Outlining New Regulatory Horizons

A computer-Internet-mobile-broadband-driven age is one the forces shaping the social and economic landscapes. A very interesting approach about this understanding has been presented by Thomas Friedman in his book “Thank you for being late”.

Connectivity is one of the main pillars of this technological change. Among other determining factors for a better understanding of the current days, Friedman indicates a progressively interconnected, hyperconnected and interdependent global environment.

This ultra connectivity, already impressive, is in its early stages. If the 4G changed lives, the so called 5G will reshape the society. It is a revolutionary technology that will impact the socio-economic scenario of the nations. Far beyond a new technology that will use new frequencies bands, it is a technological standard that will enable the 4th industrial revolution; it will connect trillions of Internet of Things (IoT) devices; it will foster precision agriculture as a management strategy; it will enable remote like-real experiences through reliable connectivity with the tactile Internet; it will provide an order of magnitude increase in the mobile and fixed broadband. Besides many new use cases are yet to be discovered or better explored. 5G will be the network of networks.

Heraclitus of Ephesus said that “change is the only constant in life”. Nowadays maybe we could say that an exponential rate of change is the only constant. Indeed, the world has never been so fast. The benefits and spillovers effects of changes and innovations are so impactful and diversified that any attempt to list them would be inaccurate.

Nevertheless, connectivity is not an end in itself. We should think more about meaningful connection which requires a humanistic approach. A connectivity related to the society needs scale. Connectivity to save; to protect; to care; to include and enable; to not only create wealth but also to better distribute it. In this perspective, 5G is powerful tool for overcoming the challenges associated to the achievement of the so-called Sustainable Development Goals (SDGs).

Once the digital flows are being combined with the dawn of “the cognitive era of computing”, we should better think how to foster an artificial intelligence (AI) that expands human capabilities and experiences. How to incorporate trust in technology in order to guarantee privacy, transparency and security? Assumptions for algorithmic responsibility are implementable? How AI can promote inclusiveness?

Related to that context, it will be even more important to develop critical thinking and to understand the distinction between the essence of things and the appearance of things. With so much information and misinformation, the current challenges will not be proper addressed if it come to be orphaned of the ‘truth of the facts’. If the truth is relative, it will soon become irrelevant.

Those perspectives inspire both optimistic expectations and legitimate concerns among policy makers, regulators, academics and leaders in general. In this context, it is reasonable to conclude that the organizations should be able to rethink themselves. How to enhance the adaptability of our institutions?

For telecommunications regulators, in particular, the challenges are many, and, in some aspects, more complex that they used to be. Substantial additional network capacity is being required; an increasing sensitivity to latency (delay that takes place during communication over a network); cybersecurity issues are highlighted; and spectrum allocation efficiency becomes even more critical.

That said, how to improve the regulatory framework to the pace of the ongoing digital transformation that is characterized by a data-driven approach?

First of all, believing that regulation can address all market problems would be regulatory messianism. Besides that, the traditional economic and competition tools will not be sufficient (or adequate) to tackle challenges associated to multi-sided platforms which have been more prevalent in the digital economy.

Settling new concepts and, more important, novel principles is essential to enforce new forms of regulation. In this sense, the telecommunications regulator in Brazil is changing its approach from a command-and-control to a responsive regulation. This paradigm shift assumes that there are no universal regulatory solutions.

The traditional notion of “command-control” encloses the regulator in a dichotomous approach, namely: to punish or not. This view diminishes the regulatory landscape by limiting its acting alternatives. In addition, it can generate a negative externality: the excessive edition of regulations with the aim, deliberate or not, of justifying the regulatory apparatus.

From the perspective of responsive regulation, the success of the regulatory framework is increasingly dependent on the regulated ones themselves. The regulatory gear needs to establish incentives correctly in favor of persuading economic agents to act properly. This approach raise challenges that demand innovative responses. One of the central aspects of responsive theory is the adoption of a constraint pyramid, in which there is a gradual escalation of state intervention courses.

The adoption of regulatory strategies that merge both incentives and sanctions shall be more effective in comparison to those structured only in punishments. And the consistency of behavior on the part of the regulated shall consolidate a light-touch regulation. Furthermore, this approach requires the search for solutions that maximize the intersection of public and private interests.

However, changing culture, including a regulatory culture, is not easy. It takes a lot of work. The fear of the unknown is a great source of resistance. Important questions, without a clear answer, can be daunting. And we don’t have many of the answers. Fortunately, as the philosopher Francis Bacon once said, “if a man will begin with certainties, he shall end in doubts, but if he will content to begin with doubts, he shall end in certainties”.

In any case, the binomial questions-answers derived from the innovations above mentioned may be more effective if the regulatory framework lies in the field of incentives for public-private cooperation.

President, Agência Nacional de Telecomunicações (ANATEL), Brasil