The Regulatory Balancing Act-Not so Difficult

I had written a post titled "Closing the Market Efficiency Gap-Regulation and Competition" wherein I has said that closing the Market Efficiency Gap demands putting in place sound laws and regulation modeled on international best practices but adapted to local context. This would ensures inter alia a level playing field which precludes vested interests from rent seeking behaviour that is detrimental to the economy as a whole.

In this post I has mentioned the likely mandating of a reduction in access charges for fixed line grid by the Italian firm Telecom Italia SpA by the Communications Regulator of Italy. This article also speaks about the general trend towards reduction in network access charges (both fixed line and mobile) across Europe as a result of conscious efforts of regulators to enhance penetration. It does mention that the Italian Regulator was under pressure from Telecom Italia's rivals.

It is now reported that the Italian Regulator's (Agcom) ruling has been put on hold by the European Commission on account of doubts as to whether the proper procedure of a separate market analysis of impact of cut was carried out. A quote from The European Commission er in charge of the digital agenda is enlightening and worth emulating by telecommunications' regulators:

"In departing from the approach announced last year for setting access prices in the Italian broadband markets, Agcom undermines the required regulatory certainty for all market players,” ...... “Regulation must aim at creating a level playing field for all operators.”

The lesson here is that a systematic and scientific approach to regulation can ensure that regulators meet the ultimate aim of consumer welfare and not fall prey to regulatory capture or political pressures.

Closing the market Efficiency Gap-Regulation and Competition

As I mentioned earlier closing the Market Efficiency Gap demands effective regulation and competition. In my view there is no point in utilizing public funds or USFs to take telecommunications to market segments that operators would willingly serve if they were facilitated through effective regulation and forced to as a result of healthy competition. This is one area where developing countries with overall institutional (implementation) weakness may fall short.

This makes it all the more important that they focus on putting in place sound laws and regulation modeled on international best practices but adapted to local context. This would ensures inter alia a level playing field  which precludes vested interests from rent seeking behaviour that is detrimental to the economy as a whole.

As an observer of worldwide developments in the area of telecom regulation I would like to draw the attention of readers to to some recent  news items:

The first is about investigation of several telecom giants for suspected abuse of dominance by the competition wing of the European Commission.  This can be read at:

http://www.theregister.co.uk/2013/07/11/european_commission_inspects_telcos_over_alleged_violation_of_competition_rules/

The second is about the likely  mandating of a reduction in access charges for fixed line grid by the Italian firm Telecom Italia SpA by the Communications Regulator of Italy. This article also speaks about the general trend towards reduction in network access charges (both fixed line and mobile) across Europe as a result of conscious efforts of regulators to enhance penetration.This is available at:  http://www.businessweek.com/news/2013-07-10/telecom-italia-is-said-to-face-about-6-percent-cut-in-grid-access-fees.

The third is about a  more liberalised M&A regime in Europe consistent with market conditions.  This includes a softening of attitude towards active infrastructure sharing. Ultimately increasing penetration is also about ensuring the financial health of the telecom opertaors. This can be viewed at http://www.mobileworldlive.com/fours-a-crowd.

An article  from the Indian Express dated 12.7.13 about present regulations relating to M&A in India may also be of interest to readers. This may be viewed at http://www.indianexpress.com/news/permit-spectrum-trade-m-as-will-follow-vodafone/1140801/