Sunday 20 May 2012

Contents of module

Introduction

The effectiveness of a regulatory body is largely determined by the manner in which it is established. This section looks at the various issues that should be addressed.

Establishing a Regulatory Body

The manner in which regulatory bodies have been set up is similar from country to country.

Originally one organisation, often a government department, provided the telecom services and also set the regulations. No other organisation was involved. Subsequently, when it became obvious that the monopoly situation must change and competition had to be introduced, it also became clear that the whole structure had to be changed. Having one operator (out of many) setting the rules for everyone was not just unfair but unworkable.

The first task, therefore, was to separate the regulatory duties from the provision of service. This was accomplished by creating two separate organisations. Those staff with regulatory responsibilities provided the basis of the new Regulator.

This process is not a simple matter. The new Regulator needs to have a range of powers and controls over other organisations that were not needed in the previous monopoly situation. The opportunity is usually taken to review the whole industry, with particular reference to trends such as convergence with related industries. Usually new legislation must be formulated and enacted.

Thus, establishing a Regulator is not just a question of transferring regulatory responsibilities from one organisation to another. The nature of the responsibilities must be radically changed, and the powers must be established under which they can be effectively enforced. At the same time, the opportunity is presented to review the whole role of telecoms in the light of changing national needs and changes in the industry itself.

This Section is concerned with establishing an appropriate regulatory body in the light of the above circumstances.

Level of Independence

It is generally considered that, in an open and transparent environment, a Regulator should be independent of any sectional interests, whatever these might be. Specifically, a Regulator should not be subject to political influence that, by its nature in a democracy, is transitional.

Whatever the ideal, the level of autonomy that telecoms Regulators enjoy varies considerably from country to country. Some of the more common situations are:

  • being part of some other body, often a government ministry;
  • being a semi-autonomous independent regulator with a high level of independence in practice, although having its decisions subject to review by ministers;
  • being a fully autonomous independent regulator empowered to make decisions not subject to review by any organisation or body other than the government or a Court of Law;
  • ! being a fully autonomous independent regulator empowered to make decisions not subject to review by any organisation or body other han a Court of Law; or
  • being part of a process of industry self-regulation.

Basis of Financing

The manner in which a regulatory body is financed has considerable significance, especially with regard to the need to maintain its independence. Where a Regulator is financed by a government ministry, for example, its decisions cannot be independent of that ministry. This is detrimental to the philosophy of the Regulator being an independent body.

One approach that is taken in some places is for the regulatory body to be self-financing. This can be done from the revenue obtained from the issuing of licences being used to support the regulatory process.

Since licences tend to be renewable on a regular basis, often annually, a regular source of income is maintained.

Appointing a Chief Executive

The appointment of the chief executive of a regulatory body, often known as a Director General, Commissioner or Chief Officer, is obviously crucial in building an effective organisation.

One factor influencing the decision is the manner in which the regulatory body is set up. If it is to be part of government, then it is natural for the government to supply the person, perhaps on a secondment. If the regulatory body is to be independent, and it is necessary to emphasise its independence, then an outsider would be more appropriate.

The terms of appointment bear some consideration. Obviously they should be generally consistent with the importance of the job, but the length of tenure is a matter for debate. If it is a secondment, the length of appointment is likely to be pre-determined. However, where the independence of the body is important, an open-ended appointment is more suitable.

The personal qualities of the individual appointed, such as the ability to lead, to make sound decisions and to represent the organisation externally, are similar to those for the chief executive of any large and highly visible organisation. In addition, the head of a regulatory body in telecoms should have some technical knowledge and an understanding of information technology in general.

Administrative Structure

Regulatory bodies cover a range of issues, and their administrative structures obviously reflect the different areas of responsibility covered. A typical administrative structure, with the areas each section may cover, is:

Regulation

  • producing and issuing licenses;
  • regulating the various industry players;
  • promoting competition;
  • ensuring satisfactory interconnection; and
  • settling disputes.

Technical

  • devising technical standards;
  • managing the radio spectrum;
  • type approval certification; and
  • coordinating with other bodies such as in broadcasting.

Planning

  • monitoring developments in the telecoms industry;
  • monitoring relevant development in the community generally;
  • anticipating future developments; and
  • planning for future developments.

External Relations

  • distributing information about the telecoms industry to the public; and
  • publicising the work of the organisation.

Further Reading

Hong Kong’s Regulator, OFTA, is commonly referred to as having been set up on the right lines, with a good balance between having a light-handed approach in general but having the power to exert control when necessary.