Information Technology and Telecommunications Law

8/9/2019 Information Technology and Telecommunications Law

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INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS LAW

"DO CONVERGED REGULATORY AUTHORITIES REPRESENT THE OPTIMAL WAY

FORWARD FOR THE REGULATION OF THE COMMUNICATIONS SECTOR?"


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"DO CONVERGED REGULATORY AUTHORITIES REPRESENT THE OPTIMAL WAY FORWARD FOR THE REGULATION OF

THE COMMUNICATIONS SECTOR" DISCUSS

Telecommunications Law:

2

TABLE OF CONTENTS

INTRODUCTION

PART I: CONVERGENCE OF THE COMMUNICATIONS SECTOR

y What is convergence?

y The effects of convergence.

y Regulatory issues in a converged communications sector.

PART II: CONVENTIONAL REGULATION

y What is regulation?

y How should the communications sector be regulated?

PART III: CONVERGED REGULATORY AUTHORITIES AND THE REGULATION OF THE

COMMUNICATIONS SECTOR

y Converged Regulatory Authorities.

y The Office of Communications (OFCOM).

y Advantages of Converged regulatory authorities.

y Disadvantages of converged regulatory authorities.

PART IV: CONCLUSION

BIBLIOGRAPHY


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SUMMARY

This essay answers the question "Do converged regulatory authorities represent the

optimal way forward for the regulation of the communications sector" by depicting that

converged regulatory authorities are indeed the best possible way forward for theregulation of the communications sector.

Part I introduces you to the concept of convergence to enable you to understand why

converged regulatory authorities are of the essence in the dynamic communications

market.

Part II embodies a description of the nature of the present-day regulation in the United

Kingdom, in order to give you a clear comprehension of where regulation has been and

how it is being forced (by the vertical and horizontal convergence of industries in the

communications sector) to progress towards converged regulation as the most

favourable way forward for regulation of the communications sector.

Part III takes a look at the prerequisites for successful regulation under a converged

framework with the spotlight on the Office of Communications (OFCOM) as an example

of a converged regulatory authority. In its attempt to reaffirm the assertion that

converged regulatory authorities are the optimal way forward for the regulation of the

communications sector this chapter of the essay takes a concise look at the

advantages and disadvantages of converged regulatory authorities.

Part IV concludes this essay by emphasising that converged regulatory authorities

represent the optimal way forward for the regulation of the communications sector.

INTRODUCTION

The continuous expansion of applications of information and communicationstechnologies (ICT) has led to the transformation of local, national, regional and

international economies throughout the world. This ICT revolution is in the process of

creating another "paradigm shift" for the 21st century economies and societies. The

liberalisation of the communications sector worldwide in general and in Europe in

particular, has been followed closely by convergence resulting from changes in

technology, changes in the market structure, and subsequently changes in policy.

Convergence has occurred in industries (e.g.) telecoms as it becomes more closely

associated with the information technology and broadcasting industries. This has had

profound effects on competition and the way the industry is regulated.

Seeing that many telecoms services are being made available across computer

networks, and manyb

roadcast services canb

e delivered over telecoms networks thereare numerous fore sighted questions (e.g.) "Which regulatory structure is most ideal for

the dynamic converging market? Can sector specific regulation suffice? Must regulation

follow the trend of the market by way of convergence? A re converged regulatory

authorities the optimal way forward for the regulation of the communications sector? In


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an attempt to answer the lingering questions, this essay clearly depicts the role that

converged regulatory authorities shall play in the communications sectorby focusing

upon the regulation of the communications industry in the United Kingdom.

PART I: CONVERGENCE OF THE COMMUNICATIONS SECTOR

In order to be able to comprehend what converged regulatory authorities are and how

they shall function in the regulation of the communications sector, it is vital to take a brief

look at convergence which has essentially led to the creation of converged regulatory

authorities.

What is convergence?

