The emergence of the 6G ecosystem is another tipping point for policy and regulatory orthodoxy. Against the backdrop of the US offering overall the best conditions for innovation, policymakers in Europe must recognize the need to change their analytical and planning structures. Telecom regulators need to break out of their sectoral silos. Fortunately, many are ready to do so, and 6G provides the opportunity. 5G, and even more so 6G, IoT, cloudification, edge computing, etc., are gamechangers, and digital platforms have taken over a growing share of interpersonal communications, while most traditional telecom companies have been reduced to providing connectivity. We are therefore right to ask ourselves what we want to regulate and, above all, why. Are we regulating in the right place? By what means? In this chapter, we analyze regulatory developments in Europe, North America, and Asia and draw conclusions on how Europe's competitiveness and innovative strength can be improved with better interlinking of industrial policy, innovation, and regulation.
The difficulty lies not so much in developing new ideas as in escaping from old ones.
(John Maynard Keynes)
Advocacy for a New Policy and Regulatory Approach for 6G
Why is this chapter important and why should one read it? The sequential numbering of the various generations of mobile communications technologies (most of them known as GSM or 2G, UMTS or 3G, LTE or 4G, etc.) intuitively paints a picture of linear development, with one generation following the next. With 5G, a development has already begun that is no longer linear. Ubiquitous communication, which includes not only person-to-person but also machine-to-machine or person-to-machine and vice versa, represents a paradigm shift from interpersonal communication to ubiquitous communication between everyone, everything, everywhere. Billions of IoT devices (i.e., real everyday physical things) are communicating with us and with each other. This development forms the basis for the digitalization of society and the economy, a development that permeates all areas of life. At the same time, it is about creating the conditions for Europe to become more competitive, to innovate, and to invest in a globalized world. It is therefore obvious that the policy and regulatory framework for such a new ecosystem cannot remain the same. In this article, we explain why a significant change in the policy and legal framework, including regulatory governance, is important and what it could look like.
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Prior work on the regulation of mobile communications (Garrard, 1991; Coen, 2005; Dunnewijk & Hultén, 2007; Cave et al., 2019) has summarized the historical evolution of regulations along with the technology development from state-owned monopolies to competition. Most recently, 5G has become a source of international controversy introducing national security concerns (Robles-Carrillo, 2021) and new local deployment models (Matinmikko et al., 2018). Attention on the future development of 5G has shifted to developing policy with incomplete knowledge and under conditions of uncertainty, which calls for adaptive forms of policy and market design for innovation (Bauer & Bohlin, 2022).
Regulation: More or Less?
Regulation is and has always been contested, and the discussion surrounding regulation hovers between ‘more’ or ‘less’ of it, and whether activity A or B should be regulated. It is striking to observe that when it comes to the issue of regulating the digital industry and the telecommunications industry, there is often a remarkably black-and-white view, with two diametrically opposed camps. On the one hand, there are the advocates of blanket deregulation who want to leave everything to the market, and on the other hand, there is the regulatory orthodoxy, the almost religious-looking representatives of the group who want to immediately press every innovation into a regulatory straight-jacket without even waiting to see how an innovation develops. This is ostensibly done with justifications such as protecting consumers from the supposedly harmful consequences of this very innovation. Then, there is also a public lament that there is no ‘Silicon Valley’ in Europe and that start-ups very often emigrate to the US precisely because they expect better conditions there. How does all this fit together and is there perhaps a mediating forward-looking position? In other words, are we not in Europe shooting ourselves in the foot again and again with often excessive or wrongly placed regulations and at the same time complaining that innovations and new jobs are largely in other parts of the world? What if we looked at regulation from a European sovereignty and competitiveness angle? How would it appear differently?
Developments in the field of electronic communications services and networks are driven by a seemingly never-ending stream of technological advances and the resulting product and service innovations and—not to forget—hypes. A key driver of this development is the progressive evolution of electronics and software with Moore’s Law as the underlying paradigm. This essentially states that the performance of electronic circuits doubles every 12–24 months.
There is a very telling anecdote—notably from a US perspective—about the impact of Moore’s Law and how important it is to recognize it in a timely fashion: Qualcomm and CDMA versus TDMA. Thomas Friedmann describes the TDMA vs. CDMA story in detail in his book Thank you for being late with a focus on the visionary thinking of Irwin Jacobs (Friedmann, 2016). In the early days of mobile telephony, the European Commission mandated the standard (GSM/TDMA), and the US government allowed the market to choose. By 1991, Qualcomm had persuaded a dozen or so American telecom companies to undertake large-scale tests of CDMA technology. Once again, a serious discussion about standards started in America and in 1993, the industry body CTIA accepted CDMA as an American mobile phone standard. In the words of Irwin Jacobs, the visionary person behind the CDMA standard and co-founder of Qualcomm: “One key reason we won was that even though CDMA was more complicated to implement, people were just thinking about the capacity of chips at that moment in time. They were not considering Moore’s law that would allow the technology to improve every two years and enable the greater efficiency that could be achieved through CDMA”. People say that in hockey you don’t go where the puck is, you go to where the puck is going. Qualcomm went where the puck was going—according to Moore’s Law. It must be noted though, that this historical digression is only made to illustrate the power behind Moore’s Law, which was well exploited by the CDMA standard. The CDMA/GSM split ended, as phone companies all switched to LTE, a single, global 4G standard, which evolved to current 5G standards.
