Digital Regulation Platform
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Regulator structure and mandate

01.09.2020

Institutional structures of regulators

Regulators overseeing the ICT sector base their structures on three general design models: the sector-specific regulator, multisector regulator, or converged regulator.

As countries began liberalizing their telecommunication markets in the 1990s, they often created new sector-specific regulators to oversee the telecommunication sector, ensuring non-discrimination and promoting competition as monopolies (often state-owned) gave way to new entrants. When there was limited or no competition in telecommunication markets and fewer ICT services available, sector-specific regulators provided an effective institutional structure that enabled staff to build specialized knowledge in the sector, such as tariffing or spectrum engineering. For example, prior to 2003, the United Kingdom had five separate regulators overseeing telecommunications, broadcasting standards, independent television, radio, and radiocommunications.

UK process to converged regulator

The U.K. government established the Office of Telecommunications (Oftel) in 1984 to promote competition and protect consumers in anticipation of privatizing British Telecom later that year. In a 2000 Communications White Paper, the government acknowledged the acceleration of convergence in the communication sector and set out to establish a single regulator tasked with overseeing all aspects of the ICT sector. Subsequently, in 2003, the government approved the Communications Act, which established the Office of Communications (Ofcom) as the converged, single regulator tasked with overseeing the entire communication, broadcasting, and media sectors by absorbing the responsibilities of its predecessors.

Currently, multisector and converged regulators are the norm, with the former increasingly giving way to the latter. The case for a multisector regulator has been primarily driven by the classification of telecommunications as a public utility (Henten and others 2003). Multisector regulators may derive efficiencies from sharing knowledge, skills, and resources within one entity, which could be particularly useful during early stages of liberalization of the telecommunication sector. Because telecommunication services were often viewed as public utilities, multisector regulators generally oversee energy, water, and other utilities. The Danish Energy Agency is an example of a heavily merged multisector regulator, responsible for all forms of energy, climate action, telephony, transportation, radio equipment, and more. Another example is Jamaica’s Office of Utilities Regulation (OUR), which oversees the telecommunication, power, water, and transportation sectors, with spectrum and broadcasting handled by two separate agencies.

Converged regulators owe their formation to changing dynamics in the ICT sector, including technological convergence, liberalization, and a shift away from viewing telecommunication networks and services as public utilities. Because converged regulators can simplify administration, licensing, and oversight processes in the ICT sector, as well as keep pace with technological advances, they are now the main type of regulatory authority in the world. In 2007, converged regulators made up about one-third of institutional structures globally (ITU 2018). By 2017, over 70 per cent of regulators worldwide were converged. For example, in recognizing that “…technological and other developments in the fields of broadcasting and telecommunications are causing a rapid convergence of these fields,” South Africa created the Independent Communications Authority of South Africa (ICASA) in 2000. ICASA merged the responsibilities of the Independent Broadcasting Authority (IBA) and South African Telecommunications Regulatory Authority (SATRA), and supplemented additional responsibilities, such as spectrum management.

In 2016, Singapore merged the responsibilities of the Infocomm Development Authority (IDA), Media Development Authority (MDA), and portions of the Personal Data Protection Commission (PDPC) to create the Infocomm Media Development Authority (IMDA). The converged regulator inherited the responsibilities of overseeing spectrum assignment, broadcasting, telecommunications, and certain aspects of data protection. The IMDA was created to mirror the convergence taking place in the telecommunication and media sectors, which included spearheading the Infocomm Media 2025 Plan and overseeing policy development for the converged landscape.

Traditional regulator responsibilities

The responsibilities traditionally assigned to ICT regulators were designed to meet the needs of the first three generations (G1 to G3) of ICT regulation, and part of the fourth generation (G4) (ITU 2020).

Beginning with market liberalization (G2 stage of regulation), the regulator’s responsibilities have included licensing and enforcement, protecting consumers, and promoting competition. While licensing frameworks have generally been designed to balance adequate oversight over new market players with low barriers to entry to foster competition, some countries have adopted more streamlined approaches while others maintain stricter rules that limit competition.

