Comreg – The captured regulator

Comreg – The captured regulator

IrelandOffline a leading consumer advocacy group today examine the phenomenon of the captured regulator and how it applies to Ireland.

What is regulatory capture?
The captured regulators theory refers to the fact that, in most industries, the people who control government regulatory bodies are *THE EXACT SAME PEOPLE* who control the industry being regulated. Most regulations are written to benefit large corporations and their management. “Captured regulators” mean that regulators are answerable to executives in the industry regulated, rather than the general public.Regulatory capture is a form of government failure.
A captured regulatory agency that serves the interests of its invested patrons with the power of the government behind it is often worse than no regulation whatsoever.

How this applies to Comreg
It is in Comreg’s interest to keep prices artificially high as Comreg benefits and raises its revenues from a percentage of the turnover of the industry that it regulates, so there is no incentive for the regulator to seek price reductions to bring us into line with the prices charged in other European countries. This leads to the the fact the the line rental charges are the highest in Europe, without exception. All other telecommunications companies base their prices off these exorbitantly high line rental charges, which of course benefits the regulator. All in all it’s a vicious circle.

More often than not, Regulators who do a “good job” are rewarded with a high-paying job in the industry regulated. This is the “revolving door” theory. “If you do a good job for us we’ll reward you with a nice job in the future”.

The only solution is to break the vicious circle, as outlined above, and decouple Comreg’s income from that of the industry and a more consumer focused approach instituted instead.
Any ongoing Revenue from Operators should be taxed in the normal way, not funnelled through Comreg to the Treasury. Comreg should be funded instead from The Department and thus ultimately answerable to the Electorate. At this time they are not really controlled by anyone other than the Larger Telecoms Operators.

Eamonn Wallace, chairman of IrelandOffline commented : “Comreg should engage more with consumer groups by placing a more consumer focused representative on their “Consumer Panel”.These consumer groups should be involved in any major decisions on broadband as they will be affected by the decisions made in their name and these groups have a wealth of expertise in the industry.”

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