Federal Communications Commission 

 International Bureau 

 445 12th Street, SW 

 Washington, DC 20554

International Bureau 

 Working Paper Series 

1 Traits of an Independent 

Communications Regulator: 

a Search for Indicators 

June 2004

Irene Wu 
1

 The FCC International Bureau's Working Paper Series presents staff analysis and 

research in various states. These papers are intended to stimulate discussion and critical 

comment within the FCC, as well as outside the agency, on issues in international 

communications policy. Titles may include preliminary work and reports on work in 

progress, as well as completed research. The analyses and conclusions in the Working 

Paper Series are those of the authors and do not necessarily reflect the views of other 

members of the International Bureau, other Commission staff, or the Commission itself. 

Given the preliminary character of some titles, it is advisable to check with author before 

quoting or referencing these Working Papers in other publications. This document is 

available on the FCC's World Wide Web site at http://www.fcc.gov/ib/. 
2

Traits of an Independent Communications Regulator: 

a Search for Indicators

By 

Irene Wu* 

Assistant Chief, Regional and Industry Analysis 

Strategic Analysis and Negotiations Division 

International Bureau 

Irene.Wu@fcc.gov 

Federal Communications Commission 

International Bureau 

Washington, DC 20554 

June 2004 

IB Working Paper No. 1 

* The analyses and conclusions in this working paper are those of the author and do not 

necessarily reflect the views of other members of the International Bureau, other 

Commission staff, or the Commission itself. 
3

Contents 

1. Introduction 4 

2. Useful points from previous work 6 

3. What is the regulator’s relationship with other state organizations? 9 

4. What is the regulator’s relationship with industry? 15 

5. Regulator’s relationship with consumers 17 

6. Decision-making procedures 19 

7. Ethics rules 23 

8. Conclusions 26 

Appendix: the surveys 31 

Notes of appreciation 35 

Tables 

1. Leadership of the regulatory organization 10 

2. Telecommunications wireline licensing 12 

3. Independence from other state organizations 14 

4. Regulator’s relationship with industry 16 

5. Dispute resolution, consumer concerns, and universal service functions 18 

6. Decision making processes 19 

7. Ethics rules 24 

8. Summary of indicators from 18 country survey 28 
4

1. Introduction 

As the world moves from the industrial into the information age, doing a good job 

of governing the communications infrastructure becomes more important. Historically, 

the power to make decisions about the telecom network resided with the 

telecommunications and/or the broadcasting monopoly, but now it is widely accepted that 

consumers benefit when there are competitive markets for these services. The question 

then arises, how should the authority to govern communications networks be arranged to 

suit this new, competitive environment? For many reasons outlined below, an 

independent regulatory authority appears to be an effective way to govern. To establish a 

framework for defining regulatory independence, the universe of political interests that a 

regulator faces can be divided into three groups: other state institutions, the industry, and 

consumers. This paper uses two sets of data, a survey of 18 countries’ communications 

regulators on their organizational structure, and a more in-depth survey of four countries’ 

ethics rules and decision-making procedures to examine the techniques used to mediate 

between regulators and each of these three groups. While these surveys are not 

comprehensive, they draw from a broad range of countries. In the end, some conclusions 

can be drawn as to what indicators may be used to characterize a regulator’s 

independence. 

In the past, there have been government departments or ministries with 

responsibility for communications. Recently, the trend is to establish separate regulatory 

agencies for communications. In 1990 there were only 13 telecom regulatory agencies in 

the world.1

 Since then, the number has roughly doubled every four to five years. Today 

 

1 World Telecommunication Development Report 2002. Geneva: International 

Telecommunication Union, 2002, 49. 
5

there are no less than 119 such authorities.2 Another element of this trend is that many 

states are establishing independent regulators as part of their commitments under the 

World Trade Organization’s Basic Telecommunications Agreement. This reflects the 

widely held notion that independent regulators are best. The effort to establish or 

maintain independent regulators suggests a need to develop criteria to identify when a 

regulator is independent. 

What, then, makes a regulator independent? Particularly, from whom or what is 

the regulator supposed to be independent? One way to approach this question is to 

distinguish between policy and regulation. The policy maker is expected to broker 

agreement on broad objectives, and every brokered agreement could be unique from the 

next depending on political circumstances. The regulator, because it is independent from 

direct political pressure, is instead expected to reach similar conclusions in similar cases. 

The challenge, however, becomes how to design a regulatory institution insulated from 

the vagaries of politics that is still consistent with democratic notions of accountability 

and majority rule. 

The first section of this paper discusses methods regulatory regimes use to 

manage their relationships with three different sources of political pressure: other state 

institutions, industry, and consumers. Not only does the regulator have an interest in its 

own independence, but also each of these three groups also has a long term interest in the 

regulator’s independence as well. For the other state institutions, having developed 

policies that resolve the tensions between consumer and industry interests, an 

independent regulatory regime with clear focus and technical skills to implement is 

 

2

 Domestic Enforcement of Telecom Laws, Best Practice Guidelines” ITU-D Question 18/1, 

Rapporteur’s Draft No. 2, July 2003, 3. 
6

critical to successful implementation of those policies. Three indicators of regulatory 

independence are the stability of its leadership, scope of its authority, and the 

independence of its funding. For investors, a regulatory regime independent from 

political vagaries is key to providing a predictable investment climate. Investment is 

important in order for communications services to develop. Indicators for independence 

relevant here are whether the incumbent operator(s) are government-owned, and how 

commonly staff move from the regulator to the industry and vice versa. For consumers, a 

regulatory regime independent from the industry is important as an advocate, their voice 

in the state. In the communications field, firms are more concentrated than consumers; it 

is easier for firms to organize and represent their interests to the state than for consumers. 

