Global ICT Regulatory Outlook 2017

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17 May 2017
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This Global ICT Regulatory Outlook 2017 is the first of an annual series of reports tracking market and regulatory trends in the information and communication technologies (ICT) sector and their implications across the economy. Understanding current trends and challenges across ICT markets and regulatory frameworks can help address the gaps and capitalize on unexplored opportunities. This report provides useful insights and a clear, evidence-based perspective to do that. This report is also a key resource on smart, inclusive and forward-looking ICT regulation. Its findings can provide useful guidance in reviewing and upgrading regulatory frameworks for the ICT sector as the basis for the digital economy today and for the future. The report reaches out to the regulatory community worldwide, policy-makers, industry and the ICT community in general

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  • Acknowledgements

    This first edition of the Global ICT Regulatory Outlook Report was prepared by the ITU Regulatory and Market Environment Division (RME) of the ITU Telecommunication Development Bureau (BDT). The team comprised Sofie Maddens Toscano (Head of division), Youlia Lozanova (lead author), Nancy Sundberg and Carmen Prado-Wagner. The report was edited by Beth Friedemann Peoc’h. The work was carried out under the overall direction of Kemal Huseinovic, Chief, Infrastructure, Enabling Environment and e-Applications Department (IEE), Telecommunication Development Bureau.

  • Foreword

    I am proud to present the Global ICT Regulatory Outlook 2017 that will be published annually to provide key insights on market and regulatory trends and forecasts in the information and communication technologies (ICT) sector.

  • Acronyms
  • Executive summary

    Over past decades the world has witnessed a digital revolution that is ushering in huge change. The rate of that change continues to accelerate challenging our governments and institutions to keep pace.

  • Introduction

    A thriving digital economy needs operators, content and app providers to provide a broad range of products and services to a diverse range of customers. Regulation is the invisible interface that makes the interplay between investors, service and content providers, and consumers smoother, richer in opportunities and more predictable.

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  • Expand / Collapse Hide / Show all Abstracts Global ICT market trends

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    • ICT moves centre-stage as the digital economy gains momentum

      ICT has become both the most and least visible sector as the digital economy expands centre-stage, linking people and machines across diverse aspects of our everyday lives. New efficiencies and opportunities have triggered important developments in industry and science, ushering in new possibilities to our daily lives. Much of this progress is due to massive investment in infrastructure and growing consumer demand. And yet, the global picture remains mixed: while the growth of mobile has been extraordinary, large populations have as yet no access to the Internet. This looks set to change however, with a growing swathe of urban young in developing countries making new demands for future connectivity.

    • Mobile - The engine for expanded global access to the internet

      Mobile is today’s ICT poster-child. Generations of mobile-broadband technology have rapidly succeeded each other fueling outstanding growth. By 2017, three-quarters of all global Internet use will likely be via mobile, as consumers use smartphones and tablets to access the web. Much of that growth will take place in low- and middle-income countries. In spite of extraordinary growth, the global picture remains mixed: significant gaps in penetration exist and more than half the world’s population has yet to be connected to mobile broadband. Mobile virtual network operators have taken up this challenge however, and are successfully targeting under-served market niches and optimizing network coverage to grow subscriber bases. Many elements are coalescing in new and innovative ways to expand penetration: new technologies are evolving rapidly, sparking agile business models aligned with them and with regulatory incentives while consumer demand continues to outgrow expectation. While fixed connectivity will continue to help leverage ICT for increased productivity, outreach and efficiency, the mobile sector is set to be the engine for transforming economic sectors across the board.

    • ICTs are less visible but more prevalent

      As ICTs increasingly underpin economic and social activity in countries and are interwoven in communication protocols, production processes and transactions, both wireless communications and broadband are considered a public utility. For some countries access to fast Internet connectivity is now considered nothing less than a human right. As ICT moves into each area of our lives, cloud computing represents a major advance. Cloud computing has become the catalyst and enabler of important technological advances that will help address some of the key challenges that governments and businesses face, including social challenges in the areas of environment, education and healthcare. The cloud not only stores, sorts and analyzes big data but transforms people’s data into an increasingly valuable by-product of service providers and online service providers (OSPs). Today’s data trails produced by users using multiple ICTs are massive and growing, generating ‘big data’. A new culture of ‘dealing in data’ is beginning to take root.

