Divergent Convergence:
The Diffusion of Regulatory Reform in the Telecommunications Sector
Volker Schneider and Marc Tenbücken
Department of Politics and Management
University of Konstanz1
April 2003
Paper prepared for delivery at the workshop “The Internationalization of Regulatory Reforms”,
organized by Jacint Jordana, David Levi-Faur and David Vogel
University of California, Berkeley, April 25th to 26th, 2003
Abstract
Sparked by a trend towards convergence, all western industrial nations have opened their
telecommunications markets, dismantled state monopolies, and established National Regulatory
Authorities (NRAs). Using Facet Analysis and Partial Order Scalogram Analysis (POSA) we will
demonstrate that despite this convergence there are considerable differences between the NRAs in
terms of their organizational structure, regulatory competencies, and in turn their degree of
independence. Thereafter we shall investigate the causes for this divergent convergence and present a
model that takes both the combination of horizontal and vertical diffusion mechanisms as well as their
“embeddedness” in national political structures into account. Of crucial significance for the diffusion
process was the USA, whose incisive reforms at the beginning of the 1980’s triggered a global chain
reaction that sooner or later spilled over to every western industrial nation. The pattern of convergence
was intensified by negotiations in international organizations as well as the role of the European Union
as an intermediary or intervening actor that was able to anchor international harmonization demands
into a regional context. The variation in the institutional implementation of the new regulatory
approach can be traced back to different national political mechanisms, such as the structure of the
interest mediation system, the institutional cementing of the status quo and the capacity of the political
decision-making system to act.
1
We would like to thank Nadja Schorowsky for her help with data collection and Michael Dobbins for his
linguistic support.
1
1. Introduction
Starting with developments in the USA at the end of the 1970’s, the wave of liberalization and
privatization spread to the telecommunications sector of all western industrial nations one by one. The
pressures for deregulation evoked by phenomenon of globalization forced different states to carry out
extensive institutional reforms to favorably position themselves to face growing international
competition. At the beginning of the 21st century formerly closed markets are now opened for private
contractors, state monopolies have been dismantled, and public telecommunications companies have
been partially or completely privatized in the OECD-countries.
However, since the early 1990’s we detect a global trend towards re-regulation parallel to that
of the liberalization and privatization developments (Vogel 1996). In the course of the paradigmatic
change from the positive to the regulative state, most countries have established National Regulatory
Authorities (NRAs). These are equipped with their own regulatory responsibilities, resources and, in
organizational terms, are detached from ministries and thus not subject to the direct influence of
politicians or government officials (Doern and Wilks 1996; Gilardi 2002; Levy and Spiller 1996;
Majone 1997; Thatcher 2002a, 2002b among others). The main task of the NRAs is to control the
market power of the former state monopolists and provide for fair competition in the liberalized
infrastructural sectors. In all western industrial nations the NRAs have taken responsibility for the
regulation of the telecommunications sector. This entails, for example, various tasks concerning
interconnection disputes, unbundling of the local loop or license allocation and control in mobile- and
fixed-voice telephony.
A crucial question in this chapter is how the wave of liberalization and the related spread of
National Regulatory Authorities emerged. Which factors were decisive for the departure from a model
of regulation whose cornerstone was a government ministry and in turn the choice for an approach that
brought an independent, sector-specific agency into the spotlight of regulatory activities? The second
part of this chapter seeks to shed light on not only why this new regulatory approach spread, but also
whether this diffusion led to the adoption of a relatively unitary model, e.g. the American blueprint, or
2
whether the countries reacted differently to this paradigm change in institutional terms. According to
Grande and Risse (2000: 244), in most cases “there is an interaction effect between convergence
brought on by globalization pressures, and path dependency created by traditional national structures.“
If national aberrations in the adoption of the new regulatory model did in fact result, which
determinants best serve to explain this “divergent convergence”?
We will demonstrate that a process of diffusion was responsible for the spread of regulatory
reforms in the telecommunications sector that operated both horizontally through the specifically
targeted political and economic pressures of the USA on the EU-countries and Japan as well as
vertically through steps towards harmonization within the European Union and the transfer of
knowledge by means of international organizations. Furthermore, we shall constitute that differences
in the concrete institutional implementation of these regulatory reforms can be explained by the given
national political structures.
In the following, we shall first present the analytical framework of this chapter and thereby offer
a brief introduction to the theory of evolution and complexity and the concept of fitness landscapes.
Afterwards we shall summarize the liberalization developments in the telecommunications sector and
the proliferation of the new regulatory paradigm. The fourth part will then deal more extensively with
matters of institutional implementation of the new regulatory approach. In doing so, the organizational
structures and regulatory competencies of the NRAs will be illustrated on the basis of the concept of
fitness landscapes and then compared and contrasted applying a new independence index.. In the fifth
part we present a diffusion approach which enables us, on the one hand, to explain the international
convergence in the spread of the NRA model and on the other the national variation in the institutional
implementation of this new regulatory paradigm. The conclusion shall summarize the most significant
results of the paper and dare to offer a forecast for the future evolution of the convergence of
telecommunications, broadcasting, and Internet.
3
2. Convergent evolution in a fitness landscape
The growth and development of institutional patterns such as organizational structures or
functional profiles of NRAs can be conceived as a process of evolution by which specific institutional
forms and combinations emerge, change or persist. A key idea behind this mode of thinking is that
similar functions may be fulfilled by multiple forms, but not every form is able to fulfill the functional
prerequisites for its survival. Evolution thus is driven by variation and selection.
During the last decades, the theory of evolution has become a kind of meta-theory of change
which may be applied to almost all scientific fields of study. The power of this theory is that it
provides general mechanisms that serve to explain the emergence of and changes in various patterns.
For instance, a process of convergence in this perspective may be explained by either by limited
variation or strong selection (e.g. by adaptive pressures) so that only similar structures emerge and
survive in a given environment.
Evolution theory has been quite successful in a number of sub-disciplines of the broad spectrum
of social sciences, i.e. in sociology, economics, cultural studies, management, etc. In political science,
however, evolutionary theorizing yet to become a wide-spread theoretical orientation. Even in the
specialized sub-field of “political development studies”, the use and application of evolutionary
concepts to political change has instead been sporadic. Notable exceptions in political theorizing based
on evolutionary concepts are Axelrod (1984, 1997) and Cederman (1997). One the one hand, this
neglect may be explained by the fact that political changes often involve disruptive power struggles
and conscious political decisions. Political changes can begin abruptly and have quite drastic
outcomes. Many political processes are therefore far away from the gradual pattern which most
analysts associate with an evolutionary process.
Against this narrow perspective of evolution it must be emphasized that: (1) in the realm of
politics, too, there are many phenomena – such as ideologies and institutions – which transform rather
gradually and imperceptibly. (2) During the last decades there have been a number of advancements in
evolutionary theory which not only included discontinuous processes, but also the role of one’s
4
conscience (e.g. learning and emulation) in the overall process of evolutionary change (Stanley 1979,
Kauffman 1993, Eldredge 1999).
