions of multiple stakeholders and
exploration of the role of the ICT regulator in facilitating thus suggests that ICT regulators may play a
the use of ICTs to reduce greenhouse gases is still in its coordinating role among the many agencies and
early stages. More study and more discussion are departments involved, for example, in the fight against
necessary. cybercrime. Perhaps the most important core
competency of the ICT regulator is its knowledge of the
358 Conclusion
ICT sector and technologies. This knowledge makes the obsolete. Some wondered whether a competition
ICT regulator uniquely placed to advise government authority could eventually take over all the roles of the
and other regulators and agencies about the potential telecommunication regulator. But such speculation was
implications of proposed policy approaches, legislation, before the advent of ICTs, before convergence, and
and regulation in societies where ICTs are ubiquitous before the integrated and interconnected, digital
and carry great importance in society’s well-being. This information society had emerged. Today, most
also suggests that there may be a potential role for ICT countries in the world retain regulatory staff with
regulators in building awareness and skills among special knowledge of the ICT sector and whose
industry members and consumers with respect to mandate includes tasks specific to the sector. The
issues such as cybercrime, climate change, and the ubiquity of ICTs and their central role in promoting
potential applications of broadband. social, political, and economic development have
generated a continued need for specialized ICT
Not long ago, some speculated that an industry- regulatory staff and institutions as countries chart their
specific telecommunication regulator may become course forward in the digital information age.
Conclusion 359
REGULATORY INFORMATION
Regulatory information is available on ITU’s online ICT Eye portal

The world’s unique one-stop-shop for Telecom/ICT data collection and dissemination!
www.itu.int/ITU-D/icteye
361
The ICT Eye allows users and web visitors to access the latest trends and developments
in the ICT sector in an interactive manner.
Regulatory reports available from the Regulatory Information section (Regulatory Knowledge Centre)
include both regional and country reports on the subjects listed below:
362
GLOSSARY OF TERMS
The following definitions are included to assist the readers of this report. They are adapted from non-definitive
reference sources and are not intended to replace or contradict the terms and meanings used by each ITU Member
State in its national laws and regulations or in international agreements.
2G: Second-generation mobile network Active optical A network in which the passive split-
or service. A general term for sec- network: ting point is replaced with an optical
ond-generation networks, for exam- line distribution unit, which is a pow-
ple GSM. ered unit making it possible to have a
higher bit rate on individual routes
3G: Third-generation mobile network or over longer distances than on a pas-
service. Generic term for the next sive optical network.
generation of broadband digital mo-
bile cellular systems, which has ex- ADR: Alternative dispute resolution.
panded broadband capabilities for
mobile data applications. See ADSL: Asymmetric digital subscriber line.
IMT-2000. A technology that enables high-
speed data services to be delivered
3GPP: Third-Generation Partnership Project: over twisted pair copper cable, typi-
A cooperation between regional cally with a download speed in ex-
standards bodies to ensure global cess of 256 kbit/s, but with a lower
interworking for 3G systems. upload speed. Corresponds to ITU-T
Recommendation (standard)
4G: Fourth-generation mobile network or G.992.1.
service. Mobile broadband standard
offering both mobility and very high ADSL2: Asymmetric digital subscriber line 2
bandwidth. (ITU-T G.992.3 and ITU-T G.992.4). A
sequel to the original ITU Recom-
Accounting Regulatory remedy requiring an op- mendation. It allows increased line
separation: erator to separate a company’s ac- speeds, new power-saving elements,
counts so that the costs and and extends the reach of the original
revenues associated with each sub- ADSL specification.
sidiary or business unit can be indi-
vidually identified and allocated.
ADSL2+: Asymmetric digital subscriber line 2
Active infrastructure Provision of specified services and plus (ITU-T G.992.5). This revised
sharing: active network elements needed to version of ADSL2 enables increased
ensure interoperability of end-to-end speeds by increasing the frequencies
services to users, including facilities used on the copper line.
for intelligent network services or
roaming on mobile networks (Direc-
tive 2002/19/EC, TRAI.
Glossary of terms 363

Adware: Advertising-supported software. Backhaul: A high-capacity line dedicated to the

A software package that automati- transport of aggregate communica-
cally plays, displays or downloads tion signals from base stations to the
advertising material to a computer core network (also ITU-R F.1399).
after the software is installed or
while an associated application is Bandwidth: The range of frequencies available to
being used. be occupied by signals. In analogue
systems it is measured in terms of
AMPS: Advanced mobile phone system. Hertz (Hz) and in digital systems in
bits per second (bit/s). The higher
the bandwidth, the greater the
Analogue: Transmission of voice and images
amount of information that can be
using electrical signals. Analogue
transmitted in a given time.
mobile cellular systems include
AMPS, NMT and TACS.
Base station: A radio transmitter/receiver and an-
tenna used in the mobile cellular
Analogue network: A telecommunication network in network. It maintains communica-
which information is conveyed as a tions with cellular telephones within
continuously varying electronic signal a given cell and transfers mobile traf-
(see also Digital network). fic to other base stations and the
fixed telephone network.
API: Application program interface.
Basic service: Refers to the provision and carriage
ARPU: Average revenue per user. Usually of voice telephony service, though
expressed per month, but also per some definitions also include telex
year. and telegraph services.
ASN: Autonomous system number. Best-efforts: A traffic delivery standard for which
the network exerts its best efforts to
Asymmetric ensure that the traffic is delivered,
The application of different regula-
regulation: but provides no guarantee that all
tory requirements on different regu-
traffic will be delivered.
lated entities, based on their levels
of market power or their possession
of significant market power. Bill and Keep: In contrast to CPNP, this term de-
notes an interconnection arrange-
ment in which the carriers exchange
ATM: Asynchronous transfer mode.
traffic on a negotiated basis, gener-
A transmission mode in which the ally without paying interconnection
information is organized into cells; it charges. Each carrier bills its own
is asynchronous in the sense that the customers for the traffic and keeps
recurrence of cells from an individual the resulting revenue. Also known as
user is not necessarily periodic. “sender keeps all” interconnection.
ATSC: Advanced Television Systems Com- Bit (binary digit): A bit is the primary unit of electronic,
mittee. digital data. Written in base-2 binary
language as a “1” or a “0”.
AWS: Advanced wireless services.
Bit/s: Bits per second. Measurement of the
Backbone: Network that handles the major transmission speed of units of data
voice and data traffic of a country. It (bits) over a network. Also kbit/s: ki-
employs the highest-speed transmis- lobits (1000) per second; Mbit/s:
sion paths in the network. The access megabits (1 000 000) per second;
networks are attached to the back- Gbit/s: gigabits (1 000 000 000) per
bone to directly connect the end second; and Tbit/s: terabits
user. (1 000 000 000 000) per second.
364 Glossary of terms

