Paul Scott and David De Joux “Uncertainty and Regulation: Insights From Two Network Industries” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). The effects of light-handed regulation and heavy state intervention on network industries are showcased in this paper that considers both the telecommunications and electricity sectors. The circular nature of regulatory changes that the telecommunications industry has had to endure is a feature of the paper which identifies the history of this industry, regulatory changes and their impact on uncertainty and investment.
The social welfare obligations placed on both industries plus the Ultra Fast Broadband Initiative are also discussed because of their impacts on regulation effecting these industries. The paper concludes that experimenting with different regulatory regimes in these industries has not encouraged investment and has not improved regulatory certainty, by but increased uncertainty. Additionally the paper suggests that a fixed regulatory framework, that remains stable and unaffected by changes of government, is the most likely to benefit these two network industries long-term.
Paul Scott and David De Joux “Uncertainty and Regulation: Insights From Two Network Industries” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). This was not the end of the dispute, however. In 1996 Clear requested a variation of the agreement, which Telecom refused. Clear then began to withhold part of its payments. When Telecom started actions to claim the amount owing, Clear counter-claimed that there had been breaches of the Commerce Act and "at both the High Court and the Court of Appeal, it was found that Clear could legally withhold payments, pending a substantive determination on the alleged Commerce Act breaches". This had the effect of reintroducing uncertainty in the market, and doubts on the efficiency of light-handed regulation. Clear did not pursue litigation to its end. The appearance of the Internet had redistributed the cards.
Paul Scott and David de Joux “Uncertainty and Regulation: Insights from Two Network Industries” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). 11.7.2 Parliamentary uncertainty
One of the issues Mladenovic identified as ripe for investigation was regulatory uncertainty. It almost goes without saying it is a concern for regulated entities. However, it can mean different things in different contexts.
One type of regulatory uncertainty involves how Parliament has provided for regulation. In New Zealand the path to regulation has, as Ahdar notes, been tortuous. As Mladenovic shows, it has moved from a state-run affair to light-handed relying on general competition law and then on to regulation with specialist regulators. This is not optimal. As Ahdar notes citing Joskow "a continuing stream of reforms rather than one comprehensive package is not conducive to the sort of large, long-term investment the sector needs."
This history of pragmatic piecemeal reform has done nothing to improve regulatory certainty. Indeed, the recent reform is the fifth Act of Parliament in the name of reforming industry since the Electricity Industry Reform Act 1998. It does nothing to attract investment into the industry.