Although there is multitude of evolutionary approaches, the common core of the theory of
evolution may be outlined as follows: 1/ All material and ideational “forms of existence” are subject to
some degree of variation over time. 2/ Some of these variants have a greater probability to survive
(and to reproduce or replicate themselves). This leads to some selectivity in development processes. 3/
The interaction of variation and selection creates – in the long run – increasingly complex structural
configurations and combinations, which may be conceived as “machines of survival” better adapted
to their conditions of existence (Dawkins 1989). The way in which variation and selection works –
blindly or purposefully – does not change the basic mechanisms itself, although it may affect the speed
and range of transformations. All changes through variation and selection thus can be seen as
conscious or unconscious strategies of adaptation, by which physical, biological or cultural structures
combine and recombine in order to search for equilibrium states in their specific environments.
A key innovation in this advancement of evolutionary theory is the concept of “fitness
landscapes”. This concept allows the integration of complexity theory, processes of self-organization,
and the basic mechanisms of evolutionary change (Kauffman 1993). In order to illustrate this complex
adaptation process, scientists have developed the metaphor of a “fitness landscape” (Wright 1932,
Stadler 2001; see also Eldredge 1999). In this perspective adaptation is compared to hill-climbing in a
mountainous region. Elevations in the landscape represent better adaptation and increased fitness. A
peak in the overall scenery indicates a kind of maximal “fitness”. Multiple peaks would imply that
there are several combinations with rather similar degrees of fitness, and a single peak (like the
Japanese Fujijama) in an overall landscape would indicate that there is only one distinct structural
combination that is best adapted to its environment.
The various structural configurations of an “evolutionary unit” are represented by points in a
three-dimensional space. Elevations in the landscape express the vertical dimension in the topography,
whereas two horizontal dimensions indicate the proximity (similarity) of the various structural
5
combinations to each other. Similar combinations imply adjacent locations in the topography, whereas
dissimilar combinations are located more distant from each other. As Kauffman (1993) convincingly
shows, evolutionary adaptation is significantly shaped by the overall topography of the landscape.
This may be “smooth” or “rugged”. Variation in a rugged landscape is more risky than in a smooth
one, since changes are subjected to stronger forces of selection. In a rugged area, one step in a “wrong
direction” can lead to a plunge into a steep gorge. Only a small variation can drastically reduce the
chances of survival. As shown in Figure 1, successful evolution in the sense of a monotonically
increasing fitness signifies a sequence of hill-climbing activities on a mountain range, leading from
small hills to ever higher peaks and summits.
< Figure 1 about here >
The metaphor of fitness landscapes is not just an illustrative analogy, but offers a number of
conceptual advantages: It provides not only an easily accessible illustration of the core assumptions of
evolution theory, but it also integrates some of the most recent developments in the theory of
evolution. In this respect, there are three important aspects that can be integrated into the landscape
concept:
1/ “Normal” topographies with multiple peaks imply that there is not only one single successful
strategy of adaptation. Often there is a whole series of local optima.
2/ Specific topographies may imply a kind of “dead end” in the evolution process. The
phenomenon of “path dependency” can imply that a specific sequence of hill-climbing paths
leads to a local optimum where further development is “locked-in”. In terms of the fitness
landscape, there is no uphill path from a medium peak to an adjacent higher peak.
6
3/ Depending on the shape of the landscape (rugged vs. smooth), variation also can lead to a
stagnating or even declining fitness, as recent advances in the theory of evolution are dealing
with this phenomenon using the concept of “punctuated equilibrium” (Eldredge 1999).
Some organizational scientists have shown that the concept of “fitness landscapes” also may be
applied to the evolution of organizational, institutional or cultural structures (McKelvey 1999).
According to Douglas North (1990) we may define institutions as rule systems which structure human
interaction. In complex societies, the various rule systems are combined in an “interdependent web”
which also may be considered an “institutional matrix” (North 1991). Such combinations may be
modeled in a most simple way as binary strings, for instance as a six-dimensional combination
(101101). As a kind of “institutional gene”, each digit expresses the presence or absence of a given
institutional feature. Such institutional combinations are then subjected to forces of variation and
selection in a process which may be far more complex than the various mechanisms in biological
evolution. Institutional traits can be transmitted through multiple “channels” and their transmission
can be more speedy than transmission through biological descent. A good example is the diffusion of
innovations through mass communications (for a systematic treatment of different transmission
mechanisms in cultural-institutional evolution see Cavali-Sforca).
In agreement with the core propositions of evolution theory, it is assumed that different
institutional combinations will involve varying degrees of “fitness”. From this perspective, the
unfolding of an institutional landscape and the tracing of an evolutionary pathway would require a
procedure including the following analytical steps:
1/ To locate the various institutional combinations in a two-dimensional space, where the
structural similarity of these complexes is somehow represented by their geographical
proximity.
2/ To locate the various institutional combinations in a vertical scale according to a given
measure of “fitness” or “adaptability”.
3/ To trace the hill-climbing walk through the overall landscape.
7
In the context of institutional evolution it is quite difficult to associate measures of fitness to the
various combinations. A proxy measure, however, could be to pinpoint the number of combinations
that occupy a given location or area. In this case degrees of fitness are not represented as points of
elevation, but rather as clusters or agglomerations. Low fitness, in contrast, then is indicated by white
or sparse areas, where only few or no institutional combinations can be identified. In section 4 we will
apply this concept to the emergence and spread of NRAs. As we are still at the beginning of adaptive
processes in this area, we limit our analysis to the first two steps mentioned above.
3. Liberalization, privatization and the emergence of National Regulatory Authorities
In the last 20 years we have been witness to a profound re-dimensioning of the state which
manifests itself in the liberalization of previously monopolistically organized infrastructural sectors
and the privatization of state-controlled enterprises. In political science literature there are various
approaches geared at explaining these developments. Along these lines, the opening of markets and
the transfer of property rights are often justified by the influence of the neo-liberal paradigm in
economic policy (see Berger and Dore 1996; Hall 1992; Strange 1996). Primary goals of the politics
of re-dimensionalization are cited to be strengthening competition, balancing the state budget and
increasing national economic growth by means of greater direct (foreign) investment. The literature on
regulation often assumes that a functional change in the role of the state from the ‘positive’ or
interventionist state to the ‘regulatory’ state has as occurred on the basis of the developments since the
early 1980’s in the USA and Europe (Grande 1994; Seidman and Gilmour 1986).
In this process, the telecommunications sector was not only one of the first markets to be
liberalized, but also one in which efforts at reform were carried out in the most radical and
comprehensive manner. Significant steps towards opening the telecommunications market had already
been undertaken in the 1970’s in the USA. The American politics of deregulation first concentrated on
abolishing obstacles and market entrance barriers hostile to competition, which was necessary due to
the jurisdiction of national courts. Of central importance were the activities of the Federal
8
Communications Commission (FCC), however, that implemented the liberalization of the terminal and
network monopoly among other things.2 With the deregulation of the telecommunications giant AT&T,
the consequential split of the integrated Bell Systems, and the opening of the most important buying
markets, the reform process reached its temporary climax in 1982 (Coll 1986). This liberalization and
reform movement continued in Great Britain first with the privatization of British Telecom in 1984
and NTT in Japan in 1986 and had reached all western industrial nations by the end of the 1990s.