Bit-stream access: A form of network unbundling. With BWA: Broadband wireless access. Encom-
bit-stream access, the incumbent passes either mobile or fixed access
maintains management control over technologies that provide connec-
the physical line. Unlike full unbun- tions at speeds higher than the pri-
dling and line sharing, access seekers mary rate (for example, 2 Mbit/s).
can only supply the services that the
incumbent designates. Byte: (1) A set of bits that represent a sin-
gle character. A byte is composed of
eight bits. (2) A bit string that is op-
Blog: Blog is short for weblog. A weblog is erated upon as a unit and the site of
an online journal (or newsletter) that which is independent of redundancy
is frequently updated and intended or framing techniques.
for general public consumption.
C-band: The spectrum band comprising fre-
Bluetooth: A radio technology that enables the quencies between 3400-4200 MHz.
transmission of signals over short
distances between mobile phones, CA: Conditional access (ITU-T J.193 (04),
computers and other devices. It is 3.10). The conditional granting of
typically used to replace cable con- access to cable services and content
nections. based upon what service suite has
been purchased by the customer.
BPL: Broadband over power line.
A wireline technology that is able to Cable modem: A technology that allows high-speed
use the current electricity networks interactive services, including Inter-
net access, to be delivered over a
for data and voice transmission.
cable TV network.
Broadband: Broadband is defined, for the pur-

CAGR: Compound annual growth rate.
poses of this report, as Internet ac-
cess with a minimum capacity equal
CATV: Cable television. A system for deliv-
to or greater than 256 kbit/s in one
ery of television video and audio
or both directions. Fixed broadband content via a wired network, em-
is implemented through technologies ploying either co-axial cable or fibre.
such as digital subscriber line (DSL),
cable modem, fibre-to-the-home CDMA: Code division multiple access.
(FTTH), Metro Ethernet, wireless lo- A technology for digital transmission
cal area networks (WLAN), etc. Mo- of radio signals based on spread
bile broadband is implemented spec-trum techniques where each
through technologies such as wide- voice or data call uses the whole ra-
band CDMA2000, CDMA2000 1xEV- dio band and is assigned a unique
DO, HSDPA, etc. code.
Broadcast: A transmission from a single sender CDMA2000: Code division multiple access 2000.
to all connected devices. See also A third-generation digital cellular
Unicast and Multicast. standard based on Qualcomm tech-
nology. Includes CDMA2000 1x,
1xEV-DO (evolution, data optimized)
Browser: Application that retrieves WWW and 1xEV-DV (evolution, data and
documents specified by URLs from voice). One of the IMT-2000 “family”
an http server on the Internet. Dis- of standards.
plays the retrieved documents ac-
cording to the hyptertext markup Cellular: A mobile telephone service provided
language (HTML). by a network of base stations, each
of which covers one geographic cell
BSS: Broadcasting satellite service. within the total cellular system ser-
vice area.

CERTs: Computer emergency response Collocation: (Also Co-location/Colocation.) Facil-

teams. ity-sharing in which the incumbent
operator houses communications
Channel: One of a number of discrete fre- equipment of competitive operators
quency ranges utilized by a base sta- to facilitate connectivity to end
tion to transmit and receive users.
information from cellular terminals
(such as mobile handsets).
Connectivity: The capability to provide, to end us-
CIF/QCIF: Common intermediate for- ers, connections to the Internet or
mat/Quarter common intermediate other communication networks.
format. An international standard
size for low-resolution image and Convergence: A term used to describe a variety of
video display formats. CIF dimen- technological and market trends in-
sions are 352 × 288 pixels and QCIF volving the blurring of previously dis-
are 176 × 144 pixels. tinct lines between market segm-
ents such as cable television, tele-
Circuit-switched A temporary connection that is es- pho-ny and Internet access, all of
connection: tabished on request between two or
which can now be provided through
more stations in order to allow the
a variety of different network plat-
exclusive use of that connection until
it is released. At present, most voice forms.
networks are based on circuit-
switching, whereas the Internet is Copresent user Condition where multiple individuals are
packet-based. See also Packet-based. sharing: sharing the same computer sys-tem at
the same time.
CLEC: Competitive local exchange carrier.
A network operator or carrier – often Coverage: Refers to the range of a mobile cellu-
a new market entrant – that provides lar or any wireless network, meas-
local telephony in competition with
ured in terms of geographic coverage
the incumbent carrier.
(the percentage of the territorial
area covered by mobile cellular) or
Cloud computing: Typical cloud computing providers
population coverage (the percentage
deliver common business applica-
tions online, which are accessed of the population within range of a
from a web browser, while the soft- mobile cellular network).
ware and data are stored on servers.
CPE: Customer premises equipment.
CMTS: Cable modem termination system.
Equipment typically found in a cable CPNP: Calling Party’s Network Pays. In a
company’ she had end and is used to CPNP regime, the call receiver’s pro-
provide high-speed data services, vider levies some predetermined
such as cable Internet or voice over
charge per minute on the call origi-
IP, to cable subscribers.
nator’s provider for termination,
while the call receiver’s operator
CODEC: A device or computer program capa-
pays nothing.
ble of encoding and/or decoding a
digital data stream or signal.
CPP: Calling Party Pays. Billing option
Cognitive radio: Technology that could make efficient whereby the person making the call
use of unused spectrum, allowing dy- is charged. By contrast, in a “receiv-
namic reallocation of available spec- ing party pays” (RPP) system, the in-
trum at any given time and avoiding dividual that receives the call pays all
interference among licensed or unli- charges for that call.
censed users.

CSMA: Carrier sense multiple access. Domain name: The registered name of an individual
A network protocol in which a node or organization eligible to use the
verifies the absence of other traffic Internet. Domain names have at
before transmitting on a shared least two parts and each part is sepa-
rated by a dot (point). The name to
physical medium, such as an electri-
the left of the dot is unique for each
cal bus, or a band of electromagnetic
top-level domain name, which is the
spectrum. name that appears to the right of the
dot. For instance, the International
Cybersecurity: Protection of network integrity and Telecommunication Union’s domain
content from electronic infiltration name is itu.int. “ITU” is a unique
or “hacking” to disrupt networks or name within the gTLD “int”.
to illegally obtain private or re-
stricted data. DSA: Dynamic spectrum access. This ap-
proach to spectrum management
DAB: involves unitizing spectrum in terms
Digital audio broadcasting.
of time slots or geographical loca-
A technology for broadcasting of au-
tion. It is closely related to flexible
dio using digital radio transmission. spectrum management and spec-
trum trading.
Dark fibre: Fibre optic cable that is not being
used at the time. DSA: Dynamic spectrum allocation.
DECT: Digital enhanced cordless standard. DSL: Digital subscriber line. See also ADSL,
ADSL2, ADSL2+, SHDSL, SDSL, VDSL
Digital: Representation of voice or other in- and xDSL.
formation using digits 0 and 1. The
digits are transmitted as a series of DSLAM: Digital subscriber line access multi-
pulses. Digital networks allow for plexer. A device, located at the cen-
higher capacity, greater functionality tral office of a DSL provider, that
separates and routes the voice-
and improved quality.
frequency signals and data traffic on
a DSL line.
Digital network: A telecommunication network in
which information is converted into DSP: Digital signal processing. The study
a series of distinct electronic pulses of signals in a digital representation
and then transmitted as a digital bit- and the processing methods of these
stream (see also Analogue network). signals.
DMB: Digital multimedia broadcasting. DTH: Digital-to-home. A satellite television

A technology for broadcasting of system that allows end users to re-
multimedia (audio, TV, data) using ceive signals directly from geosta-
digital radio transmission, mainly tionary satellites. The term DBS
used in Republic of Korea. (Direct broadcast satellite) is also
used.
DOCSIS: Data over cable systems interface
DTT or DTTV: Digital terrestrial television.
specifications (ITU-T J.112). An ITU
Recommendation for cable modems.
It specifies modulation schemes and DTV: Digital television. A system for
broadcasting and receiving video and
the protocol for exchanging bi-
sound through digital signals rather
directional signals over cable. than through traditional analogue
signals.
DOCSIS2: Data over cable systems interface
specifications 2 (ITU-T J.122). The Duct: A tube or passage that confines and
newest, revised version of DOCSIS, conducts cables (copper or fibre op-
approved at the end of 2002. tic) of a physical network.