Indicators relevant here are whether there are specialized offices for consumer concerns 

and for universal access concerns. 

The second section of the paper draws on another study examining the ethics rules 

and decision-making procedures of several countries, systemic techniques that can be 

used by regulatory regimes to mediate relationships with all three interest groups. 

Decision-making procedures govern how the regulator interacts with interest groups at 

the moment a particular case is under consideration. Ethics rules govern how the 

regulator’s individual employees overall relationship with interest groups. 

2. Useful points from previous work 

Several scholars have explored the question of how a government can make the 

commitment to liberalization of the telecommunications market, a commitment which 

can be politically difficult to sustain. They map the location of greatest power in a 
7

particular type of state system and, based on this analysis, make suggestions on how a 

government can make the most credible commitment to difficult policy objectives. Peter 

Cowhey emphasizes that legislation can represent a strong commitment in countries 

where the power of legislature is great relative to the president’s. When power is divided 

between executive and legislature, it is harder to reach agreement on policy objectives, 

laws are less frequently modified, and therefore, laws can reasonably be expected to be 

unchanged for a period of time. 3 In some presidential systems, however, the executive is 

more influential than the legislature. In such cases, note J. Luis Guasch and Pablo Spiller 

in their study of some Latin American countries, presidential decrees are the most 

powerful policy commitments.4 In parliamentary systems, by contrast, the views of the 

prime minister and parliament may be easier to achieve, and laws can change frequently. 

Legislation in these countries does not lend itself to policy credibility; other mechanisms 

may be more effective.5 

 Contracts between the regulator and regulated firms can be an effective tool of 

policy commitment in those systems with strong judiciaries. For example, an operator’s 

license to offer communications service may take the form of a contract between the firm 

and the state, detailing both sides’ obligations. Guasch and Spiller note that these reflect 

government commitment because the contract cannot be changed without both parties’ 

 

3

 Peter Cowhey and Mathew McCubbins, eds. Structure and Policy in Japan and the United 

States. Cambridge: Cambridge University Press, 1995, 2-8. 

4

 J. Luis Guasch and Pablo Spiller. Managing the Regulatory Process: Design, Concepts, Issues, 

and the Latin America and Caribbean Story. Washington, D.C.: World Bank. August 1999 . 

5

 Peter Cowhey and Mikhail Klimenko. “The WTO Agreement and Telecommunication Policy 

Reforms.” Washington, D.C.: World Bank Working Paper No. 2601. April 25, 2001. 
8

agreement. Not only in these contract-based regimes, but in a variety of regimes, the 

judiciary may serve as an important check on legislative or regulatory caprice.6

Federal or national action, as opposed to local government action, in some 

countries, is key to achieving policy commitment. Greater centralization could be 

expected to provide greater policy credibility over time. In countries where local 

authorities have more power, this relative decentralization may lead to less consistency 

over time, although it can foster regulatory innovations which can also be beneficial.7

Several scholars have identified possible mechanisms to ensure the independence 

of a regulatory regime. In his examination of Europe, Gianfranco Majone shows how 

European politicians established separate institutions with fixed rules that would be able 

to issue consistent regulations over time. These separate institutions protect regulations 

from shifts in political winds that are perceived as unpredictable by investor firms.8

 

Won-ki Min in an OECD paper has a list of measures including separating the regulatory 

body from the Ministry, separate funding for the regulator, and a procedure through 

which the regulator’s decisions can be overturned.9

 Peter Cowhey and Mikhail Klimenko 

identify a number of other factors including the regulatory regime’s accountability to the 

public, its ability to hire and fire staff, and public reporting of all communications 

between the regulator and ministries.10 Jon Stern and Stuart Holder identify qualities that 

regulators should hold as measures of their independence. They include (1) clarity of 

 

6

 Brian Levy and Pablo Spiller. Regulations, Institutions and Commitment. Cambridge: 

Cambridge University, 1996. pp. 1-35. 

7

 Cowhey and Klimenko, 15 

8

 Gianfranco Majone. Regulating Europe. New York: Routledge, 1996, 5. 

9

 Won-ki Min. “Telecommunications Regulations: Institutional Structures and Relationships.” 

Organisation for Economic Co-operation and Development. Working Party on 

Telecommunication and Information Services Policies. DSTI/ICCP/TISP(99)15/FINAL. May 

26, 2000, 14-15. 
9

roles and objectives, especially between ministries and regulators and between policymaking and commercial management of companies; (2) autonomy from political 

intervention; (3) effective participation by interested parties in decisions; (4) 

accountability, including opportunities for decisions to be challenged if unfair or 

incompetent; (5) transparency in the regime to reduce the likelihood of unfairness and 

incompetence; (6) predictability of the regulatory regime.11 These are cogent traits, but 

are values which can be difficult to measure. 

3. What is the regulator’s relationship with other state organizations? 

Many countries separate the policy-making organization from the regulatory 

organization. Many do not. In a survey of 18 countries (see Appendix for more details) 

certain systems of democratic government – parliamentary or presidential, for example, 

did not predict whether the policy-maker would be separate from the regulator. 

Therefore, rather than focusing on the broad, systemic characteristics, the survey 

examines in detail the organization of the institutions that develop the rules that 

implement policy. Three aspects of the survey are relevant to examining the regulatory 

relationship with other state institutions: the terms and conditions of the leadership, the 

scope of the regulatory authority to issue licenses; and the source of the regulator’s 

budget. 

