Technological convergence in the telecommunications and broadcasting markets is hastened by the growth of broadband networks, since the higher speeds and larger capacities of broadband create new opportunities for operators to offer an array of services, including voice, data, and video. For example, two of the largest broadband network operators in the world, Comcast and Time Warner, began as cable television (TV) operators, but now derive substantial revenues from Internet and voice services, as well as from pay TV, particularly through their “triple-play” packages (Raja 2010). Broadband also supports the expansion of markets and competition as well as helping to reduce prices, improve the efficiency of service provision, and increase the variety of offerings for subscribers. To facilitate the supply of emerging wireline and mobile broadband networks, an enabling licensing framework is necessary.

Convergence and the distributed nature of networks and communications have unleashed a disruptive force across traditionally segregated industries that demands new, flexible, enabling responses (Benkler 2006). Traditional, service-specific regulatory frameworks have typically required separate licenses for wireline, wireless, and broadcasting networks as well as for different types of services. In many instances, operators have been prohibited from offering services outside their traditional, rigidly defined industry—even though new digital broadband technologies make this easily possible. For example, Internet Protocol television (IPTV) was restricted in the Republic of Korea until the IPTV Business Act of 2008 permitted telecommunications operators to offer television programs in real time over their broadband networks.* IPTV Business Act, http://www.glin.gov/view.action?glinID=205548. Within a year of enabling this converged technology and licensing three IPTV operators, Korea had more than 1 million IPTV subscribers.* Telecoms Korea, “IPTV Subscribers Top 1 Mln in Korea,” October 2009, http://www.telecomskorea.com/market-7674.html.

As this and similar cases demonstrate, distinctions between types of network infrastructure are becoming increasingly impractical in a converged environment. Thus policy makers and regulators in both the developed and developing worlds are enacting reforms to transform legacy regulatory regimes so that they can effectively address converged networks and services. These efforts generally have two key elements: (1) the introduction of the principles of technology and service neutrality and (2) the establishment of greater flexibility in key aspects of licensing and authorization frameworks, particularly the authorization of a wide range of networks and services under a single license. At the same time, there is expected to be greater reliance on broad competition law and regulation, as the historic restrictions contained in licenses and authorizations are progressively reduced.

3.2.1 Technology and Service Neutrality

Technology neutrality is based on the premise that service providers and network operators should be allowed to use the technology that best meets the needs of their network and the demands of their customers; such choices should not be dictated by governments. In the licensing context, technology neutrality means that different technologies capable of providing similar or substitute services should be licensed and regulated in a similar way.* infoDev and ITU, “ICT Regulation Toolkit, Module 7: New Technologies and Impacts on Regulation,” sec. 3.3.2, Technology Neutrality, http://www.ictregulationtoolkit.org/en/Section.1833.html. In the broadband context, this means that broadband service providers abide by similar licensing processes and conditions regardless of whether they deliver services via wireless, digital subscriber line (DSL), fiber, cable modem, or other technology. However, a licensing framework that is generally considered technology neutral does not have to treat all providers in exactly the same way; it may treat certain broadband technologies or services differently. For example, the promotion of nascent services (for example, voice over Internet Protocol, VoIP) using a light-handed regulatory approach may warrant departure from technology neutrality, at least on a temporary basis, to promote the development of those technologies. This also may be the case for wireless vs. wireline broadband technologies due to the need for separate spectrum authorizations and other spectrum-related matters, such as capacity constraints and interference.

Service neutrality is based on the similar premise that network operators should be allowed to provide whatever services their technology and infrastructure can deliver. In the past, due to the limitations of technology, networks were “purpose built.” As information and communications became increasingly digitized, however, it became possible for different networks to support similar or substitute services. Thus both cable and telecommunications networks can now support a wide range of voice, data, and video services. More relevant for developing countries, mobile service providers are increasingly able to offer such services as well. Given this convergence, constraining network operators’ services based on old conceptions of technology is no longer appropriate. Adoption of more liberal licensing regimes allows companies to provide a wide range of services under a single license or authorization, which thereby enables the operator to take “cues from the market as to which services are most in demand or most cost-effective” (ITU 2004).

For example, Botswana, Ghana, Kenya, South Africa, Tanzania, and Uganda have already implemented technology- and service-neutral licensing frameworks. In Tanzania, the Electronic and Postal Communications Act, 2010, specifically incorporates both principles into the converged licensing framework, providing that “a licensee is authorized to provide any electronic communication service” (that is, service neutrality) and allowing the licensee to “use any technology for the provision of electronic communication services” (that is, technology neutrality).* Article 3 of the Electronic and Postal Communications Act, 2010, http://www.tcra.go.tz/policy/epoca.pdf.

Together, technology and service neutrality recognize and facilitate technological convergence and promote new and innovative services and applications by reducing the number of licenses that an operator must obtain and expanding the variety and breadth of services an operator may provide. Neutrality may also contribute to reducing unnecessary or even contradictory regulatory obligations, such as different reporting standards and requirements provided under service-specific regimes. However, a country’s licensing regime often requires substantial reforms from traditional service-specific licensing to a more unified licensing framework capable of accommodating technology and service neutrality.

3.2.2 New Authorization Options and Their Implications for Broadband

In light of the regulatory implications that flow from convergence and the transition to a next-generation network (NGN) environment, regulators have begun to adopt more unified frameworks based generally on one of the following approaches: (a) unified or general authorization or (b) multiservice authorization (ITU-D 2009a). Establishing some form of converged licensing framework that includes technology and service neutrality can be a key step for developing countries to foster the supply of broadband, increase investment, and improve the uptake of broadband.

3.2.2.1 Unified or General Authorizations

In principle, these authorizations are technology and service neutral, allowing licensees to provide all forms of services under the umbrella of a single authorization and permitting them to use any type of communications infrastructure and technology capable of delivering the desired service (figure 3.1). This is the most flexible approach, and it typically permits any number of operators to be authorized, except where scarce resources, such as spectrum, are involved. In addition, this type of framework may only require registration or notification in order for the operator to begin offering services. The general authorization regime established by the European Union (EU) Authorization Directive in 2002, as amended in 2009, characterizes this type of framework (European Union 2002). Under that regime, a provider may offer any type of electronic communications network or service with a simple notification to the relevant national regulator. No license application or approval process is generally required.

3.2.2.2 Multiservice Authorizations

A multiservice licensing framework allows operators to offer a wide range of services under a single authorization and may also permit certain categories of licensees to use any type of communications infrastructure and technology capable of delivering the licensed services. However, the multiservice authorization framework is generally not as flexible or as streamlined as a general authorization approach: (1) there are multiple license categories rather than a single license category; (2) the various license categories may limit the number and types of services that may be provided; (3) licensees may be required to hold multiple licenses; and (4) rules may bar licensees from holding more than one type of license, which may stifle convergence if, for example, a telecommunications licensee is not permitted to hold a broadcasting license and therefore cannot offer video services.

Singapore has adopted a simplified variation of the multiservice licensing framework, which is based on two main types of licenses: facilities-based operator (FBO) and services-based operator (SBO; IDA 2011a, 2011b; figure 3.2).