Competition and economics

Competition and economics

15.12.2020

Introduction: Regulatory transformation in the digital economy Over the past 10 years there has been significant market and regulatory disruption caused by digital transformation. This disruption, which is set to continue, extends to almost all corners of the economy, and is primarily the result of a transition to data-centric business models based on digital platforms (ITU 2020a). Digital platforms are embedding market power and, in a race for scale and scope, leading to transnational markets. This means that regulation is increasingly beyond the scope of individual national regulatory authorities (NRAs).[1] Elsewhere, NRAs have to work in regional collaboration if they…

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The impact of policies, regulation, and institutions on ICT sector performance

25.08.2020

Introduction The current crisis has brought new challenges to the ICT sector. Regulatory frameworks need to be adjusted to stimulate investment while maintaining a moderate level of competition. Markets and consumer benefits are now examined by decision-makers through the lens of financial adversity and uncertain outlooks. Amid disruption, policy-makers and regulators need evidence-based guidance that provides a solid ground for their reforms. A new ITU study has used econometric modelling to examine the impact of the regulatory and institutional frameworks on the performance of the ICT (Information Communication Technologies) sector and its contribution to the national economy as a whole.…

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Approach to market definition in a digital platform environment

26.08.2020

Introduction Market definition is both an economic concept and, in many jurisdictions, a legal requirement. It is a necessary precursor of a regulatory finding of dominance (or significant market power, SMP) and thus provides the starting point for determining whether ex ante[1] regulatory intervention is required within electronic communications markets. It is also the initial step for assessing anticompetitive behaviour and merger control within the remit of competition law. Competition authorities and courts are increasingly concerned with the market power achieved by the large digital platforms. Several countries have strengthened merger control rules and many abuse cases that involve digital…

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ICT Market analysis and determination of dominance guidelines

27.10.2022

1 Market analysis process “Market analysis” means a review of the various existing markets for electronic communications services in a specific country, defined for the purposes of regulation. In an effectively competitive market, it is the dynamic interplay of several service providers that determines market outcomes, not individual competitors. In a market characterized by dominance[1], however, the dominant ICT operator or service provider will invariably make decisions that are to its commercial benefit, and which do not advance the economic welfare of customers. Dominance describes the power that enables one or more operator or service provider to make decisions and…

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How the growth of data traffic affects interconnection charges

26.08.2020

The growth of data Source: Incyte Consulting Ltd. It is well known that data traffic has exploded in recent years while voice traffic has declined. This trend has been fuelled by over-the-top (OTT) applications taking traffic away from traditional voice services on fixed and mobile networks, by the increasing amount of Internet traffic and, most dramatically of all, by the explosion in video-based applications which now represents 73 per cent of all traffic (Cisco 2020). At the same time, the residual voice traffic has migrated from fixed to mobile networks. These trends have created a dramatic shift in traffic patterns,…

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The decline and fall of mobile termination rates in Europe

26.08.2020

Mobile termination rates in Europe Source: BEREC 2019. The figure above shows the evolution of (simple) average mobile termination rates in Europe. The average rates in Europe steadily decline from EUR 0.14 (January 2004) to EUR 0.0088 (January 2019), a cumulative decline of 93 per cent from the initial average rate. This article explores why such a dramatic fall in prices has occurred.[1] How mobile termination rates have been regulated Historically the common position among national regulatory authorities (NRAs) around the world is that the termination of voice calls to mobile customers is a separate market in which each mobile…

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Joint dominance

27.08.2020

Introduction On March 17, 2020, the Dutch Trade and Industry Appeals Tribunal, the highest administrative-law court in the Netherlands, reversed a market analysis decision by the Dutch telecoms regulator, the Authority for Consumers and Markets (ACM) which was based on a finding of joint dominance (ACM 2020). The case throws new light on the regulatory challenges associated with joint dominance and raises questions about the relevance of this concept in digital services markets. The ACM decision On 27 September 2018, the ACM published its analysis regarding the provision of wholesale access at a fixed location in the Netherlands (ACM 2018).…

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The regulation of price bundles

27.08.2020

Introduction According to research conducted by Ofcom in the United Kingdom (Ofcom 2020b: 22), U.K. customers make an average saving of 20-28 per cent, compared with purchasing the same services individually. Not surprisingly, these savings have led to 80 per cent of customers purchasing their electronic communication services in bundles,[1] but Ofcom also found (Ofcom 2020a: 19) that not all consumers are benefiting, with the 41 per cent of customers who do not recontract or switch provider at the end of their contract period missing out on the available savings. Price bundles are both a boon for customers and an…

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Access pricing for very high capacity networks in the European Union

28.08.2020

Introduction The European Commission (EC) has given a lot of attention to the matter of how access prices should be set so as to encourage investment in very high capacity networks whilst maintaining effective competition at the retail level. The guidelines developed in Europe provide a useful benchmark for regulators elsewhere, in particular for regulating the price of access to fibre of cable networks. The European Electronic Communications Code The Directive establishing the European Electronic Communications Code (EECC) was adopted by the European Parliament on December 11, 2018 (European Union 2018). The purpose of the EECC is to respond to…

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Article: Base Erosion and Profit Shifting (BEPS)

28.08.2020

Introduction It was Benjamin Franklin who famously opined that “nothing can be said to be certain, except death and taxes.” And, as he might have gone on to say, human beings try desperately to avoid both of these certainties. Tax avoidance (legal) and tax evasion (illegal) are as old as the concept of taxation itself. But in the digital world, especially for global digital service providers, avoiding taxes has become a lot easier. Regulators and tax authorities are now trying to catch up. Why is BEPS a problem? The Organisation for Economic Co-operation and Development (OECD) defines base erosion and…

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