Leadership. One indicator of the relationship between the regulatory and other 

state institutions is how the leader of the regulatory organization is selected and 

 10 Cowhey and Klimenko, 15. 

11 Jon Stern and Stuart Holder. “Regulatory governance: criteria for assessing the performance of 

regulatory systems: an application to infrastructure industries in the developing countries of 

Asia.” Utilities Policy. 8(1999): 33-50. 
10

dismissed. The regulatory organization has greater independence if the leader’s position 

is protected, by custom or by law, for a specified period of time, or for life, no matter 

what decisions are taken. However, in some instances the leader can be dismissed if 

others in the state are dissatisfied with the decisions of the organization. 

Table 1: Leadership of the Regulatory Organization

 A. 

Leader easily 

removed for 

policy reasons

X = no 

O = yes 

B. 

Leader has fixed 

term of office 

X = yes 

O = no 

C. 

Term of office 

Australia X X ACA: up to 5 years, ABA: 

up to 2 4-yr terms 

Brazil X X Time set at nomination 

Canada X X 5 years 

Hong Kong X O No time limit 

Hungary O X 6 years renewable 

India O X 3 years or to age 65, 

whichever is earlier 

Italy X X 7 years 

Japan O O 

Jordan O X 4 years renewable 

Korea O Telecom = O 

Broadcast = X 

KBC: 3 years renewable 

Malaysia O X 3 years renewable 

New Zealand O X Fixed at time of appointment 

Nigeria X X 4 years, renewable once 

Singapore O O No time limit, traditionally a 

senior civil servant 

Spain X X 6 years renewable 

Sri Lanka O O 

Sweden X X 3 years renewable 

United States X X 5 years renewable 

Here the key indicator for the leader’s independence from the vagaries of politics is 

column A. Can the leader be removed for making decisions contrary to the will of the 
11

policy-makers? If not, then the leader has considerable scope to implement rules 

according to the policy, and the ability to resist pressure to bend the rules in favor of 

those who may be politically better connected. Half of the countries surveyed have 

regulatory agencies with an independent leader. In these countries, having a predetermined term of office often serves as clear time frame which insulates the leader from 

pressures on day to day decisions. The one exception may be Hong Kong, where a 

custom may be developing that the leader serves until he or she retires from civil service. 

If this custom is preserved, it serves as even greater source of independence than the 

common pre-set term of office. While in many instances this kind of leadership has been 

very effective, in principle it does present the risk of unpredictability if the single leader 

is idiosyncratic. A possible solution would be a leadership consisting of several 

individuals.12

Scope of authority. A second indicator is the clarity of the regulator’s authority. 

One area, for example, where regulators typically have great influence is in issuing 

licenses for market entry. For wireline licenses, where scarce resources are not usually at 

stake, many independent regulators have exclusive authority to issue licenses. In other 

markets, the ministry which reports directly to the political leadership has an exclusive or 

partial control in the issuing of licenses. 

 

12 Cowhey and Klimenko, 17. 
12

Table 2. Telecommunications Wireline Licensing 

 A. 

License 

issued by a 

separate 

regulator 

only 

B. 

License 

issued by 

Ministry 

only 

C. 

Both Ministry 

and regulator 

have role in 

licensing 

D. 

No license or 

only notification 

required for 

wireline 

operations 

Australia X 

Brazil X 

Canada X 

Hong Kong X 

Hungary X X 

India X 

Italy X 

Japan X 

Jordan X 

Korea X 

Malaysia X 

New 

Zealand* 

 X 

Nigeria X 

Singapore X 

Spain X 

Sri Lanka X 

Sweden X X 

United 

States 

X X 

* In New Zealand, no license required, therefore regulator is not dependent on Ministry’s 

decision in this regard. 

In 11 of the 18 countries examined, the regulator has the exclusive right to issue wireline 

licenses. Only in six countries did the Ministry retain the whole or partial right to govern 

entry into the wireline market. The one exception in this set is New Zealand, since no 

licenses are required for firms to provide wireline service, neither regulator nor ministry 

is involved. Licensing of wireline telecommunications service is only one of many areas 
13

of possible authority for regulatory organizations. If other areas were examined, a 

different range of responses on the relationship between the regulator and ministry’s 

relationship might be uncovered. 

Funding. A third indicator of the regulator’s independence is the source of its 

budget. Greater independence is possible if the regulatory organization has nearly 

complete control over how fees and funds are raised for its own operations. In other 

instances, the organization’s budget is allocated and approved by institutions that may 

seek to use the budget process to influence regulatory decisions. Some organizations are 

funded both by their own fees and by a politically allocated budget. The following table 

indicates in column C the regulator’s budget sources. Seven of the surveyed raise their 

entire budget from regulatory fees. In four countries, substantial funds are raised through 

fees, but also some portion of the budget must be allocated through the national state’s 

budget process, which subjects them to political review. In addition, in Korea, the 

broadcast regulator’s entire budget is raised from fees, but the telecom ministry has its 

funds allocated through the national budget. 
14

Table 3: Independence from Other State Organizations 

(Summary of Tables 1 and 2) 

 A. 

Independent 

Leader 

X = yes 

O = no 

B. 

License issued by 

regulator only 

X= yes 

O = no 

C. 

Independent Funding 

X =raise own funding, 

O =rely on state budget 

allocation 

Australia X X O 

Brazil X X X 

Canada X X X 

Hong Kong X X X 

Hungary O X X 

India O O O 

Italy X O X / O 

Japan O O X / O 

Jordan O X O 

Korea O O Telecom = O 

Broadcast = X 

Malaysia O X X 

New Zealand O O* O 

Nigeria X X X 

Singapore O O X / O 

Spain X O X 

Sri Lanka O X X 

Sweden X X O 

United States X X O 

 

* In New Zealand, no license required, therefore regulator is not dependent on Ministry’s 

decision in this regard. 

