Study: Customers suffer where regulators are weak

Customers pay more and are offered fewer telecommunications services in European countries where regulators have done a poor job of weakening former monopolies, according to a report commissioned by the European Competitive Telecommunications Association and released on Friday.

The report, conducted by Jones Day and Strategy and Policy Consultants Network Ltd., showed that investment in telecommunications, which leads to better services for end users, is lower in countries where there is little competition. For example, in the U.K., where the study found that the regulator is independent and has created effective regulations, telecommunications companies invest US$184 per capita. By contrast, in Germany, which tied with Greece as having the least effective regulatory environment, operators spend just $68 per capita. The incumbent has maintained a strong grip on the German market.

The report, which examined 16 countries, found that most regulators appear to be independent of the incumbent and the government. However, it concludes that state ownership in the incumbent, which occurs in Belgium, Germany, Greece, France and Portugal, presents a potential conflict of interest. Germany was singled out as a country where political interference in the regulatory environment is a concern.

Some regulators might do a better job if they could increase the fines they can hand out to operators that may break regulations, the report noted. The lack of effective fines is particularly problematic in Ireland, Hungary and Italy, the report found.

The report includes a scorecard that ranks countries by the effectiveness of their regulator. It was developed through a questionnaire that considered factors such as independence of the regulator, speed of the appeals process, speed of dispute settlement and existence of rules relating to price control and access. The U.K. received the best score, followed by Denmark, France and Austria. Germany and Greece tied for last place, with Poland and the Czech Republic scoring slightly better.