Convergence is the erosion of traditional distinctions between media,

telecommunications and information technology, the take over of the media

sector by the telecommunications and computing industries and the collapse oftechnological and regulatory barriers to market entry.1

From 1980 various service sectors began integrating both vertically (as depicted in figure

1) and horizontally (as depicted in figure 2), which, eventually lead to convergence.

Convergence, in the areas of ICT and media, essentially refers to the coming together of

IT, telecoms, broadcasting and other media, technologically, market wise and policy

wise.

Figure 1: Vertical convergence2

Other

media

Equipement

/ Hardware

Transport /Software

Content /

Service

BroadcastingTelecomIT

Figure 2: Horizontal convergence3

1Rijo Calleja "Convergence: Gone Digital, Going Interactive - Markets and Regulation in the Audio-Visual

Sector" Ent. L.R. 1999, 10(3),642ibid at p.153 ibidat p.16


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Othermedia

Equipement/ Hardware

Transport /Software

Content /Service

BroadcastingTelecomIT

Convergence of the communications market is taking place at different levels, shaped

by mergers and alliances, leading to the creation of new layers in the value chain, across

industries4 (i.e.): -

y Convergence in content production and convergence of services,

y Convergence in distribution and convergence of networks,y Convergence in equipment production and terminal convergence.

Convergence between services implies that the same content can be reached from

different technical platforms (e.g.) internet accessed via the telecom network. It also

implies that content providers will become cross-sectional; providing content to more

than one sector.

Convergence of content, services, distribution, equipment production and terminal

convergence encompasses convergence between telecoms and broadcasting (e.g.)

where British Telecom wishes to acquire a broadcasting licence, and convergence

between IT and broadcasting (e.g.) where Microsoft is involved in the development of

American cable TV.5

The trends of convergence are clearly depicted by the diagram below6

Figure 3: Trends in convergence

IT Telecom Broadcasting Other massmedia

Contentervices

ransportsoftware

ipmentardware

4ibid at p.14

5J.F. Moore & S.Koprice: "A Digital Television Ecosystem", in D. Gerbarg (ed), The economics, technology and

content of digital T.V., Kluwer, 19996Anders Henten, Morten Falch & Reza Tadayoni, "Some implications for regulation of ICT and Media

Convergence" WDR Discussion Paper No. 0202, January 30, 2002 at p.20


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Convergence is shaping the development of the communications sector by enabling

different network platforms to carry similar kinds of services and making it possible for

service providers to provide the existing products and services in innovative ways (e.g.)

on-line publishing of newspapers and journals, cable news on the Internet, on-line

distribution of software, telephony service over cable TV networks, Video-on-demand

service over telephone networks, and telephony service over the Internet. This hasresulted in increased competition between different service platforms as the traditionally

defined boundaries within the communications sector between IT, telecom, cable

television, broadcasting, satellite, cellular mobile and other mass media companies and

between the communications industry, content industry and information technology

industries are redefined, become less and less distinguishable and are less viable.7 In turn

the increasingly competitive industry sector, is resulting into cost reduction (e.g.) of

transmission and switching capacity in the telecommunications sector.

Following on from above, it is evident that the communications sector markets are linked

economically and therefore the regulatory regime needs to be in tandem with themarket (i.e.) multiple and overlapping regulation in the midst of several media of

communication. Consequently, policy makers are faced with the task of ensuring that

they are able to manage demand at the same time as ensuring technology neutral

consistency. And that all new players in the market have reasonable access to it in a

way that is simple, easy to understand and promotes maximised consumer choice.

Therefore, it is necessary for the web of regulatory agencies that developed prior to

convergence, to be amalgamated. The communications sector needs to be regulated

in a minimal manner, yet an extremely powerful regulator must exist to be responsible for

everything from telephony to television sex, bearing in mind that the numerous issues that

shall arise will not be easily regulated on an industry basis.