DVB: Digital video broadcasting. An open End user: The individual or organization that
standard for digital television main- originates or is the final recipient of
tained by the DVB Project, an indus- information carried over a network
try consortium with more than 270 (i.e. the consumer).
members, and published by a Joint
Technical Committee (JTC) of the End-user sharing: Intentional sharing of ICTs (mobile
European Telecommunications Stan- phone, PC, etc.) among end users, as
dards Institute (ETSI), the European part of the usual or normal operation
Committee for Electrotechnical of a service or application.
Standardization (CENELEC) and the
European Broadcasting Union (EBU). ENUM: Standard adopted by the Internet
A number of DVB standards exist in- Engineering Task Force (IETF), which
cluding DVB-C (Cable), DVB-H (Hand- uses the domain name system (DNS)
held), DVB-T (Terrestrial television) to map telephone numbers to web
and RCS (Return channel via addresses or uniform resource loca-
satellite). tors (URL). The long-term goal of the
ENUM standard is to provide a single
DVB-H: DVB-handheld. number to replace the multiple
numbers and addresses for users’
fixed lines, mobile lines, and e-mail
DVB-T: DVB-terrestrial. addresses.
E.164: An ITU-T Recommendation that de- EPOP: Expanding point of profitability.

fines the international public tele- A network topography where the
communication numbering plan used network expands incrementally to
in the PSTN and some other data unserved areas as they become prof-
networks. itable to operators. Newly connected
areas can then be used as backbones
EC: European Commission. to more remote areas as they even-
tually become profitable to
E-commerce: Electronic commerce. Term used to providers.
describe transactions that take place
online, where the buyer and seller Essential (also critical Network facilities that may serve as
are remote from each other. or bottleneck) facili- bottlenecks to national or interna-
ties: tional capacities and act as a barrier
to the provision of telecommunica-
ECOWAS: Economic Community of West Afri-
tion services. The definition of such
can States.
facilities varies by market.
EDGE: Enhanced data rates for GSM evolu-

Ethernet: A protocol for interconnecting com-
tion. It acts as an enhancement to 2G
puters and peripheral devices at high
and 2.5G General packet radio ser-
speed. Recently Gigabit Ethernet has
vice (GPRS) networks. This technol- become available, which enables
ogy works in TDMA and GSM speeds up to 1 Gbit/s. Ethernet can
networks. EDGE (also known as run on several types of wiring includ-
EGPRS) is a superset to GPRS and can ing: twisted pair, coaxial, and even
function on any network with GPRS fibre optic cable.
deployed on it, provided the carrier
implements the necessary upgrades. ETSI: European Telecommunications Stan-
EDGE provides Enhanced GPRS dards Institute.
(EGPRS), which can be used for any
packet-switched applications such as
EU: European Union.
an Internet connection. High-speed
data applications such as video ser-
vices and other multimedia benefit EUR: Euro. The official currency of the Eu-
rozone (European Union member
from EGPRS’s increased data
States that have joined the European
capacity.
Monetary Union).

EV-DO: Evolution-Data Optimized or Evolu- FTTH: Fibre-to-the-home. A high-speed fi-

tion-Data only, abbreviated as EV-DO bre optic, Internet connection that
or EVDO and often EV, is a telecom- terminates at a residence. See FTTx.
munications standard for the wire-
less transmission of data through FTTx: Fibre-to-the-x, where x is a home
radio signals, typically for broadband (FTTH), building (FTTB), curb, cabinet
Internet access.
(FTTC), or neighbourhood (FTTN).
These terms are used to describe the
Ex-ante and ex-post Ex-ante regulation involves setting reach of an optical fibre network.
regulation: specific rules and restrictions to pre-
vent anti-competitive or otherwise
Full (Sometimes referred to as access to
undesirable market activity by carri-
unbundling: raw copper.) A form of network un-
ers before it occurs; ex-post regula-
tion, by contrast, calls for setting few bundling where the copper pairs
or no specific rules in advance, but connecting a subscriber to the main
applying corrective measures and distribution frame (MDF) are leased
punishments if and when transgres- by a new entrant from the incum-
sions do occur. bent. The new entrant takes total
control of the copper pairs and can
FDC: Fully distributed costs. provide subscribers with all services,
including voice and ADSL. The in-
cumbent still has ownership of the
FDM: Frequency division multiplexing.
unbundled loop and is responsible
for maintaining it.
FEC: Forward error correction.
Functional (or also It entails establishing a new business
Fixed line: A physical line connecting the sub- operational) separa- division (kept separate from the in-
scriber to the telephone exchange.
tion: cumbent’s other business opera-
Typically, fixed-line network is used
tions) to provide wholesale access to
to refer to the PSTN (see below) to
the incumbent’s non-replicable (or
distinguish it from mobile networks.
bottleneck) assets, which competi-
tors need in order to compete with
FM: Frequency modulation. the incumbent in downstream retail
markets.
FMC: Fixed-mobile convergence (ITU-T Re-
commendation Q.1761 (04), 3.6).
FWA: Fixed wireless access.
Mechanism by which an IMT-2000
user can have his basic voice as well
as other services through a fixed Gateway: Any mechanism for providing access
network as per his subscription op- to another network. This function
tions and capability of the access may or may not include protocol
technology. conversion.
FMI: Fixed mobile integration. GATS: General Agreement on Trade in Ser-

vices.
FON: Fibre optic network.
GDP: Gross domestic product. The market
Frequency: The rate at which an electrical cur- value of all final goods and services
rent alternates, usually measured in produced within a nation in a given
Hertz (see Hz). It is also used to refer time period.
to a location on the radio-frequency
spectrum, such as 800, 900 or GMPCS: Global mobile personal communica-
1800 MHz. tions by satellite. Non-geostationary
satellite systems that are intended to
FSS: Fixed satellite service. provide global communication cov-
erage to small handheld devices.
FTRs: Fixed termination rates.

GNI: Gross national income. The market GSR: ITU Global Symposium for Regula-
value of all final goods and services tors, at: www.itu.int/ITU-D/
produced in a nation’s economy, treg/bestpractices.html
including goods and services
produced abroad. GNI, in constant Headend: Equipment or facility that receives,
prices, differs from GNP in that it stores, and processes television sig-
also includes a terms-of-trade
nals for distribution to a local region.
adjustment, and gross capital forma-
The headend may control interactive
tion, which includes a third category
features, manage VoD, and insert
of capital formation: net acquisition
advertisements.
of valuables.
HD: High definition.

