The Future of Media Regulation

Tim Suter gave a speech to a roundtable organised by the German regulator (Direktorenkonferenz der Landesmedienanstalten) on the Future of Media Regulation in Brussels on 3 May 2012.

The impracticalities of a Broad USF

This note from Robert Kenny and Brian Williamson considers a 'Broad USF' - a universal service fund to support the Digital Decade goals, backed by levies on telcos as well as application providers.

They find that it comes with a host of practical challenges, and is unlikely to be in operation in time to have impact on achievement of those goals

The new AVMSD - an unravelling of the Digital Single Market

In this paper for the CCIA, Rob Kenny and Tim Suter review the proposed changes to the regulation of VOD services, in particular the shift to 'country of destination' and the abandonment of the country of origin principle.

We find that:

• The process that led to the proposed revisions was deeply flawed
• The 'level playing field', the main argument for change, does not stand up to scrutiny
• The proposed changes will be difficult to implement and will have numerous adverse consequences

The price of telecoms – getting it right, why it matters

This short paper by Brian Williamson discusses the importance of a proper understanding of telcoms pricing, for regulators and national statistics authorities

Thinking beyond the WACC – the investment hurdle rate and the seesaw effect

The price cap for legacy telecoms networks impacts new investment in two important ways.

First, new networks must compete for customers with legacy networks, and so lowering the price of legacy services will reduce the price that can be charged for new ones - which in turn makes it harder to justify new investment in the first place.

Second, the treatment of legacy infrastructure will influence investor expectations on how new investment will be treated in the future - given that new investments will come to be seen as legacy over time - again potentially deterring fresh investment.

If investment in Very High Capacity Networks (VHCNs) is seen as desirable, it is therefore counter-productive to underestimate the weighted average cost of capital (WACC) for legacy networks and thereby set their pricing too low.

These issues are compounded by an approach whereby a comparatively small harmonised EU wide equity risk premium is combined with country-specific risk free rates, since this not only results in extremely low regulated returns in certain markets, but also means a divergence - rather than convergence - of investor returns across Europe.  

Brian Williamson and Stephen Howard have prepared a paper (on behalf of ETNO) considering these issues.