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Module 6. Legal and Institutional Framework Downloaded Monday, May 14, 2012 This document is a downloadable report from the infoDev/ITU ICT Regulatory Toolkit. Please note that the version that appears on the website at www.ictregulationtoolkit.org is the most updated version and has extra functionality (e.g., links, practice notes, reference documents etc). If you find any problems, please contact [email protected]. Module 6. Legal and Institutional Framework Executive Summaries 1 Introduction 2 Why Regulate? 2.1 Evolution of Regulatory Reforms 2.2 Regulation in Transition to Competitive Market 2.3 Regulation in a Fully Competitive Environment 2.4 Benefits of Regulation 3 Legal Context of Regulatory Reform 3.1 Impact of Different Legal Traditions on the Regulatory Framework 3.1.1 Snapshot of Different Legal Traditions 3.1.2 Regulatory Frameworks in Different Legal Systems 3.1.3 Implementation of Regulatory Design 3.2 Impact of Multilateral and Regional Commitments 3.2.1 Role of the World Trade Organization 3.2.2 Regional Frameworks 3.3 Maturity of the Market - Relationship between Telecommunications Legislation and Competition Policy 3.3.1 The Evolution from Sector-Specific Regulation to Competition-Based Regulation 3.3.2 Analysis of Jurisdictional Division of Power between Competition Authorities and Regulatory Institutions 3.3.3 Practical Lessons for Developing Countries 3.4 Impact of Other Legislation 3.4.1 Tax Law 3.4.2 Foreign Ownership 3.4.3 Consumer Protection Law 3.4.4 Spam Legislation 3.4.5 Property Law 4 Impact of Convergence 4.1 What is Convergence? 4.2 Different Approaches in Implementing ICT Regulation 4.2.1 Legislative Approach 4.2.2 Regulatory Approach 4.2.3 Self-Regulation Process 4.3 Modifications to Telecommunications Legislation to Address Convergence 4.3.1 Licensing 4.3.2 Spectrum 4.3.3 Interconnection 4.3.4 Numbering 4.3.5 Universal Service 4.4 Modification to Broadcasting and ICT Legislation to Address Convergence 4.4.1 Media and Broadcasting Legislation 4.4.2 Content 4.4.3 Intellectual Property Laws 4.4.4 Data Protection/Privacy Laws 4.5 Case Studies of Converged Legislation 4.5.1 European Union New Regulatory Framework (NRF) 4.5.2 Hong Kong (SAR) 4.5.3 Malaysia 5 Elements for an Effective Regulator 5.1 What Constitutes an Effective Regulator? 5.1.1 Structural Independence 5.1.2 Financial Independence 5.1.3 Functionality 6 Organizational and Institutional Approaches To Regulation 6.1 Institutional Design Options 6.1.1 Overview and Comparison of Different Institutional Designs 6.1.2 Overview and Comparison of Different Organizational and Administrative Structures 6.2 Administrative Structures: Staffing and Remuneration 6.2.1 Staffing Process 6.2.2 Staffing Design 6.2.3 Job Descriptions 6.2.4 Remuneration Principles 6.2.5 Contracting of Consultants 6.3 Separation of Power and Relationship of Regulator with Other Entities 6.3.1 Relationships with Other Entities 6.3.2 Checks and Balances/Balance of Power/Separation of Power 6.4 Legal Status of Regulatory Authorities 6.4.1 Corporate Body vs. Administrative Body 6.4.2 Judicial Capacity of the Institutional Arrangements 6.5 Ethics Rules and Conflicts of Interest 6.5.1 Acceptance of Gifts 6.5.2 Personal and Financial Conflicts of Interest 6.5.3 Post-employment Prospects 7 Functional Aspects of Regulation 7.1 Overview of Regulator’s Competencies and Mandate 7.1.1 Rulemaking Function 7.1.2 Oversight Function 7.1.3 Licensing 7.1.4 Competition Policy and Competitive Safeguards 7.1.5 Tariff Regulation 7.1.6 Interconnection 7.1.7 Quality of Service – Regulatory Roles and Responsibilities 7.1.8 Consumer Protection 7.1.9 Establishment and Management of Universal Service Funds 7.2 Decision-making Process and Consultation Framework 7.2.1 Overview of the Public Consultation Process 7.2.2 Media Relations 7.2.3 Brief Summary 7.3 Accountability of Regulators and Consumer Protection 7.3.1 Accountability of Regulators 7.3.2 Accountability for Consumers 7.4 Dispute Resolution and Enforcement 7.4.1 Dispute Resolution 7.4.2 Enforcement Module 6. Legal and Institutional Framework The telecommunications sector has undergone extensive changes in recent decades, from a monopoly structure to one of competition, motivated by the evolution of new technologies and services, the growing importance of telecommunications for national economies and the development of international trade in telecommunications services. This module provides an analysis of how countries have undertaken regulatory reform to adapt to these changes, and explores the legal and institutional framework necessary for effective regulation. The module is organized in seven chapters: 1. Introduction The Introduction provides a roadmap of the study and an overview of the objectives of the module. 