15. Telecommunications regulation

Three basic ingredients appear in most reform programmes
– private sector participation, market competition and thecreation of an independent regulator. The interpretation and sequencing of these ingredients within the overall mix of policies is what distinguishes one approach from another, and may be as important to successful reform as the individual ingredients themselves.¹

The new ICT environment – privatised, competitive, responsive to fast paced technological change and convergence
– shapes regulatory requirements. Three broad groups of converging activities are subject to regulation within the sector: telecommunications, broadcasting and the internet. Regulation of these sectors is increasingly concentrated in the hands of a single agency. Market mechanisms now play a greater role in setting prices that were regulated in a monopolistic environment, although often still under government influence. Interconnection between operators and the licensing of new entrants into the market have brought new regulatory responsibilities.

There is general agreement on the reasons for regulation. It promotes universal service through licensing conditions and efficient interconnection. It fosters competition to supply good quality, diversified products at acceptable prices. It limits anti-competitive behaviour and fosters a favourable investment climate. It optimises scarce resources such as the radio spectrum and the numbering system. And it can be a powerful tool for the protection of consumer rights.

Regulators have numerous responsibilities and use various tools, including:

• Licensing – granting of rights to telecommunication networks and services and establishing their responsibilities to contribute to national policy objectives, for example universal service

• Management and licensing of the radio spectrum – in a way that maximises the value of this limited national resource

• Competition policy – creating an environment conducive to competitive entry and managing mergers and acquisitions in the telecommunications sector to head off anti-competitive practices

• Interconnection – to ensure that new entrants are not handicapped by restrictive interconnection policies of incumbent operators, such as inflated interconnection charges

• Numbering – developing a national numbering plan, allocating numbers, and managing numbering resources, are as important to voice and data communications as physical addresses are to the postal system, and are key to ensuring easy access to networks and services

• Equipment type approval – developing and monitoring technical standards for equipment that connects to the networks

• Universal service/universal access – extending networks and connections to households and communities, which are handicapped by distance or poverty

• Telecommunications Development Funds (TDF) – establish and manage TDF to support investment in rural and under-served areas and to promote community access solutions in those areas

• Price regulation – particularly for non-competitive services provided by dominant providers, such as basic local telephony

• Quality of service – today’s tendency is to focus on the quality of basic telephone service (response to repairs, amount of time on waiting lists, directory enquiries, etc) rather than on value-added services

• Consumer protection – defining consumer rights, drafting appropriate legislation, education and communication programmes

Regulating the fast changing ICT environment to meet modern objectives presents different challenges to those found in the old monopolistic telecommunications environment. The main issues to be addresses by today’s generation of policy makers and regulators, such as universal service, tariffs, and prices, are outlined in the following section

1 Patrick Farajian, Key Lessons in Telecommunications Reform, Economic Commission for West Asia, E/ESCWA/ICTD/2003/WG.1/CRP.3, 4 Feb 2003 (West Asia Preparatory Conference for the World Summit on the Information Society)