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Against the backdrop of the rapid technological developments driven by Moore’s Law and in view of the question posed at the beginning of this chapter, it is not a matter of ‘more of the same’ but of a radical institutional renewal of regulatory work. We will show later in the text how this is intended to ensure that the challenges of digitization and a forward-looking ICT policy can be dealt with effectively.
Evolution of Regulation—An International Comparison
To start with, a brief explanation of some key concepts of telecom regulation: traditional regulation consists of the application of competition law, which by its nature is an ‘ex-post’ regulation, i.e., the authorities intervene after there has been misconduct by a market participant. At the start of the liberalization of the telecommunications market, it was clear from the outset that breaking up a monopoly through ex-post regulation would not be effective, since the monopolist would always be able to push the new entrant out of the market, and any ex-post regulatory intervention would be too late. This was the birth of ex-ante regulation, i.e., a set of up-front obligations was imposed on the former monopolist (in regulatory jargon, the ‘incumbent’) to allow the new entrant to thrive.
Sector-specific regulation of individual—so-called ‘relevant’—markets through ex-ante measures as a complement to the application of competition law, which by its nature is applied ex-post, has a long tradition, especially in connection with the opening of markets that were originally monopolistic. The inherent problem with regulation, however, is finding the right balance between too much or too little regulation. However, it should not be forgotten that this is not a matter of creating a static equilibrium, but of striving for balance in a highly dynamic market that is constantly changing due to an almost endless stream of innovations. As we pointed out in an earlier article, too much regulation can impede the innovation process, while too little regulation can reduce consumer choice and/or create consumer harm.
The concept of a regulatory authority that is independent (from government and other political entities) and organizationally as autonomous as possible is a political leitmotif in Europe, North America, and some other parts of the world. However, this concept is alien to countries such as China, Japan, and South Korea, which rely on centralized government control of ICT policy and regulation. In the countries of the Middle East, there are organizationally independent regulatory authorities, but the degree of political independence is much less pronounced than in Europe and North America.
While writing this chapter, we have found that there is very little international overview of the various regulatory approaches in key industrial regions available, such as North America, Asia, and Europe. In the search for ‘best practices’, it therefore makes sense to make this comparison from the perspective of a 6G ecosystem. In this vein, this section describes in more detail the European regulatory journey, the regulatory rivalry between Europe and the US and some telling examples from Asia in which ICT policy and regulation are directly and exclusively in the hands of the state (China, South Korea, and Japan) as well as countries which have independent regulatory authorities, but which are under the operational control of the respective government (Taiwan, Singapore).
A standard reference for regulatory archetypes is a periodical publication provided by the ITU, the Global ICTRegulatory Outlook. According to the system set out by the ITU, the conceptual framework of the generations of regulation can best be described as a regulatory ladder. Generations (G) 1 through 4 reflect the evolving levels of regulatory maturity, focusing narrowly on the telecom and then the ICT sector while Generation 5 marks a major shift from sector-specific to holistic, cross-sector policies and regulations. In just over a decade, G4 has become the established standard for ICT integrated regulation led by social and economic goals. Yet, 40 percent of countries globally languish in G1 and G2, missing out on development opportunities and global digitization. G5—or the fifth generation of collaborative regulation—is the next frontier in terms of holistic digital regulation. Generations 1 through 4 are measured through the ICT Regulatory Tracker. Generation 5 is measured through the G5 Benchmark.
Regulation from 1.0 to 4.0—The European Journey
Traditional competition law, which by its very nature is based on an ex-post analysis of markets and market participants, was supplemented about 30 years ago by an ex-ante regime that imposes ex-ante obligations based on ex-post status analyses (e.g., determination of market power). However, there is no internationally unified taxonomy for the designation of different generations of regulation. We use the designations ‘Regulation 1.0 - 4.0’ in continuation of our publication The Virtuous Circle—New Regulations, Innovationand Investment on how to bring Europe back to the top (Serentschy, 2013). The ITU uses a different designation for ‘regulatory archetypes’ G1-G5 in its periodical publication The Global ICT Regulatory Outlook. It is important not to confuse this numbering with different generations of mobile communications technology.
This is the basis of the model of traditional telecom regulation (Regulation 1.0), which became the standard with the onset of market liberalization. The initially successful Regulation 1.0 (1990–2003) transformed inefficient monopolies in nearly all European countries into a vibrant competitive landscape. In 2003, the European institutions (the Commission, the Council, and the Parliament) embarked upon a new regime, the framework of which has survived with relatively minor modifications for the following 15 years. This landscape was characterized by telecom companies competing and the outcome was understandably hailed as a success.
