Technology is driven by scientists
and marketers. Policy is driven by politicians. So by definition,
there is a big gap inherent between the paces of technology
development and policy making. And one can say categorically,
despite the "Al Gores" and "Chandrababu Naidus"
of the world, that gap will continue to exist in the forseeable
future. So, it is essential that all discussions and debates
on regulatory implications on convergence should take place
keeping this truth in mind, especially when the world is moving
towards democratic governance from centralized communist set-ups.
Come to convergence. Regulation
has not been able (quite naturally) to keep pace with the developments
in technology. Digitalization has made it possible for technologies
to smoothly integrate with each other. This has resulted in
service providers being able to provide what was so far a distinct
service, being provided by another class of service provider.
This, while being regulated by the regulatory provisions of
their traditional service, i.e. sector specific regulation.
This, along with rapid creation of new services, which do not
clearly fall into any of the traditional categories of service,
is giving tough times to the regulators around the world.
Pertinent Points
In December 1996, International Telecom Union (ITU) held a colloquium
on Regulatory Implications of Telecommunications Convergence
at its headquarters in Geneva, which saw participation of policy
makers, regulators and other communication professionals from
around the world. Though it is almost three years now, most
of the issues remain as relevant as they were then, because
ITU focused on the pure regulatory issues at a more holistic
level rather than on the specific example of convergence.
Though there were diverse opinions
about the meaning, nature, and scope of the term convergence
itself, there was a broad consensus that convergence will have
an important and inevitable impact upon the policies, regulatory
frameworks, and structures of telecom.
Taking the three levels at which
regulation is influenced-national competition policy, multilateral
trade agreements like WTO, and sector specific policies within
a country-the colloquium concluded that regulation will be increasingly
driven at the first two levels in future, rather than at the
third. The colloquium also noted emphatically that in the future
the impact of convergence upon regulation would be greater than
the impact of regulation upon convergence. The theme of much
of discussion was not how to regulate convergence, but how regulation
should (and must) change in light of convergence.
However, unlike most other hyped talks, the colloquium pointed
out that there are certain areas where the role of regulation
has become more important than ever before because of convergence.
Three areas it explicitly mentioned were:
- Radio spectrum management for
assuring equitable allocation of frequencies among competing
services, and limit interference
- Promotion of minimal technical
standards if needed to ensure universal compatibility of systems
and
- Promotion of national/social
objectives for information content for many countriesThe colloquium also recognized
the fact that there need not be and "perhaps should not
be" a common perspective on all of the issues across all
the countries. This is a bold statement considering the fact
that technology companies try their best to convince the policy
makers and industry in less developed countries, something just
the opposite.
However, it echoed the generic
campaign by the global technology vendors that convergence implies
opportunities for regulators in less developed countries, to
pursue their most basic objectives, by leap frogging development
stages and directly influence the market to invest on less costly,
more efficient technologies. This, the participants were careful
enough to point out, while seeking to maintain a balance of
social and economic interests, and equitable use of public resources.
The most significant consensus
was to question the need of importance for each specific regulatory
issue. Summarized in a set of three simple, hierarchical questions,
this is an ideal reference model for all governments seeking
to have a re-look at their regulation systems at the wake of
convergence. The questions are as follows:
- Should it be regulated (is there
a legitimate public interest goal, and would the benefits
of regulation outweigh its costs relative to market-based
options)?
- Can it be regulated (can regulation
meaningfully achieve the desired goals)?
- How can regulation achieve the
desired result, in a targeted, minimalist and resource-efficient
way?
It is interesting to note than
in that many respondents to the European Commission Green Paper
on Convergence also expressed a similar view that the future
regulation in the wake of convergence should be competition-based
with no a priori assumption that all services should be regulated.
Challenges
Some of the most significant challenges
(not completely mutually exclusive) to regulation brought about
by convergence are as follows:
Confusion regarding objectives
of regulation: This is a major challenge for many nations. Most
of the content regulation and regulation on the activities of
foreign participation in services are done with a social/nationalistic
objective in mind, whereas most of the regulation to control
competition is done with an economic objective. With all trying
to enter each other''''''''s domains, the balancing act has become
even tougher.
Limitation of sector specific regulation:
As multiple cross-sector service provision is possible by a
single service provider because of technology convergence, sector
specific regulation is increasingly becoming difficult. For
example, Internet traffic can be carried by cable TV service
providers, who are essentially providing what has essentially
been a communication service but are not subject to the regulations
that telecom sector is subject to.
Limitation of geography-specific
regulation: For example, a terrestrial broadcaster is subject
to strict regulation of the country it operates in, while satellite
channels can beam directly to the receiver with hardly any regulation.Gaps in present regulatory framework
to tackle new media and services: Emergence of new mediums like
Internet, which combine all the services and is global in nature
has made it possible to create new services almost instantly.
All the present sector specific regulations together do not
have any mechanism to regulate that.
Overlaps of regulatory domains
of multiple regulators: Sometimes, there can be conflict over
the definition of the domains of regulation of multiple regulators.