GNP: Gross national product. The market
value of all final goods and services
produced in a nation’s economy, HDR: Hardware-defined radio.
including goods and services pro-
duced abroad. HDTV: High-definition television. A new
format for television that offers far
GPRS: General packet radio service. This is a superior quality to current NTSC, PAL
mobile data service available to users or SECAM systems. The resolution of
of GSM mobile phones. It is often the picture is roughly double previ-
described as “2.5G”, that is, a tech- ous television signals and the pic-
nology between the second (2G) and tures are displayed with a screen
third (3G) generations of mobile te- ratio of 16:9 as compared with most
lephony. It provides moderate-speed of today’s TV screens, which have a
data transfer, by using unused TDMA screen ratio of 4:3.
channels in a GSM network.
HFC: Hybrid fibre/coaxial. A telecommuni-
GPS: Global positioning system. Refers to cation industry term for a network
a “constellation” of 24 “Navstar” sat- that incorporates both optical fibre
ellites, launched initially by the along with coaxial cable to create a
United States Department of De- broadband network.
fense, that orbit the Earth and make
it possible for people with ground
HFC: Hybrid fibre copper. A broadband
receivers to pinpoint their geo-
graphic location. The location accu- network that utilizes fibre optic ca-
racy ranges from 10 to 100 metres bling to the vicinity and then copper
for most equipment. A Russian sys- lines to individual users.
tem, GLONASS, is also available, and
a European system, Galileo, is under Hotspot: An access point to a wireless local
development. area network (WLAN). Hotspots are
areas where wireless data can be
GSM: Global system for mobile communi- sent and received, and Internet ac-
cations. Digital mobile standard de- cess is provided to wireless devices.
veloped in Europe, and currently the For ex-ample, a laptop computer can
most widespread 2Gdigital mobile be used to access the Internet in a
cellular standard. GSM is available in hotspot provided in an airport or ho-
over 170 countries worldwide. tel.
For more information, see the web-
site of the GSM Association at: HSCSD: High-speed circuit switched data.
www.gsmworld.com

HSDPA: High-speed downlink packet access. over the Internet with a maximum
This is a mobile telephony protocol, delay of one or two seconds at peak
also called 3.5G (or “3½G”). High- times.
speed downlink packet access is a
packet-based data service with data IMS: IP multimedia subsystem.
transmission up to 8-10 Mbit/s (and A standardized next-generation net-
20 Mbit/s for MIMO systems) over a
working (NGN) architecture for tele-
5 MHz bandwidth in W-CDMA
com operators that want to provide
downlink. HSDPA implementation
mobile and fixed multimedia ser-
includes adaptive modulation and
vices. It uses a Voice-over-IP (VoIP)
coding (AMC), multiple-input multi-
implementation based on a 3GPP
ple-output (MIMO), hybrid auto-
matic repeat request (HARQ), fast standardized implementation of SIP,
scheduling, fast cell search, and ad- and runs over the standard Internet
vanced receiver design. protocol (IP). Existing phone systems
(both packet-switched and circuit-
switched) are supported.
HSUPA: High speed uplink packet access util-
izes the same techniques as HSDPA
in terms of link adaptation on the IMT-2000: International Mobile Telecommuni-
modulation deployed and HARQ to cations-2000. Third-generation (3G)
improve the uplink and therefore “family” of mobile cellular standards
create synchronous data transmis- approved by ITU. For more informa-
sions of up to 5.7 Mbit/s. A few dif- tion see the website at:
ferences are in the way the www.itu.int/imt
scheduling works in order to service
all the devices that upload data from Incumbent: The major network provider in a par-
the network and the reduced modul- ticular country, often a former State-
tion schemes. owned monopoly.
HTTP and HTTPS: Hypertext transfer protocol (HTTP) is Interconnec-tion: The physical connection of separate
a communications protocol designed ICT networks to allow users of those
to transfer information between networks to communicate with each
computers over the World Wide other. Interconnection ensures inter-
Web. HTTPS is HTTP using a secure
operability of services and increases
socket layer (SSL). SSL is an encryp-
end users’ choice of network opera-
tion protocol invoked on a web
tors and service providers.
server that uses HTTPS.
Interconnec-tion The charge – typically including a

Hz: Hertz. The frequency measurement
charge: per-minute fee – that network op-
unit equal to one cycle per second.
erators levy on one another to pro-
vide interconnection.
ICT: Information and communication
technologies. A broad subject con-
cerned with technology and other International gate- Any facility that provides an interface
aspects of managing and processing way: to send and receive electronic com-
information, especially in large munications (i.e., voice, data and
organizations. multimedia images/video) traffic be-
tween one country’s domestic net-
IEC: International Electronical Commis- work facilities and those in another
sion. country.
IEEE: Institute of Electrical and Electronics International mobile Services allowing customers of one
Engineers. roaming: mobile operator to use mobile ser-
vices when travelling abroad.
IM: Instant messaging. Refers to online
applications that allow users to ex- Internet: Interconnected global networks that
change messages with other users use the Internet protocol (see IP).

Internet backbone: The high-speed, high-capacity lines IPTV: Internet protocol television. A system
or series of connections that form a where a digital television service is
major pathway and carry aggregated delivered by using Internet protocol
traffic within the Internet. over network infrastructure, which
may include delivery by a broadband
Internet content pro- A person or organization that pro- connection.
vider: vides information via the Internet,
either with a price or free of charge. IPv4: IP version 4.
Internet TV: A system that distributes profes- IPv6: IP version 6.

sional television content over the
Internet. While IPTV typically trans-
IRU: Indefeasible right of use. Business
mits on discrete service provider
model allowing operators to pur-
networks, Internet TV is usually over
peer-to-peer networks. chase a defined amount capacity
from the owners and operators of
cable systems.
Internet video: An unmanaged video service that
offers user-generated streaming
video over the Internet. ISDB: Integrated services digital broadcast-
ing.
IP: Internet protocol. The dominant
network layer protocol used with the ISDN: Integrated services digital network.
TCP/IP protocol suite. A digital switched network, support-
ing transmission of voice, data and
IP telephony: Internet protocol telephony. IP te- images over conventional telephone
lephony is used as a generic term for lines.
the conveyance of voice, fax and re-
lated services, partially or wholly ISM: Industrial, science and medical (spec-
over packet-based, IP-based net- trum band).
works. See also VoIP and Voice over
broadband. ISP: Internet service provider. ISPs pro-
vide end users access to the Internet.
IPR: Intellectual property rights. Copy- Internet access providers (IAPs) may
rights, patents and trademarks giving also provide access to other ISPs.
creators the right to prevent others ISPs may offer their own proprietary
from using their inventions, designs content and access to online services
or other creations. The ultimate aim such as e-mail.
is to act as an incentive to encourage
the development of new technology
IT: Information technology.
and creations that will eventually be
available to all. The main interna-
tional agreements are the World In- ITU: International Telecommunication Un-
tellectual Property Organization’s ion. The United Nations specialized
(WIPO) Paris Convention for the Pro- agency for telecommunications. See:
tection of Industrial Property (pat- www.itu.int.
ents, industrial designs, etc.), the
Berne Convention for the Protection IXP: Internet exchange point. A central
of Literary and Artistic Works (copy- location where multiple Internet ser-
right), and the World Trade Organi- vice providers can interconnect their
zation’s (WTO) Agreement on Trade- networks and exchange IP traffic.
Related Aspects of Intellectual Prop-
erty Rights (TRIPS).