However, already toward the end of this phase, voices were raised to move back to more ex-post and less ex-ante regulation. According to people familiar with the matter, this was also reflected in (to put it nicely) ‘very engaged’ internal debates on the European Commission level between the ex-post camp (the competition DG) and the ex-ante camp (the ICT DG). At that time, there were even considerations to reduce or abandon ex-ante regulation, which, as is well known, was only ever planned as a market opening instrument for a limited period. It is also not surprising that institutional rivalries between the ex-post camp and the ex-ante camp manifested themselves not only at the European level, but also at the national level. Interestingly, since then, the regulatory regime from 1.0 to 4.0 has always hovered between the poles of more ex-ante and less ex-post to more ex-post and less ex-ante regulation. Regulation 4.0 aiming at regulation platforms proposes again a more ex-ante approach.
This up and down movement between more ex-ante and less ex-post to more ex-post and less ex-ante regulation in the traditional telecom regulation can also be seen in the number of relevant markets, both at the retail and wholesale levels, recommended by the European Commission. This number of relevant markets reached an all-time high of eighteen relevant markets—including one broadcasting market1—in 2003 from originally (1997) four regulatory fields including fixed, mobile, leased lines and interconnection, only to drop to seven markets, including one retail market and 6 wholesale markets in 2007. This trend continued with the 2014 market recommendation, which included only five wholesale markets and no retail market. Most recently, in December 2020, the market recommendation only provides for two wholesale markets.
The current framework for telecom regulation is the European Electronic Communications Code(EECC),2 which came into force in December 2018, and which had to be transposed into national law in all member states of the Union in December 2020. However, this process is not yet completed in some member states. A comprehensive handbook for practitioners has recently been published on the legal issues associated with the application of the new regulatory framework (Liberatore & Konidaris, 2021).
Rival Regulatory Regimes: The US vs Europe
We can observe a rivalry of regulatory approaches between the US and Europe that has existed for two to three decades. While the US has relied more on laissez faire and ex-post control, Europe has increasingly become a ‘world power of regulation’ where far-reaching regulations and stricter consumer protection have been conceived and implemented, which have achieved international impact due to the ‘Brussels Effect’ (Bradford, 2020). But will it be enough for Europe to successfully defend its prosperity and innovative strength on this basis in the future? Very unlikely. To put it in the words of Cedric. O, the former French Secretary of State for Digital Transformation and Electronic Communications: “The USA has the FAANG,3 China has the BATX,4 Europe can't only have the GDPR. It's time to have our own technological sovereigntyand stop depending on US or Chinese solutions!”5 For three years, the EC has just been rolling over with a tsunami of new regulations and we have not only GDPR, but by now also many others. This digital policy activism includes the production of both non-legislative (i.e., strategies, action plans, etc.) and legislative acts (i.e., already applicable regulations and directives, as well as proposals for such regulations or directives).
In its own words, the European Commission is determined to strengthen Europe’s digital sovereignty and set standards rather than follow those of others—with a clear focus on data, technology, and infrastructure. The plan ‘A Europe Fit for the Digital Age’ is one of the most important and includes 16 flagship initiatives (listed in no particular order): the Artificial Intelligence Act, Data Strategy, Industrial Strategy, Chips Act, Digital Markets Act (DMA), Digital Services Act (DSA), Digital Identity (eID),6 High Performing Computing, Digital Skills, Cybersecurity, Space (including a genuine European LEO satellite constellation), Connectivity, Contributing to European Defense, EU-US Trade and Technology Council, Cloud Strategy, the Quantum Technologies Flagship (which includes quantum computing, quantum communication, and others).
With these activities, the European Commission is, on the one hand, creating a very complex policy framework and, on the other hand, Europe has increasingly become a global regulatory superpower with far-reaching regulations and stricter consumer protection designed and implemented. These regulations have achieved international reach due to the Brussels Effect and their extraterritorial nature (Bradford, 2020). This raises immediate questions: (1) How will the enforcement of such a complex regulatory framework be organized at the national and European levels, and (2) will this plethora of regulation be sufficient for Europe to successfully defend its prosperity and promote its innovative and industrial strength on this basis in the future?
Against this backdrop, it becomes clear why we should reflect on whether we still need telecom regulation—or more regulation—in the traditional sense at all or, at best, need a radically new—anticipatory—regulatory approach and policies aimed at fostering strategic autonomy, digital sovereignty, and competitiveness. There are growing voices from various directions criticizing that an overabundance of regulations could lead to a lack of coherent high-level vision and widen the gap between reality and political-economic ambitions.
The US vs. Europe
A current and very interesting comparison between regulation in the US and Europe can be drawn around net neutrality. While the defenders of net neutrality in Europe defend its supposed blessings in a mantra-like fashion and at the same time the ECJ’s (European Court of Justice) ruling on the ban of zero-rating must be implemented by the authorities—often with noticeable reluctance—because it does not result in any advantages for consumers, in the US a phase without net neutrality regulation has apparently passed without any noticeable harm to consumers. It can be evidenced that most of the innovation still takes place in the US and not in Europe, and when the innovations are made in Europe, after a while a large part of these companies emigrate to the US or to other regions that offer better conditions. In the context of strict regulation in Europe—as in the case of net neutrality—one must ask whether this is a facilitating or hindering factor for innovation in Europe. Net (or network) neutrality is the principle that Internet and telecommunications service providers (ISPs) must treat all Internet communications equally, offering users and online content providers consistent rates irrespective of the content, website, platform, application, type of equipment, source address, a destination address, or method of communication without price discrimination. There is a lot of evidence that the hindering factors prevail in Europe because we seem to have been regulating detached from the context of innovation and industrial policy for a long time.
