Effective regulation

Photo: Avaya (010045)

World regulators develop action plan to promote regulatory effectiveness and independence

Regulators are quickly emerging as one of the most important players in today’s telecommunication landscape. They are called upon to make key decisions on a range of issues including market entry, interconnection terms and conditions, end-user tariffs and quality of service standards. Regulators’ decisions not only affect the bottom line for ITU Sector Members, but also provide the bedrock upon which rest ITU initiatives targeted at bridging the digital divide. Competition can help to spread new information and communication technology (ICT) networks and services to a greater segment of the population.

But competition cannot, by itself, achieve all social or economic goals ICTs promise to attain. Regulators are needed to send the signal that markets are safe for investment. They must also take an active role to ensure that vital building blocks of competition, such as interconnection and resale, are provided in a fair and transparent fashion. At the same time, regulators must develop enforceable universal service programmes that bring networks and affordable services to rural and urban populations alike.

Because of the growing importance of regulatory bodies, the ITU Telecommunication Development Bureau (BDT) hosted the second annual Global Symposium for Regulators (GSR) in Geneva from 3 to 5 December 2001. The symposium was chaired by Anthony S.K. Wong, Director-General of Telecommunications at the Office of the Telecommunications Authority (OFTA) in the Special Administrative Region of Hong Kong (China). GSR’s success has ensured that it will become an annual event. Some 369 delegates from 102 ITU Member States, including 72 national regulatory authorities from around the globe attended the event.

Among the participants were Michael Powell, Chairman of the United States Federal Communications Commission (FCC), the world’s oldest regulatory body; Jamil Mulla, Governor of Saudi Communications Commission, one of the world’s newest regulatory bodies; heads of regulatory authorities from sparsely populated countries, for example Phillip Aeava, Director General of the Papua New Guinea Telecommunications Authority; as well as regulators from densely populated countries, for example Maya Shanker Verma, Chairman of the Telecommunications Regulatory Authority of India (TRAI).

Leaders from some 55 regulatory authorities, including Australia, Brazil, Botswana, Costa Rica, Denmark, France, Jordan, the Republic of Korea, Norway, the Philippines, Switzerland, and Uganda, also took time from their busy schedules to participate in the symposium. Many countries in the process of establishing regulatory bodies, such as Latvia whose law was passed on 1 December 2001, were also represented. These ITU Member States not only had the opportunity to share views and experiences with their counterparts who have already created a regulatory body, but also heard the views of leading regulatory experts, including William Wigglesworth, Joint Director of the International Institute for Regulators in Telecommunications at Westminster University; Eli Noam, Director of the Columbia University Institute for Tele-Information and Hank Intven, Editor of the Telecommunications Regulation Handbook.

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ITU highlighted the regulatory expertise and resources of the BDT Sector Reform Unit, including its five case studies on effective regulation. In addition, GSR attracted international and regional organizations including the World Trade Organization, the European Commission and the Commonwealth Telecommunications Organization, as well as regional regulatory associations such as the Latin American Forum for Telecommunication Regulatory Entities (REGULATEL) and the Telecommunication Regulators Association of Southern Africa (TRASA).

As a global gathering of regulators and regulatory experts, GSR fills a need among the ITU membership that had gone unmet for years. It has been described by many participants as “the only global venue to foster a free and frank dialogue among regulators”.

GSR was held during a time of growing challenges for the telecommunication sector, generated by the current market downturn and the evolution of the telecommunication market into the convergent ICT sector. As BDT Director, Hamadoun I. Touré, said at the opening ceremony, “the ICT sector is seen not only as an economic engine, but also an enabler of social, educational and medical progress. The importance of access to ICT systems has grown accordingly. It is for this reason that national and international policy-makers are harnessing their energy to transform the digital divide into a digital opportunity. Initiatives aimed at providing universal service and bridging the digital divide form the core of the BDT mandate. Perhaps the most fundamental task of ICT sector reform is to establish an effective and transparent regulatory authority.”

“Regulators are enablers and facilitators,” Mr Wong noted during the opening ceremony. “It is not enough merely to create a regulatory body; they must be given the tools needed to develop as effective regulators,” the GSR Chairman added.

It is for this reason that “Effective regulation” was chosen as the theme of the symposium. Key issues such as staffing and financing regulatory bodies, the regulator’s mandate, sanctions power and transparency in the decision-making process were discussed throughout the meeting. These issues were explored at a session dedicated to the five case studies on regulatory effectiveness and independence conducted by BDT in Botswana, Brazil, Morocco, Peru and Singapore (www.itu.int/ITU-D/treg/ ). Summaries of the Morocco, Botswana and Brazil case studies were featured in the October, November and December 2001 issues of “ITU News”, respectively.

Effective regulation was also the focus of discussion at another session, where authors of the forthcoming edition of Trends in Telecommunication Reform 2002: Effective Regulation shared their findings with a series of distinguished panelists. The 2002 Trends report will be released on the occasion of the ITU World Telecommunication Development Conference (WTDC-02) to be held in Istanbul (Turkey) from 18 to 27 March 2002.

GSR participants agreed that recruiting, training and utilizing qualified staff is perhaps the most critical part of the process of establishing an effective regulatory authority. Regulatory bodies, such as the Botswana Telecommunications Authority (BTA), emphasized training as their lifeline.

Likewise, empowering a regulatory body to finance its own operations, through the collection and retention of licensing fees, not only ensures that the agency has sufficient funds to fulfil its mandate, but also insulates it from the kind of political influence that often accompanies government appropriations. Regulators also emphasized the importance of financing measures that balance independence from political influence with the goals of fostering competition and meeting universal service goals. Regulators repeatedly identified consumer protection as one of their most important mandates.

The symposium also discussed the institutional framework necessary to establish an effective regulatory body, and agreed that transparency in the decision-making process is one of the most important hallmarks of effective regulation. Regulators who obtain information from the regulated industry and other interested parties can make decisions based on all relevant facts and diverse views. Transparency further affects regulatory certainty, reliability, accountability, independence and continuity. The symposium included an in-depth discussion of regulatory powers and functions, such as rule-making and enforcement, focusing on regulatory monitoring, investigations, sanctions and dispute resolution.

At least 112 of the 189 ITU Member States have established a regulatory authority. These regulators seek concrete tools to enable them to become more effective. In addition to providing a venue for regulators to meet and exchange views and experiences, GSR developed a four-point action plan of recommendations to BDT to further develop its range of products and services targeted to regulators. In particular, BDT is to:

• Focus on skills training for regulators.
• Conduct studies to develop regulatory benchmarks and models.
• Bolster regional and sub-regional regulatory initiatives.
• Broaden input into its regulatory activities from academics, consultants and other experts.

The symposium also came up with recommendations to further develop the Global Regulators’ Exchange (G-REX), the hot line for global dialogue on regulatory issues. G-REX is an on-line forum for regulators and policy-makers launched by BDT in May 2001 in response to the recommendations of the first global gathering of regulators held in November 2000. G-REX currently includes nine conferences on pressing regulatory issues (see the July-August 2001 issue of ITU News, pp 37-40).

Participants praised the hot line for its success, and recommended that the conferences be developed to mirror the hot line’s result-oriented approach. These conferences will be used to develop benchmarks and models on key regulatory issues such as interconnection and universal service, creating a database of regulatory rulings, decisions, license agreements and other regulatory instruments.

The next GSR will be held in the autumn of 2002.