Telecom Regulatory Environment (TRE) Assessment: Methodology and Implementation Results from Five Emerging Economies

Abstract

The scope of this paper is the regulatory environment within which telecom operators and potential new entrants function, that is, a subset of the overall Regulatory Risk environment here described as the “Telecom Regulatory Environment” (TRE) that includes only the telecom-specific aspects. The purpose of the paper is to present a tool to measure the TRE in a country.

The TRE tool presented here is a measure of perception that is affected by a number of different factors. For example, the context of the investment (new vs. incremental) and nature of the telecom sub-sector (mobile vs. fixed) will affect the perception of the TRE.

The TRE has many uses: it is a diagnostic instrument for assessing the performance of the laws affecting the telecom sector and the various government entities responsible for implementation. If the scores are low in one aspect against another, it may be that the regulatory performance needs to be improved. If the performance considered satisfactory, it may also be possible that the problem is the communication of the regulatory actions. If the latter conclusion is reached, the appropriate action would be to improve the way the agency communicates its actions. The TRE can also be used as a tool for investors to assess regulatory risk in a country. Particularly for investors facing investment opportunities in the telecom sectors of more than one country, the TRE can provide a ranking of the countries in terms of telecom-specific regulatory risk.

This paper presents the methodology and illustrates its application using a six country assessment completed in mid-2006.