As an example, in 2022 Ofcom, the UK regulator, undertook a review of the UK’s net neutrality framework to ensure that as technology evolves, net neutrality continues to support innovation, investment, and growth. In its newly published guidance, the regulator sets out its assessment of the issues raised and revised guidance on how the rules should apply. It looked at specific areas where greater clarity is needed to enable ISPs to innovate and manage their networks more efficiently, and to improve consumer outcomes. It also proposes to clarify its approach to enforcement where there is clear public benefit including enabling ISPs to prioritize and zero-rate access to emergency services, offer parental controls, and manage Internet traffic on airplanes and trains where there is limited capacity available. On the latter point, Ofcom states it is “unlikely to prioritize enforcement action against traffic management on Wi-Fi services provided on board airplanes” (OFCOM, 2023, p. 120). In addition, it says that fair use policies are compatible with the UK net neutrality rules. Ofcom has always been a European pioneer in regulation, and it is hoped, that regulators in the EU will follow Ofcom’s lead in the interest of consumers, airline passengers, and innovations.
In conclusion, it seems that digital policy activism may be based on too much reliance on the broad impact of regulation and too little focus on business models, innovation policy, and investment. Regulation is only one part of the required policy measures; the other part is still incomplete. Without doubt, targeted regulation in certain areas, such as AI, is necessary to prevent harm to society and individuals. Overall, based on our analysis and experience, we believe that coherent and clear policies, combined with anticipatory and flexible regulation and the avoidance of prescriptive micro-regulation, should be core elements of a future regulatory policy.
Illustrative Examples for Regulatory Systems from Asia
South Korea
The regulatory and competition framework in South Korea differs significantly from the situation in the US or Europe. The specific situation for regulation and competition law in the country needs to be seen in the context of the country’s history after the Korean war, its culture and specific industrial structure with its large conglomerates (the chaebol). In the words of an article, published by Moohyung Cho and Tim Büthe, South Korea, was a non‐participant in the international competition regime until the 1980s, but then in the 1990s developed substantial regulatory capacity and capability. At the same time, however, to a certain extent, its policy preferences converged upon the norms and practices established by the United States and the European Union, albeit with some distinct elements. Under these conditions, the authors expect a transition from rule‐taker to rule‐promoter. The Korea Fair Trade Commission (KFTC) plays the central role as a rule-promoter. Over the course of the four decades since it first adopted the Monopoly Regulation and Fair-Trade Act (MRFTA), South Korea has, in the realm of competition law and policy, developed strong regulatory capacity and capability, while South Korean preferences, though distinctive on some details, have become closely aligned with the established powers’ preferences.
There is also additional specific literature available, which is helpful to understand how the regulatory and competition framework in South Korea works.7,8,9,10,11
Japan
The first comprehensive guide to Japanese telecommunications policies in English can be found in a book by Hitoshi Mitomo (2020). This book allows readers to gain an in-depth understanding of Japanese telecommunications policies and discusses how Japan has addressed a variety of policy challenges leading to the promotion of cutting-edge technology.
The key telecommunications and ICT policy player in Japan is the Ministry of Internal Affairs and Communications (MIC), which publishes its White Paper on Information and Communications in Japan12 every year. This publication is a rich source describing all policy areas, the present status and challenges for digitalization, the role of the COVID-19 pandemic for the digitalization, basic data on the ICT field and ICT policy directions.
The People’s Republic of China (PRC)
A recent summary, published by Yu-li Liu and Guosong Shao in a collection of essays Europe’s Future Connected Policies and Challenges for 5G Networks13 and China’s 5G Development Strategies and Challenges in the Context of Global Competition, points out that China is at the forefront of the global race in 5G and even 6G industries, and discussing its advantages and challenges may provide a reference for other countries. The development of China’s 5G industry is not only supported by the government, but it also has advantages in terms of development factors, industry chain, user demand, and competitive strategies:
The rapid development of 5G in China has benefited from the Chinese government’s policy support and financial subsidies. The Chinese government has formulated policies to encourage the development of 5G networks and 5G applications and has provided 5G players with subsidies for 5G patent research and development, accelerated construction, and reduced prices of 5G products.
China’s 5G industry has a world-leading number of patents, a well-developed industry structure, influence in shaping technical standards, and a talent development strategy, all of which are important factors in promoting the development of 5G in China.
China’s 5G industry chain is robust, with upstream, midstream, and downstream segments all developing rapidly.
China has the necessary demand conditions for 5G development, with a large subscriber base and expanding B2B business and overseas markets.
Chinese 5G operators have adopted different service strategies to address to business and to consumer business, developing differentiated value-added services to improve their competitiveness in the market.
