Economic regulation of telecommunications
Despite the deregulation of legislative monopolies, enterprises that have operated in the telecommunications market for a long time enjoy a significant competitive advantage, as their networks were constructed at a time when no competition existed. Construction of several parallel networks is not usually economically viable. Effective competition is only possible if, among other things, the telecommunications operators with significant market power, so-called SMP operators, who are in control of the telecommunications network, offer their networks to new market entrants on reasonable terms. Economic regulation seeks to safeguard fair and reasonable pricing of telecommunications networks. The entry of new telecommunications operators into the market is possible as soon as the mutual pricing of undertakings is fair and reasonable. This will also bring about pressure for decreasing the tariffs charged to end-users. Consequently, the control of pricing is focused on the monitoring of telecommunications operators’ mutual pricing.
The Finnish Communications Regulatory Authority (FICORA) has no powers for defining the prices set by operators. Instead, the authority investigates, whether the prices set by an operator are reasonable, and, where necessary, it can oblige the operator to offer more reasonable prices.
The Finnish telecommunications market structure differs considerably from that of other EU Member States, where economic regulation is focused on one or a few companies. In Finland, the number of operators being monitored is now about 60. Along with the introduction of digital television, economic regulation has extended from traditional telecommunications operators to other companies within electronic communications, such as companies engaged in the administration of digital terrestrial television networks. Also, in these sectors the network and access to it constitute such a bottleneck that the control of network pricing is seen as necessary to ensure functional competition.
Guidance and instruction for operators is becoming increasingly important in the monitoring of reasonable pricing. Advance information and the distribution of guidelines are used as tools to reduce the number of complaints and expensive and time-consuming legal proceedings. Besides guidance, the authority will intervene in the pricing of individual companies if this is well-founded for safeguarding a functional market.