Spectrum assignment and rules for the use of frequencies are traditional areas of responsibilities that continue to be important role for ICT regulators – especially with 5G deployment underway. However, regulators are increasingly adapting to technological change by easing licence restrictions as radio equipment becomes more spectral efficient and capable of sharing spectrum resources.

Beyond licensing, regulators continue to protect consumers, foster competition, and ensure quality of service (QoS) under G2 and beyond. To protect consumers, ICT regulators – sometimes in coordination with general competition authorities – commonly enforce regulations designed to prevent fraud or deception, ensure levels of customer support, and safeguard consumer rights. For instance, the Malaysian Communications and Multimedia Commission (MCMC), another example of a converged regulator, is responsible for collecting and addressing consumer complaints concerning licensees, especially as they relate to the voluntary General Consumer Code of Practice for the Communications and Multimedia Industry of Malaysia. Similarly, in support of end users, regulators have focused on fostering effective competition in the ICT sector. Wholesale access and interconnection obligations, for instance, have ensured that operators can access each other’s networks – a particularly vital condition for new entrants. In cases where operators cannot reach an agreement, the regulator generally acts as an arbitrator.

Some regulators have also established quality of service (QoS) regulations to ensure services meet reasonable quality expectations. Operators or governments collect QoS service data on key performance indicators (KPIs), such as broadband speed, fault repair rates, and service activation time. QoS may be considered a component of consumer protection, which leads to KPIs such as time to connect to an operator for assistance or billing accuracy rates. Regulators or operators then publish the reported figures in easily accessible locations, such as on the web or in a gazette, so consumers can make informed decisions based on that data. France’s Telecommunications Regulatory Authority (Arcep) makes QoS information publicly available, including average mobile broadband upload/download speeds, percentage of calls held without disruption for two minutes, and percentage of SMS received in less than 10 seconds. It provides much of this data through an interactive dashboard, highlighted below.

Regulators may consider imposing minimum quality targets that carry potential penalties or other enforcement actions if not met. However, this may result in heavy-handed enforcement that impedes operators’ ability to deploy networks and meet QoS targets. Instead, regulators should consider establishing frameworks that encourage deployment and innovation, allowing consumer choice to reward operators that distinguish themselves with better quality or tailored services.

Shifting mandates and roles in the digital era

While traditional responsibilities remain relevant at regulatory stages G4 and G5, the approach to meeting them shifts. Previous iterations of regulatory responsibilities relied on rule-based approaches to regulation. At G4 and G5 stages, a principles-based approach provides market players with more flexibility to adapt to a convergent and a progressively more digital environment. As the ITU has noted, establishing high-level principles allows for flexible solutions even in complex areas (ITU 2020).

As an example, a rules-based approach to fair service pricing may be to establish maximum prices for various services, whereas a principles-based approach may establish that operators cannot charge “unreasonable” fees for their services relative to the cost of supplying them without specifying price ceilings. The principles-based approach allows operators set prices as they see fit but leaves open the possibility of regulatory review.

In terms of spectrum management, governments that employ a rules-based approach may require operators to deploy specific technologies in certain bands. For instance, in 1987, European Economic Community’s Directive 87/372/EEC established that member states should reserve the 900 MHz band exclusively for GSM technology. Switching to a more principles-based approach, in 2009, the European Commission modified the 1987 directive to take a technology-neutral approach, opening the 900 MHz band for “…GSM and UMTS systems, as well as for other terrestrial systems capable of providing electronic communications services that can coexist with GSM systems.”

Just as convergence and technological development demanded leaps between previous generations of regulation, so too do new services and the technological challenges they bring, such as the Internet of Things (IoT), data protection, cybersecurity, and over-the-top (OTT) services. While the regulator’s responsibilities that developed during previous regulatory generations remain important, the transition to G4 and beyond requires regulators to adapt existing responsibilities to the digital environment while adding new ones only as necessary. Licensing, for instance, will remain a vital function of all regulators, but governments continue to shift toward multiservice and unified authorization schemes as they streamline licensing, promote technological converge, and encourage competition.

Modernization of regulators in the digital environment

Presently, governments are assessing whether and how to adapt their regulatory frameworks to address the rise of new digital services. Prior to modifying regulatory frameworks, governments should undertake targeted, thorough, inclusive, and transparent review processes of the digital services in question to determine whether regulation is needed. This should include defining the scope of services under review, identifying whether there are issues to be addressed, assessing whether the existing regulatory framework is sufficient to address these issues, and considering the regulatory model that imposes the least burden on government and industry.

