Utility Regulation and Competition Policy

Utility Regulation and Competition Policy

Edited by Colin Robinson

In this book, the latest volume in the annual series published in association with the London Business School and the Institute of Economic Affairs, some of the main issues in UK and EU utility regulation and competition policy are discussed. Topics examined include the new electricity and gas trading markets, regulating the railways, introducing competition into water, telecoms and Ofcom, opening EU gas and electricity markets, the 1998 Competition Act, EU merger policy and a general review of privatisation and regulation in Britain. Essays by expert commentators are followed in each case by comments from the relevant regulator.

Chapter 6: Converging Communications: Implications for Regulation – Mark Armstrong, Chairman’s Comments – David Edmonds

Mark Armstrong

Subjects: economics and finance, competition policy, public finance, public sector economics


This chapter is about the current and future market for electronic communications and how it should be regulated. The word ‘convergence’ refers to the observation that the same communications services can now be supplied over a variety of transmission infrastructures, such as telephone lines, mobile networks, satellite and over-the-air broadcasting. One can now watch TV and make voice telephone calls via a PC, and one can use email via a TV (together with a telephone line). See Figures 6.1 and 6.2 for a schematic description of the old and the new order in electronic communications. Given that different regulatory bodies and regulatory regimes are typically associated with these different infrastructures, there is then the danger of asymmetries and inefficiencies emerging. Many of the existing structures are a legacy of the old era when there was a one-to-one correspondence between services and delivery systems: delivery systems could not carry a variety of services, and services could not be carried over a variety of delivery systems. (See Figure 6.1.) This made separate regulation based on delivery systems, while not necessary, at least fairly harmless.

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