The effects of convergence

Convergence has had the following effects upon United Kingdom's communications

sector: -

y It has boosted the growth in communications industries as they exploit new

technologies to provide more and better services to consumers.

y Convergence has led to the growth of e-commerce, which notwithstanding the

current spectacular ups and downs for "dotcoms" will come to play a significant part

in the United Kingdom's national economy.

y As a result of convergence there is enhanced ability of the United Kingdom's high-

tech creative industries to access and manipulate the information and other content

they need to grow theirbusinesses.

y Convergence has enforced efficiency gains in established industries, particularlyservices, as they fight to compete with new online entrants with lower overheads.

y Due to convergence, the level of savings in public expenditure resulting from

providing more government and other services online, has increased.

7D. Ypsolanti and P. Xavier "Towards next generation regulation", Telecommunications Policy, Vol. 22, No. 8, at

p.644


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y The access to the international market for British companies, meeting the demands

for high quality services and content around the globe, has been improved by

convergence.

y There is more efficient use of communications infrastructure, especially radio

spectrum: (i.e.) turning off the existing analogue signals will release spectrum worth

billions of pounds, as recent mobile telecoms licence auctions across the EuropeanUnion have shown.

y With convergence there is the exploitation of digital technologies and content to

deliver education and training in a rich variety of forms tailored to the needs and

circumstances of individuals, helping deliver a well-educated and highly skilled

workforce.

Convergence has had an immense impact upon all aspects of communication in the

United Kingdom as the distinction between three different industry segments continues to

blur. Su

bsequently with market forces shaping the direction of the communicationsindustry, regulation shall be forced to follow suit. Hence a look regulatory issues in a

converged market is essential.

Regulatory issues in a converged communications sector

There are a number of policy and regulatory issues that relate to convergence namely8:

y How to create a framework that improves general social benefits in terms of services

and possibilities.

y How to balance the benefits and market power problems in media synergies.

y How to secure the best possible access to networks and content.

y How far to go in establishing converging content regulation.

y What content issues with regard to privacy protection, consumer protection, and

intellectual property rights (etc) to include in convergence regulation.

y The degree to which infrastructure and content regulation can be separated.

y And how to establish the best possible institutional regulatory structure.

With the above mentioned issues at hand, the question continues to linger,

"Will converged regulatory authorities set the policy and regulatory queries to rest? Are

converged regulatory authorities the optimal way forward for the regulation of the

communications sector?" A look at conventional regulation and the move towards

converged regulatory authorities in the chapterbelow shall seek to answer this question.

PART II CONVENTIONAL REGULATION

What is regulation?

Regulation is the sustained focused control exercised by a public agency over activities

that are valued by the community, and therefore represents all actions that limit the

extent to which players in a given field of activity, such as an industry, can freely operate

8Anders Henten, Morten Falch & Reza Tadayoni, "Some implications for regulation of ICT and Media

Convergence" WDR Discussion Paper No. 0202, January 30, 2002


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in carrying out that activity. However, regulation is not an end in itself but simply a tool

which might be used to achieve policy objectives.

How should the communications sectorbe regulated?

Like all other aspects of service provision, it is vital to ensure the regulation of thecommunications industry in order to ensure the protection and promotion of the interests

of the consumerby furthering the following: -

y Universal access to basic services,

y Remedying market failures in terms of barriers to competition,

y Good quality and efficient services,

y Efficient prices,

y Utilisation of cutting edge technology in the provision of services,

y Prevention of the abuse of market power,

y

Promotion of pub

lic confidence in the provision of the service in question,y Technical limitations,

y Protection of consumer rights,

y Control of service content,

y Advancement in industrial development,

y Wealth and job creation,

y Interoperability and interconnection of network systems.

