ict in agriculture - Commonwealth Telecommunications Organisation

SECTION 1 — OVERVIEW OF ICT IN AGRICULTURE: OPPORTUNITIES, ACCESS, AND CROSS-CUTTING THEMES 19
place. For example, the ICT layer carrying the highest value
proposition for end users is the content/service layer. 6 The
framework makes it possible to consider the financial viability
of all contingent layers (network capacity, availability of
appliances, customer support, and so on) and how they may
affect the value derived from the content/service layer.
From a regulatory standpoint, the Rainbow approach captures
the significance of the separation between layers,
most prominently the separation between the carriage and
the content layers. Focusing regulatory efforts within layers
and enabling competition within and between layers is
central to achieving quality end-user services at affordable
prices. From a regulatory policy perspective, the layered
structure illustrates the trend in policy to enable competition
among technologies delivering comparable functionality by
following the principles of competition, technology neutrality,
and licensing flexibility.
Ensuring competition within each of the layers is a longstanding
policy priority, especially where the economies of scale
are conducive to monopolistic market structure. 7 Market liberalization
and free entry give incumbents incentives to pursue
a higher quality of service. For example, starting in 1992
Thailand sought to break up the Communication Authority of
Thailand’s monopoly over international gateway services by
introducing concessions to private companies under buildtransfer-operate
agreements. The entry of the private sector
alongside state-owned enterprises, such as the Telephone
Organization of Thailand, led to remarkable expansion of subscriptions
for both fixed and mobile services. Yet the level
and the degree of competition in the fixed line and mobile
subsectors varied considerably because of the number of
concessions and their terms and conditions (Nikomborirak
and Cheevasittiyanon 2008). Competition in the mobile market
yielded improved connectivity and affordability, while the
fixed-line subsector stagnated.
The lesson is that the welfare benefits of market liberalization
are achieved by implementing complementary policies
on competition that enable market pricing and restrict predatory
pricing by incumbents facing new entrants throughout
the structural layers of the ICT sector. In Thailand, fixed-line
concessions were restricted by stipulated fixed-call rates
6 Layer number 4 in figure 2.1.
7 International Internet gateways and local-loop or “last mile” fixed
networks are examples. Local-loop networks are the fixed networks
that deliver connectivity from the local exchange to the
homes of end-users. Because of the high cost of entry in developing
these networks, this segment is conducive to a monopolistic
market structure.
ECONOMIC AND SECTOR WORK
and upper bounds on the number of subscribers, which
skewed the viability of fixed-line rollouts by private concession
holders.
In addition to competition, technology neutrality is another
leading regulatory policy principle for ensuring the affordability
of ICTs. Technology neutrality is the principle of refraining
from specifying technology requirements within telecommunications
licenses. Historically, specifying technology
requirements was a means of stimulating domestic equipment
manufacturing, but technology neutrality is advisable
within the present rapidly evolving IT industry, because regulatory
decisions on technology selection can be risky (box 2.1
presents an example from Korea).
BOX 2.1: The Risks of Picking Winners in the Rapidly
Evolving IT Industry
In Korea, the licensing of new technologies arguably
led to market growth for domestic equipment manufacturers
such as Samsung and LG, yet this strategy may
prove more risky in the IT domain. Government support
for WiBro, a Korean version of mobile WiMAX (a telecommunications
protocol that provides fixed and mobile
Internet access), has since been viewed as misguided.
By the end of 2008, WiBro had attracted only 170,000
customers for Korea Telecom and SK Telecom combined,
a fraction of the government’s expected 1.4 million subscribers.
Within the Korean market, LTEa mobile broadband
services were emerging as a more viable alternative
to WiBro, and both Korea Telecom and SK Telecom
announced plans to launch commercial LTE services at
the expense of languishing WiBro services.
Source: Author, based on Kim 2009a, 2009b.
(a) Long Term Evolution (LTE) is a preliminary mobile communication
standard, formally submitted as a candidate 4G system to ITU-T in late
2009. Commitment to LTE among mobile network operators has been
growing steadily.
Because no specific technology standards are designated,
technology neutrality widens the scope for competition
within each layer of the Access Rainbow. Competing operators
choose the technology standards that allow them to
deliver services cost-effectively. The regulatory policy drift
toward technology neutrality is supported by technology
developments that lead to increased standards of interoperability
(see Rossotto et al. 2010).
The main policy lever for assuring market competition and
technology neutrality is flexible licensing policies and the