Rather than bring digital services under existing ICT regulatory frameworks, governments are often seeking to employ alternative means of regulation, such as deregulation or self-regulation. Deregulation presents the least burdensome option for governments and service providers, lifting existing oversight and compliance requirements. For example, in 2018, Thailand’s National Broadcasting and Telecommunications Commission (NBTC) reduced the fee for digital TV operators by up to 26 per cent to help operators cope with shifting consumer preferences. This deregulatory measure was a win-win for market players as it eased burdens on traditional audiovisual operators without imposing regulation on new digital platforms.

Another option is self-regulation, which reduces administrative burdens for regulators while establishing basic guidelines for the industry. Members of the Internet and Mobile Association of India (IAMAI), for instance, developed a voluntary code of conduct for online audiovisual providers of streaming services. Although still under review, if adopted, the voluntary code would potentially be overseen by a Digital Content Complaint Council that would help set parameters for online video streaming content.

Where governments determine that deregulation or self-regulation do not adequately address digital regulatory matters, the focus centres on whether the current regulatory framework is sufficient. This may entail a review of whether the existing ICT regulator’s role should be expanded to cover digital services, if a different agency’s role should be expanded (such as the competition authority), or if a new regulator tasked with overseeing digital services regulation should be established.

Many digital services offer a combination of complementary and novel services that do not fit under one label but do touch on many issues already under overseen by a regulator. The Australian Competition and Consumer Commission (ACCC), for instance, recently examined how new digital platforms, such as search engines and content aggregation services, were affecting competition in the Australian media and advertising markets. Ultimately, the ACCC recommended expanding the roles of existing regulatory authorities, such as the Australian Communications and Media Authority (ACMA), because they already had formal cooperation agreements in place and adequate competencies to address the new digital environment.

In Ireland, the government tabled the draft Online Safety and Media Regulation Bill in January 2020. Rather than create a new regulator to oversee digital content, one of the bill’s key proposals was to replace the existing Broadcasting Authority of Ireland (BAI) with a new Media Commission. In many ways, these proposals expand on the converged regulator model and therefore similarly benefit from economies of scale, reduced risk of market capture, and reduced start-up costs.

Thus far, although governments have contemplated establishing a new regulator dedicated to digital services regulation, such a standalone digital regulatory authority has not yet been created. For example, in its April 2019 consultation on the Online Harms White Paper, the UK’s Department for Digital, Culture, Media and Sport (DCMS) and Home Office sought stakeholder input on whether a new digital services regulator should be created or whether digital regulation should fall under an existing regulatory body. In its initial consultation response issued in February 2020, the DCMS decided that, rather than create a new regulator, Ofcom’s role should be expanded to cover digital platforms. The reasoning was that Ofcom “already has relationships with many of the major players in the online arena, and its spectrum licensing duties mean that it is practised at dealing with large numbers of small businesses.”

At the EU level, the European Commission (EC) opened a consultation on the Digital Services Act (DSA) in June 2020. Among the questions for stakeholder input is whether to adopt an EU-level authority to supervise and enforce online platform rules or maintain enforcement at the national level. It is unclear at this stage what type of authority will oversee digital services regulation, but the consultation responses will help inform the EC’s regulatory proposals for the DSA, which is expected to be released at the end of 2020.

References

Henten, Anders, Rohan Samarajiva and William Melody. 2003. “Designing Next Generation Telecom Regulation: ICT Convergence or Multi‐Sector Utility?” info 5 (1): 26-33. https://doi.org/10.1108/14636690310473863.

ITU (International Telecommunication Union). 2018. Global ICT Regulatory Outlook 2018. Geneva: ITU. http://handle.itu.int/11.1002/pub/81234575-en.

ITU (International Telecommunication Union). 2020. Global ICT Regulation Outlook 2020. Geneva: ITU. https://www.itu.int/dms_pub/itu-d/opb/pref/D-PREF-BB.REG_OUT01 -2020-PDF-E.pdf.

Last updated on: 02.09.2020