    • ICTs today — both enabling and disrupting industries

      ICT focus has shifted towards building platforms in the quest to integrate technologies, networks and devices powering new capabilities and services. This momentum around platforms – powered by three technologies: mobile, social and the cloud – has fueled the app economy, bringing with it huge opportunities for improved public service delivery and new models of mobile entrepreneurship. A new platform at the nexus of technology and business innovation – 5G mobile broadband – is being conceptually enhanced and is now poised to take the integration of communication protocols, devices and applications to the next level, helping expand and enhance business and government services alike. Closeto universal coverage of ICT networks, especially mobile, paves the way for the connecting up of machines and objects, a major trend over the coming years.

    • The rise of the app economy

      The app economy has unleashed a ‘virtuous cycle’, transforming multiple economic and social activities on its way, opening up new channels of innovation, productivity and communication. The rise of the app economy and ubiquity of smart mobile devices create great opportunity for companies who can leverage global scale solutions and systems. Technology design deployed by disruptive app companies – such as Uber or Airbnb – reduces transaction costs while allowing for increasing economies of scale. The outlook for both network operators and over-the-top providers (OTTs) is bright as they benefit from the virtuous cycle – as the ICT sector outgrows all others, innovation continues to power ahead creating more opportunities for growth.

    • Sharp rise in market concentration and consolidation

      The past two decades have seen ICT in constant flux as new players, services and delivery platforms have stretched boundaries and changed market dynamics. This in turn has impacted market structure with business models being created, adapted, refined and redefined. Since the 2008 crash, more consolidation has meant fewer firms fighting for market share. Led by innovation, digitization and automation, new competitors have gate-crashed markets around the world, putting incumbents and inside-the-box players under increasing pressure. In 2016, high profile mergers and acquisitions (M&A) swept the ICT landscape, featuring a wide range of market players and deals, while other market segments are riding out tough market conditions or are breaking into adjacent markets to develop new capabilities. In some cases, players from the extended ICT sector are opting for strategic partnerships or ‘coopetition’.

    • Cyber threats have grown in scale and scope

      With massive digitization in every aspect of consumer and corporate life has come increased risk, increased insecurity. The level of threat has grown more serious as the tools in the hands of criminals and terrorists have become more sophisticated and complex. The growing number of connected platforms offers new vectors for attack. Governments and corporations address cybersecurity and cybercrime-related issues at various levels – from privacy-by-design technologies to piecemeal regulation to institutional collaboration within and across national borders. Though cyber readiness has become paramount for building safe, resilient and sustainable ICT networks and services, not all countries are as prepared as they might be – as is flagged in the ITU Global Cybersecurity Index.

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    • ICT regulatory tracker identifies five generations of regulation

      The ICT regulation landscape is constantly evolving and at an ever-increasing pace. In order to measure and monitor the changes taking place in the telecommunication/ICT regulatory environment, ITU has designed an analytical tool that looks at a variety of traditional and new subjects in order to make sense of this rapid evolution and to anticipate future change.

    • The move away from sector-specific towards holistic regulation
    • Pace and volume of regulation are increasing

      the period from 2007 to 2015, ICT regulation is characterized both by the volume of change and the increasing pace at which it is being adopted. In this context there is much that is positive and extremely encouraging. No fewer than 52 regulators are now in the G4 category. Fifty-five per cent of countries have moved one generation up the ICT ladder of regulation while 15 per cent have leaped generations in only nine years. In addition, there are some surprises in the list of countries ranking as the most dynamic, making major leaps forward in a short period of time. Extraordinarily, one country has leapfrogged from G1 directly to G4. Such developments are welcome and timely for those markets in need of guidance and safe passage through the stormy growth of the ICT sector.

    • Regulation as an equalizer

      Regulation is not only the canvas against which the converged ICT sector moves ahead, but also ensures that all market players – from start-ups to national incumbents to multinational corporations – benefit from a level playing field. Competition regulation enables the market to generate new value propositions to cater for consumer choice. Regulation must also strike a balance between intervention and non-intervention, avoiding unnecessary overregulation that can stifle innovation.