2. Why Regulate? This Chapter briefly discusses the need for regulation to ensure the market transition from monopoly to competition and to safeguard the public interest. 3. Legal Context of Regulatory Reform This Chapter provides an overview different factors that may impact regulation, such as: (i) the different legal and cultural traditions of each country; (ii) the national and international commitments undertaken by the government; (iii) the impact of other legislation that impact the sector; and (iv) level of maturity of the market. 4. Impact of Convergence This Chapter examines the impact of convergence on regulation of the sector, analyzing how regulators have responded to convergence with more flexible and streamlined regulatory frameworks and how ICT related laws have impacted the sector. 5. Elements for an Effective Regulator The objective of this Chapter is to identify what it means to be an effective regulator, and the different dimensions of effectiveness, including structural and financial independence and functionality. 6. Organizational and Institutional Approaches to Regulation This Chapter provides a detailed analysis of the organizational and institutional approaches to regulation, and discusses institutional design options, the separation of power and relationship of the regulator with other entities, the legal status of regulators, their funding process, staffing procedures and ethical conduct. 7. Functional Aspects of Regulation This Chapter provides an analysis and overview of the regulator's competencies, mandate and regulatory procedures, including decision- making procedures, accountability of regulatory activities, and dispute resolution and enforcement procedures. SEE ALSO: Legal and Institutional Aspects of Regulation: Executive Summary Executive Summaries Module 6. Legal and Institutional Framework Executive Summary (English) Executive Summary (French) Executive Summary (Spanish) Executive Summary (Russian) Executive Summary (Chinese) Executive Summary (Arabic) 1 Introduction The telecommunications sector has undergone extensive changes in recent years. Many state-owned operators were privatized and the sector experienced a trend of liberalization worldwide, motivated by the evolution of new technologies and services, the growing importance of telecommunications for national economies and the development of international trade in telecommunications services. As a result, in most countries, the telecommunications sector has experienced a fundamental change in structure, from that of monopoly to competition. Following the period of growth in the telecommunications industry in the late 1990s, the “dot com bubble” burst at the beginning of the 21st century, resulting in a steep drop in stock market value for major operators. The crisis in the telecommunications market affected numerous companies, but did not deter the development of new technologies and the evolution of the information and communications technology (ICT) sector. In order to adapt to these new developments, countries have been undertaking a review of their existing frameworks, enacting new legislation and creating new regulatory authorities to implement the legal and regulatory framework. Such a framework is essential for the sector, particularly as countries move from state control to market competition, and is necessary to attract new entrants as well as private investment. Based on analysis of legal and regulatory frameworks worldwide, studies conducted by industry experts and institutions such as the World Bank, and information collected by the International Telecommunication Union, this report provides an update of the 2000 Telecommunications Regulation Handbook published by infoDev. It serves as a best practice toolkit for regulators and policymakers in the context of the current ICT environment. The importance of conducting this study is evidenced by the significance of the legal and regulatory framework as an enabler of development of the sector. Effective regulation requires the implementation of a supporting legal and regulatory framework to create an environment that promotes public confidence and ensures stability, transparency, competition, investment, innovation, and growth in the sector. Many of the laws, regulations, and best practice examples examined in this study address the fundamental change in the telecommunications industry from that of monopoly to competition and its evolution within the ICT sector, and provide guidelines for effective regulation for competition. However, while the toolkit highlights best practices for effective regulation, it is important to realize that the implementation of such practices may vary from country to country, requiring consideration of local political, economic,
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