The way the key sectors of the economy are organised is important from commercial, consumer and political points of view. So it is welcome that the Director of Telecommunications Regulation, Ms Etain Doyle, wrote for this paper setting out some points relating to the role of regulators and their independence from government.
However, her article last Monday contained some opinions that I found puzzling. All the more so, since I could not find similar sentiments on the website of the Office of the Director of Telecommunications Regulation (www.odtr.ie).
Ms Doyle wrote that market regulators have what might be described as a subversive job to do, in the sense of upsetting the status quo in key markets and preventing any new status quo cementing itself into place.
Subversive? It is not the job of regulators, in a general sense, to subvert markets. The conclusion that a regulator is not doing a good job unless there are some "unhappy major interests" doesn't hold true for many regulators who do a good job. Tough and fair regulators don't need to make businesses unhappy. Perhaps Ms Doyle's view of the general role of regulators is coloured inevitably by the experience of re-arranging, "subverting", the dominant position of Eircom in the Irish telephony market. But "market subversion" as a primary role for regulators covering other areas like airports, electricity, transport and financial services is simply not plausible.
The setting of airport charges according to a specific economic model is not a market subversive role. It is simply balancing the pricing power of a local monopoly supplier with power exerted on behalf of users. Financial regulation is not geared to subverting a status quo, but to balancing the information deficits and risks between deposit taker and savers. Financial regulation aims at stability in the consumer's interest. "Market subversion" is not usually a means to achieve this.
Upsetting the status quo of a market, irrespective of what that status quo is, is not, I hope, what Ms Doyle really meant. By contrast, in a statement to the Oireachtas Committee on Public Enterprise and Transport she said that her office had just one focus: that is to enable consumers to have a choice of telecommunications services at attractive prices. A later statement said: "The regulator's job is to open up markets, keep them open and flexible until competition is so well established that they remain open and flexible of their own accord."
It may have been inevitable that the regulatory role in telecommunications should be described in terms that put emphasis on competition issues, but it is not a general case for regulators. It also blurs a distinction between competition regulation in general and sectoral regulation.
Further, Ms Doyle went on to say: "It is essential that the regulators act properly within their mandate" - an unexceptionable statement. She asked, how can this be achieved "in the necessary absence of general policy direction and the right to remove from office?"
Good question. But I find it hard to understand "the necessary absence" of general policy direction, given that the Act creating the office of the Director of Telecommunications Regulation requires the director to "comply with policy decisions of a general kind made by the Minister in relation to the allocation and use of the radio frequency spectrum".
The Act also provides that the Minister may remove the Director from office on health grounds or because of stated misbehaviour. But what if the regulator is just not doing a good enough job? Ms Doyle is clearly conscious of this point in inviting the public and the readers to consider the achievements of her office in liberalising telecommunications. But that doesn't address the point of what could be done if the achievements had been unsatisfactory. By what standards are regulators to be judged?
The answer that regulators must act with great integrity in the consumer interest, with copper-fastened independence from the political process, and with the final outcome of their decisions as their measure, which I read as Ms Doyle's position, is not sufficient, in my view.
It relies too much on the fortunate happenstance that a regulator will do a good job, as I think a fair-minded person would say in relation to Ms Doyle. It does not address a situation where a regulator may fail in policy choice or administrative efficiency, most importantly in choosing the right kind of "long term programmes that cannot be upset by a sudden change in political direction", as Ms Doyle wrote.
The same issue goes for all regulators. It is one which is not answered by pointing to the deficiencies of Ministerial decision-making over the years, nor to the grubbiness of the political process in contrast to a benign, technocratic regime. What is to stop a technocratic regime becoming un-benign or inefficient? The courts cannot be the only possible check.
The choice of regulatory regime is not, fundamentally, for regulatory office holders to decide. It should be for us, and for our elected government, love 'em or hate 'em.