As “market referees”, regulators contribute to the delivery of essential public utilities. Their organisational culture, behaviour and governance are important factors in how regulators, and the sectors they oversee, perform. This report uses the OECD Performance Assessment Framework for Economic Regulators (PAFER) to assess both the internal and external governance of Peru's Supervisory Agency for Private Investment in Telecommunications (OSIPTEL). The review acknowledges OSIPTEL's achievements and good practices, analyses the key drivers of its performance, and proposes an integrated reform package to help the regulator prepare for the future.
Driving Performance at Peru's Telecommunications Regulator
The Governance of Regulators
Abstract
Executive Summary
The Supervisory Agency for Private Investment in Telecommunications (Organismo Supervisor de Inversión Privada en Telecomunicaciones, OSIPTEL) was created as Peru’s regulator for the telecommunications sector in 1994. Since then, the regulator has overseen the liberalisation of the market and the transformation of services offered to the country’s citizens and businesses via new technologies. While OSIPTEL has enjoyed a stable mandate, the dynamism and pace of change in the telecommunications sector have increased its regulatory functions. To adapt successfully to these new challenges, the regulator will need to strengthen its external relations strategy, create a more predictable framework for stakeholder engagement and results reporting, and enhance internal governance and clarity in decision making.
Role and objectives
OSIPTEL is a specialised and decentralised regulatory body with technical, administrative, economic and financial autonomy. However like all Peruvian economic regulators, it relies on the Presidency of the Council of Ministers (Presidencia del Consejo de Ministros, PCM) for approval for several procedures and is subject to public finance rules. It operates within sector policy set by the executive and regularly publishes non-binding technical opinions in response to Ministry consultations. There are no formal or structured co-ordination mechanisms bringing together public entities intervening in the telecommunications sector.
OSIPTEL has enjoyed a stable mandate and developed a strong reputation as a technically competent body with strong internal culture and commitment to delivering on its mandate. The regulator sets its strategic objectives in five-year strategic plans and has an active communications and outreach strategy.
Key recommendations
Build a “no surprises” relationship with stakeholders based on enhanced engagement and trust, including via a robust external relations strategy focusing on the core objectives and results of the regulator, more active sector co-ordination mechanisms and joint efforts among economic regulators to address common opportunities and challenges.
Assess whether the functions and powers of the regulator are aligned with its role and objectives, taking into account distribution of powers with other public entities as well as international best practice.
Share OSIPTEL methodology on strategic planning with other public entities and use this as a basis for building stable forward regulatory planning.
Input
OSIPTEL is entirely funded by resources received from the regulated sector. In practice, its budget has been limited by central government rules that cap the amount received from the sector below what is allowed by legislation, as well as by austerity measures, leaving the regulator feeling under-resourced and unable to manage its funds freely.
OSIPTEL is recognised as having highly skilled technical staff, but does not have a uniform recruitment framework. Despite the constraints of the government employment framework, OSIPTEL is generally viewed as a desirable place to work thanks to a number of successful initiatives implemented by management.
Key recommendations
Review regulatory fees on a regular basis based on cost recovery principles and seek clarity on central administration constraints on the regulator’s funding model and financial management.
Implement a human resources framework for diversity, recruitment, remuneration and incentives that takes into account the special needs of economic regulators, including levelling the playing field in terms of recruitment practices and contract frameworks.
Process
Decision making at OSIPTEL is led by the Board of Directors, which operates under a wide executive mandate, provides little input to strategic questions, and with limited resources. Internal management is centralised in the President of the Board and General Manager.
OSIPTEL uses good regulatory practices to improve the quality of regulations. It was a pioneer in the Peruvian administration for the implementation of regulatory impact assessments (RIAs) for all regulatory decisions. However, stakeholder engagement tends to happen late in the process, and ex post reviews are not systematically conducted. While OSIPTEL places a high priority on transparent and accountable decision making, sharing information on sector performance and its activities, it lacks formal accountability mechanisms.
Key recommendations
Assess whether the Board’s activities and resources are aligned with its mandate, and introduce internal quality control and challenge functions.
Create an advisory committee of stakeholders for transparent and early consultation with industry, users, and other relevant stakeholders to enhance the inclusiveness and predictability of OSIPTEL’s regulatory activities.
Put in place a regular engagement activity with the Congress to increase accountability and promote understanding of the regulator’s role and activities by the legislature.
Output and outcome
OSIPTEL’s activities are guided by a five-year strategic framework, which includes a mix of outcome and organisational goals, supported by sophisticated indicators to measure their achievement. However, monitoring these indicators is resource intensive, and the results are under-utilised for accountability and transparency purposes. The regulator collects and publishes large amounts of raw data, as well as a variety of reports using this data.
Key recommendations
Further align the annual report to the strategic framework and use it as an opportunity to communicate on achievements against the strategic objectives.
Organise a public event with stakeholders to present the annual report.
Explore opportunities to streamline or reduce data-reporting requirements to improve the consistency and completeness of the information, and review data collection processes.