Initially, regulation in the United Kingdom was based purely upon sector specific

regulation whereby the mode of regulation depended on the industry type. For

example, regulation of both the telecommunications sector and the broadcasting sector

was previously kept disengaged in sequence with the ideals of the market situation at

the time. The telecommunications sector evolved from a government controlled

monopoly with direct political intervention forming the basis of regulation9, whilst the

broadcasting sector regulation developed from the desire to provide universal signal

coverage with a necessity to restrict access to scarce spectrum,10 and was based upon

political and cultural criteria.11 And while telecommunications regulation hovered over

the provision and operation of the physical infrastructure, the network and access to the

network with the crux of the focus upon12: -

y Common carriage (i.e.) universal access rights,

y Non - discriminatory tariffs,

y Interconnection,

y and Price and/or profit control,

Broadcasting regulation concentrated on the plurality of ownership and provision of a

balanced and impartial range of programme content consisting of information,

9Jeremy Landau "The Future of Broadcasting and Telecommunications in the United Kingdom" C.T.L.R. 1997,3 (4)

at pg.14510ibid at pg.14611Professor Nicholas Garnham "Convergence between telecommunications and audiovisual: consequences for

the rules governing the information market" Regulatory Issues, European Commission - Legal Advisory Board -

Brussels, 30 April 199612ibid


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entertainment and regulation. Thus underbroadcasting, both the distribution networks

and content were being regulated. Whilst access to scarce spectrum was controlled by

licences which were in turn used to ensure universal coverage as a basis for content

regulation.

Content regulation was supposed to ensure the following13: -

y Pluralism (i.e.)

o provision of a balanced range of programme types,

o access to a range of voices within each programme type,

o provision for a range of audiences, both majority and minority (e.g.) children,

ethnic and linguistic minorities,

y Impartiality (i.e.) the balanced coverage and presentation of information to ensure

that no special interest group had undue influence over output,

y Protection of vulnerable social categories (i.e.) children,

y Promotion of cultural heritage (i.e.) high artistic standards, fostering nationalproduction, ensuring public access to major sporting events and the provision of

education.

In order for communications regulation in the United Kingdom to be effectual it must

guarantee14: -

y Creation of dynamic competitive markets,

y Maximisation of access to a diverse range of communications services,

y Delivery of quality, choice and value for money,

y And consumer protection.

In addition to the ab

ove criteria, any form of communications regulation in the UnitedKingdom must be at par with the European Union Directives adopted on February 14,

2002, by the European Communities, relating to the provision of communications

networks and services and entered into force on April 24, 2002 when they were published

in the Official Journal. United Kingdom like other member states is required to implement

the directives into national legislation by July 25, 2003.15

The basis for the new EU regulatory framework is five (5) major EU Communications

Directives which are intended to converge and harmonise communications regulation

throughout the community these are: -

y Directive 2002/19/EC on access to, and interconnection of electronic

communications networks and associated facilities(the Access Directive),

y Directive 2002/20/EC on the authorisation of electronic communications networksand services (the Authorisation Directive),

13ibid14 Oftel "Communications Regulation in the UK" available at

http://www.oftel.gov.uk/publications/about_oftel/whit0700.htm15

Graeme Maguire and Jason Romer "An Overview of the Draft United Kingdom Communications Bill" C.T.L.R

2002, 8(6) 141


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y Directive 2002/21/EC on a common regulatory framework for electronic

communications and services ( the Framework Directive),

y Directive 2002/22/EC on universal service and users' rights relating to electronic

communications networks and services (the Universal Service Directive), and

y Directive 2002/58/EC concerning the processing of personal data and the protection

of privacy in the electronic communications sector (the Privacy Directive).

As illustrated above, it is evident that the communications regulatory framework in the

United Kingdom is being driven by the vitality of convergence. Currently there are

approximately fourteen (14) regulatory bodies in the United Kingdom which claim

jurisdiction over the matters of media and telecommunications16 some of which shall be

merged together to form a converged regulatory authority embodied in the Office of

Communications (OFCOM) these include the following: -

y The Broadcasting Standards Commission,

y The Radio Authority,

y The Radiocommunications Agency,

y The Independent Television Commission (ITC),

y The Office of Telecommunications (Oftel).