Looking forward, China’s rapid development of 5G has laid a good foundation for the development of 6G in the future. The experiences China has gained in 5G development can be used as a reference for European countries. European countries can explore their own development models, tailored to their national conditions and characteristics. An analysis of the opportunities and challenges of 5G development in China may help to facilitate the development of 5G and 6G in Europe.
A detailed description of the policymaking bodies and regulatory authorities in the PRC can be found in an article by Shihui Partners,14 a private Chinese law firm. Raymond Wang, the author of this article, describes the situation in detail: “Over recent years, China has continuously liberalized the access restrictions for TMT through various policies. At the same time, China is also strengthening its supervisory capabilities in the fields of networkand datasecurity. With the formal entry into force and gradual implementation of a series of lawsand regulations, such as the Cybersecurity Law, Data Security Law and the Personal Information Protection Law, regulatory enforcement activities, particularly in the online space, have become increasingly prominent. Moreover, it can be assumed that cybersecurity and data protection compliance issues (e.g., those relating to listed companies) will become an increasing concern for regulators”.
Meanwhile, various incentive measures and preferential policies have been designed to ensure the protection and conditions for the expansion of fair competition and the development of a healthy market. The TMT regulation in China divides all telecommunications into two categories:
Basic telecommunications services (BTS) and
Value-added telecommunications services (VATS).
BTS essentially refer to the provision of infrastructure facilities and basic voice and data transmissions, both domestically and internationally, while VATS refer to the provision of specialized services via the basic infrastructure facilities. China adopts a strict licensing system for the telecoms industry, and telecoms operators are required to obtain a license to engage in either BTS or VATS. To fulfill its commitments to the World Trade Organization, China is gradually opening its telecoms industry to foreign investment. Among all the VATS, Internet content services and e-commerce have grown at a rapid pace in recent years. Following the prosperity of the Internet industry, online IP infringement, unfair competition, and anti-counterfeiting, antitrust, cybersecurity and data security risks, and personal information (PI) protection are issues that are starting to become of greater concern to telecoms operators.
Taiwan
Since its establishment on February 22, 2006, the National Communications Commission (NCC) has been the authority responsible for regulating telecommunications and broadcasting services in Taiwan. Originally, this authority belonged to both the Directorate General of Telecommunications and the Department of Broadcasting Affairs of the Government Information office; the merged mandate of the NCC is a milestone which is indicative of the advent of digital convergence.
Under the present trend, the convergence of telecommunications, broadcasting, and information networks has become inevitable. As a result, a regulatory agency must govern the communications sector with a broader and more accurate strategic insight, as well as an open and more efficient administration. It also must coordinate the efforts of the executive and legislative branches, as well as those of the private sector to respond to the rapid development, the expectations of the public, and the transformation of society.
The four policy goals of the NCC are: (1) promote the sound development of communications; (2) safeguard the rights of the people; (3) protect the interests of consumers; and (4) raise multicultural diversity. These four policy goals constitute the administrative principles of NCC. In addition, the four administrative beliefs of the NCC include independence, responsibility, balance, and maximum benefits for the public. The NCC carries out the four policy goals in accordance with its administrative beliefs. Together, they make up the administrative framework of NCC.
The NCC is the first legitimate regulatory agency in Taiwan independent from an executive branch. The NCC analyzes the development of digital convergence to formulate a direction for communications regulatory reform in accordance with the basic supervisory principles of the Fundamental Communications Act as well as national policies and objectives. The NCC aims to regulate the communications sector from an objective, neutral, and professional standpoint, to ensure effective competition in the market, safeguard public interest, promote the development of communications services, and thereby enhance the nation’s competitiveness. More details about telecom regulation in Taiwan can be found online.15
Singapore
The Infocomm Media Development Authority (IMDA) is in charge for telecom regulation in Singapore. As the name suggests, it is a convergent telecommunications and media regulator with the following self-description: “IMDA develops and regulates the converging infocomm and media sectors in a holistic way, creating a dynamic and exciting sector filled with opportunities for growth, through an emphasis on talent, research, innovation, and enterprise. As a statutory board in the Singapore government, it seeks to deepen regulatory capabilities for a converged infocomm media sector, safeguarding the interests of consumers and fostering pro-enterprise regulations. With more pervasive use of data, IMDA will also continue to promote and regulate data protection in Singapore through the Personal Data Protection Commission, which will be part of the IMDA. This will ensure that public confidence in the private sector’s use of personal data is safeguarded”.
In parallel to the United Kingdom, Singapore also has extensive activities and experience with regulatory sandboxing. The IMDA operates a program called Policy Prototyping with the goal of promoting the responsible use of data and supporting data-driven innovation by businesses, as well as building consumer confidence. To this end, IMDA works closely with and supports industry through policy prototyping and data regulatory sandboxing. Similarly, cross-sectoral activities are operated by the Monetary Authority of Singapore (MAS), the Energy Market Authority (EMA), and the National Environmental Agency Regulatory Sandbox.