At least based on these three indicators, four countries’ regulators have very robust 

independence from other state institutions: Brazil; Canada; Hong Kong, China; and 

Nigeria. Brazil, Canada, and Hong Kong do indeed have regulators with strong 

reputations for independence. Nigeria’s regulator is newly established, future decisions 

will determine whether it gains a similar reputation. 
15

4. What is the regulator’s relationship with industry? 

In the 2003 survey of eighteen countries, two sets of data were relevant to the 

regulator’s relationship with industry: whether the incumbent telecom operator was 

private and whether there was a revolving door for workers between the regulator and 

industry firms. 

Privatization. One indicator of the regulator’s relationship with industry is 

whether any state-owned incumbent operators have been privatized. Greater 

independence is possible if the state responsibility is first to the consumer without any 

interest in the profitability of a state-owned operator. In other instances, the state is full 

or part owner of an incumbent operator and has additional responsibilities as an investor. 

 Revolving door. A second indicator is whether there is a revolving door for the 

staff to move between the regulator and the industry. Greater independence is possible if 

staff serve their entire careers in the regulatory organization. They are less likely to be 

influenced by other interests. In other instances, staff move frequently between the 

regulatory organization and industry or other parts of the state. A counter-argument is 

that regulators benefit from the market and technical knowledge of staff drawn from the 

industry. 
16

Table 4: Regulator’s relationship with industry

 A. 

Private incumbent 

operator 

X = yes 

O = no 

B. 

Little or no 

movement of staff 

 between regulator and 

industry 

X = yes 

O = no 

Australia O O 

Brazil X O 

Canada X O 

Hong Kong X O 

Hungary X O 

India O X 

Italy O X 

Japan O X 

Jordan O O 

Korea X X 

Malaysia O X 

New Zealand X O 

Nigeria O O 

Singapore O O 

Spain X O 

Sri Lanka O X 

Sweden O X 

United States X O 

 

Based on these indicators, Korea has both a fully privatized incumbent operator and a 

regulator staff that customarily does not move in and out of industry positions. To 

characterize the Korean regulatory institution as independent from industry may be 

surprising as Korea has often been considered a prime example among East Asian 

economies of industrial policy – using state policy to promote its own country’s firms at 

the expense of others.13 Whether a state treats foreign firms differently from domestic 

 

13 For a discussion of the role of the state in Korean economic development in general, please see, “The 

Political Economy of Industrial Policy in Korea,” Cambridge Journal of Economics, 1993 (17): 131-157. 
17

firms, however, is outside the scope of this paper. These results suggest that in Korea the 

framework of the relationship between regulatory organization and industry maximizes 

the regulator’s independence from industry. 

 Another notable set of facts is that for some of the surveyed countries, 

privatization is recent. This is true of Korea, which privatized Korea Telecom only in 

2002. In other markets, such as Hong Kong, Spain, and the United States, the incumbent 

operators have been private for a long time. On the other hand, many countries listed as 

not having private incumbent operators have partially privatized. This is true, for 

example, for Australia, India, and Sweden. Whether these countries are in transition to 

full privatization or their states have chosen to retain some fraction of ownership is too 

complex to be reflected in the table, but may have an effect on the regime’s independence 

from industry. 

5. Regulator’s relationship with consumers

A regulator independent from industry interests and insulated against political vagaries 

also is likely to prove a useful advocate for consumer interests. How consumer interests 

are represented varies widely among different states. The survey results reflect this 

diversity. In telecommunications, there are two major areas of consumer interest, one is 

handling of consumer complaints and concerns, and the other is universal service or 

universal access to services. These two areas are not equally important in all countries. 

Particularly, in countries with highly developed communications networks, universal 

service/access issues may be less urgent. 
18

Table 5: Dispute Resolution, Consumer Concerns, and Universal Service Functions 

 Specialized office for consumer concerns Specialized office for universal service 

Australia Telecommunications Industry Ombudsman 

(telecom) 

ACA Funding and Subsidies Team 

Brazil Anatel's Consumer Affairs Office (telecom) Anatel's Superintendence of Universal 

Access 

Canada 

Hong Kong 

Hungary Consumer Protection Inspectorate 

India Consumer Courts Universal Service Administrator 

Italy 

Japan 

Jordan TRC’s External and Consumer Affairs 

Department 

 

Korea Korean Communications Commission 

(telecom) 

 

Malaysia 

New Zealand 

Nigeria NCC's Consumer Affairs Bureau 

Singapore 

Spain 

Sri Lanka TRC's Consumer Relations Unit and 

Internal Committee for Resolution of 

Consumer Complaints 

 

Sweden PTS's Information Department (telecom) 

and SBC (broadcast) 

 

United States FCC's Consumer Bureau Universal Service Administrative Council 

and FCC's Telecom Access Policy 

Division 

As indicated, in some markets there are offices within the regulator designated to handle 

consumer issues or universal service/access issues. In Brazil and the United States, there 

are overseers for universal service policy that are organized inside the regulatory 

institution. In other instances, institutions other than the regulator are responsible. For 
19

example, in Australia, Hungary, and India, bodies other than the regulator handle 

consumer complaints. 

6. Decision-making procedures 14

All three groups – other state organizations, industry, and consumers – interact 

with the regulator. Two kinds of opportunities for interaction exist: first, at the 

institutional level, in formal decision making processes, and at the informal level, in 

personal interaction. This section discusses decision-making procedures and the next 

discusses ethics rules, all of which govern interactions between the regulator and the 

three groups. Both sections are based on a four- country study undertaken in the second 

quarter of 2002 that examined the Canadian Radio-television and Telecommunications 

Commission (CRTC), Hong Kong's Office of the Telecommunications Authority 

(OFTA), the United Kingdom's Office of Telecommunications (Oftel), and the United 

States’ Federal Communications Commission (FCC). 