The Broadcasting Standards Commission

As established by the Broadcasting Act of 1996, its tasks are to17: -

y Produce codes of conduct relating to standards and fairness,

y Consider and adjudicate complaints,

y Monitor research and report on standards and fairness in broadcasting.

Essentially therefore, this is a statutory body forboth standards and fairness in

broadcasting. It covers all television and radio, both terrestrial and satellite.

The Radio Authority

This body was set up by the Broadcasting Act 1990 to license and regulate commercial

radio within the United Kingdom. By virtue of the said Broadcasting Act, the Authority

must conduct wide consultation subsequent to which it must draw up, review, and

enforce codes which set standards and practices for advertising and sponsorship,

programming and engineering.18 It is also required to draw up and enforce the rules on

ownership of radio licenses. The Radio Authority licences and regulates independent

radio in accordance with the statutory requirements of the Broadcasting Acts of 1990

and 1996. It also: -

y Plans frequencies,

y Awards licences,

16Jeremy Landau "The Future of Broadcasting and Telecommunications in the United Kingdom" C.T.L.R. 1997,3

(4) at pg.14517The Broadcasting Standards Commission at http: // www.bsc.org.uk/ about.htm18The Radio Authority; http://www.radioauthority.org.uk/regulation/whatwere.g.html


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y Regulates programming and radio advertising,

y Supervises the radio ownership system,

y Develops policies which affect the independent radio industry and its listeners,

y And ensures the provision of high quality services offering a wide listening

choice.

The Radiocommunications Agency

The Radiocommunications Agency is an Executive Agency of the Department of Trade

and Industry responsible for the management of non-military radio spectrum in the

United Kingdom, which involves international representation, commissioning research,

allocating spectrum, licensing its use and keeping the radio spectrum clean.19

The Independent Television Commission (ITC)

This is a statutory body established by the Broadcasting Act of 1990. It regulates

programme content including advertising and sponsorship, and also controls the licence

compliance and cross media ownership, frequency planning for terrestrial services, andalso ensures fair and effective competition in the provision of licensed services and

services connected with them.20 The ITC is also responsible for licensing television and

multiplex digital programmes and digital additional services (i.e.) electronic

programming guides whether these are cable, satellite or terrestrial services.21The ITC

therefore regulates programme content by ensuring that standards of decency,

incitement, impartiality, and all other programme services satisfy public service

broadcasting requirements including the provision of international and national news,

regional programmes, current affairs, religious and children's programmes. Since

broadcasting in the United Kingdom is concerned with not only the regulation of

programme content but also the use of radio spectrum, ITC's jurisdiction extends to theregulation of telecommunications signals sent by wireless telegraphy, if such signals are

used to carry television or radio broadcast services.

The Office of Telecommunications (Oftel)

The Office of Telecommunications (Oftel), set up under the Telecommunications Act of

1984 is the regulator for the United Kingdom telecommunications industry. Its functions

include22: -

y Promoting the interests of consumers,

y Maintaining and promoting effective telecommunications services,

y Making sure that telecommunications services are provided in the United

Kingdom to meet all reasonable demands, including: -

o Emergency services,

o Public call boxes,

19The Radio communications Agency Home Page at http://www.radio.gov.uk

20Jeremy Landau "The Future of Broadcasting and Telecommunications in the United Kingdom" C.T.L.R. 1997,3

(4) at pg.14621ibid22 http://www.oftel.gov.uk/about/index.htm


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o Directory information,

o And services in rural areas.

So far OFTEL is the one regulator that has produced the most substantial thinking about

the future of the communications sector and how it should be regulated by seeking to

tackle issues such as broadband switched mass market services, conditional access,interconnection, and universal services.23

With convergence therefore, the question is whether the rationalisation whereby the

existing regulators are merged into an "Office of Communications" (i.e. OFCOM) to

reduce multiplicity of regulatory intervention is the most suitable and most favourable

way to regulate the communications sector.

