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Feb 24 2016

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From single to multiple: a changing trend in utility regulation in the Caribbean

A few Caribbean countries plan to move from single utility regulator to a multi-utility single regulator. Some pros and cons of that proposed move are discussed.

Light Water Phone House Icons by David Castillo Dominici (FreeDigitalPhotos.net)Across the Caribbean, virtually all countries have introduced some form of regulation for the telecoms and/or ICT sectors. Most countries had a regulator whose sole focus was telecoms and possibly ICT. The exceptions included Barbados (Fair Trading Commission), Belize and Guyana ( Public Utilities Commission), and Jamaica (Office of Utilities Regulation), which covered more than one utility.

However, in the past two years, a new trend might be emerging. At least three countries have signalled an intention to expand the scope of their existing telecoms regulators:  Bahamas,  the Cayman Islands and Jamaica. In the Bahamas and Cayman Islands, other utilities will be added to the mandate of the Utilities Regulation & Competition Authority (Bahamas)  and to the Information and Communication Technology Authority (Cayman). in the case of Jamaica, certain telecoms-related functions, such as spectrum management were not being conducted by its Office of Utilities Regulation, but rather the Spectrum Management Authority; however that plan is to have that function be subsumed under the former.

Without a doubt, telecoms regulation in the Caribbean has has demonstrable success: realising competition, lower rates, more options/choice for consumers, and considerable expansion and upgrade of the infrastructure to provide (relatively) modern/latest services, to name a few. it is perhaps on the basis of that success, and the need to better manage other utilities, the premise of “not reinventing the wheel” has been adopted to broaden the scope of an existing and highly successful regulator, than to start again from scratch.

However, as straightforward as such an approach might appear, it can be fraught with challenges that ought to be considered and managed. Below, a few of the potential benefits and likely challenges are outlined.

Potential for economies of scale and sharing resources

As highlighted earlier, the broadening of the scope of an existing regulator to include other utilities could be more cost-effective than setting up separate regulator offices for each utility. In both organisations, there would be a number administrative functions, which although essential, are not unique, and thus could be undertaken by a single unit. Hence it could be argued that only incremental costs will need to be factored in when additional utility functions are incorporated into an existing regulatory office.

Further, the entire regulatory machinery may benefit from having an organisation that is already established and already has some visibility and name recognition. Internally, it could also mean that many of the initial teething pains of setting up a regulatory office would have already been resolved. Further, the existing office would already have some experience in regulation, the posture that ought to be adopted, along with the systems that ought to be established, etc., all of which could lessening the learning curve needed, unlike if a separate regulator was being established from scratch .

Specialist expertise per utility may still be necessary  

Although economies of scale and scope could be enjoyed when a single regulator oversees multiple utilities, it ought to be emphasised that there will be areas where it cannot be applied. An example of this is with regard to utility-specific expertise that will be needed in-house.  In addition to creating certain specialist positions, it may also be necessary to upgrade the skills of certain parts of the existing team consistent with broadening the scope of the organisation.

Unified regulatory approach unlikely to work

While the above two points focussed on administrative and operational matters, this point seeks to highlight the approach to regulation in a multi-utility single regulator. Depending on the policy and legislative framework that has been established, there can be a requirement of having common principles adopted across all of the utilities that are being regulated. However, trying to adhere strictly to those common principles across multiple utilities is not advisable, as it can lead to an oversimplifications of the issues, and ultimately, ineffective regulation.

One or more utility may hog the resources; others may end up neglected

Finally, an observation and experience that has been regularly reported is the fact that one or more utility may consume most of the attention and resources of the organisation, whilst others may end up being (somewhat) neglected. Having said this, it may be argued that this scenario could actually justify the multi-utility single regulator approach, as those utilities that may not be as advanced or demand continuous attention would not be cost-effective to run on their own. However, it may also mean that a multi-utility regulator may not be a position to guide those sectors as it ought to, and so drive much needed changes and improvements that may be needed, when its focus, efforts and resources are so diluted.

 

Image credit:  David Castillo Dominici (FreeDigitalPhotos.net)

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About the author

Michele Marius

Michele Marius has a wealth of experience in the telecoms and ICT space, which has been gained in the Caribbean, Southeast Asia and the South Pacific, and in the public and private sectors. She is the Editor and Publisher of ICT Pulse.

Permanent link to this article: http://www.ict-pulse.com/2016/02/single-multiple-changing-trend-utility-regulation-caribbean/

1 comment

  1. John Thompson

    Actually telecom market liberalisation is the new kid on the block, most countries have been regulating water and electricity and telephone for a long time before telecom liberalisation. the operative word for telecoms is “liberalisation” and this word directs a different regime to the one suited for water and electricity. So while there will be synergies for one overall regulator the two separate paradigms of regulation will still have to exist under the same roof. The US solution of having commissioners at the top can be adopted and separate commissioners appointed to govern each branch of regulation as the case may be so while cost savings are gained by shared resources for administration such as HR mgt, training, anti trust and financial cost modelling. competition policy and investment conditions and concession may still require divergent remedies.

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