Utility Regulation in Competitive Markets

Utility Regulation in Competitive Markets

Problems and Progress

Edited by Colin Robinson

This significant new volume contains incisive chapters on a number of prominent concerns, including changes in the British system of utility regulation, the spectrum allocation question, liberalisation of EU energy markets, security of supply issues, reform in the European postal sector, the future of rail regulation, the cost of capital and Ofcom’s strategic approach to regulation. Chapters on each topic are followed by comments from regulators, competition authority chairmen and other experts in the relevant fields. By confronting the most important international developments in utility regulation, the authors offer practical policy recommendations for an effective way forward.

Chapter 8: A strategic approach to the economic regulation of spectrum, telecoms and broadcasting

Ed Richards

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


Ed Richards P I INTRODUCTION In talking about our strategic approach to regulation of spectrum, telecoms and broadcasting, I shall cover four main areas: ● ● ● ● consider Ofcom’s general approach to economic regulation;1 review some of our key regulatory actions from an economic perspective; set these in the context of an underlying approach to economic regulation; and conclude by identifying some challenges which still remain and which we shall have to address in consultation with others in the near future. OFCOM’S GENERAL APPROACH In an article written by Michael Beesley, who gave his name to this important annual series of lectures on regulation,2 I came across a succinct and valuable summary of the core tasks of regulation as Michael saw them. With his co-author, Stephen Littlechild, he placed promoting competition at the heart of a regulators’ purpose: Promoting competition involves facilitating the entry of new competitors, including the entry of existing competitors into new parts of the market. To do this effectively involves three main steps. The first is to assess the likely pattern of entry over the foreseeable future. This will require a prediction of likely changes in technological and market conditions, since these will often provide the necessary opportunities for market entry. 205 206 Utility regulation in competitive markets The second step is to identify decisions that the regulator himself can make in order to change the regulatory framework and to assess the likely impact of these changes on the future pattern of entry. Examples of these...

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