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Experts Group Meeting for Europe on Increasing Role fo the Private Public Partnership in the ICT Ecosystem/25 Years of Telecom/ICT Sector Reform in Europe.

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Presentation on theme: "Experts Group Meeting for Europe on Increasing Role fo the Private Public Partnership in the ICT Ecosystem/25 Years of Telecom/ICT Sector Reform in Europe."— Presentation transcript:

1 Experts Group Meeting for Europe on Increasing Role fo the Private Public Partnership in the ICT Ecosystem/25 Years of Telecom/ICT Sector Reform in Europe New Fields of Efficient Regulation and Perspectives on Digital PPP ITU, Geneva, Nov. 14-15, 2012 Montbrillard Building Prof. Dr. Paul J.J. Welfens Jean Monnet Professor for European Economic Integration; chair for Macroeconomics; president of the European Institute for International Economic Relations at the University of Wuppertal, Alfred Grosser Professorship 2007/08, Sciences Po, Paris, Research Fellow, IZA, Bonn, Non-Resident Senior Fellow at AICGS/Johns Hopkins University, Washington DC welfens@eiiw.uni-wuppertal.de, www.eiiw.eu; welfens@eiiw.uni-wuppertal.dewww.eiiw.eu Welfens/EIIW, U. of Wuppertal1

2 Content 1. Introduction 2. Measuring the True Economic Significance of ICT 3. Unfinished Regulatory Business: Mobile Telecommunications 4. Regulatory Challenges: Still to Be Done 5. Smart Grids, Renewable Energy and Green ICT: Policy Options 6. Other New Policy Issues 2Welfens/EIIW, U. of Wuppertal

3 1. Introduction What went well: deregulation of fixed-line tel. Still to be done in regulations: Traditional vertical integration; unbundling – how much? Ver- tically (opaquely) integrated firms get financing via capital markets Adequate regulation in mobile telecommunications; but bundling fixed/mob Defining mobile global universal services - could include broadband Smart grids: defining a neutral data platform Newly to be considered for PPP: Green ICT, positive external effects ; efficiency+, innovation+ 3Welfens/EIIW, U. of Wuppertal

4 2. Measuring the True Economic Signifcance of ICT ICT investment share in nominal GDP declining after 2000 in US, Germany,.... Real ICT investment – based on ICT price index – relative to GDP increasing all the time; at constant prices ICT investment becomes increasingly important for output growth, jobs.. International telecommunications prices falling = higher international trade (Jungmittag/Welfens, 2008) Welfens/EIIW, U. of Wuppertal4

5 True ICT Investment-GDP Share (ICT Price Index 2000=100) versus Ratio of Nominal ICT to Nominal GDP 5 Falling ICT Price Index implies that ratio of nominal ICT to no- minal GDP is biased: underestimation of true ICT-investment GDP ratio; By implication: overall investment-GDP ratio is underestimated Welfens/EIIW, U. of Wuppertal

6 3. Theory of Regulation and PPP We need regulation as sector specific rules of competition if otherwise there is market failure through monopolistic bottleneck or similar problems (this includes silent cartel building) Telecomms: Enforcing that monopolistic bottleneck (access to customer in fixed line segment) can be leased by competitors of incumbant means that the overall digital services market becomes more competitive 6Welfens/EIIW, U. of Wuppertal

7 3. Theory of Regulation and PPP Government has role for facilitating market transactions (e.g. rules for interoperability); regulations if necessary, phasing out in the long run. NO PPP in competition policy Government(s) should avoid conflicts of interest – e.g. government as owner of firms; government as regulator PPP will be biased if government is facing conflict of interest Would be useful if government gives minimal subsidies to broadband investors in rural areas (see e.g. Sweden), BUT the debt crisis will make this increasingly difficult; PPP as a substitute in this situation International Organizations: Helping poor countries/best practice; PPP = combination of I.O.s (e.g. ITU, WB, WTO, G20) and actors from private sector Real, or virtual PPPs; 1 country, many countries involved? Welfens/EIIW, U. of Wuppertal7

8 4. Regulatory Challenges: Still to Be Done Adequate incentives for broadband investm. Adequate regulation in mobile telecommunications Defining global mobile universal services Standard setting (industry itself; PPP (GSM)) Smart grids: smart meters & intelligent network - defining a neutral data platform in an environment which brings competition, guarantees privacy, generates efficiency gain Welfens/EIIW, U. of Wuppertal8

9 PPP Models Global Actors (WB, ITU, G20); MNCs & SMEs... Regional Actors (e.g. EBRD, EU, OECD/Dev. Center) National Policy Makers Industry Representatives Firms, NGOs from Countries Academia Welfens/EIIW, U. of Wuppertal9 Germany‘s annual national IT Summit is a good example of PPP awareness, innov, entrepr., networking, overcoming bottlenecks; private sector puts issues on political agenda =progress = growth ++

10 Regulation in Mobile Communications in Regional Integration Clubs Country 1 Country 2, Country 3 (outsider); Knieps: Carrier portability instead of international static roaming (silent cartel) Welfens: Require that all major operators must offer mobile flat rate for the integration area (EU, Asean, Mercosur etc.) Auctioning spectrum in every country (otherwise bias in single market) Creation of secondary market for licenes To which extent one should allow bundling, including Free Zone provision by Google (Philippines) Regional digital markets = benefits Welfens/EIIW, U. of Wuppertal10

