Governments have a range of options for regulating the telecommunications sector. When establishing a regulatory authority, governments must take into consideration the level of development and liberalization of the ICT sector, resources available within the country, as well as the historical context and the administrative and legal frameworks available for regulating the sector.
As competition increases, new regulatory priorities (e.g., market entry regulation) emerge, and issues of regulatory autonomy gain prominence (with the separation of regulation and operation) and can affect the choice of structure for the telecommunications regulator.1 The main issues relate to ensuring separation between regulation and operation (especially in the case where the historical operator was still under public ownership), guaranteeing an independent and long-term strategy for regulation and competition in the market and ensuring protection of regulation from short-term and sometimes personal political and economic pressures. The regulator also has to be insulated from undue influence by politicians, industry, legacy operators, and consumers. As a result, much emphasis has been placed on the need to create independent regulatory authorities for the telecommunications sector.
Today, a majority of countries have a national regulatory authority for telecommunications -- the ITU T-Reg website lists 131 countries with a “separate regulatory authority.”2 Although some of the agencies fall into what are generally called “converged”3 regulatory authorities, the majority can still be described as focusing primarily on the telecommunications sector. Initial consensus often led to the establishment of a specific sector regulator, but the growing force of convergence has prompted a new and growing trend towards creating converged regulators. The justification is that a converged regulator is better suited to respond to new technologies and the interdependency of different communications services. Some countries have taken a different approach by including the regulation of the telecommunications sector in the mandate of a multi-sector utilities regulator, or by opting for an approach that veers away from sector-specific regulation and relies on the application of competition and antitrust rules to the communications sector.
In selecting the appropriate institutional structure, countries have various design options available from which to select, including economy-wide, infrastructure-wide, communication-wide or purely telecommunications-focused institutions. The choice depends in part on the extent to which the telecommunications sector is similar to (or different from) other sectors of the economy in a particular country and on the availability of suitably qualified staff. The greater the degree of openness and liberalization in the telecommunications sector, if matched by the other components of the utilities sector (e.g., electricity, water), and the greater the similarity in developments among the sectors, the larger is the scope for the application of cross-sector rules that are applicable to competitive activities in general. A key question that ultimately drives the choice of institutional format is whether the regulatory framework strikes the right balance between recognizing the specificity of the telecommunications sector and promoting the coherence of regulatory decisions across sectors.4
As the telecommunications market becomes liberalized and more competitive, disputes among operators, and between users and operators, generally increase. The regulator needs to have the authority to effectively resolve disputes and establish procedures to adjudicate them, and sufficient manpower to oversee enforcement (for further details on dispute resolution, see Section 7.4.1). These factors impact government decisions regarding the mission statement and mandate of the regulator and in some cases influence the choice of institutional design, including internal administration and staffing.
Flexibility is also a key issue that must be considered in choosing among the institutional design options. Appropriate regulatory structures change over time as sectors evolve. The change depends on the nature of the issues at stake – in transport and telecommunications, for example, where monopolies previously considered “natural” are eroding, the mandate of regulators is likely to change more rapidly.
The choice of institutional design per se will not guarantee success of the regulator. Whatever the institutional design option chosen, several important principles should be kept in mind, including:
- Regulators must be perceived by industry to be independent – thus the importance of transparency and accountability of the regulator;
- Regulators should have the expertise to assess and make sound judgments on both technical and industry-specific issues – thus the importance of appropriate appointment and staffing mechanisms;
- The regulator must take into account various viewpoints and interests, including economic, social and political objectives. This balance should be reflected in the institutional structure and in the system of checks and balances;
- The institutional design, internal structure, and administration must be flexible enough to allow the regulator to adapt to market realities.
ENDNOTES
1 Michel Kerf, Manuel Schiffler and Clemencia Torres, Telecommunications Regulators: Converging Trends?, Public Policy for the Private Sector, The World Bank Group, Public Policy Journal, Issue 230, May 2001.
2 See http://www.itu.int/ITU-D/treg/profiles/SepRegAuth.asp.
3 In this context, “converged” regulator means a regulator dealing with the various sectors of the electronic communications industries, such as telecommunications (and in some instances postal services), information technologies and broadcasting.
4 Michel Kerf and Damien Geradin, Controlling Market Power in Telecommunications: Anti-Trust vs. Sector-Specific Regulation: An Assessment of the United States, New Zealand and Australian Experiences, Berkeley Technology Law Journal, Issue 14:3 (Fall 1999), available at http://www.law.berkeley.edu/journals/btlj/articles/vol14/.