23op.cit at pg.146


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PART III - CONVERGED REGULATORY AUTHORITIES AND THE REGULATION OF THE

COMMUNICATIONS SECTOR

Converged Regulatory Authorities

"If a system of regulation is to be transparent and accountable to the public and

to the Parliament, there is a strong argument to suggest that a single regulatory

authority for communication is the most appropriate means by which these

criteria can be satisfied"24

The onset of technological, infrastructure and service convergence between

telecommunications, broadcasting, information technology and content sectors has

exerted pressure on communication regulators to look beyond communications

regulatory preoccupation and establish a dynamic regulatory framework that does not

present barriers to convergence. Regulation during the era of convergence must

essentially ensure that the communications sector is able to flourish in an age of

increasing competition and technological change, bringing both clarity and leadershipto the sectorbased upon clear thinking and the ability to take tough decisions.25 It must

be effective, consistent, responsive to different emerging techniques for delivering forms

of communications to the end user, as well as to the economic and technical constraints

which apply to them.26 And it must encourage competition, to flourish, and innovative

services to be developed, while ensuring universal access to the necessary components

of the communications sector and providing effective consumer protection and

deterrence to anti-competitive practises. It is my belief that only a converged regulatory

authority will be able to meet the demands of the dynamic communications sector.

Regulatory convergence refers to the increasing centralisation of regulatory authority

towards a system based on functional units instead of industry divisions.27 The objective

being to have similar issues centralised in one office instead of being divided acrossvarious bureaus.28 The scope of regulation in all communication sectors has converged

and will continue to converge as a result of market and technological developments.29

Thus several media of communication shall be sub ject to multiple and overlapping

regulation.

It is important to note that telecommunications and broadcasting are two sectors which

historically had different regulatory traditions and concerns,30 and convergence has

occurred between sectors that have traditionally been regulated (i.e.)

telecommunications and broadcasting and those that have not (i.e.) information

24Jeremy Landau " the Future Regulation of Broadcasting and Telecommunications in the United Kingdom"

C.T.L.R. 1997 AT Pg 14525Thomas Crane "OFCOM - A New Order for Communications regulation or a Bureaucratic Nightmare" C.T.L.R

2003, 9 (2), 3726op.cit27Martha. A. Garcia-Murillo and Ian MacInnes "Regulatory Convergence in the Information Industry" Twenty

eighth Telecommunications Policy Research Conference, Alexandria, VA28ibid29ibid at pg.14630ibid


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technology, multimedia products and internet services.31 Therefore sector specific

regulation has to be phased out and replaced with the regulation of networks and

regulation of content32 under a strong regulatory body with "platform - neutral"

uniformity33 and the ability to ensure that potential monopoly situations are controlled to

ensure non discriminatory access to network infrastructure and programme content and

to prevent undue discrimination and anti competitive behaviour in the provision of

services. Yet it must be liberalised enough to promote investment and growth in network

infrastructure and programme services.

The Office for Communications Regulation (OFCOM)

OFCOM, established by the Office of Communications Act 2002 is one example of a

converged regulatory authority and is the regulatory body created to merge or rather

replace the functions of the Broadcasting Standards Commission, the Independent

Television Commission, the Office of Telecommunications (OFTEL), the Radio Authority

and the Radio Communications Agency. As an independent body, it shall be responsible

for the following34: -

y Taking over the functions of the statutory bodies and office holders that currently

regulate the electronic communications sector,

y Encouraging effective self regulation and co-regulation, with a streamlined and

integrated strategic approach,

y Replacing the current system of licensing of telecommunications systems with a new

framework for the regulation of electronic communications networks and

services,

y As part of its wider spectrum management duties, Ofcom will have the power

to develop new mechanisms to enable spectrum to be traded in accordance

with regulations made by Ofcom, and scheme of recognised spectrum access,y Develop the current system for regulating broadcasting to reflect technological

change, to accommodate the switchover from analogue to digital broadcasting

and to rationalise the regulation of public service broadcasters,

y Establishing a content board to advise it on a wide range of content issues as

they affect viewers, listeners and citizens, predominantly dealing with broadcasting

but also responsible for the development of media literacy,

y Establishing a consumer Panel to advise and assist it and to represent and

protect consumer interests,

y Exercising concurrent powers under the Competition Act 1998 and the

Enterprise Act 2002 across the whole of the communications sector (Including

broadcasting),

y Establishing procedures for appeal of decisions relating to networks and

services and rights of use of spectrum.