Against this backdrop, it is not surprising that Singapore is one of the world’s fifth generation (G5) leaders in terms of regulation, according to the International Telecommunication Union (ITU) rankings. The ITU describes the country as a digital pioneer with a mature ICT framework. Singapore has succeeded in transforming the country’s industry and government institutions to leverage technology for the benefit of digitalization, and has done so through cross-sector, collaborative regulation. Specifically, in collaboration, Singapore leads the ITU G5 benchmark (Table 9.1), along with countries such as Norway and the United Kingdom (ITU, 2020).
Anticipatory Regulation and Beyond
In this sub-chapter, we present a proposal for a radically renewed regulatory approach in a 6Gecosystem. This sub-chapter is structured in the following way:
An advocacy for a wide-ranging digital policy authority for a 6G ecosystem.
It is time to act now—the ‘Burning Platform’.
Regulatory governance, institutional reform, and a new mandate for regulators.
A step-by-step approach.
Conclusion and areas for future research.
Table 9.1
5th Generation Regulation (G5) countries by score, rank, and the ICT regulatory tracker
Against the backdrop of the strong role of large digital platforms in the provision of interpersonal communications services, it is no exaggeration to say that traditional telecommunications companies will increasingly lose, or have already lost, their original key and universal role in the electronic communications market. Interpersonal communication has already become the GAFA’s (Google, Apple, Facebook, Amazon) home-turf, and these companies are also capturing a growing chunk of the B2B services. Whether one likes this result or not, the fact remains that most telecommunications companies in Europe have so far not—or only incompletely—succeeded in establishing additional services beyond the provision of connectivity successfully on the market on a sustained basis under the current conditions (especially under the pressure of OTTs—over-the-top players—and regulation). In addition, many telecom companies are not managed according to the principles of long-term infrastructure investment but are managed under the pressure of short-term financial results and capital market expectations.
Focus on Connectivity
Perhaps under these conditions, it would be worth considering as a telecommunications company to focus on creating ubiquitous connectivity with customized service levels. Surely that would not be a bad thing! However, there is not much time for this, because the OTTs themselves are striving to provide connectivity. The discussions about the introduction of openRAN on a large scale have, in particular, made it clear to all stakeholders that it is necessary to build up more technical capacities in the telecom companies in order to carry out the system integration of the components themselves, for example.
Mobile telecommunications have become a layer in a towering stack of technologies and applications. Downwards this includes devices (IoT, wearable, etc.) of all sorts that are becoming smart and may run substantial data analytics themselves and have direct and private network connections to edge cloud. Upwards this includes dataspaces, cloud, content delivery, services for trust, and security and access management, and apps of all sorts for communication purposes.
On the one hand, commercially, telecoms are squeezed between actors from the lower and the higher layers of the stack. OTTs are delivering communication services ‘on-top’ of the connectivity provided by traditional telecom companies, but the regulatory pressure is not evenly distributed between the players in the stack. From this perspective, 6G is an enriched connectivity and communications layer in an ever-richer technology stack. Telecoms may be seen as being controlled ever more by other players above or below telcos in the stack. On the other hand, telecoms seek to enhance value and bring these other layers closer to their core business. From this point of view, future telecoms regulation, or even a reduced regulatory environment, should serve to provide telecoms with that room to grow and compete. Innovation and industrial capabilities are the building blocks for the regulatory environment of a wider 6G ecosystem. From this perspective, the richness of 6G allows it to break out of the box. 6G would be a commercial gamechanger, perhaps even bringing a new paradigm for business models.
While we can see these two economic-technical futures, we should not forget that telecoms and their regulatory legacy also come from a history of serving essential public interests for communication and connectivity. There is a path-dependency that we need to consider. Looking forward to 6G, it is the right time to again ask the fundamental questions: what is the role for regulation of 6G telecoms in view of economic, social, and democratic interests, and what type of regulation, if any should there be? Fig. 9.1 illustrates this situation, upwards directed arrows indicate in a qualitative manner of “growing importance/relevance”, and downwards vice versa.
A chart presents regulatory policies of cyber security, with technology and communication stacks. Technology stacks include apps, clouds, I o T systems, sensors, chips, and wearables. Communication stacks include spectrum availability, chips act, E E C C, D S A, and D M A, with E E C C not relevant.
Fig. 9.1
Regulatory trajectories from traditional to anticipatory regulation
×
We can start by analyzing what it will take to realize the future that today seems most challenging, namely: how to enable the second future and contain or avoid the risks of the first potential future. To do so, we draw up a timeline that shows business activities and threats/risks to these, and the role of regulation. From this we can then assess the role of regulation vs each of the interests and the moment of intervention. The latter makes anticipatory regulation ‘live’. To make a connection with the chapter that discusses sovereignty in this book, one way would be to look at anticipatory regulation from the perspective of strategic autonomy, digital sovereignty, and competitiveness as we want it to be.
Technological Development and Regulation
Against the backdrop of the rapid technological developments driven by Moore’s Law, in our view it is not a matter of ‘more of the same’ but of a radical institutional renewal of regulatory work. In the following sub-section, we will show how this is intended to ensure that the challenges of digitization and a forward-looking ICT policy can be dealt with effectively. The traditional approach taken by representatives from the regulatory orthodoxy (most policymakers and many regulators) is characterized by a policy that is often isolated and disconnected from markets and innovation. It is characterized by an intrinsic up and down of the number of relevant markets and the hovering between more ex-ante and ex-post regulation.
