Just back from yet another extended break and my first
conundrum is the regulatory view of the competitive process. Let me explain….
The first thing that comes to my attention is the latest
broadband pronouncement from Neelie Kroes on how she sees the promotion of
competition – in
her words, “to reward those who relentlessly
focus on consumer needs”. Isn’t there a
danger that this consumer-centric idea might actually distort the competitive
process? Take, for example, the
decision by European regulators to favour service competition, rather than
infrastructure competition, in the latter part of the 20th
century. This certainly promoted market
entry, and was presumably aimed at meeting consumer needs, but how sustainable
was the competition it spawned?
According to ECTA's recent pronouncement, such competition can be remarkably fragile: “It is time for a wake-up call. The liberalisation
experiment which Europe began in the late 1990s is close to failing because
regulatory rules are not supporting the business case for even leading telecoms
competitors.”
So continued regulation is necessary to
support the competitive process… Is that really a step forward for ‘consumer
needs’? By
contrast, let’s look at Ofcom’s proposal to vary one of the mobile operator’s
spectrum licences in order for it to deploy LTE and WiMAX technologies. Surely a ‘slam-dunk’ for consumers…? In reality, however, the licence variation
might tilt the competitive playing field in a number of important ways – so
much so that a competitor
has argued:
“This is an extraordinary step for a National
Regulatory Authority to take, given its duty to promote competition…Any such
proposal must raise prima facie competition concerns...”
Without reaching judgement on that particular
issue, it demonstrates that the pursuit of competition in telecoms markets is a
far more complex challenge than the simple maximisation of consumer needs.