The paths that the regulators would take depend on their most
important objective and also on their understanding of the sector,
which are influenced in many cases by their history. This can
result in stalemate, affecting policy making and thus growth
of the sectors concerned.
Inequality in regulatory frameworks
of different countries: Because of their dissimilarities in
societies and also in states of market developments, there is
an inequality in the level, nature, and even objectives of regulation
in different countries. With globalization, the world is fast
becoming one market. There is pressure on national government
to have more deregulation. For example, countries like the US
are very liberal in all aspects. Western Europe is strictly
closed in terms of foreign technology and stringent in content
regulation, but very liberal when it comes to competition among
local service providers and really does not interfere in the
market. Canada is stringent only in content regulation, calling
it nationalistic objective, but at the same time does not interfere
in free competition. Most of the Nordic countries are liberal.
New Zealand does not have anything called a telecom regulator.
Multilateral trade organizations like Wold Trade Organization
(WTO) are trying to achieve an uphill task in terms of making
the countries to agree to some minimum standard regulation.
Conflicting regulatory stances
affecting operation of companies: A company operating in a converged
sector sometimes has to go through scrutiny by different regulators.
Hence, many companies cannot operate freely under the pressure.
And if the stances are not consistent, there may be a jeopardy.
This limits innovation, free business decisions, thus affecting
productivity of the companies. While this is undesirable, it
is tough for any regulatory mechanism to completely remove this.
The emergence of the new monopolists:
Most countries had monopoly government-owned telecom service
providers and broadcasters. Traditionally, a major task of regulators
in the newly open markets has been to keep these monopoly service
providers in check. However, today a new breed of monopolists
is emerging-companies that are using their monopolies in some
technology areas and combining it with convergence to expand
into other areas and kill competition there. All regulators
will have to face this challenge in the new millennium.
While these are some of the most
common and identifiable challenges, there are many more challenges
that are posed almost everyday because of convergence. It is
neither possible nor relevant to try discussing all of them
here. However, there are important questions that are being
raised on the role of regulation itself, in the wake of convergence.
It is necessary to debate those nationally, because the issues
concerned are more national than global in character, despite
globalization of economy.Approaches to Future Regulations
Even as many broadly agree on what convergence covers and what
are the broader challenges for regulation in the wake of converging
technologies and markets, there is a very diverse set of opinions
when it comes to future approaches to convergence.
While assuming the ITU colloquium
conclusion that in the future convergence will have more impact
on regulation than the other way round, it is nevertheless necessary
that the nations take a proactive stance to effectively cope
with convergence. Internet, for example, has made the life of
regulators difficult. But this very Internet is being used by
many countries to close the gap in telecommunications.
Most countries have either revised
their outdated (in this case more than 15 years old) telecommunications
and broadcasting legislation and replaced them with more forward-looking
legislation. The regulators are guided by clearly spelt out
objectives in those acts. But then, there are countries which
have not been so fast moving, including India which has a 115
year old Indian Telegraph Act. Changing the legislation means
you approach convergence with an open arm rather than convergence
approaching you. This not only makes the regulation more clear
and transparent, this saves a lot of time while implementing
policies. Some others have come out with what is called the
convergence policy statements. Canada is one example, which
despite stringent control over broadcasting regulation, has
really moved fast in promoting competition.
While a clear-cut policy removes
a lot of problems, the ever evolving technologies and market
still require strong regulations.
The first step in the regulation
should be clear-cut objectives of each regulatory stance taken.
There are three specific objectives that drive most regulation.
Maintaining a balance among these objectives is the job of any
regulator. These objectives are:
- Serving the consumer: This includes
ensuring such things as universal access, right tariff, and
quality of service. These are the ultimate objectives for
market regulation. These require little regulation once the
market matures.
- Nationalistic objectives: These
include handling of areas that could be national security
threats; content regulation to ensure that politically/socially
sensitive information is not broadcast (though Internet now
makes it increasingly difficult) and the information does
not hurt national ethos; and encouragement to local technologies,
which again is seen as protectionism by many.
- Economic objectives: This is
the most well known role of regulators. This includes ensuring
fair competition, no undue advantage to specific sectors,
and equitable distribution of limited resources like frequency
spectrum.Steps
Among the steps that need to be taken are
- minimizing overlaps and gaps
- clarifying the domains and powers
of different regulators to the maximum extent possible
- evolve a strong and neutral
regulatory regime to coherently address all sector, service,
and medium specific regulation
- specific steps to identify and
check monopolists
- building consumer awareness
in new markets that will minimize the role of regulator and
prepare an environment to leave it to the market forces in
the long run.
The need is to evolve a regulatory
model that is suitable for each country keeping in mind the
challenges, local issues, industry structure, stage of technology
and market penetration and, of course, the national competition
policy, as decided from time to time.
Needless to say, regulation rules
and frameworks for each country can be decided by the policy
makers in consultation with the industry in that country only.
It is necessary for the developed nations to acknowledge that
regulation more than convergence, is evolutionary than revolutionary.
And most certainly, it cannot be thrust upon a country.
It has to be kept in mind that
if the market players can be so responsible and mature, so can
be the national governments. - minimizing overlaps and gaps
- Should it be regulated (is there