An effective regulator should demonstrate additional characteristics. The most important are accountability, transparency, and predictability. All of these are enhanced by a clear division of responsibilities between the ICT regulator, ministries, and other regulatory agencies, such as the competition authority or radio spectrum management body where they are in place.
The independence of the regulator needs to be balanced with accountability. The duties assigned to the regulator provide significant power to redistribute income among different constituents in the economy. Safeguards are required to ensure that the regulator does not become corrupt or inefficient. Citizens and regulated firms must know who is responsible for a decision and the reasoning behind the decision. Interested parties must be able provide relevant input to a decision through consultation processes. They must be able to obtain redress easily and quickly when the regulator has acted arbitrarily or incompetently. These types of safeguards produce a balance between independence and accountability. Several formal safeguards have been employed to achieve this balance, such as:
- publishing the statutes of the regulator that clearly specify the duties, responsibilities, rights and obligations of the regulator and differentiating between primary and secondary regulatory goals, where there are multiple goals;
- ensuring that the decisions of the regulator are subject to review by the courts or some other nonpolitical entity (though some “threshold” should be established to deter frivolous challenges that simply delay the implementation of decisions);
- mandating annual reports by the regulator on its activities and requiring a formal review of its performance by independent auditors or oversight committees of the legislature;
- establishing rules for the removal of regulators if they show evidence of misconduct or incompetence; and
- allowing all interested parties to make submissions to the regulator on matters under review and mandating that the regulator publishes its reasoned decisions.
Transparency in interconnection and universal service obligations is a specific requirement of the World Trade Organization (WTO), and a general requirement of the EU regulatory package. Transparency entails the regulator making available in a timely fashion all relevant information. Transparency enhances the confidence of interested parties in the effectiveness and independence of the regulator and strengthens the legitimacy of the regulator. Consequently, all regulatory rules and policies, the principles for making future regulations, and all regulatory decisions and agreements should be a matter of public record. ICT regulation is an important policy issue and all citizens need information about the policy to evaluate the performance of government.
Transparency is an important contributor to good governance in general. Importantly, transparency reduces the probability that interested parties, especially those adversely affected by a regulatory decision, will believe that decisions are biased or discriminatory. When regulatory decisions, including the principles and evidence that guided them, are clearly presented on the public record, the reasons for them will be apparent. By these means the regulator can demonstrate that decisions are reasonable. Discriminatory or corrupt decisions will become evident and more difficult to substantiate when transparent processes are in place.
The market, particularly investors, requires that the regulatory process is predictable. Independent regulators are predictable if they adhere to the rule of law. The most important features of the rule of law are respect for precedent and the principle of (in common law jurisdictions) stare decisis. Respect for precedent means that regulators do not reverse policy decisions unless there is evidence that those decisions have led to significant problems. The principles of stare decisis (which also apply across all legal traditions) require that cases with the same underlying facts be decided in the same way every time. This is of particular relevance in the resolution of disputes. Adherence to these principles enhances confidence in and the credibility of the regulator and reduces regulatory risk, which reverberates positively with investors.