2 Industry Specific Regulator vs Multi-Sector Regulator

 Industry specific regulator (also known as Sector specific regulator) vs. Multi-sector regulator (also known Non-sector specific regulator / Competition Commissioner)

The first example of a Non-sector specific regulator emerged in New Zealand where the Competition Commission assumed responsibility for disputes emerging in different sectors. It was also later adopted in Jamaica.A Multi-sector regulator is responsible for the regulation of several sectors, all of which display similar legal and economic characteristics.  A multi-sector regulator often manages regulation of all prime services, for example, telecommunications, electricity and transport.  Strengths associated with the multi-sector regulator , include, low susceptibility to industry and political capture and cost-saver in developing countries which do not own a large pool of trained regulators. However, it is likely to be emerge as unpopular if it inappropriately applies a precedent set in one sector to other sectors, delays decision-making, and limits development of sector specific expertise (Tetrault, See Regulatory Handbook). Early New Zealand regulatory experience shows how inadequate sector-specific knowledge in the telecommunications sector ultimately compelled the New Zealand government to settle for an externally formulated solution or judgement. (See Blanchard, 1995 for detailed discussion).

Industry Specific regulator focuses exclusively on one sector. Where the sector is as demanding as the telecommunications sector, which is confronted by rapidly evolving technologies and services, the need of an industry specific regulator is viewed as critical. The FCC in the United States, and Oftel in the United Kingdom, as well as several telecommunications regulators in SADC are viewed as industry specific regulators. Industry specific regulators are regarded as more susceptible to narrow sectional interests or regulatory capture. In the United States many suspected that the FCC was captured by AT&T, thus the intervention of the courts and divesture of AT&T in the eighties. Whilst the demands made on a multi-sector regulator are comparatively fewer, those made on an industry specific regulator are elaborate, ranging from market structuring, management of public resources, dispute resolution and monitoring functions. However the migration to a competition board, away from formal or institutional regulators in Europe in particular, has been justified on the basis that the industry specific regulator is inefficient, overly bureaucratic and inert in the context of fast changing technological developments. Meanwhile, United Sates and United Kingdom policy-makers have adhered to the industry specific regulator and maintained competition committees to oversee anti-trust activity in view of its complex sector structure and related need for continued expert and focussed decision making. A well resourced industry specific regulator is capable of the rapid decision-making typically required by a constantly changing sector.

Several countries have adopted a dual approach, as in South Africa, where the industry specific regulator agreed to co-operate with the competition commission. However, this approach has been regarded as tension intensive as the two structures overlap in their functions. In the case of South Africa, the two structures have signed a memorandum of understanding to contain possible tensions, and presented the sector with related guidelines. Generally the option to adopt either a multi-sector or industry specific regulator depends on the size of the different sectors and the population. Generally this basic principle applies: The larger the population, the service sectors and room for competitors, the greater the demand for increased regulation or refereeing- best provided by the industry specific regulator.