LAN: Local area network. A computer Local loop: The system used to connect the sub-
network that spans a relatively small scriber to the nearest switch. It gen-
area. Most LANs are confined to a erally consists of a pair of copper
single building or group of buildings. wires, but may also employ fibre-
However, one LAN can be connected optic or wireless technologies.
to other LANs over any distance via
telephone lines and radio waves. LRIC: Long-run incremental costs.
A system of LANs connected in this
way is called a wide-area network
LTE: Long-term evolution.
(WAN). See also WLAN.
Malware: Software designed to infiltrate or

Last mile: The topology denotes the operator’s
damage a computer system without
ownership of the access network.
the owner’s informed consent.
Layered The concept of layered network ar-

MAN: Metropolitan area network
architecture: chitecture divides a network at any
specific point into layers, each of
which adds value to the physical me- Market efficiency Universal access theory that exhorts
dium of communication. gap: policy-makers and regulators to use
market forces and remove regulatory
hurdles that get in the way of reach-
LDCs: Least developed countries. These are
ing universal access goals.
the 49 least developed countries
recognized by the United Nations.
MBMS: Multimedia broadcast multicast ser-
vice. A broadcasting service devel-
Leased line: A point-to-point communication
oped by the Third-Generation
channel or circuit that is committed
Partnership Project (3GPP) that pro-
by the network operator to the ex-
vides mobile TV over 3G cellular
clusive use of an individual sub-
networks
scriber. Under national law, leased
lines may or may not be permitted to
interconnect with the public MDF: Main distribution frame (ITU-T Q.9
switched network. (88), 5005). A distribution frame to
which are connected on one side the
lines exterior to the exchange, and
LF: Low frequency.
on the other side the internal cabling
of the exchange.
Licensing: An administrative procedure for se-
lecting operators and awarding fran-
MDGs: Millennium Development Goals agre-
chises for the operation of particular
ed to by all the world’s countries and
telecommunication services, for in-
all the world’s leading development
stance cellular radio.
institutions at the Millennium Sum-
mit of the United Nations (New York,
Line sharing: A form of network unbundling that 2000) and contained in the United
allows a competitive service provider Nations Millennium Declaration.
to offer ADSL using the high-
frequency portion of a local loop at
MediaFLO: Media forward link only.
the same time that an incumbent
continues to offer standard switched
voice service over the low-frequency Media A translation unit between disparate
portion of the same loop. gateway: telecommunication networks such as
PSTN; NGN; and 2G, 2.5G and 3G ra-
dio access networks. Media gate-
LLU: Local loop unbundling. The process
ways enable multimedia commu-
of requiring incumbent operators to
nications across next-generation
open the last mile of their legacy
networks over multiple transport
networks to competitors. See ULL.
protocols such as ATM and IP.

Mesh network: A way to route data, voice and in- MSAN: Multi-service access nodes. A device
structions between nodes. It allows typically installed in a telephone ex-
for continuous connections and re- change that connects customers’
configuration around blocked paths telephone lines to the core network
by “hopping” from node to node un- and is able to provide telephony,
til a connection can be established. ISDN, and broadband such as DSL all
from a single platform.
Mobile: As used in this report, the term re-
fers to mobile cellular systems and to MSP: Multi-stakeholder partnerships.
mobile phones.
MSS: Mobile satellite service.
Mobile banking (or Financial services provided over a
m-banking): mobile phone.
MTR: Mobile termination rate.
Mobile TV: Wireless transmission and reception

of video and voice television content Multicast: A transmission from a single sender
to platforms that are either moving to multiple, specific receivers on a
or capable of moving. The transmis- network. See also Unicast and
sion can be over a dedicated broad- Broadcast.
cast network or a cellular network.
Multimedia: The presentation of more than one
MOS: Mean opinion score. medium, typically images (moving or
still), sound and text in an interactive
MP3: MPEG-1 audio layer-3 (MPEG stands environment. Multimedia requires a
for Moving Pictures Experts Group). significant amount of data transfer
A standard technology and format and bandwidth, and it invariably re-
for compression of a sound sequence quires computational facilities.
into a very small file (about one-
twelfth the size of the original file) Multiplex: The transmission of more than one
while preserving the original level of digital channel within a single fre-
sound quality when it is played. quency.
MPEG: Moving Pictures Experts Group. An MVNE: Mobile virtual network enabler.
ISO/ITU universal standard that
compresses digital video for digital MVNO: Mobile virtual network operator.
TV, DVDs and PVRs. MPEG-2 is used A company that does not own a li-
for digital TV STBs and DVDs. MPEG-
censed frequency spectrum, but re-
4 offers better compression technol-
sells wireless services under their
ogy to deliver multimedia for fixed
own brand name, using the network
and mobile video.
of another mobile phone operator.
MPLS: Multi-protocol label switching.

MVPDs: Multichannel video-program distribu-
A data-carrying mechanism that
tors. An MVPD may be a cable opera-
emulates some properties of a cir-
cuit-switched network over a packet- tor or satellite TV operator that sells
switched network. In practical terms, multiple channels of video pro-
MPLS is a mechanism that allows the gramming.
establishment of virtual paths
(known as label switched paths) for NAP: Network Access Point (ITU-T Rec-
an un-connected mode protocol. The ommendation Q.1290 (98), 2.150).
most famous protocol used with The point of connection of a physical
MPLS is IP, even though MPLS is a entity that provides network access
multiprotocol mechanism. for users.

National (mobile) Refers to an agreement among op- ferent frequencies in order to mini-
roaming: erators to use each other’s networks mize interference among channels
to provide services in geographic ar- that are close in frequency. OFDM is
eas where they have no coverage.
used in European digital audio
broadcast services, and also in wire-
Net Neutrality: A philosophy or public policy position
less LANs.
advocating equal access and non-
discrimination for content, services
and applications available over the Open access: The creation of competition in all
Internet or other publicly accessible layers of the network, allowing a
IP-based networks. wide variety of physical networks
and applications to interact in an
Network topology: The pattern of links connecting pairs open architecture. (infoDev 2005)
of nodes of a network.
Overlay spectrum Occurs when a band already licensed
NGAN: Next-generation access network. sharing: to an operator is shared with others.
NGCN: Next-generation core network. Packet: Block or grouping of data that is

treated as a single unit within a
NGN: Next-generation network. A broad
communication network.
term for a certain kind of emerging
computer network architectures and
technologies. It generally describes Packet-based: Message-delivery technique in which
networks that natively encompass packets are relayed through stations
data and voice (PSTN) commu- in a network. See also Circuit-
nications, as well as (optionally) addi- switched connection.
tional media such as video.
PAN: A personal area network (PAN) is a
Node: A point of connection to a network.
computer network used for commu-
A switching node is a point at which
nication among computer devices
switching occurs.
(including telephones and personal
NRA: National regulatory authority. digital assistants) close to one's per-
The regulatory agency or official at son. The devices may or may not be-
the central or federal government long to the person in question. The
level that is charged with implement- reach of a PAN is typically a few
ing and enforcing telecommunication meters.
rules and regulations.
Passive infrastructure Collocation or other forms of facility
Number portability: The ability of a customer to transfer sharing: sharing, including duct, building or
an account from one service provider
mast sharing (Directive 2002/19/EC).
to another without requiring a
change in number. Other forms of
portability allow end users to change PBX: A private branch exchange (PBX) is a
residence or subscribe to a new form telephone exchange that serves a
of service (e.g., ISDN) while retaining particular business or office, as op-
the same telephone number for their posed to one that a common carrier
main telephone line. or telephone company operates for
many businesses or for the general
OECD: Organisation for Economic public.
Co-operation and Development
PCM: Pulse code modulation.
OFDM: Orthogonal frequency division multi-
plexing. A method of digital modula- PCO: Public call office.
tion in which a signal is split into
several narrowband channels at dif-

