International Institute of Communications

Tel:+44 (0)20 8544 8076
Fax:+44 (0)20 8544 8077

social twitter sm  social linkedin sm  social youtube sm  social facebook sm

New beta site

Economic Catalyst

Jerry Power says regulation must change to promote digital ecosystems

Economic Catalyst

Most regulatory policies were established during a time when monopolies were needed to build the communications infrastructure necessary to support a nation's needs. Regulators served as a counterpoint to the selfserving agendas of monopoly companies by acting as a consumer advocate. In a competitive environment, competition acts as that counterpoint, allowing the role of the regulator to change from being an adversary to becoming an advocate working with industry to ensure their region will be able to fully participate in the digital ecosystem of tomorrow.

Around the world many regulatory authorities actively built on the natural rivalries between communications industry players in an effort to minimise prices for a least common denominator level of service. Several regulators have solidly demonstrated that regulatory policy can be structured to encourage market behaviours that serve to drive down both prices and – unintentionally – service quality.

However, in a networked world where the internet is working to eliminate economic borders, any effort that ultimately works to handicap a country's ability to compete in the knowledge economy on the global stage will drive information services to other countries that provide a more favourable forward-looking environment. These economies are seldom based on low-cost service structures.

Equally unappealing is the laissez-faire approach that allows the 'invisible hand' to guide the evolution of a critical infrastructure component. Under such a philosophy, investments may be prioritised to maximise established business structures to the possible detriment of future needs that societies will require in an increasingly networked environment. These types of policies tend to favour consolidation of market power and increase the digital and economic divides that are often associated with short-term gains and longterm losses.

Regulatory policy has a direct impact on the economic value of communications infrastructure. If regulators are tasked with oversight of legislative mandates, the legislature has effectively taken on the responsibility for an infrastructure that defines future economic potential. Legislative processes are slow and deliberative, making them ill equipped to respond to a fast paced economy. As an alternative approach, a knowledge-based economy may be better served by a process where regulatory agencies are directly driven by economic objectives.

In a competitive world, the role of the regulator must change from being a consumer watchdog to becoming an economic catalyst that encourages economic growth for the public good. Regulators will always have the choice to encourage rural over urban growth, consumer over business needs, or server-side market development over infrastructure growth. These choices will determine the level and direction of investments and so regulatory agencies are making significant economic decisions for each country.

So it is increasingly crucial that regulators have a clear vision of the changing needs of citizens and the role the network plays in enabling their country to compete on the global stage of a knowledge-based economy. Once that vision is established, the regulatory agencies can begin to work as partners with industry to create a climate where that vision becomes reality. A lack of vision or trust between the authority and industry will hobble the effort and open the door for competing countries.

But regulatory agencies formed with the tactical mission of overseeing domestic communications issues are finding that as industry becomes increasingly complicated their energies are absorbed in lengthy debate over policy that hopes to maintain order over a dynamic and changing process. These debates distract from the fact that the knowledge industry knows no geographic borders and countries have to compete on a global level to attract economic activity to their domain.

I believe that regulatory agencies need a new form of governance, something that won't be mired in politics but instead is tasked with overseeing and maximising a strategic industry that is instrumental to economic progress. I would suggest a break from legacy approaches that task agencies with implementation details and instead provide economic targets that require them to work with their industry partners to maximise our potential.

Stay up to date with the IIC

Tell us how you'd like to stay informed about events, interviews and more from the IIC. 

My IIC Preferences