Value chain in the Internet and the future market models - UKE

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Value chain in the Internet and the future market models


Invitation for discussion.


I am presenting the report, which was conducted in conjunction with conversations with the operators on investments in NGN / NGA. These discussions have been held for over a year. The operators have focused on the regulation of the newly created infrastructure, repeating the age-old dispute over the scope and severity of this regulation. It seems, however, that the real problems associated with the viability of infrastructure development and their benefits from occupying a place in the value chain in advanced e-services markets will be formed elsewhere.

As shown in the report, those who invest in networks construction earn not enough in comparison to those who are doing the e-business on this infrastructure. In addition, currently the entrepreneurs who earn a lot from e-business services do not require high bandwidth for their activities. However, because of transmission of many areas of our lives to the Internet and due to the emergence of increasingly independent providers of solutions for e-business, one can easily imagine the appearance of such entrepreneurs in the online world, which would initially offer the convenience and freedom from the existing telecommunications monopolies, and consequently would start dictating the business terms of the entire chain of business community and customers.

This has two important consequences: firstly, it can hinder operators from investments. The regulator expecting and supervising the construction of the next generation networks, has to take into account the whole value chain, which may change the very prospect of regulation. Therefore, the discussion must be initiated on the possible business models for the entire value chain. The debate should take into account models that provide incentives for infrastructure operators and that will also ensure that investments are rational, purposeful and effective.

Moreover, leaving the current business model, sooner or later will create new monopolists coming rather from e-business market than telecommunications. These are not under the jurisdiction of even in the scope of observation of the regulatory authorities. Evidently, it is not yet known whether any regulatory adjustments are needed, however, we observe shifts in key business decisions on market competitiveness and on the needs of consumers toward the area outside of the electronic communication, which is currently outside the jurisdiction of the regulators.

I hope that this report begins the discussion of all interested players of online market. I invite you to send comments and statements to the address until 31 January 2011, with a note under the heading 'A value chain in the Internet'.



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    The President of the Office of Electronic Communications (President of UKE) is the national regulatory authority for the market of telecommunications and postal services. The President of UKE is also the specialised authority in the area of equipment conformity assessment, including telecommunications terminal equipment and radio equipment.

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