    • Focus moves to enforcement & monitoring
    • There is no one model for best regulatory practice

      The regulatory landscape is hugely varied, fast-moving and extremely complex. It is no surprise then that a single ICT regulatory model has not been developed to date. Points of convergence are emerging however, driven by factors such as efficiency, extended access to networks, affordability and quality of service. However, some regulatory topics are generating more attention and will evolve at a faster pace than others, helping to shape markets and changing the established market order. At the same time, new issues are constantly emerging, posing growing challenges to regulators. Some topics are so intricate that they require collective action from the international community, while others will potentially disrupt the market order in the ICT sector as well as in others.

    • Good regulation has impact

      Expectations of ICT regulation have grown. In a world in which more than half the world’s population is not using the Internet, according to the latest ITU estimates,126 regulators have to reinvent the rules of the game to extend adoption and use of ICTs, align them with wider social and economic goals and set about connecting the unconnected. And this is not only possible; it is already happening. No fewer than 43 countries now conduct a Regulatory Impact Assessment (RIA) as a formal requirement before regulatory decisions are made. In some cases, incentive regulation is included to create an enabling environment for further investment, especially in infrastructure. Such developments are testament to the great scrutiny now brought to bear on the significant impact of the rules and regulations that govern ever more important ICT markets. Ex ante Regulatory Impact Assessment and evidence-based decision-making, more broadly, have become mainstream.

    • Collaborative regulation

      With the growing economic confidence of ICTs and related markets – driven by innovation and technological transformation – has come a new regulatory assertiveness. Over the past 20 years, ICT regulators have stepped up to the challenges the sector has gone through. Today, they have built sound expertise and power over the markets – they are in control. New disruption vectors, however, put pressure on established frameworks and regulators’ relationships with the other stakeholders in the digital economy.

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    • Partnership & collaboration will increase

      From increased risks to flamboyant opportunities, the year ahead is likely to herald a number of sea-changes for ICT markets and regulation. This report identifies seven trends that will underwrite change in the regulatory landscape in the years ahead.

    • Regulation will drive innovation

      Regulation needs to lead through volatility sparked by market convergence and disruption. Regulation that aids innovation will help developing countries to power ahead – checking inequality of ICT access and use, as well as of products and services. The Kenya Central Bank, a pioneer of regulatory innovation, has triggered a tsunami across both the financial and the telecom sectors by allowing M-Pesa to deliver digital financial inclusion to millions of the ‘unbanked’. How regulation can power innovation is a key consideration for ICT regulators in their pivotal role of shaping the digital economy of the future.

    • The ICT regulator meets the financial regulator

      Both ICT regulators and financial regulators recognize common interests and the potential of cooperation. As yet however, there is no model for collaboration that has won confidence from both sides. Closer collaboration will come – but not quite yet.

    • More regulatory oversight for otts while telcos still wait for less

      Creating a level-playing field for telcos and OTTs/OSPs will involve leveling down regulatory requirements for telcos while levelling up for OTTs. A number of low-risk regulatory moves are expected. In competitive markets, quality of service obligations are good candidates for removal as traditional players often address these to cope with increased retail competition – although transparency obligations should remain. On the other hand, some global OTTs are already a tax target for governments and will become more so.

    • Net neutrality debate repeating and unwinding

      Net neutrality will remain a central topic over coming years. As 2017 unwinds, the debate is headed in opposite directions across the world

    • Privacy & data protection require urgent action

      Cyber threats continue to cast a dark shadow over the future of ICTs. The time has come to do more to address such threats, with actions addressing pressing issues such as data privacy and infrastructure protection and of course cyberattacks on payment systems, health records or other personal information.

    • Harmonization across regions accelerates

      Regional policy and regulatory frameworks are based on best national, regional and international practices. The trend towards regional harmonization is not new. Multiple organizations have led targeted projects in various regions. From 2008 to 2013, ITU and the EU championed a large-scale joint project for harmonizing policies on competition, licencing and e-commerce in sub-Saharan Africa, the Caribbean and Pacific Islands. The project was well supported regionally and has had an overwhelmingly positive impact,136 demonstrating how harmonized regulation can help develop competitive regional markets for ICT services. Harmonization within a region enables vibrant competition – global or regional players can compete with local players in areas like payment, entertainment, cloud services and in the deployment of big data-enabled business models.

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