Gender Perspectives in Introduction to Competition Policy Gender Module #6 ITU Workshops on Sustainability in Telecommunication Through Gender & Social Equality

Presentation #1: Key Issues in Competition Policy

Outline What is competition policy? What is competition policy? Why is competition policy important? Why is competition policy important? Definitions Definitions Monopoly Monopoly Merger Merger Market power Market power Market dominance Market dominance

Outline 2 Objectives of competition policy Objectives of competition policy Response to market failures Response to market failures Limits on abuses of market power Limits on abuses of market power Improvements to economic efficiency Improvements to economic efficiency Limits on participation of foreign capital/companies Limits on participation of foreign capital/companies Social objectives/social welfare? Social objectives/social welfare? Link between competition and telecom policy Link between competition and telecom policy How does digital convergence change this dynamic? How does digital convergence change this dynamic?

What is Competition Policy? Regulatory intervention aimed at ensuring competition in telecom markets so as to induce suppliers to become more efficient as well as offer more products and services at reduced prices Regulatory intervention aimed at ensuring competition in telecom markets so as to induce suppliers to become more efficient as well as offer more products and services at reduced prices

Importance of Competition Policy It is a critical factor in the efficient functioning of the telecom sector It is a critical factor in the efficient functioning of the telecom sector It is important to the competitiveness of the sector and of firms It is important to the competitiveness of the sector and of firms Central to economic efficiency and economic viability at the firm, sector and national development levels Central to economic efficiency and economic viability at the firm, sector and national development levels It is key to sustaining economic growth and national development It is key to sustaining economic growth and national development

Definitions Monopoly: The exclusive possession or control of the trade in a commodity or service Monopoly: The exclusive possession or control of the trade in a commodity or service Market power: A telecom operator or other firm has market power when it is able to establish/maintain prices or other key terms and conditions of sales in a market, without regard to the market or the actions of competitors Market power: A telecom operator or other firm has market power when it is able to establish/maintain prices or other key terms and conditions of sales in a market, without regard to the market or the actions of competitors

Definitions 2 Market dominance: Extreme form of market power Market dominance: Extreme form of market power Definitions vary by country, but 2 factors are key in determining market dominance: Definitions vary by country, but 2 factors are key in determining market dominance: There must usually be a relatively high market share (usually no less than 35%, often 50% or more) There must usually be a relatively high market share (usually no less than 35%, often 50% or more) Second, there must normally be significant barriers to entry into the relevant markets occupied by the dominant firm. Second, there must normally be significant barriers to entry into the relevant markets occupied by the dominant firm. Merger: The combining of two or more commercial companies into one entity Merger: The combining of two or more commercial companies into one entity

Competition Policy Objectives Responding to market failure Responding to market failure Limiting market power abuses Limiting market power abuses Promoting economic efficiency Promoting economic efficiency Limits on participation of foreign capital/companies in domestic markets Limits on participation of foreign capital/companies in domestic markets Are there any social welfare objectives? Are there any social welfare objectives?

Competition & Telecom Policies Some countries have a general competition authority as well as a sector-specific telecom regulator Some countries have a general competition authority as well as a sector-specific telecom regulator Where this is the case, it is important that the two entities do not subject an industry to duplicative or inconsistent intervention Where this is the case, it is important that the two entities do not subject an industry to duplicative or inconsistent intervention

Competition & Telecom Policies 2 Sector-specific regulation often not related to and is even inconsistent with competition policy objectives Sector-specific regulation often not related to and is even inconsistent with competition policy objectives Competition policy usually focuses on stopping actors from interfering with the operation of competitive markets Competition policy usually focuses on stopping actors from interfering with the operation of competitive markets Traditional telecom regulation often interfered in competitive markets to achieve social welfare goals Traditional telecom regulation often interfered in competitive markets to achieve social welfare goals

Role of Digital Convergence Fundamental changes in world politics and economics in the last several years have transformed/are transforming smokestack media and communications industries and their traditional ways of functioning… Fundamental changes in world politics and economics in the last several years have transformed/are transforming smokestack media and communications industries and their traditional ways of functioning…

Role of Digital Convergence 2 Rapid innovation in and convergence of ICTs to create the so-called new digital media are: Rapid innovation in and convergence of ICTs to create the so-called new digital media are: eroding infrastructural, institutional, policy, regulatory barriers between previously separate communications industries, and eroding infrastructural, institutional, policy, regulatory barriers between previously separate communications industries, and forcing governments and private industry to reassess old assumptions/approaches about the nature and economics of the sector… forcing governments and private industry to reassess old assumptions/approaches about the nature and economics of the sector…

…everything is everything Convergence is the merging of different media types and communications technologies Convergence is the merging of different media types and communications technologies Telecom, media (broadcast/radio/print) and IT (computers) Telecom, media (broadcast/radio/print) and IT (computers) Convergence in one area is forcing convergence in others: Convergence in one area is forcing convergence in others: Regulatory/policy Regulatory/policy Equipment manufacturing Equipment manufacturing Information delivery Information delivery Business models Business models

Convergence: Regulatory/Legislative Historic torrent of mergers, consolidations, buyouts, partnerships, and joint ventures are changing the nature of the global telecom and media sector Historic torrent of mergers, consolidations, buyouts, partnerships, and joint ventures are changing the nature of the global telecom and media sector How should telecom regulation and/or competition policy handle these issues? How should telecom regulation and/or competition policy handle these issues? Impacts/implications for women, the poor, the under-represented? Impacts/implications for women, the poor, the under-represented?

Implications? Media & telecom ownership/consolidation… Media & telecom ownership/consolidation… …and its effects on product and content diversity, the economy, shareholder value vs. consumer well-being, social welfare, etc. …and its effects on product and content diversity, the economy, shareholder value vs. consumer well-being, social welfare, etc. Conflicts: Between and among global media & telecom giants and those supporting big capital vs. government regulators, smaller industry players, consumers and consumer protection advocates; the global vs. the local Conflicts: Between and among global media & telecom giants and those supporting big capital vs. government regulators, smaller industry players, consumers and consumer protection advocates; the global vs. the local