Digital regulation refers to legal and regulatory measures to address challenges brought about by digital transformation with the aim of creating an enabling environment for a thriving economy of digital services and products.
Regulating the digital sector in 2030 – two major challenges
Digital services encompass a wide range of economic activities that take place online. Some are completely unrelated to communications. Others consist in transmitting signals over a communication network or in providing access to a communication network. We see two major challenges for regulation:
- Keep up with the pace of technological development: Regulation generally lags behind technological developments. Be attentive and continuously strive to find the best possible way to create favorable conditions for digital business development, taking into consideration international regulatory trends.
- Create an enabling regulatory environment. The key lies in finding a healthy balance between promoting innovation and protecting consumers’ interests, while allowing also the State to reap sufficient benefit from the technological advances in terms of fiscal resources and administrative opportunities.
Key regulatory issues for a thriving digital economy
Institutional framework for in a digital environment
- A more flexible approach is needed. Reconsider traditional sector-specific or domain-specific institutional setup for regulating activities.
- Where local specificities do not warrant sector-specific structures, dedicated agencies to be considered to respond in a cross-cutting manner to regulatory issues.
Secure a trusted and transparent digital environment
- Define cross-cutting rules that apply to all categories of digital content.
- Establish transparency requirements as well as due diligence obligations.
- Specify conditions for liability of market players with regard to illegal third-party content and obligations to take measures against illegal content online.
Secure a fair and competitive digital environment
- Competition policies must satisfy specific requirements of the digital ecosystem. The advent of converged or unregulated players operating across national borders has challenged traditional solutions.
- M&A assessments need to expand their evaluation of market power to include access to consumer data and the necessary algorithms for data analyze and use.
- Special attention on preventing dominant players from abusing their dominant position against businesses and consumers.
- Government authorities should be given the power to address structural competition problems and to impose behavioral or even structural remedies without the need to make any finding of an infringement of the competition rules.
Promote data-driven businesses
- Create an enabling environment for data sharing and support the development of a trusted data space. This could create new business opportunities for new providers of data sharing services.
- Reconsidering data localization requirements (requirement to store data locally), which very often constitute an obstacle to free movement of data, could be a key.
Secure consumer protection
- Strike a fine balance between the protection of consumers’ personal data on the one hand and the facilitation of cross-border data flows, new business models, and new digital services on the other.
- Support the safe expansion of digital services by incorporating relevant provisions on consumer protection, effective procedures for processing complaints, and the heightening of consumer awareness including information and education about consumer-related issues.
Address tax-related issues
- Preference to balanced, harmonized and transparency approaches, integrating national and international tools.
- Avoid excessive burdens on stakeholders and focus on affordability for consumers.
- Promote innovation and effective competition among all sector stakeholders
- Keep realistic expectations regarding the capacity for action of the regulatory system.
- Make sure that regulatory frameworks reflect the evolution of cyber threats and encourage security to be integrated into 5G technology to enable effective and safe use of the technology by people and businesses.
- 5G infrastructure must be resilient and completely secure from technical or legal deficiencies.
Consider regulatory challenges relating to IPR protection
- The reproducible nature of digital goods complicates IPR protection.
- IPR approach to consider both qualitative, e.g. intended economic or commercial advantage, and quantitative, e.g. number and scope of breaches involved in the case, aspects.
Good to know — ongoing international initiatives for digital regulation (EU and others)
Regulators around the world (e.g. EU, Germany, UK, USA, Australia and China) are designing answers to challenges of the 4th Industrial Revolution. A look in the EU reveals that ongoing efforts include amongst others these four proposals: Digital Services Act (DSA), Digital Market Act (DMA), Data Governance Act (DGA), Data Act (DA)
Implications for the electronic communications sector - moving toward a new era of regulation
Through more "collaborative" regulation. Solutions range from minimalist approaches to much more substantial interventions requiring legislative changes. Achieve an appropriate level of international and regional harmonization, integrating best regulatory practices.
Digital services vs. electronic communications services
Besides sector-specific rules for electronic communications services, the regulations on digital (online) services also apply to telcos insofar as they provide digital services.
Institutional regulatory framework
National regulatory authorities (NRAs) need to act as sector facilitator and partner in the promotion of digital markets. Where different national institutions have responsibilities for different aspects, they should interact to avoid ”cannibalization” and hindering of the momentum of innovations.
Market entry (licensing)
Flexibility and dynamism are essential features of any licensing regime. Unified licenses or general authorizations are preferable to service-specific licenses. The need to combine mobile technologies with optical fiber for 5G backhaul rollout demands that eventual exclusivity of incumbent operators be reevaluated at least for cases where the incumbent operator fails to satisfy market demand.
The key lies in the ability of the regulatory framework to protect all economic players “in competition” rather than to protect some of these players “from competition”. As markets is still developing, regulatory caution is required. The most appropriate approach is a case-by-case assessment while taking into account cross-border and inter-sectoral aspects.
Business-supportive spectrum management
Spectrum is a major enabler of growth of the digital economy. Policymakers should work to harmonize the global spectrum framework for 5G. The combined use of licensed, unlicensed spectrum and spectrum sharing can help to create a balanced spectrum ecosystem that would encourage investment and efficient use of spectrum and promotes competition. A clear medium and long-term roadmap is essential to give investors certainty.
Address infrastructure sharing
Sharing of passive or active infrastructure, international sharing (international gateways and submarine cable landing stations), functional separation, and spectrum sharing are some of the options that should be considered in the electronic communications sector.
Ensure universal service and access
The universal service regime can be an appropriate complementary instrument for achieving broadband Internet access for all. Such an approach would require dealing with the scope of access and universal service, the establishment of an access and universal service fund, the means of fi nancing it, obligations relating to access and universal service and the means of enforcing them. For many countries where the ambition of a 5G for all is not realistic in the short and medium term, “3G/4G for all” should be considered.
Facilitate 5G networks
A multidimensional approach that includes regulatory and other measures is required. The main regulatory issues relate to the need for adequate spectrum, deployment of small cells for 5G, constraints to the deployment of the fi ber backhaul network, and the facilitating role of political decision-makers and regulatory authorities. In terms of measures beyond the scope of regulation, transitional measures should be considered by NRAs to facilitate the launch of startups with 5G – for example, facilitation of procedures or exemption from certain obligations, e.g., need for licensing or regulatory charges, for a certain period.
Regulation conditions the fate of the digital sector
While there is no panacea for digital regulation, it conditions the fate of the digital sector. If properly designed, digital regulation is the key enabler for a dynamic, inclusive and secure digital sector.