Independence and the regulatory state—Telecommunications in Scotland and the rest of the United Kingdom

In the autumn of 2014 the residents of Scotland, but not other parts of the UK, will vote on whether to leave the UK and to become a separate state, with a positive vote leading to an independent parliament expected to be elected in 2016. It would remain within the EU and in compliance with its acquis communitaire. This paper identifies issues that would have to be addressed in preparing for and creating a new system of governance for telecommunications markets on that tight timescale.A Scottish Parliament and devolved administration were created in 1999, though without powers over telecommunications or competition law. The Scottish administration has its own economic strategy in which the deployment and adoption of broadband play a part.The creation of new countries has been commonplace in recent years (e.g., in the fission of the USSR and Yugoslavia), but are not precedents for the independence of one part of a regulatory state in which markets deliver services. Less than one-tenth of the UK market would be separated, with all the laws, rules and institutional arrangements to be replicated.The biggest challenge would be to split the existing licences and market operations, one for Scotland and one for the rest of the UK. Operators would revaluate Scotland and would seek to revisit established regulatory decisions, though with a new regulator lacking information about the costs, market shares and viabilities of the new operators and the new markets.

► The development of the UK's regulatory state for telecommunications are analysed.
► Lessons for the separation of states for telecommunications are identified.
► The issues for the creation of a new regulatory Scottish state are discussed.
► The separation of part of a regulated market is analysed.