All four regulators’ rulemaking processes are based on a three-stage consultation 

framework.15 In the first stage, after an issue is identified, the authority releases a formal 

consultation paper soliciting comments from the public. It is followed by a comment and 

reply comment period where outside players and the public at large submit their views on 

the issue. Finally, a decision is reached based on available information and public policy 

objectives. The consultation paper, comments and reply comments, and the final 

decision are available to the public on the regulators’ website or through official 

 

14 This section on decision-making and the following section on ethics rule draw heavily on work 

jointly written by Cathleen Hsu and the author, “Decision-making procedures and Ethics Rule,” 

August 2002. Available at www.fcc.gov/globaloutreach. 
20

publications, unless there is confidential information. This three-stage consultation 

process serves as the minimum procedural safeguard to ensure that the public is notified 

of a pending decision, allowed to participate in the process, and informed of the final 

decision and its reasoning. 

Table 6: Decision making processes 

 Canada CRTC Hong Kong 

OFTA 

UK Oftel US FCC 

Public notice 

that a new 

decision will 

be made 

Public Notice Consultation 

Paper 

Consultation 

Document 

Notice of 

Proposed 

Rulemaking 

(NRPM) 

Collecting 

input on the 

possible 

decision 

• Comments 

filed by 

parties 

• Public 

workshops 

• Hearings 

• Interrogatories

• Comments 

• Further 

comments 

• Comments 

• Workshops

• Hearings 

• Comments 

• Ex parte 

filings 

• Reply 

comments 

Final decision 

issued 

publicly 

Decision Statement Conclusions Report and 

Order 

Depending on the nature of the proceeding, both informal and formal procedures 

have been incorporated into the three stage consultation framework. Of the four 

regulators, OFTA follows the core consultation framework most strictly. When it deems 

necessary, however, it does include additional steps. Similarly, Oftel modifies 

procedures on a case by case basis. Although there is a Code of Practice on Written 

Consultation, Oftel has acknowledged that informal steps have been taken to 

accommodate some complex proceedings. The CRTC and the FCC, on the other hand, 

 15 Please note that the CRTC has a separate rulemaking process for Broadcasting issues. Unlike 

its rulemaking process for Telecom issues, if the Broadcasting issue is a matter of great public 

importance, public hearings are held in place of the three stage consultation process. 
21

have included additional formal procedures in the formulation of the initial consultation 

paper and in the consultation stage. 

Initial consultation. The purpose of a consultation paper is to clearly define all 

relevant issues that need to be addressed, to provide background information on these 

issues, and to set out the regulator’s preliminary views on the issues. For example, if 

there are related issues that are not included in the petition for rulemaking, they can be 

combined into a single consultation process, instead of having multiple proceedings. A 

good consultation paper alerts the public that a change may be imminent, sets the scope 

of the proceeding, and ensures a timely and cost effective rulemaking for both the public 

and the private sector. 

Even prior to the development of the consultation paper, there can be informal 

and preliminary consultations. OFTEL, in its formulation of the Ombudsman 

Consultation Paper, hosted and chaired a working group consisting of 

telecommunications providers and consumer groups to consider the feasibility of setting 

up the scheme.16 Similarly, in the Interconnection and Related Competition Issues 

proceeding, upon receiving the consultation request from incumbent PCCW-HKT, OFTA 

wrote to all ten local fixed network operators to inform them of the intent to initiate the 

review and to invite them to raise additional issues related to interconnection so that they 

could be resolved efficiently in a single proceeding. After reviewing these responses, 

OFTA issued a formal consultation paper outlining specific issues and OFTA’s 

preliminary views on these issues.17 

 

16 Oftel (United Kingdom). Protecting Consumers by Promoting Competition: Oftel’s 

Conclusions. June 20, 2002. Accessed from www.oftel.gov.uk in 2002. 

17 OFTA (Hong Kong). Implementation of the Full Liberalization of the Local Fixed 

Telecommunications Network Services Market from 1 January 2003. Consultation Paper and 
22

Collecting input from the public. The goal in this stage is to gather all relevant 

information so that the regulator can make the most informed decision. After a 

consultation paper is released, interested parties can file comments by a specific deadline. 

Other than OFTA, the other three regulators all have a formal reply comment stage. 

The information gathering process, however, is not limited to comments and reply 

comments. During this period, for consultations involving complex issues, the regulator 

may also hold workshops and hearings (OFTEL and CRTC), request interrogatories 

(CRTC), and accept presentations of views (FCC) to obtain the broadest range of 

viewpoints, collect all relevant facts, and ensure the accuracy of the information. These 

documents supplement the comments and the reply comments and are incorporated as 

part of the public record for the final decision. 

Final decision. After the conclusion of the consultation period, the authority 

makes a final decision based on information collected during the comment and reply 

comment period and public policy factors. The regulator’s statement presents and 

justifies its conclusions on the issues identified in the consultation paper. It summarizes 

and responds to the comments, reply comments and other issues raised in the consultation 

process. If the parties do not agree with the decision, they can either appeal through the 

courts or appeal through the regulator by means of a petition for reconsideration. Canada 

is the only country with an appeals process through the federal cabinet. However, the 

cabinet usually pays deference to the CRTC. 

 

Implementation of the Full Liberalization of the Local Fixed Telecommunications Network 

Services Market from 1 January 2003Statement of the Telecommunications Authority, January 11, 

2002. Accessed from www.ofta.gov.hk in 2002. 
23

7. Ethics rules 

The degree to which there is a robust ethics regime is indicator of the relationship 

between the regulator and the public. An agency’s transparency and impartiality in 

decision making could be jeopardized if its employees are influenced by gifts from 

outside sources, financial and personal conflict of interest, post-employment prospects. 

