Trends in Telecommunication Reform 2010-11 3 ICT REGULATION IN THE DIGITAL ECONOMY Authors: Janet Hernandez, Daniel Leza and Kari Ballot-Lena, TMG 3.1 Introduction chain where competition is likely to take hold. In doing so, governments must design ICT policies and regula-tion In this second decade of the 21st century, our focus that accurately reflect the limits of market forces alone to deliver efficient outcomes that benefit con-sumers, is on the deployment of broadband and, more impor-tantly, as well as the way such limits may shift as the on broadband’s transformative power as an ICT sector evolves and matures. Governments should also take care not to impose burdensome and unneces-sary enabler for economic and social growth in the digital economy. In turn, increased adoption and use of ICTs in the next decade and beyond will be driven by the ex-tent regulation that may actually inhibit investment in broadband, impede competition, and limit the intro-duction to which broadband-supported services and appli-cations of new networks, services and applications. are not only made available to, but are also Many of the successful deployments of new services and applications have been facilitated because they fall outside the regulatory regime or because regulators have opted not to regulate these services. relevant and affordable for consumers. Take-up and usage patterns will vary widely among countries depending on the level of development and maturity of the market, what users—both individuals and businesses—demand, and how ICTs are positioned to enable such usage experiences. Numerous countries, such as Australia, Brazil, Hong Kong (China), Singapore, the United Kingdom and the United States, are current-ly engaged in highly visible public initiatives to facilitate the future development of broadband infrastructure and services; laying out comprehensive national broad-band Beyond such limits, however, regulators and poli-cymakers must strive to make the case for broadband and ICTs by bridging the access gap through universal access and service (UAS) initiatives and by engaging in possible public-private initiatives, where necessary, to finance infrastructure. Making the case for broadband and ICTs also involves stimulating demand for ICT ser-vices by adopting policies directed at making ICTs af-fordable plans; and developing and implementing digital for large parts of the population (e.g., low-cost economy initiatives. Other countries, such as the Re-public terminals, and reduced taxation of ICT equipment and services) and promoting the creation of relevant and compelling content (e.g., developing digital literacy programs, e-government, e-health, and e-learning initi-atives). of Korea, have been involved in such initiatives for well over a decade now. In developing countries, the shift from narrowband to broadband enabled IP-based services is likely to take place incrementally over the next decade and beyond. Factors such as technology, costs, digital literacy and, in particular, compelling content and applications that meet consumer preferences, will be key to this transi-tion. Network and service providers, on the other hand, must also make the case for broadband by offering ser-vices at the prices and with the features consumers demand. As voice-centric business models reach satu-ration, Governments will be responsible for implement-ing adequate policies and regulations that allow and migration towards broadband services and ap-plications targeting local needs will be necessary to enable a broadband ecosystem to develop and take root as a means to support economic growth and social development. Taking into account the state of market development, governments must balance the need for targeted ex ante regulation to address foreseeable in-stances maintain continued revenue generation and growth. This chapter charts the possible route regulators and policymakers can take to facilitate deployment of ICTs in the digital economy based on a multi-pronged approach. Section 3.2 describes the broadband ecosys-tem of market failure in the deployment of commu-nications networks and services, while at the same time and underscores the need to adopt policies that relying on market forces in areas within the ICT value Chapter 3 85