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Telecoms regulation encourages investment

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The presence of strong regulators in the telecoms market encourages investment, according to a report by the European Competitive Telecommunications Association (ECTA).

The study found that annual investment in the Irish telecoms sector rose from $639m to $684m between 2003 and 2005, which the Association of Licenced Telecom Operators (ALTO) said is a result of a better performance by ComReg.

"The better the regulator performs the more investment it encourages. The introduction of regulation has been encouraging rather than discouraging to investment," Liam O'Halloran, chairman of ALTO, told ENN.

ComReg was granted extra powers by the government in February under the amended Communications Regulation bill. O'Halloran said the ECTA study proved the presence of these extra powers would be a boost to investment in telecoms.

"This report shows that, contrary to popular belief, a strong regulatory environment is integral to achieving a competitive market. All state bodies involved with the Irish telecoms sector, particularly ComReg, need to pay close attention to the findings of this study," he said.

The study was conducted by telecommunications policy consultants SPC Network. "It has long been recognised that the actions of the state, including telecoms regulators, have a significant impact on firms' incentives to invest. What this study shows, more emphatically than any study before, is that there is a direct and positive correlation between investment levels and the effective implementation of pro-competition regulation," SPC Network director Richard Cadman said.

ECTA called on the European Commission to pay heed to the survey's findings and implement stringent regulations on telecoms markets across the EU.

ECTA chairman Innocenzo Genna said: "Our message to the commission on the eve of the new Regulatory Framework is that the continued use of tough measures to enable competition is very important. In policy terms that means we need to give regulators the proper support and tools to address bottlenecks in telecoms networks including a complete list of wholesale markets that they are encouraged to review and the power to apply functional separation where necessary."

O'Halloran told ENN that a tough regulatory approach would be required until there is strong competition across European markets. "The key point at which you cut down on regulation is when you see that the market is becoming competitive. There are few markets in Europe at present where the sector is truly competitive," he said.

© 2007 ENN

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