In four economies studied, Canada, Hong Kong, United Kingdom, and the United States, 

all have guidelines concerning employee’s proper handling of these situations to ensure 

that the regulator’s decision making process is truly independent. 

Of the four countries in this survey, Canada is the only one that has a single 

centralized guideline for civil servants. Hong Kong, United States and the United 

Kingdom each has a guideline that functions as a general ethical framework. They also 

encourage departments and agencies to develop supplemental guidelines based on this 

framework to take into account their specific functions and circumstances. These 

departments and agencies are also responsible for carrying out and enforcing the rules. 

Depending on the situation, generally, there are four approaches to ensure the highest 

ethical standard: (1) avoidance of activity, (2) disclosure of activities, and (3) divestment 

or resignation from positions that pose conflicts, or (4) recusal from an area of the 

regulator’s work. 
24

Table 7: Ethics rules 

A. 

Gifts 

B. 

Conflict of interest 

C. 

Post-employment 

Canada Decline, with 

exceptions 

Disclosure and 

disinvestment 

Restricted 

Hong Kong Decline, with 

exceptions

Disclosure and 

voluntary 

disinvestment

Admonition 

United Kingdom Decline, with 

exceptions

Disclosure Restricted, approval 

process may be 

required 

United States Decline, with 

exceptions

Disclosure and 

disinvestment

Restricted 

Gifts. The acceptance of gifts that give rise to impropriety or appearance of 

impropriety is prohibited in all four countries. In addition to state ethics guidelines, many 

countries also have criminal codes on bribery. The purpose is to prevent outside sources 

from influencing the independent judgment of a state official to the benefit of the gift 

giver. There are, however, exceptions. In the CRTC, employees may accept gifts of 

incidental value, and customary hospitality that do not give rise to appearance of conflict 

of interest or compromise the integrity of the state. In Hong Kong’s OFTA, employees 

may accept gifts from a close relative or on occasions such as their wedding anniversary, 

where it is the customary tradition to give gifts. At the FCC, gifts are allowed where the 

value of the gift is US$20 or less in each instance, and cumulatively less than US$50 in a 

year, or in some cases where gifts are given because of a preexisting, close, personal 

relationship. 

In many instances, there is oversight of what gifts may be received. In Canada, in 

circumstance where it is impossible to decline the gift, the employee must report it to the 
25

supervisor immediately.18 In OFTA, other than in excepted circumstances, employees 

must obtain special permission to accept gifts.19 In Oftel, under certain circumstances, the 

employee is required to report offers of gifts, hospitality, awards, decorations and other 

benefits before accepting them.20 

Conflict of Interest. Conflict of interest is defined broadly to include pecuniary, 

personal affiliations, and family. They commonly include the employee’s participation in 

proceedings that involve close associates or family members, and the employee’s 

stockholdings in companies that have dealings with the agency or companies that the 

employee has gained confidential information through official capacities. 

The disclosure of financial and personal interests in categories that could give rise 

to conflict and the divestment of these interests if there is or appears to be a conflict are 

mandatory in all four economies with the exception of Hong Kong. Although OFTA 

requires mandatory disclosure of direct telecommunications investments, the divestment 

of these investments, however, is voluntary. These provisions aim to prevent personal or 

financial interests from influencing the independent judgment of a state official. 

Post-Employment. As with provisions concerning gifts and conflict of interest, 

post-employment guidelines aim to maintain the independence of a state official’s 

decision making process. They prevent any suspicion that the officer might be influenced 

by the hope or expectation of future employment with outside firms and the risk that a 

particular firm might gain an improper advantage over its competitors by employing 

someone who had access to information on the competitor through official capacities. 

 

18 Canada. Conflict of Interest and Post Employment, Appendix A, Part II. 

19 Hong Kong. Civil Service Branch Circular No. 17/92. 

20 United Kingdom. Civil Service Management Code, 4.1.3. 
26

Employees are encouraged to take precautions to avoid and mitigate situations 

where a potential conflict or appearance of impropriety might arise. For example, if an 

employee is unsure about the appropriateness of a gift, he should either decline or if that 

is not possible, accept the gift and report it immediately to his supervisor. Employees, 

especially senior officials, are typically required to provide written reports disclosing 

financial and personal interests, and in cases of possible outside appointment, a written 

application to obtain permission within one or two years after leaving office. If a conflict 

is identified, however, the employee is required to divest the interest or recuse herself 

from the particular matter. 

8. Conclusions

This paper began with a discussion of the tension between commitment and 

flexibility that all states face in creating and implementing communications policy and 

rules. Policy was used to describe the major objectives a state reached by brokering the 

interests of various political groups. Once major agreement is reached on policy, rules

are needed for the state to implement the policy. The institutions which are responsible 

for developing these rules were the subject of this paper. Given that the effectiveness of 

the regulatory institution depends largely on its independence – its ability to render 

similar decisions for similar cases, unlike in political discussions – what indicators can be 

used to characterize a regulatory regime as independent? In the main, these indicators 

reflect the regulatory institution’s relationships with three other groups: other state 

institutions, industry, and consumers. 
27

Relationship with other state institutions. While there should be some means to 

keep the regulator accountable to the public, an independent regulator has some measure 

of insulation from political winds. These can include 

• A leader who cannot be dismissed for unpopular decisions 

• A leader with a guaranteed term of office 

• Scope of authority that is clearly distinct from the policy-maker 

• Funding which is independent of political review 

Relationship with industry. While industry can be a great source of market 

knowledge and technical data, the regulator must be independent from industry in order 

to be perceived as fair by other state institutions and consumers. Two markers of 

independence from industry are whether the incumbent telecommunications operator is 

privately owned and whether the staff of the regulator and regulated firms frequently 

exchange positions. 

