An Examination of the Limits of State Intervention in Telecommunications Infrastructure Contracts through Regulatory Mechanisms

Abstract

The transformation of the state from a direct economic operator into a regulatory authority has intensified the need to redefine the permissible limits of public intervention in infrastructure-related contractual relations. Telecommunications is among the sectors in which regulation remains indispensable because of characteristics such as natural monopoly in certain network layers, network effects, operators’ dependence on essential infrastructure, and the strategic importance of continuity in communications services. Nevertheless, the expansion of regulatory authority may restrict contractual freedom and the commercial autonomy of market participants, making it necessary to determine the legitimate boundaries of state intervention. Using a descriptive-analytical legal method and focusing on the Iranian legal system, this study examines the extent to which the state may intervene in telecommunications infrastructure contracts through regulatory mechanisms. The analysis demonstrates that regulatory intervention is primarily justified by the need to correct market failures, control monopoly power, protect competition, and safeguard the public interest. At the same time, such intervention must remain compatible with freedom of enterprise and contractual autonomy. The findings indicate that one of the principal challenges of telecommunications regulation in Iran is the overlap between the jurisdiction of the Competition Council and that of the sector-specific communications regulator, which may generate conflicting decisions and undermine contractual legal certainty. Moreover, determining the permissible intensity of intervention in contracts concluded by the Telecommunications Infrastructure Company requires a distinction between its sovereign functions and its proprietary or commercial activities. Accordingly, legitimate intervention should be founded on clear statutory authority, a defined regulatory objective, necessity, proportionality, competitive neutrality, transparency, and effective judicial review. The study concludes that regulatory intervention may legitimately be more extensive in monopolistic and sovereign activities, whereas greater contractual autonomy and more limited direct intervention should prevail as activities become increasingly commercial and competitive.