NIC reports on the future of infrastructure regulation

NIC reports on the future of infrastructure regulation

The National Infrastructure Commission (NIC) was asked by Government in October 2018 to review the regulation of the UK’s energy, telecoms and water sectors

In February 2019 a Call for Evidence was published asking for opinions of where economic regulation has failed or succeeded in facilitating future investment needs, promoting competition and innovation and in meeting the needs of both current and future consumers. The study also considered the full range of potential implications of any changes with a focus on affordability and protection of vulnerable customers.

The final report of the study was published on 11th October. It says that the UK’s regulatory system must adapt to meet the demands of the future and secure the strategic investment needed.

The telecommunications sector must be in a position to respond to the increased demand for data and migrate from copper to fibre. An additional £1.3 billion each year is needed to provide 5G coverage to most of the country by 2027, and an additional £2.2 billion each year is needed to deliver full fibre networks by 2033. The regulatory framework must be updated to support this and facilitate investment in a strategic way to address these challenges effectively. Public and political confidence in the regulatory system must also be improved. The current system of regulation does not need to be completely overhauled, but it needs to change as it was not designed to meet the forthcoming challenges, including providing 5G coverage and delivering full fibre networks.

To facilitate this long-term strategic investment, an updated and strengthened regulatory system should:

  • provide a strategic framework to deliver the UK’s long-term investment needs;
  • make investment decisions reflecting the priorities of the whole of the UK;
  • have statutory duties that support long-term investment; and
  • use competition to drive innovation (e.g. delivering 5G and full-fibre network).

Ofcom’s implementation of governance measures to facilitate working with the Scottish and Welsh governments to make superfast broadband available in rural areas was cited as a good example.

One of the key recommendations in the report if that the UK Regulators Network (UKRN) should have a stronger role, supported by an independent chair by the end of 2020 and that the government should review data sharing powers to ensure they can develop a complete picture of the customer. In terms of consumer engagement, the high levels of investment required in future will ultimately be funded by consumers, so they must have the confidence that their money is being spent on the right things, in the right way and that they are not being exploited (especially vulnerable customers).

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