Thursday, December 1, 2011

Denmark eliminates the independent regulator (by Francesc Trillas)

Denmark has decided to eliminate its telecommunications national regulatory authority. The few existing official details are in  Telecommunications expert William H. Melody, Guest Professor at Aalborg University in Copenhagen tells me that his best guess is that the top staff in the Ministries were jealous of the success of the regulatory agency, which has been regarded as one of the leaders in the EU since its inception in 1994, and the Director who has been there the entire time, and they took advantage of the ignorance and naivete of the new government about these matters.  This would also have been supported by the private equity owners of TDC, the incumbent, who are bleeding the company financially and seeking weaker regulation. I would like to know more about this issue, but it seems interesting and intriguing to me that a country that has been for long at the top of telecommunications rankings in Europe, has decided to eliminate its independent national regulatory authority (a requirement of EU rules) after a political change. Something similar has been happening for many years in Chile, a country that is often mentioned as a paragon of virtue in terms of liberalization and performance: Chile's regulatory agency is part of a ministry. Independent regulators may under some conditions contribute expertise and alleviate time inconsistency problems. But they have advantages and inconvenients, and they are vunerable, despite being a typical recommendation of international institutions. They seem to be no panacea, and they are neither a necessary nor a sufficient condition for good performance.

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