Liberalization developments in the telecommunications sector were founded upon a profoundly
new orientation of regulation policies. Until the 1990’s a ministry that functioned simultaneously as a
network administrator and public telecommunications operator (PTO) was responsible for the
regulation of the telecommunications sector in almost all OECD-countries. However, to pursue
effective and credible liberalization policies and encourage new firms to invest in the newly created
market, governments strove to remove the PTO from the ministry and completely privatize it. Along
with that, attempts were made to establish NRAs in tune with the model of the FCC in the USA, which
was geared to survey both the adherence to sector-specific rules as well as general competition
regulations. While the goal of complete PTO privatization has yet to be attained, all OECD-countries
with the exception of Japan had created a NRA by 2001.3 However, there are significant differences
between the OECD-countries in terms of the organizational structure of the NRAs and the regulation
competencies transferred to them. These varieties of regulation which we will discuss more in-depth
later have brought about different degrees of autonomy of the NRA as a consequence.
Regulatory authorities as an institutional prerequisite for market opening
The central dilemma of the transition from a monopoly situation to that of stable and
functioning competition entails guaranteeing new network administrators and service providers fair
2
Deregulation must be distinguished from re-regulation to the extent that deregulation applies to the
(quantitative) dismantling of regulatory barriers and hurdles while regulation pertains to the re-formulation of
existing and the creation of new rules to facilitate the transformation from monopoly to competition (Vogel
1996: 3).
9
access to the market and controlling the dominant position of the (former) PTO on the market. The
NRA thus primarily functions as a referee to secure the politically desired competition among
entrepreneurs. The establishment of National Regulatory Authorities that are as independent as
possible from the influence of state actors and private interest groups and watch over the new sectorspecific regulation imperatives is in turn the most visible result of the regulatory reforms in the
telecommunications sector to date as well (Gilardi 2002; Thatcher 2002b).
The EU-Directive 95/62/EC on the application of Open Network Provision defines a NRA as
“[…] body or bodies in each Member State, legally distinct and functionally independent of the
telecommunications organizations, entrusted by that Member State, inter alia, with the regulatory
functions addressed in this Directive” (European Commission 1995). The harmonization of European
law demands the NRA to be functionally independent of the ministry and the (former) PTO to avoid a
conflict of interests on regulation matters under all circumstances. In the next part of this chapter we
will illustrate the extent to which this formally required independence has actually materialized in
regulatory practice.
Both the liberalization and privatization developments as well as the establishment of the NRA
followed the pattern of a bandwagon effect, where more and more states joined the privatization
strategy with time. Figure 2 clearly demonstrates that an extensive liberalization and privatization
development did not set in until the beginning of the 1990’s, which reached its climax between 1995
and 1998.4 By 2002 all OECD states had begun to liberalize their market for fixed-voice telephony.
With the exception of Luxembourg, all countries had at least partially privatized their PTO and, with
the exception of Japan, established a NRA. Contrary to assessments of political science literature at
the end of the 1980’s and beginning of the 1990’s (see Grande and Schneider 1991; Morgan and
Webber 1986; Rubsamen 1989), we observe quite a pronounced pattern convergence for the politics of
3
By the end of 2002 only six OECD-countries (Denmark, Great Britain, Ireland, Mexico, New Zealand and
Spain) had completely privatized their PTO. The telecommunications firms in Canada and the USA had always
been entirely in private hands.
10
liberalization and regulation in the telecommunications sector. This does not mean, though, that there
is no variation in detail, as we will see later in the comparison of the NRAs.
< Figure 2 about here >
The steps liberalization, privatization and establishment of a NRA have essentially run
remarkably parallel, i.e. the timing of market opening and the creation of a regulatory authority is
frequently equivalent. It is striking, though, that in all countries except for Great Britain, Sweden, The
Netherlands and the Federal Republic of Germany, NRAs were created before market liberalization
and PTO privatization began. This means that the institutional setup was mapped out before the
opening of the telecommunications monopoly. One might also observe that the market in numerous
countries was not opened until the PTO had been (partially) privatized. The USA and Canada are
special cases. The telecommunications sector had always been privately organized in both countries
and a NRA was founded very early: the FCC in 1936 and the Canadian CRTC in 1976.
However, the convergent development cannot blur the fact that there were differences between
the countries in terms of the institutional implementation of the regulatory reform. Such differences
pertain not only to the material configuration of the liberalization and privatization policies, as we still
can detect a significant variation between the states when it comes to the property and control rights of
previously monopoly enterprises (Schneider, Fink and Tenbücken 2003).5 In particular the institutional
structure and the competencies endowed to the NRA tend to greatly vary.
The main reason for the abundance of liberalization measures at the end of 1990’s is the EU-Directive
96/19/EC, providing that all EU member states completely open their markets for fixed-net telephony starting
January 1st 1998 and that the PTOs allow new providers free access to their network infrastructure.
4
5
Some countries have already completely privatized their PTO, e.g. Denmark, Great Britain or New Zealand,
while others have yet to undergo any steps towards privatization (e.g. Luxembourg) or the majority of the
company is still controlled by the state (e.g. Belgium, France and Norway).
11
Competence profiles of National Regulatory Authorities
In the course of the regulatory reform of the telecommunications sector existing rules were
modified or abolished, while new regulation norms were created to guarantee the transformation from
the monopoly to open markets and secure properly functioning competition. The task of watching over
the adherence to these new norms was primarily transferred to the NRA. This entailed, for instance,
stipulations on licensing, interconnection, numbering or pricing. Since the beginning of the 1990’s the
European Union has attempted to harmonize national regulation stipulations and develop a common
regulatory framework to which legislation and the regulatory authorities in the member states must
adhere (Majone 1996; McGowan and Wallace 1996). Now that the previous common legal framework
was aimed at facilitating the transition from monopoly to competition, the new legal framework that
has been passed in 2002 should serve to come to terms with the increasing technological convergence
of telecommunications, broadcasting and Internet.6
As indicated by Table 1, the NRAs are primarily responsible for the control of licensing,
pricing, as well as the surveillance of the service quality of the telecommunications sector. The
ministries are quite often involved in the frequency planning and allocation for the area of mobile
communication and also play a role in decision-making on the licensing of fixed-voice telephony in
various countries. The cartel authorities, on the other hand, nearly exclusively deal with its functions
in (sector-specific) merger control and are only of secondary importance or entirely insignificant for
other regulation tasks in the telecommunications sector (see Coen and Héritier 2000).
< Table 1 about here >
The main document of this new European legal framework is the ‘Directive on a common regulatory
framework for electronic communication networks and services’ from March 7 th 2002 (European Parliament
2002).
