By Gautam, Vinayshil; Sinha, Sanjay
Journal of Services Research , Vol. 2, No. 1
Globally telecommunications, has been traditionally controlled by the government, as have been most other infrastructure industries. It is true that in old days, telecom had probably been one of the most regulated industries all over the world.
However, over the past decade, there has been an explosive growth in regulatory bodies in core infrastructure industries as telecom aviation, and power throughout the world. ITU reports that there are now over 84 independent1 telecom regulatory agencies in the world as against only 10 before 1990.
Regulatory agencies may be defined as entities within the government whose primary function is channelling and directing of economic activities of firms through formulation and enforcement of rules intended to serve public interest.
It is clearly difficult to find a single rationale for regulation either in the developed or in the developing world. Regulation is essentially a means of preventing the worst excesses of monopoly and is not a substitute for competition. Actually, regulation as practised in today's world is much more than preventing monopoly and economic regulation. Research shows that the roles of a regulator today include,
* spectrum allocation (licensing methods, terms and conditions, compliance)
* regulating competition (recommending number of operators, recommending the need and timing for introduction of new service providers)
* settling disputes between operators (though looking at innumerable court cases in the last 5 years, the disputes seem to be more between operators and the regulator themselves
* ensuring technical compatibility between operators
* protecting interests of consumers of telecom services and social benefits to the economy and the industry
* regulating tariffs, terminating charges
But is there a need to regulate at all? Can't we do without a regulator? The question is difficult to answer and there are clearly scores both for and against it. However today, it seems that there is a clear global belief that emerging telecom services should not be regulated. This view is partly due to the widespread opinion that the value added services at early stages of development should not be loaded with regulatory obligations and also the growing belief that fixed telecom networks have been excessively regulated resulting in limited innovation and growth. This fact has been fairly well accepted in the last few years and thus most countries have lately been taking a liberal stand on controlling value added services like mobile telephony and internet. An ITU research2 has shown that most of countries consider the regulation of value added telecom services unwarranted. The actual regulatory model adopted has however varied significantly from country to country and also from time to time.
Today, full privatization has been quiet rare and most governments, have chosen to move gradually towards market liberalization. It is accepted that some amount of regulation is certainly needed, at least to ensure operation without frequency interference. Establishment of a fair regulator is actually critical to the success of the current wave of reforms and advent of new technologies in the new networked economy. So if a regulator is required, then how and how much to regulate becomes the burning question.
A measure of a good regulatory regime is of course the satisfaction and dissatisfaction of the telecom users themselves. This is especially true of evolving markets in Asia Pacific where the telecom evolution is just coming of age. In a telecom user survey in 1998 by Telecom Asia3 a majority of users were not satisfied and did not believe that their telecom regulators were fair and were working towards their best interests. However, a recent survey in 2000 revealed completely contrary views. The trend was clearly positive. More than 60% of the telecom users in Asia Pacific seemed satisfied with the efforts of their regulator in the last two years towards their efforts to address user issues and needs. …