Relationship with consumer. Consumer interests are usually widely dispersed in 

the market and, therefore, their views are more easily overlooked both in the policymaking and rulemaking process. Regulators seeking to balance this against the strength 

of industry and other state institutions’ views may make special efforts to collect and 

reflect consumer interests. Two indicators here are whether there is a dedicated office to 

consumer affairs and, an important issue for consumers in many markets, whether there is 

a dedicated office to universal service. 
28

Table 8: Summary of indicators from 18 country survey 

 A. 

Independent 

Leader 

B. 

License 

issued by 

regulator 

only 

C. 

Independent 

Funding 

D. 

Private 

Incumbent

Telco 

E. 

Little 

mov’t 

of staff 

between 

regulator 

and 

industry 

F. 

Consumer 

office 

G. 

Universal 

service 

office 

Australia X X X X 

Brazil X X X X X X 

Canada X X X X 

Hong 

Kong 

X X X X 

Hungary X X X X 

India X X X 

Italy X X 

Japan X 

Jordan X X 

Korea X X X 

Malaysia X X X 

New 

Zealand 

 *21 X 

Nigeria X X X X 

Singapore 

Spain X X X 

Sri Lanka X X X X 

Sweden X X X X 

United 

States 

X X X X X 

In addition to these indicators, there are system processes that regulators can use 

to mediate all of its relationships with other state institutions, industry, and consumers. 

This paper covered two: decision-making processes and ethics rules. In several, wellestablished, independent regulators, there are common elements in decision-making and 

ethics rules which help manage their relationships with interest groups in a transparent 
29

manner. In decision-making, they had in common a three-step process which involved 

public notice of rule changes; opportunity for all parties to provide written, public 

comments; followed by a public decision that includes the reasoning of the regulator. In 

ethics rules, they had in common rules about gifts, conflicts of interest, and postemployment that require the regulatory employees to avoid certain activities, disclose 

other activities, divest or resign from positions that presented conflicts, or quarantine 

themselves from certain areas of regulatory work. 

In no instance did any single regulator adopt the most independent option for all 

of the traits that were examined in this paper. However, nine of the countries have 

regulator(s) which used most of the tools outlined in this paper: Australia, Brazil, 

Canada, Hong Kong, Hungary, Nigeria, Sri Lanka, Sweden, and the United States. 

Among the eighteen countries in the first survey, most had regulators with the sole 

authority to issue wireline licenses and offices that represented consumer interests. At 

least half had independent leadership and independent funding. 

In democratic systems especially, demand for independent regulatory decisions 

must always be balanced against accountability of all institutions to the public. Which 

traits of independence are suitable for any one regulator to adopt will vary, depending on 

the state’s institutional endowments and political culture. However, some combination 

of these traits is likely essential in establishing a regulatory institution perceived by all 

interested parties as independent. Finally, while any number of mechanisms can be 

constructed to aid in establishing a regulatory regime’s independence, in the end it is the 

perception of the public that matters the most. Such approaches have been taken to 

 21 No licenses are required in New Zealand. 
30

assess corruption, for example.22 While this paper presents techniques that governments 

can use to strengthen their regulatory regimes, other studies which measure the opinion of 

the public – other state institutions, industry, and consumers – would be useful to 

measure the effectiveness of these techniques. 

 

22 Daniel Kaufmann and Aart Kray. “Growth Without Governance.” Washington, D.C.: World Bank 

Working Paper No. 2928. November 19, 2002. 
31

Appendix: The Surveys

Two sets of surveys were used: an eighteen-country market survey on the 

organization of the regulatory institutions in June 2003 and a four-country study of 

decision-making procedures and ethics rules in August 2002. The four-country study by 

the author and Cathleen Hsu is available on the FCC website. Data were collected 

directly from regulators. Further information was collected in correspondence, materials, 

and interviews with officials from the Canadian Radio-Television Commission, Hong 

Kong’s Office of the Telecommunications Authority, the United Kingdom’s Office of 

Telecommunications, and our own organization the United States Federal 

Communications Commission. 

In the eighteen-market survey of regulators there was a special effort to collect 

information from developing countries with smaller populations, as information on larger 

markets is often available already. Of the eighteen countries in the survey, six had 

populations of less than 10 million, nine had populations of less than 20 million. Of the 

eighteen, seven had per capita income of less than US$10,000 per year. Nigeria, India, 

and Sri Lanka, have fewer than 20 telephones (wireline and wireless) per 100 people. 

Jordan, Brazil, and Malaysia, have fewer than 60 telephones per 100 people. All other 

countries have at least one phone per person; the highest, Sweden has 1.6 phones per 

person. Five countries had 20 television sets per 100 people or less. The two highest 

countries, the United States and Sweden, had more than 80 television sets per 100 people. 

Where markets have separate regulators for telecommunications and broadcast, efforts 

were made to include both, although not in all cases were responses received. 
32

These eighteen markets were chosen because the FCC currently has good working 

relationships with the regulators and because they have recently seen significant 

improvement in their communications network development. Future research on 

differently derived sets of countries will show whether this selection criteria introduces 

distortions that affect the paper’s conclusions. 

A copy of the questionnaire for the 18 country survey and a list of which 

institutions responded follows. 
33

Organizing an Effective Regulatory Regime for the Communications Industry 

The FCC International Bureau’s analysis office is undertaking a study of institutions responsible 

for telecommunications and broadcasting regulation. The results of the study will be compiled, 

analyzed and offered as a reference to regulators and others who seek technical assistance from 

the FCC. We believe your regime is a good example of an effective regulatory regime, and 

would appreciate learning some details about your organization and how it works. 