6
12
Thus, we have established that despite the world-wide diffusion of NRAs there are considerable
differences in terms of the regulation competencies delegated to them. Although the regulatory reform
of the telecommunications sector was sparked by developments in the USA and had a great impact on
all other states, they have not merely copied the American blueprint of a materially independent NRA
with extensive regulation competencies. Instead there is a significant degree of variation in the
organizational structure and regulation competencies of the NRA which implies that national factors
are responsible for the country-specific adaptation to the internationally present diffusion mechanisms
(Haverland 2001; Schmidt 2002).
4. The fitness landscapes of National Regulatory Authorities
Having presented the convergent development of the liberalization and regulation politics in the
telecommunications sector, we shall now compare and contrast the NRAs in detail in the following
and examine the degree of their material independence from state principals on the basis of their
structural and functional traits. The goal is to locate the individual NRAs as a specific institutional and
functional combination in a two-dimensional fitness landscape (see part 2 of this chapter), compare
them with other NRAs and thus pinpoint their structural location compared to the ideal type of a
completely independent institution. Applying facet theory as a method to deal with multiple
combinations of institutional traits, we are able to differentiate between materially independent and
less independent regulatory authorities, while Partial Order Scalogram Analysis allows us to illustrate
the multi-dimensional profiles of the regulatory authorities in a two-dimensional landscape. Since
neither facet theory nor POSA – according to our knowledge - has yet to be applied to political
research, we will first briefly elaborate on the methodological and theoretical aspects of this form of
analysis and presentation.
13
Facet Theory and Partial Order Scalogram Analysis (POSA)
The basic principle behind facet theory is that distinctions can be made on an object using a
certain amount of elements (facets), so that a previously unorganized universe can be structured. The
individual elements of each and every facet assume different values and therefore describe the internal
variance of the given facet. The combinations of different facets are labeled as structuples, each of the
facet elements being a struct. In the case of an analysis with four facets, each of which containing
three elements, for example, the structuple ‘2321’ as a combination of 34 (81) possibilities in total is
realizable. In case all structuples of a set of objects are comparable with each other, we are dealing
with a linear or complete order.
However, in complex social science phenomena, it is difficult to compare all structuples of a
data set, e.g. the structuples ‘1312’ and ‘1222’, so that is necessary to illustrate the structuples in a two
or multi-dimensional space. The lacking comparability of all existing structuples is also the main
difference between a linear order (Guttmann scale) and a partial order (Borg and Shye 1995: 107).
Using non-metric multi-dimensional techniques of analysis, it is possible to geometrically illustrate
this kind of data set. To depict multivariate distributions in which actors – in our case regulatory
authorities – can be granted different profiles – here the organizational structure or competence profile
of the NRA – Multidimensional Structuple Analysis (MSA) is an adequate technique. MSA maps out
structuples by points in a multi-dimensional space which in turn can be partitioned into different
regions by every facet serving as the basis of the structuples, in which only points with the same struct
lie.
For our analysis of the independence of NRAs and their illustration in a fitness landscape, we
apply a special form of MSA (Levy 1998: 5), Partial Order Scalogram Analysis (POSA). POSA
distinguishes itself from MSA by ordering each variable in the same direction, i.e. for the elements of
all facets we obtain {1<2<3<4...<n}. To pinpoint the smallest possible dimensionality adequate to
represent this partial order while strictly maintaining the order, POSA with base Coordinates (POSAC)
is used. POSAC lists all profiles (structuples) that appear in a data set and represents these in a two-
14
dimensional space by means of geometric distances on the basis of their structural similarity
(Guttman and Greenbaum 1998: 27). Using both main dimensions (in the plot ‘DIM (1)’ and
DIM (2)’) every profile that occurs is depicted in the form of a point in a two-dimensional diagram.
Organizational structure and regulatory competencies of the NRAs
The NRAs in the OECD-countries often differ considerably in terms of their organizational
traits and regulatory competencies. While some do come very close to the ideal type of an independent
NRA, others demonstrate characteristics that imply a persistently above-average dependency on state
principals. With the help of POSAC we are able to offer a comparison of the institutional and
functional profiles of the NRA in a fitness landscape and thus spatially illustrate their degree of
independence. In doing so, we consider the fitness landscape to be a two-dimensional space in which
the profile with the lowest degree of independence is located in the lower left corner while the profile
with the highest degree of independence is nested in the upper right corner.
We assume an institutional evolution from a position at the bottom left to one in the upper right,
thus an increase of the independence of the NRA with time. The geometric distances between the
points refer to the similarity of the organizational structure and the competencies of the NRA.
Regulatory authorities with a similar institutional structure and comparable regulatory functions are
thus closer to each other than those having clearly different structures or competencies.
For the POSAC, data were collected on the organizational structure and the regulatory
competencies of the regulatory authorities in 27 OECD-countries.7 These data were transformed along
a coding scheme for the POSAC (see Appendix 1/2). For the comparison of the institutional profiles a
variable representing a high degree of independence is coded with ‘3’, a moderate degree of
independence with ‘2’ and a low degree with ‘1’. For the sake of comparison of the functional profiles
we code such cases in which the NRA has the sole or partial regulatory responsibility with ‘2’ and
7
The data set is based on both information given by the ITU and OECD as well as our own research. It can be
accessed at http://www.uni-konstanz.de/FuF/Verwiss/Schneider/redimensionierung.htm.
15
cases where other regulatory institutions fulfill this task (e.g. ministry, cartel office) are coded with
‘1’.
The POSAC of the organizational profiles uses nine variables of the data set that cover the main
institutional characteristics of the NRAs in terms of their internal and external environment (see
Appendix 1). For the organizational profile with the structuple {CB, AH, RT, FF, AD, OD, AB, TO,
ST} we end up with the topography illustrated in Figure 3.
< Figure 3 about here >
The fitness landscape demonstrates a relatively large degree of variation, as a unitary
organizational model in the OECD-countries has evidently not yet emerged. As for their organization
structure, the NRAs still considerably vary and have approached the ideal model of an independent
sector regulator following highly diversified patterns. However, for all countries there is a clear
tendency towards greater independence of the NRA.8 In terms of their organization profile, Turkey,
Ireland, the USA and the Federal Republic of Germany are momentarily the most independent of all
25 countries analyzed.9
While the result for the USA – the first nation to have established a NRA for the
telecommunications sector – is no surprise, the position of Turkey does strike our attention. With
0.767 it demonstrates the greatest independence score in the comparison of organizational profiles, but
together with New Zealand, South Korea and Poland, the lowest score (0) for the comparison of
competencies. This could be explained by the fact that Turkey did indeed establish a NRA thanks to
8
This is recognizable by the fact that all NRAs are located to the right of the diagonal and thus closer to the most
extreme score at the upper right (very much independence) than to the point in the bottom left (very little
independence).
9
The available data for Japan and Luxembourg were not sufficient and both countries thus were not taken into
account in the POSAC.
16
initial formal liberalization measures, but transferred only few competencies to it in the course of the
sluggish privatization of TürkTelekom.
