Economic regulation

Résumé du document

A regulation is the “employment of legal instruments for the implementation of social-economic policy objectives” (Govender 2008: 10). In this way, according to OECD (2001), regulation “refers to the various instruments (both formal legal and such informal tools as “guidance”) used by government to control some aspects of the behavior of private economic actor. Regulation can also include rules issued by non-governmental bodies to which governments may have delegated regulatory powers. All regulations are supported by explicit threat and punishment for non-compliance”. In this respect, it is interesting to study the nature and extent of economic regulation with reference to the fixed-line telecommunications sector in South Africa and more especially Telkom.

Firstly we need to understand what regulation means, what monopoly is and who implement regulations. Regulation – is a control which is imposed to a company which dominates the market with the intention of promoting competition not monopoly and promoting healthy business as defined by Selznick.

Extraits

[...] Neotel is owned by Transtel Eskom enterprises, and TATA (Telkom SA: Investor relations: 2007). Neuhoff et al. (2006: 111) dominance occurs when extensive economies of scale and ownership of infrastructure are experienced. If the government privatized the national network of lines, both of Telkom and those of the smaller new SNO Neotel (also partially government owned), a bigger more complete network would have been the end result (using both companies' infrastructure) and customers could then to one of the two operators. [...]

[...] (2004) The birth of a new era in telecommunications [Internet], Untitled document. Available from: http://www.compcom.co.za/resources/newsletter%20-%20dec04/html [Accessed on 6 May 2008]. Genesis Analytics 2005. “Telecommunications prices in South Africa an international peer group comparison”. Govender, M Economics for Managers. Module 3. Part Regulation and government in the market place. MMB 711. University of the Free State, Bloemfontein, South Africa, 5th May 2008. [...]

[...] This step on its own would have increased competition and might have made regulation unnecessary if other factors such as horizontal integration were put out of the equation. The Competition commission however, granted a five year exclusivity period for Telkom, from 1997 to 2002, to make sure the basic network will be build out quickly and extensively. (Competition commission 2004: 1). Theron et al. (2006: 576) suggests that fixed line initial expenses are very high so high that profits are only made after 6-8 years. [...]

[...] Telkom is a dominant player in South Africa when it comes to fixed line communications. It has been proved that as a result of that it determines its prices with no competition and that is unhealthy in business. The other thing which is happening as of this dominant is that the service is becoming poor day by day thereby reducing its revenue still because there is no competition. The way that Telkom is a dominant company in this market, it makes it difficult for new companies to enter the market in other words it creates a barrier for new players to participate. [...]

[...] All regulations are supported by explicit threat and punishment for non-compliance”. In this respect, it is interesting to study the nature and extent of economic regulation with reference to the fixed-line telecommunications sector in South Africa and more especially Telkom. The warranty of regulation of the fixed-line telecommunications sector in South Africa Firstly we need to understand what regulation means, what monopoly is and who implement regulations. Regulation is a control which is imposed to a company which dominates the market with the intention of promoting competition not monopoly and promoting healthy business as defined by Selznick. [...]