PCS: Personal communication services. In Penetration: A measurement of access to tele-

the United States, this refers to digi- communications, normally calcu-
tal mobile networks using the 1900 lated by dividing the number of sub-
scribers to a particular service by the
Mhz frequency. In other countries, it
population and multiplying by 100.
refers to digital mobile networks us- Also referred to as teledensity (for
ing the 1800 Mhz frequency. The fixed-line networks) or mobile den-
term Personal communications sity (for cellular ones), or total tele-
network (PCN) is also used. density (fixed and mobile combined).
PLC: Power line communications.

PDA: Personal digital assistant. A generic A communication network that uses
term for handheld devices that com- existing power lines to send and re-
bine computing and possibly com- ceive data by using electrical signals
munication functions. as the carrier. Power flows on the
line at 50-60 Hz while data is sent in
the 1 MHz range.
PDH: Plesiochronous digital hierarchy:
A technology used to transport large POI: Point of Interconnection – among
quantities of data over networks such networks.
as fibre-optic and microwave radio
systems. PDH allows transmission of PON: Passive optical network. A type of full
passive wave division multi-plexing
data streams that are nominally run-
(WDM) network that allows multiple
ning at the same rate, but allowing locations to connect to one optical
some variation on the speed around a fibre strand (or wavelength) by using
nominal rate. optical splitters to break up the
wavelength of light into allocated
time slots for each user. See WDM.
Peering: The exchange of routing announce-
ments between two Internet service
POP: Point of presence.
providers for the purpose of ensuring
that traffic from the first can reach
Portal: Although an evolving concept, the
customers of the second, and vice-
term portal commonly refers to the
versa. Peering takes place predomi- starting point, or a gateway through
nantly at IXPs and usually is offered which users navigate the World Wide
either without charge or subject to Web, gaining access to a wide range
mutually agreed commercial arran- of resources and services, such as
gements. e-mail, forums, search engines and
shopping malls.
Pharming: A cyber attack in which the hacker
redirects a website's traffic to an- PPP: Public-private partnership. An ar-
other, bogus website. rangement or partnership combining
funding and activities of both gov-
ernment and private-sector entities
to build network infrastructure.
Phishing: The fraudulent process of attempting
to acquire sensitive information such PPP: Purchasing power parity. An ex-
as usernames, passwords and credit change rate that reflects how many
card details by masquerading as a goods and services can be purchased
trustworthy entity in an electronic within a country, taking into account
communication. different price levels and cost of
living across countries.

Private network: A network based on leased lines or RFID: Radio-frequency identification.

other facilities, which are used to A system of radio tagging that pro-
provide telecommunication services vides identification data for goods in
within an organization or within a
order to make them traceable. Typi-
closed user group as a complement
or a substitute to the public network. cally used by manufacturers to make
goods such as clothing items trace-
able without having to read bar code
Private ownership/ The transfer of control of ownership
data for individual items.
Privatization: of a state enterprise to private par-
ties, generally by organizing the en-
terprise as a share company and Rights of way: Strip or area of land, including sur-
selling shares to investors. More face and overhead or underground
generally, the term is sometimes space, which is granted by deed or
used to refer to a wide range of mo- easement for the construction and
dalities whereby business is opened maintenance of specified infrastruc-
to private enterprise and investment. ture elements such as copper or fibre
optic cables, etc.
Protocol: A set of formal rules and specifica-

RIA: Regulatory Impact Assessment
tions describing how to transmit
data, especially across a network.
RIO: Reference interconnection offer
RPNP: Receiving Party Network Pays. An

PSTN: Public switched telephone network.
operator receiving a call pays a per-
The public telephone network that
minute charge to the originating
delivers fixed telephone service.
operator for interconnection.
PTO: Public telecommunication operator.

RPP: Receiving party pays. In a “receiving
A provider of telecommunication in-
party pays” system, the individual
frastructure and services to the gen-
that receives the call pays all charges
eral public (“public” refers to the
for that call. See also CPP.
customer base). Also referred to as
an operator, service provider, carrier
or “telco”. RTSP: Real time streaming protocol.
A protocol that enables users to re-
motely control streaming video from
PVR: Personal video recorder. A device
a server, which allows users to play,
that records video in a digital format
pause, and stop the video.
and stores the video on a disk drive
or other medium. The term DVR
(Digital video recorder) is also used. PTT: Public Telephone and Telegraph ad-
ministration. See PTO.
QoS: Quality of service. A measure of net-
work performance that reflects the SCLS: Submarine cable landing station. The
quality and reliability of a connec- choke points where international ca-
tion. QoS can indicate a data traffic ble and satellite systems linking mul-
policy that guarantees certain tiple countries land. These are the
amounts of bandwidth at any given facilities that aggregate and distrib-
time, or can involve traffic shaping ute international traffic to and from
that assigns varying bandwidth to each country.
different applications.

