Anchor product regulation – retrospective and prospective

Communications networks are undergoing a transition from copper to fibre, from 2G and 3G to LTE and from switched to IP. Where ex ante regulation applies transition involves particular challenges and trade-offs that differ from those applying to relatively stable pre-existing infrastructure. The rationale and approach to ex ante regulation should therefore be re-assessed to take account of network transition – indeed the desire for transition – as a policy goal.
Anchor product regulation, an approach whereby an ex ante price control is applied to the legacy network service or to a sub-set of services over a new network, was first proposed in 2007 as an intermediate approach between a full cost orientated price control and no price control; and with network transition in mind. In relation to copper-fibre transition anchor product regulation, alongside non-discrimination requirements for network access, has been adopted by Ofcom in 2010 and in the recommendation on nondiscrimination and costing adopted in September 2013 by the European Commission. This paper explores the motivation for anchor product regulation, its origins and its prospects.