Regulatory Economics

Regulatory Strategy, Policy, and Advice

NERA is in an unrivalled position to provide advice on regulatory issues and strategy, drawing on first-hand experience with telecommunications regulation in many countries and on an understanding of the crucial relevance of economic theory and analysis to regulatory policy. We help telecommunications operators understand the key regulatory issues and the implications for their businesses, devise an appropriate regulatory strategy and influence the decision making process. Our work includes advice, reports and testimony regarding regulatory options, as well as productivity growth analyses for use in incentive regulation plans.

We have provided advice on and analyses of:

• Proposed new measures for regulating the rollout of mobile base stations;
• Regulatory proposals for assessing the extent of competition in individual communications markets;
• Proposed changes in price cap regulation;
• The negative effects of excessive and/or asymmetric regulation on competitive markets;
• Proposed universal service funding (USF) policies;
• Competitive theory and implementation of the US Telecommunications Act of 1996;
• Advantages and disadvantages of employing the various costing approaches to price network services and unbundled network elements; and
• Interconnection and collocation costs and benefits, focusing on the negative effects of excessive regulation.

Regulatory Reform, Privatization and Sector Restructuring

We have substantial experience in assessing the impact of liberalization, including analyses of the impacts of competition on the market, the financial consequences for incumbent operators and broader economic and employment impacts. NERA advises governments and regulatory agencies on the design of the regulatory framework and the sector structure in the context of privatization or sector reform. We provide advice on efficient regulatory structure, on methodologies to assess its effectiveness and on issues relating to monitoring the performance of the incumbent operator.

NERA also carries out cost/benefit analyses of alternative policy options and assesses the economic impact of licensing new operators, of telecommunications investment and of the use of radio resources.

Incentive Regulation, Price Caps and the Determination of the 'X' Factor

Many states and nations have abandoned traditional rate-of-return (cost-based) regulation in favor of incentive-based regulation. NERA is a leading firm in designing incentive plans and securing approval for these plans from regulatory agencies. We have carried out studies of comparative efficiency for numerous regulators and operators, employing advanced econometric and mathematical techniques. Our capabilities include building price cap models to help regulators to determine the 'X' factor in the price cap formula. Our experts are well positioned to understand the economic issues of cost and to help clients understand the cost concepts appropriate to address the variety of questions that arise in today's environment.