In the following sub-sections, we attempt to answer the question of how to get policymakers out of the box. Ultimately, a combination of strong leadership at the top and experts with broad multidisciplinary backgrounds seems to be a possible recipe for success.
Europe lacks a smart combination of regulation and industry/innovation policy (Serentschy, 2021) as a ‘third way’ between the poles of more or less ex-ante regulation and ex-post regulation. This approach would also take the geopolitical focus into account, as argued in the sovereignty-related chapter of this book. How such a combination of regulation with industrial and innovation policy can be organized and managed will be described in the following sub-sections. Europe as a regulatory superpower, combined with the Brussels Effect, behaves like a referee, but the referee does not make the game! We need to get much more on the playing field in Europe! Europe’s digital policy approach is too focused on regulation. The idea of gaining industrial competitiveness and innovation power by regulating others is like stopping halfway. To make our position clear: We are not advocating for a blanket reduction or abolition of traditional telecom regulation, which is being cut back all the time anyway. In our view, what is crucial is how a smart combination of regulation with innovation and industrial policy can be achieved and what the necessary political pre-conditions and institutional structures are for this to happen.
A Call for a Wide-Ranging Digital Policy Authority
Regulation in a broader sense must provide the policy, operational and competition framework for a particular sector. One of the challenges in a very fast-moving and innovation-driven market is how to ensure future-proof and targeted regulation in a rapidly changing environment, driven by dynamic technological advancements and market developments. The characteristics of these changes include, on the one hand, the declining relevance of traditional telecommunications services and, at the same time, the increasing narrowing of telecommunications companies’ business activities to the provision of connectivity, and, on the other hand, the growing importance of digital platforms for the delivery of communications services. Against this backdrop, the strategic question arises as to what future-proof and targeted regulation of the ICT sector will look like and what will be required to promote innovation and the industrial ecosystem in Europe. Another aspect which should be kept in mind in this context is that the specifics of 5G development should be considered for an effective 6G policy framework.
The specifics of 5G development include, for example: (1) concentration of relevant intellectual property rights—IPRs (i.e., patents, etc.) with a few (corporate) players; (2) greatly varying efficiency in the use/exploitation of IPRs by those very players (e.g., Huawei has wide-ranging IPRs, but can only use them to a limited extent due to US restrictions); and (3) the increasing complexity of standardization. In some areas, smaller specialized players are driving the development, initially working proprietarily in mobile private networks (MPNs). In the area of individual components, such as core networks, there are many providers, each of which focuses on only one or a few topics or components. These players try to bring their innovative approaches into the standardization processes to broaden their business perspectives and market. At the same time, (4) a fragmentation of the technological development can be observed in technologies such as LoRaWAN (Long Range Wide Area Networks), which may weaken standardization ambitions.
This is a call to action for all relevant ICT policy bodies (ministries, regulators, general competition authorities, R&D, and innovation institutions, etc.) to develop an effective policy and institutional framework to improve the conditions for promoting the ICT sector. Clearly, the introduction of policy, regulatory, and institutional innovations also require challenging and time-consuming debates with the political and regulatory orthodoxy about the need for change. A promising approach to a forward-looking debate might be to paint a burning platform scenario.
The ‘Burning Platform’
Providing key stakeholders with a compelling vision of the future is a typical approach to inspiring change and conveying a message that the future painted on paper will be better than the current state. The problem with this approach is that a grand vision is not always enough to get everyone mobilized and moving in the same direction. Another approach to motivating people to change is to create a ‘burning platform’ scenario. The concept of a burning platform comes from the analogy of standing on an oil platform at sea that is on fire—the urgency to save yourself is so great that you act and jump off. In business, a burning platform is a term used to describe the process of helping people to see the dire consequences of not changing. By sparking just enough concern about what happens if the status quo remains the same, people embrace change. The problem with this approach is that people usually do not know what lies on the other side of the change.
Against the background of the changes described previously, the question arises as to whether the existing institutional set up is still fit for purpose, since regulatory work is often carried out detached from industrial and innovation policy. On the one hand, Europe has increasingly become a ‘world regulatory super-power’, with far-reaching regulations and stricter consumer protection designed and implemented, which have achieved international impact due to the Brussels Effect. But will this not be enough for Europe to successfully defend its prosperity and foster its innovative and industrial strength forever, as pointed out by Cedric. O, the former French Secretary of State for Digital Transformation and Electronic Communications. In response to this dilemma, the EC is just rolling out a tsunami of legislative acts and we have not only GDPR, but by now also the DMA, DSA, Chips Act, Data Act, Artificial Intelligence Act, eID, etc. However, there is a growing awareness that an overabundance of regulations will not guarantee better outcomes in terms of innovation strengths and competitiveness. Against this backdrop, it is clear why we need new policies aimed at fostering competitiveness, strategic autonomy, and digital sovereignty for Europe. An additional highly topical aspect for the efforts for strategic autonomy which should not be forgotten at this point is the further geopolitical threat scenario for Europe, which extends the strategic need for action in the direction of raw materials, energy supply, securing global supply chains, etc. For more details, see Timmers (2022).
