An opportunity for less, not more, regulation

Regulation is often claimed as one of the great panaceas of our age. Every problem and abuse, followers of this new religion would have us believe, is capable of being regulated out of existence. Why, once the right regulatory structure and safeguards were put in place, it was even possible to privatise the water and electricity industries. Never mind a few failings here and there along the way, on the whole it works, proponents insist.

Against this background, it is perhaps unsurprising that those in the business of regulating should be looking for ways of further extending an already growing empire. The brave new world of multi-media seems to offer a god-given opportunity; Oftel, the telecommunications watchdog, is reaching out to grab it with both hands.

We should not, however, be too hard on Don Cruickshank, director-general of Oftel. His office has managed to produce a detailed, informed and illuminating consultation document on the regulation in this area. At a time when the market is clearly moving far ahead of regulators, it is encouraging to see signs of careful thought from those normally deemed to be woefully lagging.

It is encouraging, too, that Mr Cruikshank shies away from too onerous a regulatory framework, preferring to allow the market to read the signals, make the adjustments, and meet the demands of consumers. Wherever possible, that is surely the right approach. The aim must be less regulation, not more of it.

But there are two dangers in what Oftel is proposing. First, the initiative could well set off a debilitating battle for jurisdiction with another regulator, the Independent Television Commission.

Both the ITC and Oftel have seen fit in recent weeks to push for a greater statutory role in the regulation of multi-media, claiming that their respective industries - broadcasters and telecoms service providers - are moving quickly toward converging "content" and "carriage". The last thing these industries need is a turf war. The City has been greatly harmed and discredited by division and duplication among squabbling regulators.

More important in the long term, however, is the kind of regulation Britain needs. One school has it that regulating the information highway is an impossible and pointless task; aside from insisting on minimum rules to enforce competition (already in place and enforceable by the Office of Fair Trading and the Monopolies and Mergers Commission), governments should get out of the way. On that view, not only should we do away with the ITC - surely the subliminal, if not the explicit, message of the Oftel consultation document, at least when it comes to the ITC's role in the awarding of broadcasting licences - but Oftel should go too.

That approach may appear appealing to regulatory minimalists. Get the distribution network right - fair and equitable access for all suppliers and a common standard to allow "inter-operability" among infrastructures - and 10,000 flowers will bloom. Those more concerned about content, quality and universal access ask: Who will be the gardeners? Who will plant and cull, pluck and arrange? Do we really want a free-for-all along the information highway?

Mr Cruickshank is right to think that regulating will be a difficult task in the digital age, and may require a reformulation of the rules governing the sector. An artifical division between broadcasting and telecommunications is obviously unsustainable if we are to have video-on-demand, interactive home shopping and other products and services of the digital future.

Better, then, to have one regulator handling the nuts and bolts of the market - the questions of access, of inter-operability, of cross-ownership - regardless of whether the supplier is a broadcaster or a telecoms operator. The ITC, for its part, may or may not need to survive as a "standards" watchdog, ferreting out unacceptable content and imposing regional or local thresholds.

The Labour Party has suggested an "Ofcom" to regulate the market in the post-convergence world, and a revamped ITC to oversee more politically charged issues such as content and quality. This may well be a model worth retaining, whatever one's view of the rest of Labour's policy on the information highway.

Mr Cruickshank has explored the complicated world of what his office infelicitously calls "broadband switched mass-market systems" and has pointed a way foward for their regulation. That way must not be to over- regulate by allowing Oftel and the ITC to poach on each other's territory. Combining the existing two offices as they stand in a new monolith would be equally unsatisfactory. What is needed is a new, slimmed-down regulator.

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