For the POSAC of the competence profiles of the NRAs eight variables were chosen from the
data set (see Appendix 2). These span from licensing (FL, ML), to pricing responsibilities (RB) and
interconnection (IC) to the surveillance of company mergers (MA). The fitness landscape shown in
Figure 4 coincides to the 25 profiles with the structuple {SA, ML, MA, NA, FL, OL, RB, IC}.
< Figure 4 about here >
Here we detect an even greater variation than in the case of the institutional profiles. The USA
and the Federal Republic of Germany are countries that have granted their respective NRAs the most
comprehensive regulatory involvement. They have reached the maximal score of 1, illustrated by the
position to the upper right in the Profile Plot. Other European countries such as Denmark, Ireland,
Sweden and France have also delegated extensive competencies to their NRAs. The laggards are New
Zealand, Poland, South Korea as well as Turkey, where none of the analyzed regulatory functions are
executed by the NRA. In these countries, the ministry remains responsible for all matters of regulation.
The result for New Zealand and Poland is surprising though, as their NRAs showed a relatively high
degree of independence in the analysis of the organizational structure. Under the premise that
regulatory authorities in the telecommunications sector do experience an evolutionary process aimed
at completely independent institutions, these countries’ NRAs are still at the very beginning.
The material independence of the NRAs
By means of these partial results we are now able to produce an index of independence that
equally takes the organizational structure and regulatory competencies of the NRA into account. For
each country the arithmetic mean was calculated from the POSAC score for the institutional and
functional profiles. Using these mean values, we shall develop a rank order of the analyzed countries
17
in terms of their degree of material independence of their NRAs from state principals (see Appendix
3). A graphic representation of this index is offered by Figure 5.
< Figure 5 about here >
The most independent NRAs are again located to the upper right of the diagram. It is not
surprising that the USA appears to have the most independent regulatory authority with the FCC,
closely followed by the RegTP of the Federal Republic of Germany and ComReg in Ireland. Of the ten
most independent regulatory authorities, seven of them belong to a country of the European Union
according to our research.
The great variance between the different degrees of independence among the countries becomes
evident in the diagram. This confirms our hypothesis that there indeed has been a world-wide diffusion
of the models of national regulatory authorities, but by no means can we identify in all cases equally
independent regulatory authorities with extensive competencies. The fact that up to now all OECDcountries have complemented the opening of the telecommunications market with the creation of
formally independent NRAs sheds no light on how the institutional implementation and competence
delegation was actually carried out in practice. All states have established a formally independent
NRA by now, with the EU-countries in particular having been required to do so by Directive. Until
now, though, no unitary model has emerged and penetrated all countries, nor has there been a mere
emulation or spread of the American FCC-model. The institutions often labeled by the literature as
classic examples of independent NRAs, such as OFTEL (since fall of 2002 OFCOM) in Great Britain
or OPTA in the Netherlands, demonstrate a surprisingly low degree of material independence. And in
Spain and Austria as well the ministry continues to hold significant regulatory responsibility at the
costs of the influence and independence of CMT and TKK. In the Federal Republic of Germany and
Sweden, on the other hand, RegTP and PTS today are authorized to decide autonomously on almost all
questions of telecommunications regulation.
18
5. International diffusion and national adaptation
As already indicated, the world-wide liberalization of telecommunications evoked both
convergent as well as divergent trends. As convergent we label the fact that all states have opened
their markets by now and at least formally established NRAs to facilitate the transformation from
monopoly to competition through regulatory reform. On the other hand, there is a clear pattern of
divergence when it comes to the concrete institutional setup and delegation of competencies to the
NRAs. In the following part, we will now present a model of dynamic transformation to explain the
seemingly oxymoronic divergent convergence that has been described above. The model emphasizes
the interaction between both global policy diffusion and the “digestion” of such policies in a national
context.
The diffusion of regulatory reform
As demonstrated by numerous contributions in this volume, processes of diffusion, e.g. in the
implementation of privatization measures (Meseguer), foreign trade policy (Simmons and Elkins),
new environmental instruments (Tews, Busch and Jörgens) or independent regulatory agencies
(Gilardi) are of high explanatory value. Depending on the subject of analysis, different factors are
identified for the spread of certain policies or institutions. Emulation, thus the imitation of others,
applies either to the strategic response to the behavior of competitors who compete on the same
markets for direct investments (competitive emulation) or the adoption of certain behavioral patterns
due to cultural values and common traits, without being aware of the true national repercussions of
these policies (cultural emulation). Rational learning based on experiences from reform processes in
other countries also plays a crucial role in our understanding of international diffusion processes.
Like most articles in this volume, our approach differs in two significant ways from previous
diffusion models that seek to explain institutional reform (i.e. Ikenberry 1990; Vogel 1996). Firstly,
previous approaches dedicate too little attention to the international and supranational level in the
processing of regulatory reforms, and, secondly, diffusion is conceived to be a continuous process. As
19
we will show, though, it is more plausible to assume a dynamic multi-level process for reform
diffusion that does not merely penetrate the states horizontally, but also vertically through the spread
of knowledge by means of international and supranational organizations. Secondly, the individual
countries were not exposed to the same pressures to reform, as these tended to manifest themselves as
a self-stimulating, path-dependent process with time. However, in this case, it did not hinder the
countries from adopting different institutional arrangements which in turn were based on differences
in the means by which domestic politics responded to the global pressures to reform.
Convergence through horizontal policy diffusion
The wave of liberalization in the telecommunications sector and the related reform process
began at the beginning of the 1980’s with a big bang in the USA. There were optimal preconditions
for reform because the USA was far more technologically advanced than other nations and because the
dominant provider, AT&T, was a private enterprise that was easier to split up than the publicly
controlled telephone companies of European countries or Japan (Coll 1986). As early as 1934 decisive
regulatory functions were delegated to the FCC, whose task was to control the functioning of the Bell
System as a private monopoly. The USA demonstrated a much greater capacity towards structural
adaptation than other nations because its governance structures were – in institutional terms – not as
deeply anchored as those in Japan or the countries of the European Community (EC), where the
provision of state telecommunications services was frequently guaranteed by statutory law. In the
USA important institutional arrangements in the telecommunications sector could already be modified
by decisions of the FCC or through the jurisdiction of the national courts.
As a consequence, the institutional reform in America increased the political and economic
pressure on other states who began to partake in the de- and re-regulation process. As a forerunner of
the liberalization of the telecommunications sector, the Reagan administration aimed to stimulate the
opening of markets in other countries by means of trade diplomacy and the creation of transnational
alliances. Rapidly increasing market shares of foreign firms on the American telecommunications
market heightened the pressure on the US government, Japan and the larger EC-countries to open their
20
markets and enable American companies the same competition conditions in their home markets. Thus
the American government entered bilateral and multilateral negotiations within the OECD and GATT
on the opening of markets with the still heavily regulated states of the EC. A popular means of
bilateral pressure was (and still is) the threat of creating tariff and non-tariff barriers to imports from
selected countries. Parallel to the large political-economic offensive of the Reagan administration,
subsidiaries of large US telecommunications companies increased pressure in particular on the
governments of Germany, France, and Great Britain to carry through with similar liberalization
measures and reforms as in the USA.
