Some of the most important decisions that Ofcom takes are in choosing the appropriate regulatory approaches to deliver our statutory duties. Our choices can range from no regulation at all, through industry self-regulation (where industry administers a solution without formal oversight), co-regulation (where a form of statutory control is present), to full statutory intervention.
We aim to be as transparent and objective as possible when making such assessments. This statement describes the high-level principles that we will refer to when determining appropriate regulatory solutions. The aim of these principles is to provide a starting point for our analysis of options, taking into account any case-specific considerations. They have not been developed with any specific scheme or policy issue in mind.
Since Ofcom’s inception, our preference has been to work in partnership with stakeholders to develop regulation. We recognise that self- and co-regulation can, in the right circumstances, provide an effective means to address citizens’ and consumers’ interests, in line with our statutory duties and obligations. The fast moving and technologically complex nature of the communications markets can also, under some circumstances, make statutory regulation insufficiently flexible. There are several good examples of self- and co-regulatory schemes in the sector; for example, in the areas of mobile content, broadcast training and skills, and metering and billing solutions. However, in some cases the incentives for industry to act without statutory regulation may be insufficient to achieve the required outcomes.
We have a number of legal responsibilities, set out in the Communications Act 2003, in relation to promoting self-regulation and reducing unnecessary regulatory burdens. Our consultation in March 2008, and this statement, update our 2004 Guidelines on self-and co-regulation, to incorporate our experience to date and to reflect market changes over the past four years.
Our consultation document proposed an approach to determining whether self- or co-regulation is likely to succeed in specific cases. Central to this was the recognition, based on an analysis of existing schemes, that industry approaches work best where the incentives of industry are aligned with those of the public. Our proposals included five steps to help assess industry’s incentives to deliver effective self- or co- regulation. We also proposed a set of criteria to consider as good practice when establishing new self- and co-regulatory schemes.
We received 26 responses to our consultation, from a wide range of stakeholders. Overall, stakeholders were broadly supportive of our proposals, and made a number of useful comments and suggestions. Based on this feedback, we have decided to adopt the high-level principles set out in our consultation. We have adjusted the detail of our steps and criteria in the light of stakeholders’ suggestions.
In summary, we have found that self-regulation is most likely to work where the following conditions are present: industry collectively has an interest in solving the issue; industry is able to establish clear objectives for a potential scheme; and the likely industry solution matches the legitimate needs of citizens and consumers. It is unlikely to be appropriate where the following conditions are found: there are incentives for individual companies not to participate; or there are incentives for participating companies not to comply with agreed codes. Where we determine that self-regulation is unlikely to succeed, co-regulation may be used to ensure that incentives are effectively aligned. Where neither self- or co-regulation are appropriate but regulation is necessary, a statutory solution will be required.
When supporting the establishment of new self- and co- regulatory schemes, we will refer to criteria identified following our review of best practice. These are: public awareness transparency, significant industry participation, adequate resources, clarity of processes, ability to enforce codes, audits of performance, system of redress in place, involvement of independent members, regular review of objectives, and non-collusive behaviour.
We will adopt a pragmatic and flexible approach to applying our principles, and take additional factors into account as appropriate to a specific case. In every instance we will look to engage stakeholders in discussions on how best to achieve the desired outcome. For instance, it may be that not all criteria will be required for any given scheme. We will consult publicly on any proposals for changes in regulation, and will include impact assessments of different options in our consultations.