Communications services have come a long way since the early days of the fixed line phone provided by one national operator.
Since the opening of communications markets, there has been a need for regulators to intervene to ensure dominant operators, such as Europe’s fixed line incumbent companies, are unable to abuse their market power.
The focus of regulatory intervention has been to ensure competition at the retail level by setting the terms of wholesale access where insufficient infrastructure competition is observed. This approach has resulted in retail markets typically being competitive and therefore a reduction in the amount of precautionary “ex ante” regulation. However, this approach has not produced competition across the board and a number of bottlenecks still remain, therefore ex ante regulation is likely to be necessary for a number of years to come.
It should be in the mindset of regulators that strong market intervention is an inherently difficult task and an inappropriate intervention can have serious unintended consequences. This is especially true in a market as dynamic as the communications market where convergence means there is a greater risk of market power in relation to one market being leveraged to an adjacent market. Therefore, Vodafone believes regulators should seek to limit the instances of market power as a primary objective, and regulate market power as a secondary objective.
However, the removal of ex ante regulation is not an independent objective – it should be the product of a concerted policy attempt to eradicate the remaining bottlenecks that prevent competition taking root across the entire industry today. The regulatory approach that is commonly followed at present is not sufficiently ambitious in this regard in that regulation is often perceived as an acceptable long-term solution.
A better objective would be to ensure that all barriers to effective competition are removed (and not just focusing on barriers to entry) rather than engaging in detailed analysis to determine the border between ex ante regulation and ex post competition law. With a more concerted drive towards effective competition and the removal of persistent bottlenecks, the degree of ex ante regulation can be reduced and consumers will be protected by their own collective power rather than the threat of competition law.