Regulatory Strategy for Commercial Success

Develop an understanding of the objectives, process and basis for regulation and how to develop an appropriate strategy to ensure commercial success.

Course Overview

The course is aimed at managers and executives in organisation holding a stake in the process of liberalisation and regulation of telecommunications markets, wherever in the world. Such organisations may be incumbent operators, new entrants or potential new entrant operators or regulators. The course aims to bridge the divide between the legal, economic and commercial aspects of regulations and thus will be of interest to any business manager wishing to understand the basis for regulation and its commercial impact.

About the Trainer

Martin graduated from Cambridge University with an Honours degree in Mathematics. Following this he worked in public administration, with spells at the European Commission and OFTEL before moving into consultancy and training. Martin has worked for both regulators and operators offering advice on retail price controls, interconnection negotiation, regulatory cost accounting and price regulation of mobile call termination. Martin couples real experience of the impact of regulation on business planning to a sound understanding of the theoretical and legal aspects of regulation. Having worked on both sides of the regulatory debate, Martin can bring a complete view of the regulatory process to help participants develop a strategy for regulatory success. Martin delivers a course on "Strategic Thinking" to Ofcom the United Kingdom's regulator.

Course benefits

The course is designed to enable participants to better understand the "bigger picture" when faced with regulatory issues or commercial issues with a regulatory slant in order to set out a strategy which achieves the commercial needs of the organisation. Key objectives include:

• Increasing knowledge of the range and forms of regulations
• Improved understanding of the regulatory process
• Understanding the relationship between regulation and the profitability of market participants
• Moving away from short term, reactive, responses to regulatory issues to a longer term strategy

Who should attend?

The workshop will benefit anyone with a stake in the impact of developments in the regulatory environment in which they operate.

Prerequisites

The course requires no previous knowledge of regulation, law or economics.

Course Structure and Contents

The course is held over two days comprising. The first five sessions of the course are intended to provide a rapid overview of the theoretical aspects of regulation. The work will draw heavily on case studies, looking at the impact that regulation has had on the development of the markets in different countries. After this the course will become more interactive aiming to produce a regulatory strategy for the organisation.

Background to Regulation

• Economic justification
• History of Regulation
- US - AT&T Break-up
- UK - Privatisation and gradual liberalisation
- EU liberalisation
- WTO
• International, primary and secondary national regulation and licence conditions
- EU Directives
• The role of regulatory bodies
- Independent regulators
- Governments
- Competition authorities
- Courts

Regulatory Stakeholders and Licensing

• Government and Regulators
• Consumers and consumer pressure groups
• The EU Licensing Directive
• Service competition vs. Infrastructure Competition
• The fixed incumbent
• New entrant operators - Long Distance Operators; CLECS; Cable TV operators; Resellers; ISPs
• Mobile operator
• Spectrum Licensing
- First come first served
- Beauty contests Auctions

Regulatory Service Costing

• Reasons for service costing
- Internal management
- Regulatory price setting/authorisation
• Types of costs
- Direct costs
- Indirect costs
- Common costs
• Calculating cost
- Cost of capital
- Depreciation and asset valuation
• Allocating costs
- Fully allocated costs
- Incremental costs
• Calculating allocation keys
- Volume based allocations
- Ramsey pricing
- Revenue or cost based allocations
• Limitations of service costing
- Subjectivity
- Product lifecycle effects

Retail Prices and Universal Service Obligations

• The EU Universal Service Directive
• Rebalancing
- Access deficit
• Price control
- RPI-X
- Price authorisation
• Universal Service
- Obligations
- Costing
- Funding

Interconnection and Access to Networks

• The Interconnection and Access Directive
• Service vs. infrastructure competition
• Types of interconnection and access to network
- Call termination
- Call origination
- Local loop unbundling
- Data services
- Access to information systems
- Must carry obligation
• Interconnection rights and obligation
• Reference Interconnect Offer
• Interconnection pricing
- Cost accounting
- Price

Understanding the relationship between regulation and profitability

• The aim of this interactive session is to rate the importance of each part of regulation on each of the market players.
• Regulation that is essential for the market player to operate.
• Regulation that has a significant impact on profitability
• Regulation that has little impact on the profitability of the market player

Setting the Regulatory Agenda

• Pro-active vs. reactive regulation
• Regulatory Capture
• Regulatory Gridlock
• Horse trading - negotiating Win/Win outcomes
• Small group session: Setting a negotiating strategy for the host organisation.

Presentation and Roundup

• Presentation of results of small group work from previous session
• Roundup