Questions: organizational issues 

1. How many officials are in your organization? 

2. Can you provide an organizational chart, indicating how many staff are in each unit? 

3. What percentage of the staff come each profession - i.e., engineers, economists, 

attorneys, accountants, etc? 

4. In the course of an individual career, is it common for someone to serve as an official 

and then move to work in industry, or vice versa? 

5. In the course of an individual career, is it common for someone to move from one 

government organization to another? 

6. Are there procedures for recruitment of personnel, or examinations to admit officials 

into the government? 

7. How is your organization funded? 

8. How is the head of your organization selected? How long may the head serve in the 

office, and are there other conditions to the office? What would cause the head of the 

organization to leave? 

9. With which other organizations in the government do you work closely, and what is 

your organization’s relationship to them? 

 

Questions: telecommunications 

What offices are involved: 

1. When issuing a new wireline license? 

2. When issuing a new wireless license? 

3. If there is a dispute between operators over interconnection? 

4. If a wireless operator has a complaint about interference? 

5. If the consumers prices for local or long distance are going to change? 

6. If a consumer has a complaint about an operator? 

7. In organizing and implementing a universal access plan, if any? 

8. In enforcing rules, issuing fines, and other judgments? 

 

Questions - broadcasting 

1. Which offices are involved: 

2. When issuing a new cable television, satellite TV, or terrestrial TV or radio license? 

3. When disputes arise between broadcasters and program providers? 

4. When a viewer has complaints about a program? 

5. When deciding which programs a broadcaster is required to carry? 

 

Questions - Internet 

1. Which offices are involved: 

2. When issuing a license, if a license is required? 

3. When a consumer has a complaint about an Internet service provider? 

4. If there are disputes between Internet service providers? 
34

Communications Regulatory Organizations 

(Survey responses from italicized organizations) 

Country Telecommunications Broadcast Internet 

Australia Australian Communications 

Authority (ACA), Australian 

Consumer and Competition 

Commission 

Australian Broadcast 

Authority (ABA)

ACA, Australian Consumer 

and Competition 

Commission 

Brazil Agência Nacional de 

Telecomunicações (ANATEL) 

Anatel 

Canada Canadian Radio Telecommunications 

Commission (CRTC) 

CRTC CRTC 

Hong Kong Office of the Telecommunications 

Authority (OFTA) 

Broadcast Authority, 

Television and 

Entertainment Licensing 

Authority 

OFTA 

Hungary Hírközlési Felügyelet (HIF) National Radio and 

Television Committee 

(ORTT) 

Ministry of Informatics and 

Communications (MIC) 

India Telecommunications Regulatory 

Authority of India (TRAI),

Department of Telecommunications

Ministry of Information and 

Broadcasting 

Department of 

Telecommunications, 

Ministry of 

Communications and 

Information Technology 

Italy Autorità per le Garanzie nelle 

Comunicazioni (AGCOM) 

AGCOM AGCOM 

Japan Ministry of Public Management, 

Home Affairs, Posts and 

Telecommunications (MPHPT) 

MPHPT MPHPT 

Jordan Telecommunications Regulatory 

Commission (TRC) 

Information and Media 

Commission 

TRC 

Korea Ministry of Information and 

Communications (MIC) 

Korea Broadcast 

Commission (KBC) 

MIC 

Malaysia Malaysia Communications and 

Multimedia Commission (MCMC) 

MCMC MCMC 

New Zealand Commerce Commission (CC) Broadcasting Standards 

Authority 

 

Nigeria Nigerian Communications 

Commission (NCC) 

 NCC 

Singapore Infocomm Development Agency 

(IDA) 

Media Development 

Authority (MDA) 

IDA 

Spain Comisión del Mercado de las 

Telecomunicaciones (CMT) 

Ministry of Science and 

Technology, CMT

 

Sri Lanka Telecom Regulatory Commission 

(TRC), Ministry of Mass 

Communications

Ministry of Mass 

Communications 

TRC 

Sweden Post and Telestyrelsen (PTS) Swedish Broadcast 

Commission (SBC) 

PTS 

United States Federal Communications 

Commission (FCC) 

FCC FCC 
35

Notes of appreciation 

For the eighteen-country survey, the staff of the Regional and Industry Analysis 

Branch who were integral to its success. Patrick Boateng and Bob Somers offered early 

ideas and inspiration. Patrick, Richard Nunno, Emily Talaga, Alan Thomas, and 

especially Anita Dey reached out to their colleagues all over the world and engaged them 

in the surveys. Sean Savage made sense of the data that came in. Thanks also to Don 

Abelson, Patricia Cooper, Kathryn O’Brien, John Giusti, Doug Webbink and Tracey 

Weisler and the rest of the staff for their comments, discussion and support. 

For the four-country study of decision-making and ethics rules, a variety of 

foreign officials were generous with their time and information. From Canada, Helene 

Cholette-Lacasse, Industry Canada; Valerie Dionne, CRTC; Douglas Heath, Canadian 

Embassy, Washington, DC; William Howard, CRTC; Allan Rosenzveig, CRTC. From 

Hong Kong, M.H. Au, OFTA. From the United Kingdom, Vincent Affleck, Oftel; Geoff 

Delamere, Oftel; and Simon Towler, British Embassy, Washington, DC. 

Also, throughout, Xia Mei of the FCC library was gracious and prompt in her 

assistance. 

However, if despite the guidance and suggestions of all these people there are still 

errors and misjudgments in the paper, I am responsible for them.