Interviewed by Serwat Perwaiz, Editor of King & Wood’s Publication Group

As China’s economic and social presence on electronic forms of communication continues to develop and expand, the country’s regulatory bodies are stepping up to the challenge to keep pace with the new developments. We are lucky to have Dr. Martin Cave, Professor and Director of the Centre for Management under Regulation, Warwick Business School, to provide us his comments on the hot topics of Technology and the Internet.

When asked about his key areas of interest, he commented that he was particularly interested in “reform and liberalisation of the radio spectrum, which can support the amazing growth of voice and broadband wireless technologies we have seen in the past decade.” He went on to discuss how the standard model in Europe and the United States, which “relies on maximising competition and reducing regulation to the minimum, with a relatively small role for government policy and government subsidy” differs significantly from models in Asian countries where “government policy is a much stronger driver.”


Providing South Korea as an example, Dr. Cave commented on the fast development and implementation of broadband in that country, and added to that example the Singapore government’s policy “for creating a very high speed broadband network throughout the island.” According to Dr. Cave, “This approach yields much quicker results, and can also be used to support local equipment development and manufacture.”

As the conversation progressed from these Asian countries towards China, Dr. Cave pointed out that while he is not a China expert, in his opinion,


“…it is obvious that mobile voice, in China, as in India and elsewhere, is transforming the consumer market place. Mobile also provides a fertile opportunity for the development of Chinese technologies and standards. I have recently prepared a report for the GSM Association, a coalition of mobile operators, which argues that mobile communications thrive in a relatively unregulated atmosphere — one which utilises competing operators’ desires to win customers with keen prices and new services."


Dr. Cave commented that this transforming marketplace naturally progresses towards mobile broadband and that the next decade will see increasing broadband speeds, In fact, securing access to broadband has become intrinsically tied to a country’s economic growth. Dr. Cave further commented on mobile broadband that

“A country which loses out in this race [to develop mobile broadband networks] risks suffering major economic loss. In areas where there is no fixed network, wireless is the key, and many technologies are or will be available — 3G, varieties of 4G, Wi-max, etc. ”


Dr. Cave provided as an example the Australian company, Telstra, which has built a wireless network within a short time period which delivers high speed broadband to 99% of the population. He commented that Telstra’s network

“…is encouraging its competitors to follow suit. If this sort of network is replicated in other countries, and if enough spectrum is made available to support the traffic, the capacity of less affluent countries to ‘catch-up’ could have remarkable effects. There will still be a need to develop fibre-based networks for business, and in areas where they are already available, but these might take second place to wireless networks in meeting household demand. The good thing about wireless technologies is that they are inherently competitive, so the need for regulation is more limited than it is for monopoly fixed networks; this state of ‘permanent competition’ imposes on operators a permanent need to invest to retain customers and capture new ones. ”


However, while certain areas develop best with minimal regulatory interference, Dr. Cave added that others require regulatory interaction to ensure fair competition in an international market. He emphasizes that

“business customers – especially large corporations – [need to] get the range and quality of services which assist them in competing successfully in international markets. This involves creating regulatory incentives to extend fibre deployment in business districts.”


Dr. Cave added that he sees enormous scope for China in the communications equipment market. He commented, “[China] has a large home market, and already a major international one, where its success is increasingly based on technological rather than price-based competition.”


When asked about the future of copyright protection for data exchanged over the
Internet, through phone devices, or through other web-related devices, Dr. Cave pointed to the market power shift from networks to content that has occurred in the last two decades. He states

“From this point of view, the proponents of net neutrality, such as Google, are fighting off an attempt by network operators such as AT&T and Verizon to re-assert themselves. However, content is only as valuable as its copyright protection is effective, and peer-to-peer exchanges, social networking sites and other developments endanger its value. But this is a new manifestation of the permanent battle between owners and would-be copiers. The copyright owners use technology such as digital rights management and new business models such as low-cost music downloads to make their paid offerings more palatable to consumers.”


As our discussion with Dr. Cave came to a close, he predicted that while copyright owners won’t lose this battle over copyright, the way they are remunerated may change significantly.