Regulation of the telecommunications services industry is taking place in many countries of all stages of economic development. This follows from governments' policies from the 1980s to create competitive markets in this industry, where before there had been monopoly supply. Often, the national government owned the monopolist, which was in some cases part of the civil service, that is, of the government itself. Regulation forms one aspect of a restructuring process that has the three components. Any one of these could be implemented without the others, though obviously they must inter-relate when applied together. The motivation for this restructuring is a belief by governments that competition and private ownership will increase and continue to increase the power of the industry to satisfy growing customer demands with greater economic efficiency. The long-run effectiveness of all this remains to be confirmed by experience, through both boom times and lean times. Although rapid technological development has played a major role in reducing prices in this industry, there can be no doubt that additional strong and downward price trends have been observed over the last two decades in liberalising countries.

This section provides a brief overview of the legislative background to the regulation of telecommunications. Readers requiring more detail about legislation and case law should consult one of the legal guides and textbooks, such as References 1 or 2. This is a rapidly moving field. For example, the 1996 Telecommunications Act of the USA revised the previous legal framework drawn from the 1934 Act, while the European Union revised its Open Network Provision (ONP) framework directives from around 1990 in the period 1997-1998, and has done so again in 2002. This new European framework, which comes into effect in July 2003, is summarised in some detail in the Appendix.

Interconnection between separately owned telecommunications networks is as old as the industry itself. Even yesterday's monopoly networks needed to interconnect for the purposes of international communications. Various standards-setting bodies laid down the technical interfaces and operational basis, enabling telecommunications companies to operate together with an acceptable and well-understood quality of service. The International Telecommunications Union (ITU) is a United Nations charter organisation and a major agent for standardisation. The main concern of this chapter, however, is not with technical standards but with the regulatory arrangements necessary to oversee successful interconnection and interoperation between separate networks in competitive markets.

The portability of a telecommunications number may be defined as the possibility for the user of that service to retain it after some change to the service. Different classes of number portability refer to different changes through which the number is conserved, for example, a change of the user's physical location, a change in the kind of service, or a change of service provider. Service provider portability is an important factor helping the development of a competitive telecommunications market. Without it many domestic and business customers would encounter a real barrier in moving to another supplier, because of reluctance to accept a change of number and so to have to inform their contacts. Regulators therefore use their powers to establish service provider portability in their national telecommunications markets.

This chapter discussed the regulation in telecommunication services sector providing its new product and services. A telecommunications services regulator has to regulate a rapidly changing market. Some of this flux is a result of the regulation itself, but not all. Were the advancement of competition the only change, then a regulator's task might eventually terminate after the transition from monopoly to stable competition. In reality, the market is exposed to technological evolution, product innovation and commercial realignments. The regulator must examine each of these, and react by continuing, withdrawing, amending or extending the intervention currently being practised. The aim in all cases will be to ensure that consumers enjoy the best products at the most advantageous prices, using competition as the primary medium of achieving these goals. The regulator must, therefore, act against actual or potential exercise of market power to the consumers' detriment.

This appendix presents the European regulatory derivatives in telecommunication regulatory framework. European Union directives on telecommunications regulation have the harmonisation of regulation among the member states as an objective. This is an additional purpose to that of regulation in general, and is aimed towards the creation of a single European market. European directives thus specify the type of regulation that should or should not be enacted in member states, and contain much in the way of administrative provisions. They do not reproduce precisely the content of national laws and regulatory rules, although they have a very large influence upon them. The basic European approach to telecommunications regulation was established in 1990 with the following directives. A further reappraisal of the telecommunications regulatory framework has led to a new set of four directives in 2002, which are described in this article. There now follows a summary of the provisions of each of the directives listed in Table A.1. This summary represents the author's paraphrase of the more important features. The original text, which can readily be obtained via the European Union's web site, is acknowledged and is in all cases complete, authoritative and definitive. Where editorial comments have been inserted in these summaries, these are distinguished by the use of square brackets.