Thursday, June 30, 2016

Cuban telecommunication regulation in context

The International Telecommunication Union (ITU) publishes an annual report on "Trends in Telecommunication Reform" and in the 2015 edition, they defined four generations of telecommunicationi regulation as follows:

  • G1: Regulated public monopolies – command and control approach
  • G2: Basic reform – partial liberalization and privatization across the layers
  • G3: Enabling investment, innovation and access – dual focus on stimulating competition in service and content delivery, and consumer protection
  • G4: Integrated regulation – led by economic and social policy goals

They determine the generation of a nation's regulation as a function of 50 indicators in their database. The following figure shows the evolution of regulation over time:

As of 2013 fewer than ten percent of the nations on which they had data were stuck in the first generation and about 20% were fourth generation regulators.

It is not surprising that regulation has an impact on performance. For example, mobile broadband penetration is consistently highest and growing fastest in nations with fourth generation regulation.

Cuba was not included in the analysis shown here because of insufficient data, but, if they had been, they would have clearly been a first-generation nation. There cannot be many nations left in the world in which a single state-run monopoly is responsible for wholesale and retail fixed and mobile telephony and Internet access. North Korea may be in the same boat. (The US is rated as a third generation nation).

One can quibble with the methodology used in constructing this (or any) index -- the indicators and the way they are weighted are selected intelligently, but arbitrarily, and the data is self-reported, but there is no denying that it has some merit and Cuba is at or near the bottom of the list.

That is the bad news.

The good news is that just as Cuba could leapfrog technology generations, they could theoretically leapfrog regulatory generations -- they do not have to evolve over time, but could adopt global best practices. Cuba could opt for wholesale and retail competition and the pursuit of economic and social policy goals. (I am not optimistic, but it is conceivable).

I have advocated that Cuba should leapfrog current technology -- plan for future technology and take stopgap measures in the interim -- but that is less important than setting effective policies on Internet infrastructure ownership and regulation.

Update 7/10/2016

A Spanish translation and discussion of this post and another on the possibility of Cuba leapfrogging regulation generations can be found here.

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