11 Defining Global Universal Digital Services (GUDS) Define universal global service for global mobile service markets; e-mail+voice tel.+x Political decision at the national and international level Interoperability at global level + effective competition in all countries = basis for GUDS Reason for such definition: stimulate global network effects = equivalent to positive external effects which normally would call for subsidies; if market process can organize internalization then ok without government intervention Welfens/EIIW, U. of Wuppertal11

12 5. Smart Grids and Green ICT Smart grids is a regional and regulatory challenge and could involve PPP With global warming and rise of share of renewables in electricity generation smart grids necessary; ICT + electricity sector in a competitive environment with international standardization = efficient smart grids Who should own the data generated by households/users: one may recommend concept of neutral data interface – houshold can give green light for use of data/sell data for third parties; firms can exploit data for innovation. Welfens/EIIW, U. of Wuppertal12

13 Smart Grids and Green ICT Smart Grid is one clear element of green ICT Saving in electricty generation Saving in transmission network inv. Induced innovations (houshold applicance, firms...) Welfens/EIIW, U. of Wuppertal13

14 International Smart Grid Initiatives Case of regional international electricity net- work integration – e.g. Scandinavia, EU etc.; Requires international standardization, otherwise markets will remain fragmented; standardization reforms e.g. to the minimum set of data to be collected Government ownership of electricity plants can be problem – will government-owned plants from different countries cooperate? Welfens/EIIW, U. of Wuppertal14

15 Green ICT Will Help to Save C02 Emissions, Cut Costs/Price Europe, USA, Japan NICsLDCs Welfens/EIIW, U. of Wuppertal15

16 Smart Grid Dynamics: Which Investments, Which Ownership Smart Grids, Smart Meters Relevant Data; Demand Management Systems = Matching with Supply = Saving on Ressources (about 40% in grid inv.; 10% in power generation capacity) Relevant Data/Data Management and Regulation; e.g. smart meters to be leased to competitors on the basis of efficient provision of metering 16Welfens/EIIW, U. of Wuppertal

17 Green ICT: Global Warming = Global Challenge; PPP National & PPP International Best-practice Global Diffusion Innovators (Green ICT) Industry Initiative Welfens/EIIW, U. of Wuppertal17

18 PPP in Smart Grid Building Can Be Quite Important Cooperation within „regional integration clubs“ and across clubs EU and Mercosur or EU and ASEAN, EU and Gulf Cooperation Council etc. so that from the EU some outreach program could be realized Government ownership in electricity sector could be useful in a separate grid company which gives open access to all electricity producers Welfens/EIIW, U. of Wuppertal18

19 Social Networks Role of digital social networks increasing Natural problems with competition as there are powerful network effects Search engine markets are a particular problem Cross-financing is to some extent typical in the internet – this development is doubtful since prices as a means to express scarcity is not used adequately; so where are the price signals for investors and users? Welfens/EIIW, U. of Wuppertal19

20 6. Other Policy Challenges 20 Quelle:OECD (2012), Internet Economy Outlook. Welfens/EIIW, U. of Wuppertal This is a very crucial field crucial: e.g. ICT & labor markets; find a job online (CDN/Germany, FR, IT, GR...

21 Internet Security in a Global Perspective Internet security is a national policy challenge to some extent however, mainly is an international policy challenge – can cooperation be organized; e.g. through ITU Welfens/EIIW, U. of Wuppertal21

22 Only 1% ICT Expenditures in Education in OECD vs. Share of Value-added is About 5% 22 Quelle:OECD (2012), Internet Economy Outlook. Welfens/EIIW, U. of Wuppertal

23 ICT and Human Capital Formation ICT Expansion Requires more skilled workers Human Capital Formation/Training ICT can be used to cut costs/raise efficiency National & regional gov.; International cooperation Setting standards, Benchmarking Mobile Teaching/cost of mobile serv. Welfens/EIIW, U. of Wuppertal23

24 ICT and Finance Poor prudential supervision in financial markets can cause problems – lack of funding for new innovative firms Import problem in many countries Welfens/EIIW, U. of Wuppertal24

25 Venture Capital as a Challenge 25 Quelle:OECD (2012), Internet Economy Outlook. Welfens/EIIW, U. of Wuppertal

26 Public Investment: Smart Grids Will Mainly Be Programme at National Level Governments could push on an individual basis for more smart grids Smart grids – particularly with share of renewables increasing - could be easier rolled out if government can organize some coordination among smart grid actors Welfens/EIIW, U. of Wuppertal26

27 ICT and Health could bring considerable benefits through cutting of costs PPP pilot projects possible and useful Caveat: differentiated approaches needed – for the elderly ICT and health is a rather difficult field; training with the elderly necessary. Welfens/EIIW, U. of Wuppertal27

28 ICT Patents per 1 Mill. Inhabitants at the USPTO 28 Greece Portugal Italy Spain Welfens/EIIW, U. of Wuppertal

29 ICT, Education and Patents Digital schools/universities Internet education approach (including universities) Patents in ICT: considerable divergence across countries Welfens/EIIW, U. of Wuppertal29

30 www.eiiw.eu Thank your for your attention See our website 30Welfens/EIIW, U. of Wuppertal


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