Competition is a desirable goal not for its own sake, but because of the benefits from competition. These benefits derive from the pressure competition places on firms to be efficient, innovative and customer focused in order to thrive and survive. They include lower prices, higher productivity, more service choices, and greater connectivity.
The overall aim of competition policy is to achieve sustainable competition, where competition occurs on a “level playing field” and consumers and operators are not subject to anti-competitive practices.
This aim faces a number of challenges in the ICT sector.
Competition policy is typically developed and implemented in the context of residual regulations from the monopoly era. In addition, it must be weighed against other policy objectives, such as consumer protection and the development of a viable telecommunications industry.
In addition the telecommunications marketplace is increasingly volatile. In many developed countries the industry has experienced ups and downs of financing and development during the last 10 years. This has resulted in spurts of growth in facilities and services deployment, followed by reductions in service operators and consumer choices and a slowing down of connectivity expansion. This has in turn slowed down the financing of some viable communications projects in developing countries.
Against this background regulators’ task of fostering the transition to sustainable competition is a complex one. Regulators may be tempted to micromanage the market to ensure that competition (or a particular form of competition) takes place. Alternatively, they may decide prematurely that the market is fully competitive. Neither of these paths is likely to result in sustainable competition.
Regulators are faced with a complex balancing exercise. Individual regulatory decisions need to balance:
- The long term objective of ongoing, sustainable competition,
- The resolution of immediate short-term concerns, and
- Conformance with the regulatory and legislative provisions under which regulators operate.