How temporary is telecoms sector-specific regulation?

Citation

Blackman, C. (2005), "How temporary is telecoms sector-specific regulation?", info, Vol. 7 No. 1. https://doi.org/10.1108/info.2005.27207aaa.001

How temporary is telecoms sector-specific regulation?

The process of liberalisation of telecommunications markets in Europe, and the rest of the world for that matter, was expected to follow the same broad pattern. Telecoms had to be separated from the postal service, corporatisation, privatisation, the establishment of an independent and separate telecoms regulator, and the liberalisation of the market in stages. The argument in favour of greater competition had been won, but there was a paradox – how was it that liberalisation needed more regulation when everyone was talking about “deregulation”? The answer was that more regulation was needed in the short term to protect the nascent market from the power of incumbents but that, as competition became established, telecoms sector-specific regulation would gradually give way in favour of general competition law and consumer protection.

We have now had 15 years’ experience in Europe (20 years in the UK) of sector-specific regulation and yet the prospect for regulatory exit still seems remote. Does this just mean that the temporary, transition period of regulated competition needs to be much longer than was intitially thought? Or is sector-specific regulation permanent and necessary to ensure competition? In their examination of European electronic communications markets in this issue of info, Berhin, Godart, Jollès and Nihoul argue that sector-specific regulation will be with us for the foreseeable future for several reasons, not least because competition law is inadequate to deal with technical and economic concerns about access to the market. Perhaps more worryingly, the authors show that that because of the way European institutions are structured, there is a kind of “institutional regulationism” built into the system.

The presumption seems to be that competition is unlikely to develop dramatically in electronic communications markets and, indeed, we could see further concentration. While liberalisation has brought down prices in fixed line telephony, incumbents still dominate the residential market. The question is whether there are fundamental changes taking place now and in the near future that question the validity of the assumptions underlying the current regulatory approach. Fixed to mobile substitution, for instance, is bringing about a more competitive cross-platform voice market. More fundamentally, unregulated Voice over IP networks offer the prospect of new suppliers entering the market that could significantly erode the market power of incumbents. Do these and other potential developments require a fresh look at the basis for regulating the sector?

Colin BlackmanColin Blackman is the editor of info, and an independent consultant. He may be contacted at 13 High Street, Cottenham, Cambridge CB4 8SA, UK (E-mail: colin.blackman@ntlworld.com)