SESSION 2: IMPACT OF THE FINANCIAL CRISIS ON REGULATION - LESSONS LEARNED

14:00 - 15:30          SESSION 2: IMPACT OF THE FINANCIAL CRISIS ON REGULATION - LESSONS LEARNED

Moderator: Mr. J. Genachowski, Chairman, Federal Communications Commission (FCC), United States

GSR Discussion Paper on Impact of effective regulation on investment: an investor’s perspective,
Ms. Lynne Dorward, CRO, Zain Group

GSR Discussion Paper on Effective regulation: the “stimulus plan” for the ICT sector, [presentation]
Ms. Mandla Msimang, Managing Director, Pygma Consulting

Interactive panel discussion:

• The importance of effective regulation in light of the global economic downturn and the financial crisis
• What regulators can do to attract and secure investment in the sector: hands on or hands off?
• The crisis: a call for government intervention and more public-private partnerships?
• Who will pay for NGN infrastructure now?

Panelists:

• Dr. A. Hiasat, Chairman of the Board and CEO, Telecommunications Regulatory Commission (TRC), Jordan
• Mr. M. Kurth, President, Federal Network Agency, Germany
• Mr. C. Lopez-Blanco, Director of International Office, Telefonica, Spain 

I won't type everything being said here. The presentations will be up later or are up now. So I'll save my wrists and type only the discussions and maybe some original things I hadn't heard yet.

Mod: How can we not let this crisis go to waste?
BNetzA: This industry has already survived one crisis. so I am optimistic. Also if you look at innovation in the industry, it is amazing to see how much there is going on. the Smartphone is a good example. People want to use it and want to use it more. But it is about getting more access to it. Wireless in my opinion is a good solution for many places in the world. Stability of regulation is also important it is not about light touch or even a regulatory holiday. Countries are different, so we will have different regulatory regimes here and there. We should only regulate where market forces work. We must be aware that heavy competition stimulates investment and then we can step away as a regulator. PPP is good but only in areas where there are areas where competition and private investment doesn't work. And we do have to realize that we have intermodal competition. We learned our lessen in the last 15 year. We need to have open access, legal content should be accessible. The openness of networks and interconnection is of great importance.

TRC Jordan: Thanks the writers for the papers. Crisises don't last. They generally take some years, but regulation is for 10 -15 years. Licenses are there for 10-20 years. We can have a look at some exemptions so to encourage investment. Awarding spectrum maybe even for free might stimulate growth too. In the third world we should couple investment in spectrum with the investment in broadband. So that if you get a spectrum license you will also invest in Broadband

Telefonica: One of the central beliefs is that the crisis is the result of a lack of regulation. I cannot agree with that. More regulation by itself is not an advantage. We need to understand the big difference between the financial sector and the telecom sector. The telecom sector is suffering less, probably because we suffered a crisis a few years ago. We know regulation well. We think that regulation must and will play a critical role. We know as both an incumbent and new entrant the role of regulation. We are resilient, but not immune to the crisis. I think the question is how the telecom sector can promote recovery. There are four questions:
- What is the role of the telecom sector. How do we promote new services in the IP world
- How to build the new infrastructures of the 21st century.
- What is the social responsibility of this sector
-the roll of the public sector in the roll out of new networks. There is no one size fits all roll for the government. We think the public sector can play a role, but governments shouldn't violate the traditions of this sector. We as Telefonica have rolled out new networks in Latin America. It was the private sector that delivered that.

The delegate from Cyprus: I agree with Telefonica. I can see the regulator as a facilitator to investment. But I don't see a role for the regulator in investing. Also if we see that a lack of broadband access is a social problem, than that shouldn't be impacted by the regulator. Gentleman from South Asia going on for 5 minutes. Other gentleman: disagrees with the idea that the financial crisis isn't a problem for the telecom sector. Gentleman from Sierra Leone. Would the stimulus not need to go directly to the consumer. Saudi Arabia: It seems to us the wireless industry is making the same mistake as with 3G. They are over investing and they are paying huge amounts of money for buckets of air and I would like your comments on that. Lady asking question on in country consolidations.

Answer Ms. Msimang, the biggest problem is that regulators are not consistent in their approach and are changing regulations half way through an investment. Also I would encourage regulators to do a cost benefit analysis.
Answer ms. Dorward: I had to smile about the statement by Saudi Arabia. the regulator is as much responsible for the high price as the telco. They set floor prices too high and already book the profits in their budgets. We're collectively involved in this.
Answer Telefonica: Regarding the role of public investment I would point to the European Commission who has a balanced approach to public investment in new networks. Furthermore it is about transparancy. It is a good approach. another aspect is that we are resillient sector, but that doesn't mean we don't feel the crisis. For us it is important to look at the new services. Mobile broadband is hit by the crisis. For us it is important that we are facilitated in getting as low as possible costs for investing in new netowrks through co-investment and shared infrastructure.
Answer Jordan: There is no one solution. We could agree to revenue sharing or retail price caps for certain offers. There is not one kind of support a regulator can give to the industry.
Answer BNetzA: Mobile services is growing strong and it is affordable. Just look at China and Africa. How do we guarantee that it will be affordable. If we study it, I think that we can't conclude that free licenses give cheap mobile access. It is about competition. We made 50 billion from the spectrum sale, but we won't from the new spectrum sale. But the German consumers haven't paid for this high investment in spectrum. They have some of the lowest prices in Europe. (OH YEAHH??? Rudolf)

Moderator Julius Genachowski: there is a crisis, but there is also an apportunity. We see examples from all over the world of innovation. We heard about the importance of a good regulatory regime. We heard about the importance of the private sector, of openness and transparancy and technological neutrality. There were many more themes to digest.