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Future Communication Regulation Trends Facing the Development of Broadband and Applications

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Future Communication Regulation Trends Facing the Development of Broadband and Applications Future Communication Regulation Trends facing the Development of Broadband and Applications March, 05, 2015 The authors: European Expert(s) Chinese Expert(s) Chapter “Strengthening Competition”: Fabio de Alisal Shi Lina Chapter „Broadband Rollout“ by Thomas Hart Zhang Li Chapter on „The Role of OTT and the Bernd Holznagel Jin Xiaxia Challenge of Net Neutrality“ by Dominik Schomm Shen Ling Martin Grusczyk The EU-China Policy Dialogues Support Facility (PDSF II) is a project financed jointly by the European Union and the Government of the People's Republic of China, implemented by a consortium led by Grontmij A/S. This publication has been produced with the assistance of the European Union. The content is the sole responsibility of Grontmij A/S and can in no way be taken to reflect the views of the European Union. 1 Summary of assignment Locations EU and China Dialogue partners DG CNECT, EU Commission Ministry of Industry and Information Technology (MIIT), China Chinese Academy of Telecoms Research (CATR) Brief description of assignment To identify key challenges and recommendations on future development of markets for electronic networks and services in support of the EU-China Information Society (ICT) Dialogue. Tasked by Chris Brown Programme Manager, EU-China Policy Dialogues Support Facility (PDSF) PDSF activity number 29 2 I. Introduction ............................................................................................. 6 II. Strengthening Competition in the Electronic Communications Markets 10 1 Equity reform and market opening in China ......................................................................... 11 1.1 Background of telecom corporate equity reform in China ............................................... 11 1.2 Ownership structure and governance structure of Chinese telecom enterprises ........... 12 1.3 Opening up of China's telecom industry ........................................................................... 15 1.4 Analysis of Equity reform and market opening ................................................................ 17 1.4.1 Equity reform models of telecom enterprises .......................................................... 17 1.4.2 Main policy tools for market opening ....................................................................... 19 2 European Union’s Approach and Experiences ...................................................................... 19 2.1 Why Competition in Telecommunications ....................................................................... 19 2.2 Liberalization and Privatization ......................................................................................... 21 2.2.1 Definitions ................................................................................................................. 21 2.2.2 Privatization of the incumbents: models, process and current situation ................. 27 2.2.3 Privatization and public control ................................................................................ 29 2.2.4 Regulation adjustment after the privatization. ........................................................ 36 2.3 Market opening. ................................................................................................................ 53 2.3.1 Steps to open up. ...................................................................................................... 53 2.3.2 Methods to open up the electronic communications markets ................................ 62 2.4 Market regulation. ............................................................................................................ 90 2.4.1 The Market-based Regulation Model. ...................................................................... 90 2.4.2 The Ladder of Investment” approach. .................................................................... 109 2.4.3 Wholesale regulation. ............................................................................................. 112 2.4.4 Retail regulation. ..................................................................................................... 123 2.4.5 Future perspective of the implementation of ex-ante regulation in Europe. ........ 125 3 Analysis and Findings .......................................................................................................... 127 III. Broadband Rollout Policies and Measures ........................................ 130 1 Broadband Rollout in the EU .............................................................................................. 130 1.1 Current Level of Broadband Rollout and the rural rollout challenge ............................. 131 3 1.2 The Digital Agenda for Europe ........................................................................................ 141 1.3 Measures to Reduce Investment Costs........................................................................... 143 1.4 Choice of Investment Model and PPP options................................................................ 147 1.5 Choice of Business Model ............................................................................................... 153 1.6 Choice of Finance Tools .................................................................................................. 154 1.7 Member State Examples ................................................................................................. 159 1.8 Additional Information and references .......................................................................... 166 2 Broadband Rollout and Universal Service in China ............................................................. 168 2.1 Connotation and goals of broadband universal service ................................................. 168 2.2 Development status and problems ................................................................................. 170 2.3 Policy Analysis and Recommendations on Universal Service ......................................... 173 2.3.1 The Program of “Extending Telephone Coverage to Every Village” is major measure of China to promote rural telecom universal service ............................................................. 173 2.3.2 New moves of the government to promote rural broadband penetration in recent two years 175 3 Analysis and Findings .......................................................................................................... 176 IV. OTT and Telecoms Operators – Redefining Relationship and Dealing with Network Neutrality ............................................................................ 179 1 Relationship between OTT and basic telecom enterprises in China .................................. 179 1.1 Current development of OTT services in China .............................................................. 179 1.2 Impact of Internet OTT services on traditional telecom industry ................................... 181 1.3 Competition between the telecom operators and OTT enterprises .............................. 184 2 Analysis China: Relationship between OTT and the basic telecom operators ................... 186 2.1 Relationship between OTT enterprises and basic telecom enterprises ......................... 186 2.2 Discussion on supervision of the Government over OTT services .................................. 187 2.3 Suggestions on development and regulation of OTT services ........................................ 189 3 European Union Market Players and Competitive Relationship ........................................ 190 3.1 OTT-Providers as new Players in the Telecom and IT Markets ....................................... 190 3.2 Most important Telcos and OTT-Providers in Europe .................................................... 191 3.2.1 Telcos ...................................................................................................................... 191 3.2.2 OTT-Providers ......................................................................................................... 192 3.3 Competitive Relationship between TC- and OTT-Providers ........................................... 199 3.4 Effects on Revenue ......................................................................................................... 204 3.5 Countermeasures by the Telcos...................................................................................... 206 4 3.6 Net Neutrality: Debate on Regulatory Framework ......................................................... 209 3.6.1 Technological Basics ................................................................................................ 209 3.6.2 Violations of Net Neutrality .................................................................................... 212 3.6.3 Stakeholders’ Positions ........................................................................................... 213 3.6.4 Dimensions of Blocking and Throttling ................................................................... 215 3.6.5 Legal Framework of Net Neutrality ......................................................................... 217 3.6.6 Legal Framework in EU ........................................................................................... 221 3.6.7 Criticism .................................................................................................................. 222 3.6.8 Future plans on Net Neutrality in EU ...................................................................... 224 3.6.9 Outlook...................................................................................................................
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