This economic and political pressure was intensified by a horizontal suction effect that triggered
a change in strategy of many governments starting in the early 1990’s. The suction mechanism can be
interpreted as a path- and frequency-dependent process in which incentives change depending on the
number of actors that have opted for or against the opening of the market (Arthur 1997; Witt 1989).
Like a self-stimulating Markoff process, the more states who had partaken in the reform trend, the
greater the incentives for governments to equally liberalize their telecommunications sector (i.e. the
transition probability is not fixed but depends on the number of transitions that already have taken
place). Once the number of reform-oriented states had reached a certain threshold, the utility of
cooperation and the adoption of reform-oriented behavior outweighed the advantages of clinging to
the status quo, as illustrated by Levi-Faur in his chapter of this volume (see also Granovetter 1978).
At the beginning of the 1990’s, the view that public monopolies and state regulation are an
obstacle in the face of growing international competition in the telecommunications sector began to
prevail. The greater the number of states who had opened their markets, the greater the costs of
sticking to older monopolistic structures. Thus, according to the increasingly wide-spread assumption,
governments risked falling behind in the global location competition.
Increasing convergence through vertical diffusion mechanisms
Along with the described horizontal diffusion mechanisms we must also consider the role of
supranational and regional institutions for the vertical diffusion of regulatory reforms. In particular in
21
those European countries who were not willing or able to join the reform trend that originated through
horizontal diffusion forces, hierarchic mechanisms evoked such a policy change. Already established
and newly founded institutions, such as the OECD, the World Trade Organization (WTO), the
International Telecommunications Union (ITU) and the EU formed networks that were accessed by
sector-specific ‘epistemic communities’ and ‘policy communities’ for contacts and the exchange of
information. These roundtables of international experts were instrumental for sharing specialized
knowledge on the construction and means of function of the NRAs. For example, since the end of the
1970’s the OECD served as a crucial transmitter of knowledge on developments in the USA and, thus,
played an important role in the formulation of national interests in the context of regulatory reform in
the telecommunications sector. The ITU, founded in 1865 in Paris as the International Telegraph
Union, is a specialized UN-agency responsible for both the establishment of technical standards and
developmental support of the member states, in particular in the creation of a general framework for
the national regulation of telecommunications. Meetings of the Council and World Conferences of the
ITU facilitated the exchange of knowledge and experience of the member states as well as the
coordination of their policies (World Bank 2000: 12). Thus, the ITU played a significant role in the
process of diffusion. Other important organizations for the hierarchical diffusion of reforms are the
European Conference of Post and Telecommunications Administrators (CEPT) and the European
Telecommunications Office (ETO). They enhance cooperation among member organizations and strive
for harmonization in certain regulation matters , e.g. licensing conditions, frequency management or
number allocation.
A particularly significant role in the vertical diffusion was played by the European Community
and its industrial policy offensive starting in the middle of the 1980’s. On the one hand, this offensive
led to the strengthening of national reform interests. Yet, it also served to considerably loosen the
institutional rigidities created by older regulatory structures in most countries. The structural changes
in the USA, Japan and Great Britain, their experiences with an independent sector regulator and the
economic effects of the market opening, stimulated the interest of the Commission, that had begun to
accumulate competencies in industrial matters since the beginning of the 1980’s. Its primary intention
22
was to turn negative integration into positive integration in the EC through industrial policy activism
(Schneider, Dang-Nguyen and Werle 1994). This development was further bolstered by geopolitical
rhetoric that the EC member states cannot be the victim of a “pacific bigemony” (Grewlich 1991: 385)
and become a political-economic colony of the USA and Japan. This, in particular, motivated the
Commission to instigate institutional changes in the EC-member states and introduce more
competition in the infrastructure sectors previously characterized by state monopolies.
In this context, the most important initiative was the drafting of the Green Book 1987, in which
the cornerstones of a future telecommunications policy were laid out. In combination with the
practically simultaneously passed Single European Act and the Internal Market Program planned for
the end of 1992, a momentum arose that intensified the reform orientation produced by horizontal
diffusion in most countries. The rapid growth of sector regulatory authorities starting in the mid1990’s (see part 2 of this chapter) can also be traced back to a legislative initiative of the EU. By
Directive 90/388/EEC (European Commission 1990) and Directive 96/19/EC (European Commission
1996), the member states were required to open their national market for voice telephony and the
telephone network for competition by July 1st 1996 and January 1st 1998, respectively. Therefore,
regulatory reform measures and the establishment of NRAs became inevitable for guaranteeing a
system of functioning competition in the EU member states.
This Europeanization of industrial policies is enhanced by the EC-legal system oriented towards
case law that allots the European Court of Justice (ECJ) and the Court of First Instance an extremely
influential position in the web of European institutions. ECJ-decisions can exert a very far-reaching
impact and lead to new harmonization impulses within the EU (Mattli and Slaughter 1998). Thus,
since the middle of the 1980’s reform-oriented actors have increasingly strategically reverted back to
the integration mechanism of EU-law, a development that penetrated other policy areas (e.g.
environment or consumer policy) much earlier.
The fact that all OECD-states have opened their telecommunications sector for competition by
now is thus a combination of horizontal and vertical pressure for reform, national interest in regulatory
23
reforms as well as persistently greater incentives to join the liberalization trend to avoid losing out in
the development. To make the newly pursued liberalization course appear credible to investors, they
had no other choice than to follow the North American model and delegate large portions of sectoral
regulatory competencies to a NRA that is independent of government and administration both in
organization and staff. Fabrizio Gilardi demonstrated empirically that the delegation of regulatory
functions to a NRA serves to boost the credibility of liberalization policies and that delegation
becomes more probable in the case of a recent opening of a sector previously dominated by (state)
monopoly (Gilardi 2002).
However, this trend towards convergence does not automatically imply the adoption of identical
institutional structures. As we have demonstrated with the concept of fitness landscapes of national
regulatory authorities, the American FCC-model was not adopted by all countries. On the contrary,
there is still a high degree of variation within the overall institutional topology when it comes to the
implementation of the reform at the national level. The NRAs often hold highly diverse organizational
and functional characteristics and, as a consequence, extremely different levels of independence from
political principals, which in turn has repercussions for regulatory practice on the respective national
telecommunications market.
National adaptation
What influences the different forms of adaptation to diffusion processes? Taking account of the
national constellations of actors and institutions will shed light on this. The countries influenced by
diffusion processes do not represent unitary actors, but instead are composed of an array of domestic
actors whose behavior is coordinated by different political and institutional arrangements. To pinpoint
the probability of adoption of reforms we must focus on the domestic political structures which
mediate this adaptation process. This entails the structure of the interest mediation system as well as
the institutional “embeddedness” of the status quo and the collective decision-making system’s
capacity to act. The probability that a country adopts a reform concept spread by a process of diffusion
24
– in our case the liberalization of the telecommunications market, regulated by an independent
authority according to the FCC-model – depends on a combination of these three variables.
