The Regulation of Network Infrastructures in the New European Union

Abstract

Based on a regime definition that goes beyond the narrow perspective of existing case studies, the dissertation focuses on a combined analysis of privatization, liberalization and reregulation policies in network infrastructures. By pointing to the individual role of each of the three dimensions as well as their interconnectedness, it becomes possible to analyzethe emergence of distinct regulatory regimes at the European and at the national level. The telecommunications and the electricity sectors are archetypical for the privatization of state-owned companies, the opening of product and service markets and the establishment of new regulatory institutions whose task is to ensure fair competition between the incumbent and new market entrants. In this dissertation, regulatory reform is perceived asthe transformation of the public ownership regimes of the 1960s and 1970s to new regime forms, i.e. private competition regimes.So far, no study exists that systematically compares and categorizes regulatory regimes in the enlarged European Union, and that asks for reasons behind potential regime diversity among the new member countries. The empirical analysis thus seeks to answer three research questions that are derived from the discussion of the regulation literature. Time series data for both sectors between 1980 and 2003, contained in an Infrastructure Data Set that was exclusively compiled for this study, made it possible to analyze in some detail the pattern of state retreat across countries and sectors. According to the timing and scope of privatization, we can indeed ascertain an encompassing retreat of the state in both infrastructure sectors of the EU-15. For the CEEC-10, in contrast, it does not seem adequate to speak of a general retreat of the state due to different outcomes in the telecommunications and electricity sector. The second research question asks whether regulatory reform did result in similar national regimes or whether diversity prevailed. The analysis revealed that in both sectors regime similarity is higher among the EU-15 thanamong the CEEC-10. In addition to greater regime similarity, Western EU members also show a significantly larger scope of reform than the CEEC-10.The third research question sheds light on the factors behind regime diversity among the CEEC-10. Using the example of two first round accession countries, it becomes clear that neither vertical policy transference nor horizontal policy diffusion can account for the fact that Hungary had progressed substantially further as regards reforms than Slovenia. To compensate these methodological insufficiencies, the focus is therefore put on the role ofRegulatory Reform in Network Infrastructures domestic variables: first, in Hungary the institutional environment was much more favourable for reforms than in Slovenia. A second difference was the role of civil society, which was relatively weak in Hungary and strong and consensus-orientated in Slovenia. Athird difference was the high continuity of party rule in Slovenia and the breaks in government constellations in Hungary. Fourth, differences in party ideology played a role, and in Slovenia the dominant belief was that protection against Western companies was necessary. Finally, strong unionization in Slovenia prevented major reform efforts while weakly organized labour interests facilitated reforms in Hungary.As regards methodology, the study employs a combination of quantitative and qualitative analysis for answering the three research questions. While the former allows a structuration of the regime landscape in the EU-15 and CEEC-10, a systematic cross-country comparison of central domestic variables reveals the origins of regime diversity among two new EU members with strongly diverging reform outcomes. This dualistic approach demonstrates that exogenous forces, i.e. Europeanization or policy diffusion, are necessary but by no means sufficient elements of an explanation behind regime dissimilarity in infrastructures. In sum, the evaluation confirmed the assumption that also in the CEECs domestic factors need to be explicitly considered for a more encompassing analysis of regulatory reform.