31ibid32Professor Nicholas Garnham "Convergence between telecommunications and audiovisual: consequences for

the rules governing the information market" Regulatory Issues, European Commission - Legal Advisory Board -

Brussels, 30 April 199633Thomas Crane "OFCOM - A New Order for Communications regulation or a Bureaucratic Nightmare" C.T.L.R

2003, 9 (2), 3934 http://www.ofcom.org.uk


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In essence therefore Ofcom shall be responsible for: -

y Furthering the interests of consumers in relevant markets,

y Securing the optimal use of radio spectrum,

y

y Ensuring that a wide range of television and radio services are available in the

United Kingdom, comprising of high quality services of broad appeal,

y Protecting the public from any offensive or potentially harmful effects of

broadcast media and safeguarding the public from being unfairly treated in

television and radio programmes,

y Promoting competition,

y Securing a wide range of TV and radio services both of high quality and

calculated to appeal to a variety of tastes and interests.

OFCOM's duties are not prioritised and in carrying out its functions OFCOM will have to

balance the respective importance of each duty in individual cases. Where OFOCM has

specific duties under the European Directives these will take precedence in the event ofconflict.35 OFCOM will roll back regulation by adoption of "light touch" regulation and as

sector specific regulation is rolled back; OFCOM will be able to rely increasingly on

general competition powers.

The new converged regulator will exercise its powers by reference to a set of fixed

principles which will be consistently applied, whatever the particular segment of the

sector the company in question operates in.36 OFCOM will also bear the task of ensuring

that in such a diverse sector key decisions are determined rather than avoided as has

been seen to be the case with Oftel.37

As clearly portrayed above, OFCOM has an immense task ahead of it; however there is

evidence to show that OFCOM will do a better job at the task as a converged regulatoryauthority in a converged communications market than a multitude of regulators

attempting to regulate various industries independently in the age of convergence. The

said evidence is embodied in the advantages of converged regulatory authorities

outlined below.

The Advantages of converged regulatory authorities

The key advantages of converged regulatory authorities include the following38:-

y Converged regulatory authorities reduce the risk of "industry capture" because the

creation of a regulator with responsibility for more than one sector can help avoid

the rule-making process being captured by industry specific groups,

y Regulation by way of converged regulatory authorities reduces the risk of

political capture because a regulator with responsibility for more than one sector will

35Graeme Maguire and Jason Romer "An Overview of the Draft United Kingdom Communications Bill" C.T.L.R

2002, 8(6) 13936 ibid.37 ibid38Schwartz. T and Satola. D (2000), "Telecommunications legislation in transitional and developing economies"

World Bank Technical paper No.489, Washington D.C.: The World Bank Group at

http://global011.worldbank.org/site/products.nsg


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be more independent of the relevant Minister. The broader range of entities

regulated by such a regulator will be more likely to resist political interference in a

decision on, say, price regulation in one sector since that could set a precedent for

the others,

y Converged regulatory authorities ensure an effective means of dealing with the

bundled provision of services (e.g.) provision of both telecoms and cable

television by the same company) and with the co-ordination requirements

between sectors (e.g.) where companies from different sectors all need to dig up

the same roads to construct their networks,

y Where regulation is merged through the converged regulatory bodies, there is the

creation of more precedents and therefore less uncertainty, for investors because a

decision by the regulator in relation to one sector on a regulatory issue common to