Thus we can expect that the diffusion of regulatory reform has greater repercussions on a
country the stronger the alliance of the institutional reform interests, the weaker the institutional
“embeddedness” of the status quo and the greater the structural capacity to act of the decision-making
system presiding over the institutional reforms. These arena-dependent capacities and interest
structures sometimes change with time, though, which is why a dynamic perspective is also adequate
here. This was particularly evident in the example of the telecommunications reform in the member
states of the EU, where the pressure to assimilate grew with time and modified national institutions.
Thus, the increasing EC-intervention led not only to the reshaping of the national interest structure, but
also to a change in the institutional underpinnings of the telecommunications sector.
The frequent considerable variation in the degree of NRA-independence could, for instance, be
traced back to the fact that the specific organizational structure of the NRA and the regulatory
competencies delegated to it are highly dependent on the political and legal system of the country at
hand. In countries with a powerful executive the delegation of regulatory competencies from the
government to the NRA may be more sluggish under some circumstances than in countries with a
powerful legislative branch. In the “ideal case” that the NRA is not only formally, but also materially
independent, it is able to execute its regulatory mandate without the political or private influence on
the part of the government, other regulatory institutions or societal groups. Along these lines, Gilardi
demonstrates that the delegation of regulatory competencies to a NRA depends on the number of veto
players in a political system; more veto players lead to less delegation (Gilardi 2002: 884).
On the other hand, the divergence in the NRA structures may be linked to the fact that
regulatory competencies in some states are rather assigned to the state due to past experiences with
certain alternative governance-structures. If independent regulatory institutions or self-regulation
mechanisms were unable to produce the desired political outcomes in a certain political domain in the
past, this form of governance might not be viable for a newly liberalized sector. Furthermore, it is also
25
possible that societal groups and private actors opt against a certain institutional form of a regulatory
policy that pertains to them and are able to prevent the establishment of this institution through their
(indirect) influence on the political process (e.g. labor unions in the privatization of employment
services).
Whatever the decisive factors behind the national political structures may be, institutions and
(reform) policies that spread internationally through diffusion processes are seldom exactly adopted. It
seems to be clear, however, that certain national factors may facilitate or aggravate the exact
implementation of reforms or the absorption of institutions. The very mechanisms behind these
different patterns of national adaptation remain unclear for the most part and thus pose a crucial task
for the future research agenda.
6. Conclusion
This chapter has shown that the regulatory reform of the telecommunications sector that began
in the USA has prevailed in all western industrial nations in the last 20 years. All countries have
opened their markets for competition by now, privatized former state enterprises and established
National Regulatory Authorities. An array of different factors on the international and transnational
level have been responsible for the spread of regulatory reform and the related convergent
development in the telecommunications sector. Both horizontal and vertical pressures and “suction
mechanisms” determined the decisive steps towards liberalization that led in turn to the creation of the
NRAs. In this process the European Union assumed the role of an intermediary or intervening actor
that served to anchor international assimilation demands into a regional context.
Despite the fact that the convergence process intensified with time, we observe a clear variation
in the institutional implementation of the regulatory reforms of the telecommunications sector. The
OECD-countries essentially created NRAs with often very different organizational structures and
regulatory competencies. This institutional diversity has direct repercussions on the level of
independence of the individual NRAs. We find a very visible gap between countries with a
26
comparatively independent NRA, such as the USA, the Federal Republic of Germany, or Ireland, and
those states whose institutions (ministries, cartel offices) still maintain far-reaching regulatory
authority, such as Japan, New Zealand or Poland.
The main determinant of this divergent convergence is the different domestic political structure
of the respective countries which disabled them from adopting a mere carbon copy of the American
FCC-model. The structure of the system of interest mediation, the institutional “stickiness” of the
status quo and the capacity of the political decision-making system to act are the most crucial variables
that exert an influence on the respective national probability of adopting the model. The fact that
supranational assimilation demands always allow individual countries certain room for maneuver in
the implementation of policies served to intensify the institutional divergence. Thus, EU-Directives are
only to a limited extent devised to be immediately effective in the member states, and thus grant them
a certain degree of discretion in their institutional implementation.
In this chapter we have presented a model that enables us to explain the evolution of the
telecommunications sector in the last 20 years. While international and supranational diffusion
mechanisms are coercing the individual countries onto a similar path of development, and – in
evolutionary terms – demand an assimilation of national structures and patterns within a certain fitness
landscape, they maintain room for maneuver due to specific national traits. This in turn can bring
about institutional divergence. The extent to which this model can explain the reform developments in
other infrastructural areas must be examined by future studies. However, we remain convinced that
both the combination of horizontal and vertical diffusion mechanisms as well as their being embedded
in national political structures offer a great contribution to our understanding of regulatory reform
processes in other sectors as well.
27
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Figures and Tables
Table 1: Regulatory Institutions in the Telecommunications Sector
Role
in
Telecom
Regulation
Regulatory Functions
Licensing
Spectrum
Institution
Pricing
Monitoring
of Service
Quality
Yes
No
Issuing
Fixed
Licence
Sector
Regulator
23
4
14
18
5
14
15
18
21
Ministry
22
5
11
8
3
12
13
9
4
Competition
Authority
23
4
0
1
23
0
0
3
1
Oversight Licence Merger
Requirements
Approval
Planning
Allocation
Data Source: ITU (2003); OECD (2001a, 2001b).
31
Figure 1: Adaptation in a fitness landscape (Eldredge1999)
32
Figure 2: The Reform Process in Telecommunications since 1980
30
Markets liberalized; PTO privatized;
Foundation of NRA
25
20
15
10
5
0
1980
1981
1982
1983
1984
1985
1986
Market liberalized
1987
1988
1989
1990
1991
1992
Privatization of PTO
Year
Data Source: ITU (2003); OECD (2001a,
33
1993
1994
1995
1996
1997
1998
1999
2000
Foundation of NRA
2001
2002
Figure 3: Fitness Landscape of Institutional NRA-Profiles
POSAC Institutional Profiles
1.0
F
MEX
I
ES
USA
TUR
GR
KOR
0.8
A
NL
UK
0.6
NZL
IRL
CAN
S
DIM(2)
PL
D
P
AUS
CZ
FIN
0.4
B
ISL
NOR
DK
0.2
0.0
0.0
0.2
0.4
0.6
0.8
DIM(1)
Proportion of profile pairs correctly represented: 0.875
34
1.0
Figure 4: Fitness Landscape of Functional NRA-Profiles
POSAC Functional Profiles
1.0
D, USA
CZ
ISL DK, IRL, P, S
F
MEX
0.8
AUS
NOR
B
DIM(2)
0.6
FIN
CAN
ES, NL
0.4
A, I
GR, UK
0.2
KOR, NZL, PL, TUR
0.0
0.0
0.2
0.4
0.6
0.8
DIM(1)
Proportion of profile pairs correctly represented: 0.894
35
1.0
Figure 5: Independence of NRAs
Scatterdiagram Independence
D
1
S
DK
0,8
F
MEX
Functional Profile
IRL
CZ
CAN
ISL
B
NL
0,6
USA
ES
P
A
I
AUS
UK
GR
FIN
NOR
0,4
0,2
KOR PL
0
0
0,2
0,4
0,6
Institutional Profile
36
NZL TUR
0,8
1
Appendix
1. POSAC Coding for Institutional Profiles:
CR
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
CN
AUS
A
B
CAN
CZE
DK
FIN
F
D
GR
ISL
IRL
I
KOR
MEX
NL
NZL
NOR
PL
P
ES
S
TUR
UK
USA
RI
2
1
1
1
2
1
1
1
1
1
2
2
1
2
1
1
1
1
3
1
1
2
2
1
1
ST
3
1
2
2
3
3
3
1
3
1
3
2
1
1
1
1
1
3
2
3
1
2
1
1
1
IP
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
RT
1
1
1
3
3
1
1
2
2
3
1
3
2
3
1
1
3
1
2
3
3
1
3
2
3
AD
3
3
1
3
3
1
3
3
3
3
3
3
3
3
1
3
3
3
3
3
3
3
3
3
3
OD
3
3
3
1
3
2
3
3
3
3
3
3
3
3
1
3
3
1
3
3
3
3
3
2
3
AB
2*
3
1
1
2
1
3
2
2
1
1
3
3
2
1
1
2
2*
2
1
2
2*
3
1
2
FF
1
2
1
2
1
3
1
1
2
2
1
3
2
1
1
2
2
1
1
1
1
1
2
2
2
Note: No sufficient data for Japan and Luxembourg available.
