NIC Open Future of Regulation Study into UK Telecoms and Utilities

The Government’s National Infrastructure Commission has today announced the launch of yet another study, which is seeking evidence on what “future changes” may be required to ensure regulation of the energy, telecoms (broadband and mobile) and water industries supports investment and innovation.

At this point some of our readers might be forgiven for getting a sense of deja vu from this announcement, particularly since there have been quite a few Government linked reviews and papers into UK telecoms regulation and investment over the past few years. The most recent one resulted in last year’s Future Telecoms Infrastructure Review (FTIR), as well as Ofcom’s related regulatory proposals (here).

Since then the NIC has published an assessment of the UK’s long-term infrastructure needs (here), which largely echoed the FTIR goals. The commission are also in the process of examining market regulation for the next 30 years or so (here) and the language suggests that today’s Call for Evidence may form a part of that on-going work.

As usual the core aim on the telecoms side is likely to focus on what changes can be made to help boost investment and support for future 5G mobile and “full fibre” (FTTP) ultrafast broadband ISP networks, albeit while also “keeping costs down for consumers.”

Chancellor Philip Hammond said:

“Our regulators play a key role in ensuring the framework underpinning our vital telecoms, energy and water services remains agile and innovative, delivering for consumers and giving the UK a competitive edge.

Technological change is having a transformative effect across the economy and regulators must be able to respond to keep the UK at the forefront of these advances.

That’s why I’ve asked the National Infrastructure Commission to look at how our regulators can prepare for and adapt to this change. Their findings will be key in helping ensure we rise to these challenges and remain fit for the future.”

Sir John Armitt, Chairman of the NIC, said:

“From turning on a TV to turning on a tap, all of us rely on our energy, telecoms and water industries for basic everyday activities.

Regulators are therefore a vital part of ensuring we are treated fairly by these essential service providers, and that vulnerable customers get the support they need. But their work should also encourage investment and innovation which will benefit households and businesses alike for the long term.

Whether it’s companies or regulators, consumers or investors, we want to hear how the current system of regulation is working, and what a future framework may look like to deliver both good quality services, and world-class infrastructure.”

We hope that any recommendations will go beyond the ground that has already been covered by the FTIR, such as to more fully consider the arguments for extending the current business rates holiday on new fibre and how to tackle the retirement of copper lines in favour of fibre optic ones.

Equally the report will no doubt need to be mindful of the Government’s new Statement of Strategic Priorities (SSP) for UK mobile and broadband services, which were unveiled at the end of last week (here). Otherwise the deadline for submissions is 12th April 2019 and you can see what questions it will ask below.

Competition and innovation
4. How have the energy, water and telecoms sectors performed with respect to efficiency, since privatisation?

5. How has competition impacted on investment, innovation and outcomes for consumers across energy, water and telecoms since privatisation?

6. How has regulation affected the level of innovation in energy, water and telecoms, compared to these utilities in other countries and/or other comparable industries?

7. When has regulation been too slow to adapt to changing market circumstances and what have been the consequences for consumers and investors?

Regulatory consistency
8. Where could regulators work together more consistently to meet future challenges, achieve efficiencies within the regulatory system or to promote better outcomes for consumers, investors or society?

9. What changes to the existing regulatory framework would be necessary to promote greater collaboration and regulatory consistency? Are there functions that might better be provided on a multi-utility basis without the need for wider organisational change?

10. What is the case for or against a multi-utility regulator covering energy, digital and water?

Policy and regulation
11. Is the traditional role of economic regulation, to mimic the outcome of a competitive market, sufficient to ensure future investment and to meet the needs of current and future consumers, and if not, how might this role need to change?

12. What should be the boundary between government setting policy and strategic direction and independent regulation in these sectors? Do the existing duties and functions of regulators need to be adjusted to reflect this?

13. Has there been a lack of clarity over strategic goals? What is the cause of this and what has been the impact on investment?

14. Are the government’s principles for economic regulation* – accountability, focus, predictability, coherence, adaptability and efficiency – fit for purpose; and if not, how should they change?

15. How can regulators act in the future to support public trust in the regulatory system for water, energy and telecoms?