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Economic regulation

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  1. Introduction
  2. The warranty of regulation of the fixed-line telecommunications sector in South Africa
  3. The extent to which regulation of the sector has been successful and yielded the intended consequences
    1. Sector regulation
    2. Aim and objectives of the creating a fixed-line telecommunication in the country
  4. Pitfalls of the current regulation regime
  5. Conclusion
  6. References

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.

[...] On the basis of the points indicated above we can now answer the question whether regulation is necessary or not and why. Our point of departure is that the company should qualify whether to be regulated or not. Let's look at things which warrant regulation. The business can only be regulated when: - It is a single seller occupying the entire market - The product sold is unique in the sense that there is no substitute sufficiently close to the consumers to turn to. [...]

[...] Secondly regulation will send a wakeup call at Telkom to deliver quality services within a competitive environment. Secondly consumers will be saved from abnormal prices without a contest. In business sense, if the Independent Communication Authority of South Africa can step in and impose regulation on Telkom the following important facets of a healthy business will be promoted: - It will stop Telkom from making a windfall profits without the benefit of consumers - Without regulation Telkom may deprive the public of the adequate information of the truth about the business as there will be no other business offering the same service. [...]

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