In today’s increasingly interconnected world, the communications infrastructure is to a country what the nerve system is to the human body and Communication Network Economics provides a useful framework for its analysis and for decision-making. Indeed, communication is central to the co-ordination of economic activity both at the individual firm (micro) level and for a country, region or continent as a whole (on a macro level). When business goes global, communications must follow suit and today’s communications infrastructures cater for just that. In this day and age, where products and services have to move around to make it to destination in the shortest possible time, an efficient communications infrastructure will cater for the real-time movement of data in cyberspace and for the speedy delivery of physical items all over the world.
The electronic communications industry currently faces several challenges. Technological convergence has made it easier for incumbents to gradually cut costs in the medium-to-long run as the cost of capital replacement required to deliver services drops once fully-depreciated capital equipment is decommissioned, but it has also given new entrants the advantage of the ability of going into the competition fray with a lower cost base since day one and to be able to start off with a competitive technical edge due to the non-existence of legacy systems that need to be adjusted to cater for a converging network. Technological convergence also incentivises consolidation and network re-engineering with a view to attaining higher efficiency levels and higher gains from economies of scale and scope while revenues from traditional service areas continue to wither away and be attacked from a plethora of different venues. Regulatory pressures, in the meantime, continue to build up and push in the opposite direction as National Regulatory Authorities (NRAs) strive to address network accessibility issues and retail pricing. Lack of clarity coming from the regulatory domain continues to be one of the biggest hurdles to electronic communications operators in the area of Next Generation Networks (NGNs), alongside the entry of lean operators who at times do not own much in terms of infrastructure and yet are able to compete very effectively against long-established, infrastructure-owning incumbents. Going forward, new services intended to safeguard existing revenue streams, as well as experimentation with different business models and the adoption of those that make it through the feasibility filter intended to enable new revenue streams to be created are going to become progressively more crucial for incumbents while the new entrants continue adopting new disruptive technologies in their endeavour to expand their subscriber base and to raise their Average Revenue Per User (ARPU).
The postal services industry is not without its challenges either. Following liberalisation pressures and the supplantation of conventional (snail) mail with electronic mail, incumbent postal operators have had to contend with competitors in the non-reserved area and the challenge of declining mail volumes having to be delivered at roughly the same cost (a substantial part of it fixed) that they have inherited from the days when postal services were still widely used for pretty much everything and about which they can do very little given the regulatory universal service and quality of service obligations that regulators have established. This drop in volumes has been partly offset by parcel forwarding which usually attracts a higher margin and which has boomed with the rise of e-commerce.
Our communications practice features a team of individuals with a vast wealth of regulatory and operational experience in the telecoms and postal sectors alike. We believe that one cannot regulate an industry as complex as that of communications, without having a proper, in-depth understanding of these complexities and Communication Network Economics expertise. By the same token, one cannot be expected to operate a communications business optimally without having the same in-depth knowledge of these complexities and a good knowledge of the prevailing statute. Our communications team has been at the forefront of developments in policy and regulation in the sector and in implementing these regulations, as well as in assisting communications companies rise to the challenges brought about by liberalisation, increased competition, technological evolution and changing regulatory obligations.
Members of our communications team have worked for regulators, policy-makers and leading operators, and have, time and again, proved themselves by tailoring solutions to the specific issues faced by our clients. We have learned to translate complex legal, economic, management and engineering principles, into useful practical advice. Our team has, to that effect, established in-house methodologies with which to be able to advise its clients.
These methodologies are predicated on the paradigms depicted at a high analytical level below.
The Equinox Advisory communications practice team’s contributions to the communications sector include, inter alia:
- advice on standards-compliant postal sampling;
- business process re-engineering;
- ex post and ex ante regulatory design;
- market analyses;
- network cost modelling (of the bottom-up; top-down or hybrid type);
- regulatory policy and competition policy advice;
- spectrum management and auction design;
- tariffing, service pricing and bundling;
- technology roadmaps and adoption plans for the unification and efficient delivery of electronic communications services;
- the development of investment models for specific projects;
- the estimation of optimal network access and interconnection charges;
- the provision of business strategy and network architecture advice; and
- time and motion studies for postal services operations.
Our electronic communications team also includes engineers with a wide spectrum of expertise.