37
CB
2
2
1
3
1
1
1
3
1
3
1
2
3
3
3
2
2
1
1
2
3
3
3
1
3
AH
1
1
1
1
1
1
1
3
1
3
1
1
3
1
3
1
1
1
1
1
1
1
1
1
3
TO
2
2
3
2
2
3
3
3
2
2
2
3
3
1
3
2
2
3
2
2
3
1
2
2
2
Coding Scheme
Country Number
Country Name
Regulatory Institutions
Staff per inhabitant (Mill.)
Independence from Political
Power
Reports to
Autonomy of decision-making
cr
cn
ri
st
Countries from 1 to 14
Names of Countries
SR+C+M = 1; SR+C or SR+M or C+M = 2; SR = 3
small = 1; medium = 2; large = 3
ip
No = 1; Yes = 3
rt
ad
Overturning of Decisions
od
Approval of Budget
Form of Financing
Collegial Body
ab
ff
cb
Appointment of Head
ah
Term of Office
to
M = 1; G or P = 2; G+P or M+P or Other = 3
No = 1; Partial = 2; Yes = 3
Political Dependent Institutions = 1
Political Independent Institutions = 2
Courts = 3
M or G = 1; P = 2; SR = 3
1 source = 1; 2 sources = 2; 3 sources or more = 3
No = 1; small (<4) = 2; large (>=4) = 3
M
or
G
=
1;
P
=
SR or P+G = 3
<4 = 1; >=4 = 2; >=6 = 3
Note: M = Ministry; G = Government;
C = Competition Authority; * = value estimated
P = Parliament;
38
2;
SR = Sector Regulator;
2. POSAC Coding for Functional Profiles:
CR
CN
FL ML OL MA IC
DR SP
SA NP
NA RB FP
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
AUS
A
B
CAN
CZ
DK
FIN
F
D
GR
ISL
IRL
I
KOR
MEX
NL
NZL
NOR
PL
P
ES
S
TUR
UK
USA
2
2
1
2
2
2*
1
1
2
1
2
2
2
1
1
2
1
1
1
2
2
2
1
1
2
1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
2
1
2
2
2
1
2
2
2
1
2
1
2
2
2
2
2
1
2
2
1
1
2
1
1*
2
1
2
1
2
1
1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
1
2
2
1
2
1
2
2
2
1
2
2
2
2
1
1
2
2
1
1
2
1
2
2
2
1
1
1
1
1
1
2
1
2
1
1
2
1
2
2
2
2
2
1
2
2
2
2
2
2
1
2
2
1
1
1
2
2
2
1
2
2
1
1*
1
2
2
1
1
2
2
1
1*
1
1
1
1
1
1
1
1
1
1
1
1*
1
2
1
2
2
2
1
2
2
2
2
2
1
2
2
1
2
2
1
1
1
2
2
2
1
2
2
2
1
2
1
2
1
2
1
2
1
2*
2*
2
1
2
1
1*
2
1
2
1
2
1
1
2
Note: No sufficient data for Japan and Luxembourg available.
39
2
1
2
2
2
2
2
2
2
1
2
2
2
1
2
1
1
2
1
2
1
2
1
2
2
1
2
1
2
2
2
1
1
2
2
2*
2
2
1
2
2
1
2
1
2
2
2
1
2
2
2
1
2
2
2
2
2*
1
1
2
1*
2
2
1
2
2
2
1
2
2
2
1
1
2
2
Coding Scheme
Country Number
Country Name
Fixed-Voice Licence
Mobile-Voice Licence
Oversight Licence Requirements
Merger Approval
Interconnection Charges
Dispute Resolution
Spectrum Planning
Spectrum Allocation
Numbering Planning
Numbering Allocation
Regulatory Body (Pricing)
Fixed Price Regulation
cr
cn
fl
ml
ol
ma
ic
dr
sp
sa
np
na
rb
fp
Countries from 1 to 14
Names of Countries
M = 1; SR = 2
M = 1; SR = 2
M = 1; SR or SR+M = 2
Other = 1; SR or SR+C = 2
M = 1; SR or SR+M = 2
SR = 2
Other = 1; SR or SR+M = 2
Other = 1; SR or SR+M = 2
Other = 1; SR or SR+M = 2
Other = 1; SR = 2
Other = 1; SR or SR+C or SR+C+M = 2
Other = 1; Price Cap = 2
Note: M = Ministry; G = Government; P = Parliament; SR = Sector Regulator;
C = Competition Authority; * = value estimated
40
3. NRA-Ranking “Independence”
Rank
Country
Institutional
Value
Functional Value Joint Value
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
USA
D
IRL
S
DK
CZ
CAN
P
F
I
MEX
A
B
ES
ISL
AUS
GR
FIN
NL
UK
NOR
TUR
NZL
PL
KOR
0,759
0,749
0,760
0,692
0,588
0,700
0,707
0,722
0,629
0,721
0,568
0,698
0,645
0,630
0,574
0,693
0,698
0,700
0,563
0,617
0,609
0,767
0,717
0,652
0,635
1,000
1,000
0,926
0,926
0,926
0,781
0,749
0,710
0,776
0,632
0,779
0,632
0,655
0,654
0,710
0,567
0,535
0,530
0,654
0,535
0,487
0,000
0,000
0,000
0,000
Note: Japan and Luxembourg omitted because of insufficient data.
41
0,880
0,875
0,843
0,809
0,757
0,741
0,728
0,716
0,703
0,677
0,674
0,665
0,650
0,642
0,642
0,630
0,617
0,615
0,609
0,576
0,548
0,384
0,359
0,326
0,318