Research Trends and Conclusions: Regulatory Communications 2011
With the benefit of over 10 years of research and thousands of votes from clients and private practitioners, Who’s Who Legal takes a closer look at developing trends in the regulatory communications legal marketplace worldwide.
The end of the dot-com bubble at the beginning of the century saw the communications sector strip out a considerable amount of dead wood. This helped soften the blow of the global financial crisis for most jurisdictions, and facilitated continuing commercial activity in the sector. The healthy volume of transactional work we reported towards the end of fourth quarter of 2009 has continued throughout 2010 according to our sources, particularly in emerging markets.
A key contributor to this trend is consolidation, particularly in the mobile telecoms area where “individual providers are no longer making money hand-over-fist”, according to one source. More deals such as the Orange/T-Mobile network merger are expected internationally, which in turn will give rise to a huge number of regulatory issues. However, lawyers in a number of jurisdictions where mobile penetration exceeds 100% pointed out that markets had become saturated as a result of this trend. Many of the lawyers we spoke to are looking to undeveloped markets as future sources of work as potential domestic clients become fewer.
Chart 1
While England emerges as the largest jurisdiction in the current edition for number of lawyers listed, our sources here were quick to emphasise that large portions of their work over the past year have come from emerging markets. One source of work in particular has been the efforts of developing countries to implement comprehensive communications regulation, with the majority favouring the English system as a working model on which to base their rules. The knock-on demand for English expertise – particularly in the Middle East and sub-Saharan Africa – has helped make up the shortfall caused by decreased demand in the UK, where “the time when a firm would see its regulatory practice engaged on a day-to-day basis is over,” according to one source.
On an international scale, the traditionally dominant firms continue to record strong performances in our research (see chart 1).
Between them these firms are home to almost a third of all the England-based lawyers we feature. The firms’ non-London listings are entirely based in Europe and developed Asian markets such as Hong Kong and Singapore.
Closer analysis of the leading firms in England over the past four editions presents a more diverse picture, with TMT specialists Olswang consistently commanding a stronger portion of the domestic market share than most of the full-service firms we list (see chart 2 below).
Chart 2 – note: figures for SNR Denton prior to 2011 refer to Denton Wilde Sapte LLP
A similar picture emerges in the US. Even while the regulatory activism of the current Democratic administration has contributed to a healthy year for the US lawyers in this edition, those we spoke to conceded that the low profitability of regulatory work had led many large firms to re-evaluate the necessity of a large regulatory communications practice, with some firms siphoning lawyers into their competition teams. A large proportion of the sources we spoke to in the US also noted that an increasing number of lawyers were being drawn away from full-service firms to communications boutiques with clients now “more willing to give work to specialised small firms with more flexible fee-arrangements”.
A look at the most visible firms in DC, the country’s most populous jurisdiction, over the past four editions reveals the relatively strong position held by telecoms boutiques such as Goldberg Godles Wiener & Wright and Levine Blaszak Block & Boothby compared with major internationals like Hogan Lovells (see chart 3 below).
Chart 3 – note: figures for Hogan Lovells prior to 2011 refer to Hogan & Hartson LLP
Outside Europe and the US, lawyers in those markets that already operate under developed regulatory structures, but that nevertheless still have a way to go in terms of telecoms penetration and infrastructure development, perform well in our research. Australia is one such jurisdiction, claiming one of the largest market shares in the Asia-Pacific region (see chart 4 below)
The Australian government is currently in the middle of implementing the National Broadband Network: the largest infrastructure project in Australian history, aimed at providing high-speed internet connections to 90 per cent of the country’s homes and businesses. The scope of the undertaking has kept Australian lawyers engaged on both the regulatory and commercial side in 2010, and has seen an increase in the visibility of the communications bar.
The majority of the jurisdictions featured in Latin America see a year-on year increase in the number of lawyers listed, and, with the exception of Mexico, the sophistication of the legal practitioners in the region as a whole has grown since the previous edition as a result of the increased demand (see chart 5 below).
Brazil maintains its position as Latin America’s strongest jurisdiction by number of lawyers listed. The national telecoms authority Anatel’s decision in late 2009 to allow France’s Vivendi to bid for local mobile operator GVT without the usual regulatory restrictions is indicative, sources suggest, of the importance of the communications sector to Brazil’s economy. In this environment, with a strong deal-flow throughout 2010, lawyers have been heavily engaged in regulatory work.
The largest increase in listings in the region compared with the previous edition is posted by Chile. The Chilean government has taken an active interest in national communications provisions, and in November 2010 enacted a national portability law, allowing telecoms users to change operators without changing numbers while also setting the goal of nationally available broadband by the end of 2014. Sources suggested that such policies will give rise to more competition work going forward and many see the increased visibility of the national communications bar as timely.
The greatest scope for build-out in communications regulation and commercial projects remains in Africa and the Middle East according to our sources. However these regions account for only 2 per cent of the total international listings in this edition, with the majority of the work falling to foreign lawyers. A complex array of cases has arisen in the past year, including the suspension of BlackBerry services by regulators in the UAE and the Nigerian government’s sale of Nitel to a China-Dubai led consortium comprising Unicom and Minerva, and demand for quality advice from overseas is likely to remain high throughout 2011.
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Traditional centres for leading regulatory communications lawyers like Europe and the US maintain the majority market share of listings in this edition, but the gap between established and emerging markets is narrowing. Europe and the US both witness a decline in the number of recognised lawyers, while jurisdictions in Latin America and the Asia Pacific see notable leaps in the level of international recognition their lawyers receive.
Lawyers in more developed countries, where the communications sectors have less potential for growth, view these emerging markets for future engagements. Looking into 2011, many spoke with optimism about unlockable markets in sub-Saharan Africa, where infrastructure development and telecoms penetration still has a long way to go, and where regulatory regimes are under development.
Lawyers in developed jurisdictions also predict a continuing migration from full service to boutique firms this year, however others were keen to point out the importance of international networks to firms looking to tap into less developed regional markets. “Like it or not, clients fly to quality,” says one source, “so there is now a trade off between fee pressure – which favours smaller firms – and the firm’s ability to provide adequate supply for relevant demand – which full service firms are better placed to give when the case is complex and spans numerous countries.”