SDH: Synchronous digital hierarchy: security information and a memory

A standard developed by ITU (G.707 for a personal directory of numbers.
and its extension G.708) that is built This information can be retained by
on experience in the development of subscribers when changing handsets.
SONET. Both SDH and SONET are
widely used today: SONET in the SIP: Session Initiation Protocol. A protocol
United States and Canada, SDH in the developed by the IETF MMUSIC
rest of the world. SDH is growing in Working Group and proposed stan-
popularity and is currently the main dard for initiating, modifying, and
concern, with SONET now being con- terminating an interactive user ses-
sidered as the variation. sion that involves multimedia ele-
ments such as video, voice, instant
SDR: Software-defined radio. A radio messaging, online games and virtual
communication system that uses reality. In November 2000, SIP was
software for the modulation and accepted as a 3GPP signalling proto-
demodulation of radio signals. col and permanent element of the
IMS architecture. It is one of the
SDSL: Symmetrical DSL. A proprietary leading signalling protocols for Voice
North American DSL standard. How- over IP, along with H.323. The SIP
ever, the term SDSL is often also server initiating the call will unambi-
used to describe SHDSL. guously be aware of the time at
which the voice session was initiated,
and will in general also know the
Server: (1) A host computer on a network
time at which the voice session
that sends stored information in re-
ended. The VoIP service provider,
sponse to requests or queries.
which is not necessarily the network
(2) The term server is also used to
operator, will generally be the party
refer to the software that makes the
operating the SIP server.
process of serving information
possible.
Site sharing: See Collocation.
Service neutrality: A general term referring to rules that
allow operators to provide any ser- SLA: Service level agreement. An SLA pro-
vice in the spectrum band that they vides a way of quantifying service
are licensed to use. definitions by specifying what the
end user wants and what the pro-
vider is committed to provide. The
SES: Satellite Earth station.
definitions vary at business, applica-
tion or network level.
SHDSL: Single pair high-speed DSL. The in-
formal name for ITU-T Recommenda-
SME: Small and medium enterprise(s).
tion G.991.2 that offers high-speed,
symmetrical connectivity over a
twisted copper pair. SMP: Significant market power.
Signaling gateway A network component responsible SMTP: Simple mail transfer protocol. The de
for transferring signaling messages facto standard for e-mail
(i. e. information related to call es- transmission across the Internet.
tablishment, billing, location, short
messages, address conversion, and Softswitch: A type of telephone switch that uses
other services) between Common software running on a computer sys-
Channel Signaling (CCS) nodes that tem to carry out the work that used
communicate using different proto- to be carried out by hardware.
cols and transports.
Spam: Unwanted, nuisance e-mail, some of
SIM: Subscriber identification module which may contain computer viruses
(card). A small printed circuit board or worms, fraudulent consumer
inserted into a GSM-based mobile scams or offensive content.
phone. It includes subscriber details,

Spectral A measure of the performance of connection-oriented, reliable stream

efficiency: encoding methods that code in- services between two hosts. This is
forma-tion as variations in an ana- the primary transport protocol used
logue signal. by TCP/IP applications.
Spectrum: The radio-frequency spectrum of TCP/IP: Transmission control proto-

hertzian waves used as a transmis- col/Internet protocol. The suite of
sion medium for cellular radio, ra- protocols that defines the Internet
diopaging, satellite communication, and enables information to be
over-the-air broadcasting and other transmitted from one network to
services. another.
Spectrum commons: Spectrum bands reserved for unli- TDCDMA: Time division – Code division multiple
censed use and shared among low- access.
power devices on an open access
basis. TDMA: Time division multiple access. This is
a technology for shared medium
Spectrum re- A spectrum management approach (usually radio) networks. It allows
assignment: when the regulator decides when several users to share the same fre-
and to whom the spectrum authori- quency by dividing it into different
zation will be transferred – and at time slots. The users transmit in
what price. rapid succession, one after the other,
each using their own time slot. This
Spectrum trading: This spectrum management ap- allows multiple users to share the
proach allows parties to transfer same transmission medium (e.g.,
their spectrum rights and obligations radio frequency), whilst using only
to another party, in return for a the part of its bandwidth they re-
financial or market benefit. The quire.
market determines the value.
TD-SCDMA: Time division synchronous code-
Spread- A radio technique that continuously division multiple access. A 3G mobile
spectrum technology: alters its transmission pattern either telecommunication standard, being
by constantly changing carrier fre- pursued in China by the Chinese
quencies or by constantly changing Academy of Telecommunications
the data pattern. Technology (CATT), Datang and Sie-
mens AG, in an attempt to develop
home-grown technology and not be
SS7: Signaling System No. 7 A set of te-
“dependent on Western technol-
lephony signaling protocols which
ogy”. TD-SCDMA uses time division
are used to set up most of the
duplexing (TDD), in contrast to the
world's public switched telephone
frequency division duplexing (FDD)
network telephone calls
scheme used by W-CDMA.
STB: Set-top box. A device connected to a

Technology-neutral: A general term referring to rules that
television that receives and decodes
allow operators to adopt any tech-
digital television broadcasts and in-
nology standard for a particular ser-
terfaces with the Internet through
vice.
the user’s television.
Teledensity: Number of fixed telephone lines per
Switch: Part of a mobile or fixed telephone
100 inhabitants. See Penetration.
system that routes telephone calls or
data to their destination.
TISPAN: Telecoms and Internet converged
services and protocols for advanced
TACS: Total access communication systems. networks, developed by the Euro-
pean Telecommunications Standards
TCP: Transmission control protocol. Institute (ETSI).
A transport layer protocol that offers

Total Sum of the number of fixed lines and UMTS: Universal mobile telecommunications
teledensity: mobile cellular subscribers per 100 system. The European term for third-
inhabitants. See Penetration. generation mobile cellular systems
or IMT-2000 based on the W-CDMA
TPC: Transmit power control. A technical standard. For more information, see
mechanism used within some net- the UMTS Forum website at:
working devices in order to prevent www.umts-forum.org
too much unwanted interference be-
tween different wireless networks. UN: United Nations.
Traffic exchange Traffic exchange points are used by Underlay spectrum Underlay technologies may include
point: operators to exchange traffic sharing: UWB, mesh networks, SDR, smart
through peering directly between antennae and cognitive radios.
service networks rather than indi-
rectly, via transit through their up-
stream providers. Unicast: A transmission between a single
sender and a single receiver over a
network. See also Multicast and
Transcoding: Transcoding is the direct digital-to-
Broadcast.
digital conversion of one encoding to
another. This is usually done to in-
compatible or obsolete data in order Universal access: Refers to reasonable telecommuni-
to convert it into a more suitable cation access for all. Includes univer-
format. sal service for those that can afford
individual telephone or other ICT
Transit: An arrangement for interconnection service and widespread provision of
of ISP networks in which a consumer public access to ICTs (i.e., telecen-
ISP pays for traffic to be routed tres, cybercafés, etc.) within a
through the network of a provider reasonable distance.
ISP, in contrast to peering, which in-
volves interconnection among USD: United States dollar.
roughly equal-sized ISPs.
USO: Universal service obligations. Re-
Triple play: A term referring to the bundling of quirements that governments place
fixed and/or mobile voice, video and on operators to offer service in all
broadband Internet access services. areas, regardless of economic
feasibility.
True access gap: The shortfall between market-based
regulatory measures and universal UTRAN: UMTS Terrestrial Radio Access Net-
access. work.
Ubiquitous comput- A term that reflects the view that UWB: Ultra-wideband.
ing: future communication networks will
allow seamless access to data,
VAN: Value-added network.
regardless of where the user is.
UDP: User datagram protocol. VANS: Value-added network services. Tele-

communication services provided
over public or private networks
UHF: Ultra high frequency (698-806/
which, in some way, add value to the
862 MHz).
basic carriage, usually through the
application of computerized intelli-
ULL: Unbundled local loop. See LLU. gence. Examples of VANs include
reservation systems, bulletin boards,
UMB: Ultra-mobile broadband. and information services. Also known
as enhanced services.

