Classroom Companion: Business

 
Chapter 22 · Digital Regulation

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337
22
chapter examines more deeply the regulation of mobile communications and the 
Internet. These are regulations by law. 
7
Section 
22.4
 reviews how social norms, 
the marketplace itself, and technology also contribute to regulate the market.
22.2
 Mobile Network Regulations
The most comprehensive overview of regulations of the ICT market is the 
Telecommunications Regulation Handbook (Black & Srivastava, 
2011
). This section 
and the next are based on this source and rules applied by the Norwegian 
Communications Authority (Nkom) (Nkom, 
2017
).
The main motive for regulating the mobile market is to build the foundation for 
a competitive market—or in other words, to avoid market dominance by one oper-
ator and to stimulate new operators to enter the market. To achieve this, a large 
number of market attributes have to be regulated and monitored.
22.2.1 
 Fair Competition
When Europe opened for full competition of mobile communication in 1992, one 
of the first company in each European country to established itself as mobile 
network operator (MNO) was the operator owning the entire telecommunica-
tions infrastructure of that country—the government-owned de facto monopoly 
(also called the incumbent). The incumbent had thus an enormous initial market 
power. To reduce the market power of the incumbent as MNO, the authorities 
required the MNO to commercially separate from the other business areas of the 
incumbent and that the conditions for interconnecting to the fixed network and 
for the use of infrastructure components (e.g., to connect base stations and 
exchanges) owned by the incumbent to be the same for all MNOs, including its 
own MNO.
The MNO must have access to exclusive slots in the radio-frequency spectrum. 
The amount of spectrum allocated for mobile communications is scarce, and there 
is room for only a few MNOs in the same region. Fair competition for frequency 
resources is achieved by dividing the spectrum into slots and then auctioning each 
slot to existing or new operators. This allowed only a few operators in each country. 
To increase competition, the market was also opened up for resellers and mobile 
virtual network operators (MVNOs). Resellers buy bulk traffic capacity from 
MNOs and resell it under their own brand to the customers. MVNOs own some 
network infrastructure but buy access to the wireless infrastructure from MNOs. 
Resellers and MVNOs need no frequency licenses to operate. The regulation 
authority enforces competition rules and supervises that resellers and MVNOs 
meet fair competition in the mobile market. See also 
7
Chap. 
5
 for more about 
resellers and MVNOs.
The mobile market is an oligopoly with just a few MNOs in each country. Some 
of these MNOs may have market power big enough to take actions that alter com-
petition or establish new market rules. These are referred to as dominating MNOs.