regulatory affairs departments

A friend working for an incumbent telco in a country moving to a more competitive environment asked me for thoughts about the organization of regulatory affiars departments. Some thoughts:

The personality of senior management, by natural selection, tends to be competitive. Regulatory affairs departments tend to emphasize regulatory competition to get support from senior management. Regulatory affairs departments can easily form their own objectives that have little relationship to the company’s long-term profitability (in economic jargon, the principal-agent problem). Doing well in regulatory lobbying is not the same as doing well as a company. Winning regulatory battles is not the same as making money.

In countries in which many companies have participated in the telecommunications industry for a number of years, companies’ regulatory affairs departments typically interact extensively with various industry associations and lobbying groups. The organization of a company’s regulatory affairs department should be considered in relation to other extra-company regulatory affairs resources.

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