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From Public to Private: The Relentless Rise of the Independent Regulator

08.11.2019
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1981: The Institute in Peril

The IIC had enjoyed some golden years during the 1970s, supported by generous grants from the Ford Foundation and others. But by the early 1980s the Institute faced a crisis. Funding had dried up, research had dwindled and the IIC found itself struggling for an identity in a world, described by a member at the time, as ‘stiff with consultants, research institutes, university media departments, in-company corporate planning departments and recently-fired industry executives, all proclaiming their expertise in what had been the IIC’s near-exclusive territory’. All the IIC really had left was its international network of experts, policymakers and academics and a great deal of good will.

As it turned out, this was enough.

The Data Economy Looms

It is surprising to reflect on how, as recently as the 1960s, telephony was regarded not as tool of industrial and social development, but a useful public service, not dissimilar to water and sewerage. It was held to have little significance to the wider economy, and was generally provided by departments of state as a direct government service. In the United States telephony was run by a private sector monopoly (AT&T), but under strict regulation. In the 1970s, with the emergence of technologies such as packet-switching and the Ethernet, came a broader interest in the potential of data communications. The response was a public mandate for universal access. By the end of the ‘70s the telephone was an everyday tool for consumers in developed countries, but it was still essentially a national asset constrained by national borders, with limited services and types of equipment provided by monopoly regimes. Much of this mentality continued for a long time. It was with the digitisation of telephony, and with it the far-reaching possibilities of computerisation, that a market-orientated approach to telecoms came in to favour.

The New Landscape Emerges

The demands of globalising businesses meant that the old monopolistic state models were simply too slow and inflexible. Change was inevitable and, with eyes cast across the Atlantic, a new model based on liberalised markets, reduced state ownership and independent regulation gradually emerged, though it wasn’t universally well-received.

Liberalisation in Europe took hold first in Sweden and the UK, but the tipping point came with the privatisation of British Telecom in 1984 accompanied by the creation of an independent regulator, ‘Oftel’. By the mid-1980s the ‘information society’ was heaving into view, and understanding of both costs and opportunities associated with international telecommunications was scant.

Telecoms Goes Global

The IIC, with its global network of policymakers, academics and telecoms experts, was well-placed to provide the kind of informed analysis the industry so clearly needed. A major study was commissioned by a group of sponsors comprising policymaking bodies, commercial operators and major users, all under the auspices of the IIC.

The report: ‘From Telecommunications to Electronic Services: A Global Spectrum of Definitions, Boundary Lines, and Structures’ was published in 1985. Written by Robert Bruce, a lawyer who had worked at the FCC and an IIC member, the 600 page book was the first definitive review of telecommunications comparing the approaches and regulatory practices of countries around the world. The research was considered invaluable.

The sponsors commissioned a second, more wide-ranging report, published in 1988 as ‘The Telecoms Mosaic’ . Of even greater significance was the recognition of the rapid rate of change identified in the reports, and the value of the international co-operation and engagement between industry and policymakers that researching the reports had involved. It was considered essential that this collaboration continued and, in 1987, the inaugural IIC Telecommunications Forum was held in London, bringing together for the first time a broad spectrum of parties involved in the telecommunications industry. The IIC was once again at the centre of communications policymaking.

The Rise of the Regulator

The liberalisation in European telecommunications only went so far. With infrastructure controlled mostly by governments, there was little appetite to allow competition, in spite of EU edicts advocating, if not entirely mandating it. In mobile communications, however, rapid advances were taking place. With mobile operators well-resourced and moving into the world of 3G, the need for competition regulation and consumer protection resulted in a number of new regulatory bodies emerging, including AGCOM in Italy and ARCEP in France, both in 1997, and Germany’s Federal Network Agency (BNetzA) in 1998.

Regulators, once drawn from the ranks of civil servants, came increasingly from business and the professions.

The companies themselves needed good relationships with regulators, both to understand and where possible influence policy thinking. Compliance departments grew, and soon an international ecosystem of telecoms and media regulation took shape. The IIC had always catered for this group in the Telecoms and Media Forums, but now it became clear that the regulators themselves wanted the opportunity for more private exchanges, informally and in formal debate.

A Forum of Their Own: The International Regulators Forum

The first IIC International Regulators’ Forum was held in Malaysia in 2003. It included delegates from Asia and Africa, as well as New Zealand, Canada, the US and Europe. Then, as now, the meetings were held under the ‘Chatham House Rule’, in which opinions could be expressed safe in the knowledge that they would not be repeated outside the meeting. The subjects debated included competition policy, video over internet protocol, content regulation and digitalisation. Richard Hooper, a founding Deputy Chair of Ofcom, described how he remembered these meetings as:

the fine IIC regulatory fora and the cleverness of the IIC in bringing regulators and regulated together.

IRF meetings have been held every year since 2003. The IIC remains the only body regularly convening meetings for Telecommunications and Media regulators from every part of the world, and Regional Regulators’ Forums have followed successfully in their wake. If the story of telecommunications is one of technology and enablement, it is also the story of the rise of the independent regulator, a role which becomes ever more important in the era of digital communications, social media and convergence.

The rise of platforms and the overlapping services they provide suggests that market liberalisation may be giving way to market concentration. In response, it is competition, or ‘anti-trust’ regulation that has moved centre-stage, and will almost certainly become the defining tool of policymaking in the years ahead. As the next stage of this story unfolds, the IIC will proudly continue to play its full role as facilitator, convenor and natural home for the world’s communications regulators.

It is surprising to reflect on how, as recently as the 1960s, telephony was regarded not as tool of industrial and social development, but a useful public service, not dissimilar to water and sewerage. In 50 years of the IIC, new and reformed regulatory bodies have become the centre of communications policymaking and we've seen the rise of the independent regulator.

Theme:
Governance, Innovation and Content
Series:
IIC at 50
Governance, International Regulators' Forum, IRF, Regulation, Regulators
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