Regulatory Competition and Cooperation

Regulatory Competition and Cooperation

Historically, information communication technology often referred as telecommunication markets in Europe were believed to be natural monopolies. The reforms of this issue were launched in 1980s in order to comply with the EU treaties. The legal regulation reforms were undertaken in two phases: The first phase was to regulate the changeover from a monopoly to competition took and it took place from 1897 to 2001. It aimed to allow for full use and access of the telecommunication services to all (From & Kjell A. Eliassen, 2007).

The second phase took place in 2002. The EU released a new package of orders to control the complete liberalized telecommunications market. This phase targeted at establishing a common approach to the telecommunication regulation among the EU which was aimed at promoting market freedom. These directives were aimed at adopting natural measures with respect to access of telecommunication facilities with a view of non violation of fundamental rights of a natural person.

The main objective of the EC ICT regulatory framework are to promote competition in telecommunication markets; enhancing the running of the home European market; and to defend introductory user interests that would not be assured by market forces. The framework new rules to be simple, directed at deregulation, technology-neutral, and adequately flexible to continue being applicable in the dynamic telecommunication markets sector (From & Kjell A. Eliassen, 2007).

The Regulation also aimed at establishing a coordinated framework to regulate telecommunication networks and services. Certain aspects of terminal equipment to facilitate access for disabled users were also included. The regulation contains several measures: definitions, the scope and general ethics, general requirements on the national regulatory authorities, the new concept of considerable market power, and essential resource sharing rules.

Before the implementation of the 2002 regulatory framework,  the regulatory framework that was in place in the EU before was basically aimed at managing the shift from monopoly to competition, and was, therefore, aimed at the creation of a competitive market and the rights of new starters.  Due to the rapid change of technologies and the emerging challenges of the newly liberalised markets it created a need for a single framework to cover EU telecommunication services.

The EU telecommunication framework also aimed at effective control the rapid increase of the market players due to the dynamic and instability of telecommunications markets.  In light of growing union among services, networks and technologies, the telecommunication regulatory framework developed to a more flexible framework that regulates all the services in the telecommunication infrastructure in a consistent manner as compared to the established telecommunication oriented structure (From & Kjell A. Eliassen, 2007).

Results of opening up of the ICT market in Europe

The EU telecommunication regulation has acted as a catalyst in the telecommunication market sector due to the competition that makes the market entry easier and stimulating investment in the sector. According to Progress Report on the Single European Electronic Communications Market, the EU telecommunication regulation that encouraged a competitive ICT market has proven to be the key technology of the past decade. The widespread and use of internet, mobile telephony and broadband networks has greatly boosted the growth of the European market. Despite the poor performance of the economy before the EU telecommunication regulation, the growth of the economy has greatly improved. Many firms have embraced the use of computer networks for economic purposes such as outsourcing and buying and selling of goods and services. The opening up of the ICT market has resulted to boosting the economy in the following the following ways:

Growth in ICT production

There is a notable rise in production of ICT manufactured goods and services in Europe, which has made a large share to gross domestic product growth. Some of the EU countries that have benefited from the EU ICT regulation include; Finland, Ireland and Sweden, which are major producers of telecommunication hardware and software.  The knowledge impacted to customers as well as suppliers from the telecommunication producing material firms are believed to provide additional drive to productivity growth. Moreover, these firms that have implemented the ICT have gained substantial market share and are able to grow in competitive markets such as United States.

According to Organization for European Economic Co-operation, Lack of innovation in the ICT service sector has been a great challenge in the European countries (OECD, 2003a). Innovation is very essential since many companies have made valuable ICT investments through innovative experimentation. Without the technological innovation, the economic impact would be more limited in EU countries.

ICT investment

The EU has been investing in telecommunication facilities which have lead to capital deepening, resulting to input of GDP growth in the past decade, and the ICT investment accounted for between 0.3 and 0.8 percentage of GDP per head growth EU before the EU ICT regulation (The Economic Intelligence Unit, 2004). Over the past decade, ICT investment share in total investment has expanded across Europe than any other duration in history. Other European countries are also investing large amounts of capital in ICT goods and services.

ICT gross fixed capital in EU is expanding at a moderate rate, however, Europe is said to lag behind in terms of the share of ICT investment in GDP as compared to other countries. For example, the European Union accounted for 2.6% of GDP as compared to US 4.2 in 2001 (The Economic Intelligence Unit, 2004). Therefore, Europe has to invest more in ICT capital stocks order to catch up with US levels. The ICT regulation has enhanced the ICT investment growth with 70 % of the companies in EU increasing their investments.

The opening up of ICT market is also evident on the use of ICT on learners in all sectors of education in Europe. For the last decade, most European countries have given priority to use and training of ICT in education with some countries embedding ICT in their curriculum. ICT progress has been achieved at a cost, with most EU countries investing ICT in schools in the form of digital learning components, facilities and connectivity.

The recent trends in the banking sector have also varied due to ICT development influence. Most of the banks in European Union have embraced the technology that allows effective online transactions as well as marketing their products online. For example, the banks have automated the application of services such credit cards, as well as commoditization of products (Beccalli, E).