VDSL: Very-high-data-rate digital subscriber VSAT: Very small aperture terminal.

line (ITU-T G.993.1). The fastest ver- A two-way satellite ground station
sion of DSL that can handle speeds with a dish antenna that is smaller
up to 52 Mbit/s over very short dis- than three metres, as compared to
tances. Often used to branch out around 10 metres for other types of
from fibre connections inside apart- satellite dishes.
ment buildings.
WAN: Wide area network. WAN refers to a
VHF: Very high frequency. network that connects computers
over long distances.
VHS: Video home system.
W-CDMA: Wideband code division multiple ac-
VLAN: Virtual local area network. cess. A third-generation mobile stan-
dard under the IMT-2000 banner,
first deployed in Japan. Known as
VoD: Video on Demand (ITU-T J.127 (04),
UMTS in Europe. See also CDMA.
3.3). Programme transmission
method whereby the programme
starts playing after a certain amount WDM: Wave division multiplexing. Technol-
of data has been buffered while re- ogy that allows multiple data
ceiving subsequent data in the back- streams to travel simultaneously
ground, where the programme is over the same fibre optic cable by
completely created by the content separating each stream into its own
provider. Using this system, users are wavelength of light.
able to select and watch video and
multimedia content over a network Web 2.0: A term referring to a perceived sec-
as part of an interactive television ond generation of web-based com-
system. VoD systems either “stream” munities and hosted services such as
content, allowing viewing in real social-networking sites and wikis that
time, or “download” it, in which the facilitate collaboration and sharing
programme is brought in its entirety between users.
to a set-top box before viewing
starts. WiBro: A wireless networking technology
(IEE 802.16x) that will enable port-
Voice over broadband A method of making voice calls over able Internet access. The Republic of
or Voice over DSL a broadband connection. The calls Korea commercially launched its
(VoDSL): can be either made via a computer WiBro services in 2006.
or through traditional phones con-
nected to voice over broadband Wi-Fi: Wireless fidelity. A mark of interop-
equipment. See also IP telephony erability among devices adhering to
and VoIP. the 802.11b specification for wireless
LANs from the Institute of Electrical
VoIP: Voice over IP. A generic term used to and Electronics Engineers (IEEE).
describe the techniques used to However, the term Wi-Fi is some-
carry voice traffic over IP (see also IP times mistakenly used as a generic
telephony and Voice over broad- term for wireless LAN.
band).
Wiki: A web application designed to allow
VPN: Virtual private network. A method of multiple authors to add, remove, and
encrypting a connection over the edit content.
Internet. VPNs are used extensively
in business to allow employees to WiMAX: Fixed wireless standard IEEE 802.16
access private networks at the office that allows for long-range wireless
from remote locations. VPNs are es- communication at 70 Mbit/s over
pecially useful for sending sensitive 50 kilometres. It can be used as a
data. backbone Internet connection to
rural areas.
VPO: Village phone operator.

Wireless: Generic term for mobile communica- WTO Agreement Informal terminology for the Fourth
tion services which do not use fixed- (GATS): Protocol to the General Agreement
line networks for direct access to the on Trade in Services (GATS). The
subscriber. agreement, concluded in early 1997,
included commitments by more than
WLAN: Wireless local area network. Also 70 countries to open their markets
known as wireless LAN. A wireless for basic telecommunication ser-
network whereby a user can connect vices. The accompanying Reference
to a local area network (LAN)
Paper spelled out principles for regu-
through a wireless (radio) connec-
tion, as an alternative to a wired latory treatment of basic telecom-
local area network. The most popular munication service providers,
standard for wireless LANs is the IEEE including “major suppliers”.
802.11 series.
xDSL: While DSL stands for digital sub-
WLL: Wireless local loop. Typically, a scriber line, xDSL is the general rep-
phone network that relies on wire- resentation for various types of
less technologies to provide the last- digital subscriber line technology,
kilometre connection between the such as ADSL, SHDSL, and VDSL. See
telecommunication central office ADSL, SHDSL, VDSL.
and the end user.
WRC: ITU-R World Radiocommunication

Conference.
WSIS: The United Nations World Summit on

the Information Society. The first
phase of WSIS took place in Geneva
(hosted by the Government of Swit-
zerland) from 10 to 12 December
2003, and the second phase in Tunis
(hosted by the Government of Tuni-
sia), from 16 to 18 November 2005.
For more information, see:
www.itu.int/wsis

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1 OVERVIEW OF TRENDS IN THE ICT MARKET APPENDIX D – CHILE: THE IMPACT OF

List of figures vii

Figure 4.1 Liberalization and unbundling of ICT .......................................................................................... 127

viii List of figures

Table 2.1: Research results of Broadband Impact on GDP growth ................................................................ 24

Box 1.1: Bridging the mobile gap in BRIC countries ...................................................................................... 4

xii List of boxes

Box 5.4: Technical Considerations in Implementing DTT .................................................................. 171

List of boxes xiii

Box 7.21: Nokia Siemens Networks Off-Grid Renewables .................................................................. 279

xiv List of boxes

1 OVERVIEW OF TRENDS IN THE ICT MARKET AND IN ICT

1.1 Introduction money services, largely based on simple text messaging

Figure 1.1: Global ICT development and growth in competition, 2000-2010

Global ICT development, 2000-2010

Growth in competition of selected ICT services, world

Box 1.1: Bridging the mobile gap in BRIC countries

growth in mobile cellular subscriptions in BRIC

Mobile subscription No mobile subscription

Note: * Mobile penetration as of September 2010

Mobile cellular subscriptions per 100 inhabitants, 2010*

Internet users per 100 inhabitants, 2010*

Source: ITU World Telecommunication/ICT indicators database

Competition in selected services, by region, 2010

Basic Services International gateways

Broadband per 100 inhabitants 2010*

50 46.3 Mobile Broadband

Competition in selected broadband services, by region, 2010

IMT 2000 (3G) Fixed wireless Broadband Cable DSL

Figure 1.3: Social Networks, worldwide23

Credits: Vincenzo Cosenzy www.vincos.it License: CC-BY-NC

Figure 1.4: Privatization trend of the main-fixed line incumbent

Status of the main fixed-line incumbent, 2010

80% Private State-owned

Box 1.2: Strategic Framework Model for regulatory reform in telecommunications

Continuum of perspectives on competitive reform in the

Government Industry Consumers

Figure 1.5: Separate telecom/ICT regulators

Countries with a separate regulator, 2010

Number of regulators worldwide, 2010

1990 1995 1998 2000 2002 2004 2006 2008 2010

Source: ITU World Telecommunication/ICT Regulatory Database.

Figure 1.6: Mandate of the Regulator, 2010

Mandate of the regulator, 2010

Source: ITU World Telecommunication/ICT Regulatory Database.

Box 1.3: Lithuania’s move to create a multi-sector regulator

Regulator only Regulator and sector ministy

Source: ITU World Telecommunication/ICT Regulatory Database.

Figure 1.8: Funding of the Regulator’s budget

more than two

Source: ITU World Telecommunication/ICT Regulatory Database.

Figure 1.9: ICT dispute resolution trends, 2005-2010

Trends in dispute resolution mechanisms, world

Figure 1.10: Broadband policies and plans, 2010

Has your country adopted a national policy,

Source: ITU World Telecommunication/ICT Regulatory Database.

Figure 1.11: Infrastructure sharing regulation, 2010

Infrastructure sharing regulation, world 2010

Source: World Telecommunication/ICT Regulatory Database.

2 THE IMPACT OF BROADBAND ON THE ECONOMY: