Regulators’ Decision Function

Telecom companies lash out at EU fiber proposal
(Click image for full article)

Reading this news piece got me thinking: What is the best, single point decision function for regulators?

  • maximise consumer benefit,
  • maximise domestic employment and investment opportunities, or
  • help develop national champions who can grow and compete globally

Each has its pros and cons, and they all tend to be in conflict with each other.

Currently most regulators, like the one in news above, seem to prioritise consumer benefit, followed by local investment and employment opportunities wherever possible.

But, is that the best option? If not, which one of the above should a regulator chose to maximise? (Or, in what order should a regulator prioritise them?)

In my understanding, the answer might depend on two factors – the size and maturity of domestic market.

A small, ill-connected country like Bangladesh might prefer domestic investment and connectivity over anything else but a small and already well-connected country like South Korea might want to assist its national champions into expanding abroad. Then again, given the speed of technology in an industry like telecom, the maturity level of a market might change quickly – Europe was ahead of the curve with its 3G deployment but is behind the curve in 4G and fibre broadband deployment. In such a scenario, should they support firms like T-mobile and Telefonica to capture fast growing markets abroad (even at slight detriment to local consumers, who would suffer due to lack of new capital employment) or force them to cater to local consumers and investment even if it means losing better returns abroad?

P.S.: In my very personal opinion, regulators of a large markets like Europe, US, India and China should always cater to customers first – the scale of markets they govern ensures the telecom firms cannot afford to abandon them almost irrespective of the regulations levied.

P.P.S.: Specifically in view of recent controversies in India related to telecom regulation: For any market, fast-changing, often contradictory, biased regulatory changes can dampen the investment momentum far more than onerous, customer favouring regulation.

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