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The Challenges of Regulating in a Converged Environment

The life of an ICT regulator has never been easy. An effective regulator needs to be - and be seen to be – entirely impartial. To have enough "teeth" to enforce its decisions in the face of powerful commercial interests. And to juggle competing interests, ensure a level playing field, promote transparency and create an environment that nurtures the technological and service innovation that’s at the very heart of the information and communication technology sector.

But the advent of convergence – where the lines between previously discrete domains like broadcasting, telephony and different kinds of network traffic are blurring – is hugely complicating matters. In the majority of countries, services continued to be operated under licences linked to particular technologies. But new digital platforms are allowing operators and service providers to quickly spread their wings and launch themselves into new market segments. Bundled ‘entertainment’ offers are one popular example, with telcos offering VoIP and digital TV services in addition to the plain old telephone service that used to be their bread and butter. Another is the Virtual Mobile Operator, able to launch mobile communication services without actually owning or managing a network infrastructure of their own. And for their part, broadcasters are developing their own content offerings designed specifically for non-broadcast markets such as the web, and, increasingly, handheld mobile devices.

Fair dealing

Because they’ve been developed and introduced over time, and under varying circumstances, different types of ICT services (wireline, wireless mobile, fixed wireless . . . ) have generally evolved under different regulatory frameworks, including different licensing, interconnection and retail price regulation.

And when it comes to wireless services like mobile telephony, WiFi and wireless broadband, it’s also clear that no country’s radio spectrum has ever been a ‘blank slate’ on which a regulator can design the perfect assignments and allocations. Typically, in fact, national radio frequencies are the province of a range of government departments, institutions and companies, who already hold legal rights to use substantial portions of useful spectrum.

Likewise, Next-generation networks (NGNs) introduce a range of issues relating to interconnection regulation and pricing, because of the reduced numbers of interconnection points but increased number of potential layers at which interconnection may occur.

For today’s regulators, that means facing the huge challenge of trying to minimize the market distortions arising from regulatory treatment of different technologies, so that markets may flourish and freely adopt the best technologies and most efficient use of resources.

For the ICT industry, governments and ICT consumers alike, there’s a great deal at stake in the effective management of these increasingly complex regulatory frameworks. Investments have been made; expensive licenses may have been purchased – yet legacy rights and obligations may distort competition in fast-evolving markets.

Regulators face the problem of continually migrating from existing regulatory obligations to new ones, while battling the resistance of entrenched interests and influences. This requires not just meticulous planning of migration paths for change, but dealing quickly and effectively with the many contentious subjects and disputes that arise.

Neutrality, impartiality

Determining key regulatory issues like ‘market dominance’ in what is often uncharted terrain has become a major challenge. Effectively, dominance in one layer of the network (for example content) can be used for anti-competitive purposes in another layer (for example transport). This can lead to seemingly endless disputes that may generate thousands of pages of legal opinion.

Network openness is another key issue, revolving around considerations like network interoperability and the proliferation of proprietary technologies and services. While the concept of ‘open systems’ has gained much momentum in areas like software development and interconnection between different types of networks, bottlenecks can still arise in areas where developers or service providers may have a strong lead over their competitors.

Regulators strive to promote the sharing of resources, so that operators are encouraged to open their networks to use by other providers, and infrastructure companies such as tower providers are open to adding the equipment of new operators, or new types of technologies.

The issue of network openness also has wider implications in the ‘net neutrality’ debate, where market rules may mandate non-discriminatory carrying of traffic. But as traffic management tools become increasingly sophisticated, how can regulators ensure that an operator is not slowing competitors’ traffic in favour of its own packets, or discriminating against certain types of traffic in favour of another, to gain market advantage? Can regulators even legitimately involve themselves in how an operator manages traffic across its own networks?

Privacy concerns

The many undeniable benefits of open networks have had the inadvertent effect of greatly increasing threats to privacy and data protection. The large amounts of personal data that individuals share across networks are of potential interest to a diverse range of entities – from companies seeking to target their marketing efforts, to governments wishing to track citizens’ political views, to criminals scoping the Net for victims. Behavioural advertising relies on tracking of user preferences through their browsing habits – a practice that’s coming under increasing regulatory scrutiny as consumer groups complain of invasion of privacy.

At the same time, regulators are increasingly being involved in cybersecurity issues. For instance, several countries have been striving to tackle the problem of spam not just as a consumer protection issue and a burden on operators’ networks, but as a threat to network integrity, since much spam now carries malware designed to infect the computers of unwitting users. In future, ICT regulators will need a more clearly defined role that meshes closely with the roles of security and intelligence agencies, law enforcement agencies and consumer protection and civil liberties groups and legislation.

Sustainable regulation

In the face of all this, the challenges for ICT regulatory agencies can sometimes seem insurmountable. Regulators increasingly need not only to understand engineering and to carry out complex economic and legal analysis, but to have the foresight to quickly recognize and adapt to shifting technology paradigms. They need to be ready to question previous approaches in a fast-evolving market, while nevertheless applying consistent regulatory principles. Regulators face the challenge of judging when market failure requires regulation, and where regulation is no longer required and can be removed. And as the impact of regulation endures for many years after regulations are issued, regulators face great responsibility to ensure that they maintain minds as open as the Internet itself.

As a result, high-level consultation processes like the Global Symposium for Regulators, organized every year by the ITU, are more crucial to successful regulation than ever before. Regulators from around the world can meet to debate thorny issues, share experiences, and together forge best practices and consensus-driven approaches to common problems.

While regulation will always trail the lightning pace of technological innovation, cutting-edge best-practice regulation is as essential to the futuristic equipment, services and applications - and their fair pricing– as the work that keeps the boffins busy in the world’s R&D labs. For markets to truly flourish, regulators need inspired regulatory approaches that are as innovative as the technologies that are their subject

 

 

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Updated : 2009-12-14