The Regulatory Role of the Government on the Polish Market for Telecommunications Services and Electricity
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Publish date: 2013-06-30
Gospodarka Narodowa 2013;264(5-6):43–67
The article examines the impact of government regulation on the prices and quality of services provided by companies in Poland’s telecommunications and electricity sectors from 2006 to 2011. The author also attempts to determine if the regulator’s practice of forcing companies in the studied sectors to be predominately based on cost-effectiveness in their operations does not lead to a decline in the quality of services provided. To achieve this objective, descriptive analysis and basic statistical methods, such as the index method, are used in the article. The analysis showed that price regulation was chiefly based on the government establishing some basic principles for businesses to follow in their pricing policies as well as on approving tariffs and reducing the price expectations of companies, the author says. In the telecommunication services market, pricing policies were predominately focused on the wholesale market in order to reduce the so-called Reference Interconnect Offer (RIO) charges, while in the electricity sector pricing policies focused on network charges and end-user electricity prices (the goal being to reduce their growth). The analysis found that in the case of the telecommunication services market, the regulator pursued a more effective price control policy, reflected by a decline in prices. By creating an increased competitive pressure on the wholesale and retail markets, along with regulatory activities in relation to the quality of services, the regulator brought about a situation in which falling prices were accompanied by improvements in quality standards. This applies to the level of quality indicators as well as an expanded and more flexible range of services provided. The opposite effect was observed on the electricity market. Prices rose, although the regulator strongly reduced the price expectations of companies, and the introduction of incentive regulation negatively affected the quality of electricity supply in Poland, making it one of the worst in the European Union, according to Nagaj. The research has shown that regulators should put more emphasis on the quality of services, the author says. In the case of the telecommunication services market, the tasks of institutions need to be clearly defined and a set of indicators should be adopted in order to adapt the quality and availability of services to market requirements. Meanwhile, in the electricity sector, the quality of services needs to be supervised on a permanent basis rather than subject to ad-hoc inspections, the author says.