Telecommunications regulations have always played a key role in the business environment. Today, regulation touches all aspects of the business, from networks and technology to marketing, legal and finance. Certainly, governments need to protect consumers from monopolies and discriminatory practices. Good communications are key to the quality of life and regional development, so in many ways, it is essential that states and transnational bodies have some stake in the market.
However, telecoms are also a key sector for innovation. Many services provided by the industry have a significant impact on international and regional development, stimulating the economy and enabling new services. The industry needs to work with regulators to ensure that new technology can succeed. In this article, we discuss how business can navigate telecoms regulations to maximise advantages for all stakeholders.
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Why telecommunications regulations are so extensive
Telecoms are regulated to some degree in every country in the world. This is because it’s generally accepted that leaving telecommunication networks entirely to market forces could lead to poor outcomes. For instance, regulators may need to act to ensure that the market delivers:
- Industry investment levels
- Service quality and innovation
- Customer service
- Availability of service in all areas and to all groups in society.
As an example, telecommunications regulations often stop some customers getting unfair priority over others. Imagine a scenario where selected subscribers have better access to telephone lines; this could mean that less favoured users may have limited access to essential communications such as emergency services. Laws and regulations have been put in place to prevent this kind of discrimination, to ensure that as far as possible all members of society have free and equal access to communications, which play an essential role in economic, social and cultural life.
Challenges balancing innovation and regulation
However, not all discrimination is bad. Introducing a new service in all areas at once might give rise to an unsustainable level of risk. Telecoms businesses need to be encouraged to develop and trial new technologies and products unimpeded. Therefore, regulators must strike a balance between setting rules that encourage competition and intervening in the market where it has failed – for instance, regulators can lower prices or impose coverage obligations where they think competition is insufficient, but this might itself discourage new competitors from entering the market.
Advocating for mutually beneficial regulation is a complex task, which means representatives from operators and regulators have to collaborate closely to arrive at workable solutions. That said, they are still likely to encounter substantial roadblocks, namely differing company interests, lengthy consultation processes, and legal challenges. These points are expanded on below:
Conflicting interests between telecoms companies
A significant challenge arises due to the enormously varying nature of many communications providers. Different operators may have very different goals. For instance, smaller operators are more likely to favour initiatives such as number portability that make it easier for customers to move, whereas larger operators may benefit from initiatives to subsidise roll out of new services and technologies in under-served areas. Thus, it’s challenging for the industry to present a unified front to advocate for a regulatory environment that fosters technological advancement.
Complex consultation processes
Moreover, regulatory projects can be quite complex and slow-moving. One reason is that generally, if not by law then by good practice, any significant change to the regulatory regime is subject to a process of consultation. In some cases, a new policy may require several stages of consultation, including amended proposals, detailed implementation arrangements and so forth. Where significant technical and process complexities are involved, it may be necessary to set up an industry working group with representation from operators and regulators.
Furthermore, even after a rigorous consultation process, regulatory decisions may still be subject to further legal challenges. Obviously, this results in further delays, and can make the process more adversarial. The availability and scope of legal challenges can vary quite widely from one country to another. In countries such as the UK, and most EU countries, where the telecommunications regulator works alongside a general competition authority, there is likely to be more opportunity for operators to appeal regulatory decisions.
Considering the roadblocks discussed above, it can be a daunting task for operators to engage effectively with policymakers. However, it is essential that industry advocates and regulatory affairs professionals manage links between companies and legislators. Most importantly, these representatives must promote their organisation’s interests within the regulator’s frame of reference, which is all about consumer and citizen welfare. This is a difficult translation to make: communicating how an operator’s and the consumer’s interests intersect is complex. This is where many operators fail to make compelling arguments to regulators. However, the link between innovation, service, and economic development should always be at the forefront of the discussion.
Creating a productive relationship between regulator and operator
Telecommunications regulations are a complex aspect of corporate affairs.
Regulators have duties to protect consumers and promote investment – and with good reason. Communications are key to regional and international economic growth and free and equal access to networks is essential to participation in modern life. There is plenty of opportunity for common ground here between operators and regulators; maintaining a high-functioning network is in everybody’s interest.
Therefore, when advocating for reform in telecommunications regulations, operators have to make a strong case for innovation. Although there are certainly challenges – consultations and amendments will inevitably make the process sluggish, whereas innovation thrives in more agile environments – if operators do this effectively, they can influence a vital part of their business environment and deliver a valuable competitive advantage in the process.