other sectors (e.g. the application of price cap regulation or cost accounting rules)will set a precedent that is valuable to potential investors in other sectors,

y Under a converged regulatory basis, there is the transfer of know how between

regulators responsible for different sectors,

y Converged regulatory authorities ensure effective means of dealing with

converging sectors (e.g.) telecoms and broadcasting where it is increasingly difficult

to decide which services should be classified as telecoms services and which should

be classified as broadcasting services such as video on demand, or telecoms and

posts such as e-mail and fax re-mailing,

y During peak load periods, converged regulatory approaches can ensure

flexibility such as periodic price reviews, where intensive regulatory expertise is

needed which may spread across sectors,

y Converged regulatory authorities lead to economies of scale in by using one set of

high calibre professionals (e.g. economists, lawyers, financial analysts). Sucheconomies are particularly important during the early stages of liberalisation and

privatisation.

y In cases where there is no converged regulatory authority there are too many

regulators, creating uncertainty about regulators powers, too much duplication and

a lack of transparent and accountable regulation,39

y Converged regulatory authorities could lead to the elimination of unnecessary

redundancy, save on agency resources, reduce jurisdictional conflicts and possibly

lead to lower rates as a result of simplified regulation of the industries40.

In answering the question whether converged regulatory authorities are the optimal way

forward for the regulation of the communications sector, it is vital to highlight the

advantages of converged regulatory authorities and also look at the disadvantages ofconverged regulatory authorities, in order to unmistakably illustrate that converged

regulatory authorities will bring more benefit than loss to the communications sector and

are therefore the optimal way forward for the regulation of the communications sector.

39 See Jeremy Landau "The Future of Broadcasting and Telecommunications in the United Kingdom" C.T.L.R.

1997,3 (4) at pg.14840See Lehr William and Thomas Kiessling "Telecommunication Regulation in the United States and Europe: The

Case for Centralised Authority" in Competition, Regulation and Convergence: Trends in Telecommunications

Policy Research, S.E. Gillett and I.Vogelsang (Eds), Lawrence Erlbaum Associates: Mahwah, NJ, 1999


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Disadvantages of Converged Regulatory Authorities

The key disadvantages of Converged Regulatory Authorities include the following41: -

y They increase the risk of industry capture by a dominant industry player not only ofthe single sector regulatorbut of the entire regulatory body,

y Converged regulatory authorities, increase the risk of political capture by a

dominant ministry of not only the single sector regulator but of the entire

regulatory body,

y They increase the risk that a precedent set in relation to one sector could be

applied inappropriately in another sector (although this can be mitigated by

creating strong sector departments underneath a central cross sectoral

decision making body),

y Converged regulatory authorities can lead to the dilution of sector specific

technical expertise required where, for example, the skills of a tariff expert for one

sector are not transferable to similar tariff issues in another sector, for example, of a

frequency engineer,y Failure by the regulator in one sector can cascade to other sectors,

y Converged regulatory authorities experience difficulty in achieving acceptance by

relevant line Ministries of the concept of having a converged regulatory authority,

and subsequent difficulty in achieving consensus from the relevant line ministries on

the type of converged regulatory authority to be established.

y Converged regulatory authorities have greater complexity in establishing the legal

framework including the level of independence and allocation of functions as

between the Minister and the regulator,

y Merging existing regulatory agencies may be problematic.

PART IV: CONCLUSION

As outlined by the disadvantages of converged regulatory authorities in Part III, it is

evident that the practical effects of seeking to regulate quite diverse industries using the

same principles is a daunting task, however since the traditionally distinct industries have

begun to merge making it arbitrary to designate individual operators and/or services as

falling in one category or another and it will also become unsustainable to designate

infrastructure to a particular service the communications sector has no choice but to

ensure the collision of regulation, cross their fingers and hope for the very best.

In the final analysis therefore it is right to asset that converged regulatory authorities are

the optimal way forward for the regulation of the communications sector.

41 ibid


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