Regulation in telecommunications industries

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How far the regulator controls outcomes directly, or indirectly. For example, if one goal of regulation is low prices for service, will the regulator control prices directly, or seek to influence prices indirectly by promoting an industry structure that is considered to be favourable to achieving low prices? Or, to take another example, will the regulator directly impose particular targets for network expansion and modernisation, or rely on the effect of a general framework of incentives designed to encourage carriers to pursue these goals?

In this context, let’s consider one of the most fundamental issues about whether or not the regulator should intervene to promote innovation. There are three different views on this matter:

“Regulator as Patron”: the regulator identifies the promising innovation, and takes steps to ensure that the organisation most likely to implement it is not only authorised, but have priority access to the resources necessary to implement the innovation.

"Pro-active Removing of Obstacles": the regulator does not "pick winners" in this way, but nevertheless actively seeks to ensure that regulation itself does not impede promising innovations and to act pro-actively to provide an environment that is favourable for innovation.

“Arm's Length Approach”: the regulator’s role is minimised in decision-making about innovation, and the regulator will respond to innovation initiatives from the PTO or other interested parties (e.g. telecommunications users, resellers or providers of value-added services). This may occur if the innovation needs the regulator to take specific actions before it can proceed.

Although these approaches are different, they are not clear-cut alternatives. There are many intermediate approaches between them. In table 1, the main advantages and disadvantages of these tree alternatives are presented.

Concluding all above, we can say that establishing proper regulatory institutions is an important precondition for successfully restructuring the telecommunications sector and increasing the involvement of private initiatives and market forces. Three basic questions are to be addressed at the outset - why, what and how to regulate – in order to settle the main two principal issues: how to ensure a proper interface between the regulated and competitive parts of the telecommunications, and how to encourage the innovative forces in the sector.

Table 1 Advantages and Disadvantages of the Broad Regulatory Alternatives Concerning Innovation

Advantages

Disadvantages

Regulator as Patron

May stimulate important innovations not previously foreseen.

May significantly increase the rate of innovation.

Regulatory complexity and cost.

Blurs the line between regulatory and commercial decision-making.

Pro-Active Removal of Obstacles

Maintains dividing line between regulatory and commercial decision-making.

May still significantly increase the rate of innovation.

A country with this approach may in some cases become follower of a country with the “regulator as patron” model.

Arm's Length Approach

Simplicity and low cost for the regulator.

Maximises the clarity of the dividing line between regulatory and commercial decision-making.

May result in slower rate of innovation.

May entail significant delays since the regulator needs to undertake new policy development efforts, after initiatives are received, before he can respond.

Реферат опубликован: 26/01/2007