Digital Dependency
A recent research report by Mayer and Lu, (2022), funded by the Konrad Adenauer Foundation concluded, that Europe has not fully recognized its digital dependency yet. The results of measuring digital dependence suggest a sober reassessment of the status of ‘digital autonomy’. The Digital Dependency Index DDI has implications for various actors involved in digital policymaking at the national and EU level. The key message is that the degree of digital dependence of EU members is far greater, more pervasive, and multifaceted than often assumed:
European countries are falling behind in every dimension compared to China, South Korea, and the US. In the last decade, Europe’s digital autonomy has eroded as digital interactions have become more asymmetric with China (ICT trade dependence), with the US (infrastructure and platform dependence), and the East Asian region (IP dependence).
European governments need to rethink their entire approach to digital technologies. If the goal of improving technological autonomy is taken seriously, a consistent implementation of strategic autonomy goals in political, temporal, and financial terms as well as with a strategic vision would be required. This consistency is missed by the authors.
European companies and governments should put a stronger emphasis on reducing their growing dependency on foreign IPs in the ICT field.
Germany [and other European countries] should draw lessons from other technological middle powers, especially from South Korea and Japan.
These findings among others clearly show that the current regulatory governance and institutional set up is not sufficiently supportive for achieving digital sovereignty and strategic autonomy. Considering the amazing supremacy of the US in the field of innovation, these facts should generate a sense for urgency.
Institutional Reform and a New Mandate
The question of whether telecommunications regulation could not be institutionally combined with other policy areas to exploit substantive or financial synergies has repeatedly arisen in connection with public governance issues. In the past, there have been various approaches to this, such as the multisector regulator (the German Federal Network Agency BNetzA is a prominent example), or the widely used combination of telecom regulation with (electronic) media regulation. Experience shows that these approaches are outdated and only functional to a limited extent, since there is obviously no common denominator between these sectors due to different regulatory objectives, political accountability and, moreover, the expected synergy gains could not be realized.
The conclusion from the analysis is that telecoms regulatory authorities in the EU have become ever less relevant as EU telecoms are increasingly bypassed and left behind by large digital platform and cloud providers, and China’s techno-state policy. To make matters worse, regulatory authorities have focused only on market conditions rather than the wider interests of competitiveness and digital sovereignty.
The reasons for the failure are threefold: (1) not being mandated to address the wider interests; (2) not being mandated to use a wider toolbox than traditional telecoms regulatory policy; and (3) a degree of blindness to large changes which has been made worse by institutional fossilization. Telecoms regulatory authorities need to break out of their sectoral silo. Fortunately, many are willing to do so and 6G offers an opportunity. The implication is that a smart combination of regulation, innovation policy, and industry policy is needed to promote regulatory innovation such as anticipatory regulationor sandboxing and agile policymaking in the telecommunications and digital ecosystem (see also in one of our earlier articles17). In a different context of collaborative ecosystems and cloud applications, Berk and Saxenian (2022, p. 64) claim that “Our research suggests that competitionpolicy, innovationpolicy, and industrial policyshould be seen as complementary, particularly for supporting today’s collaborative ecosystems”.
Smartness refers to an agile form of organization in which project teams come together to find an adequate solution, depending on the complexity of the problem and whether the path to the solution is known. The opposite of smart would be a static, traditional form of organization dealing with the different aspects of ICT policy in vertical silos such as infrastructure, services, applications, etc. The key point here is that the fast pace of technological development requires agile action and the teams of experts working on these issues are moving between the middle complex to chaotic, and therefore need to be organized and managed accordingly.
Step-by-Step Toward a Wide-Ranging Digital Authority
To make Europe’s digital policies more impactful, we are advocating for a step-by-step introduction of a wide-ranging digital policy authority for a 6G ecosystem and recommend going a step further and expanding telecommunications regulation in combination with innovation and industrial policy as a first step at the national level in the direction of a far-reaching digital policy authority. The term ‘authority’ is deliberately kept ambiguous in this context: on the one hand, as an authoritative body, i.e., a group of experts, and on the other hand, a unit that makes decisions, a regulator. This ambiguity was chosen to outline a possible development path from a ‘light’ scenario with a group of experts advising the decision-making bodies to a potentially full scenario at a later stage with more powers, including decision-making powers.
There is a wealth of literature and relevant experience on various governance models for successful ICT policy implementation (including the failed approaches with a ‘digital ministry’18), but not explicitly in the sense described here. Considering the efforts toward digital sovereignty and strategic autonomy for Europe, this combined entity—covering telecom, standardization, digital platforms, innovation, and industrial policy aspects—could provide expert, non-partisan advice at the political level, support the market players in implementing laws and intervene in cases of abuse, help protect consumer interests, and make an important contribution to a successful ICT policy.
There are the first promising approaches to an integrative regulatory approach in Europe. The Danish government made a conscious decision a long time ago to bundle the digital agendas in the Ministry of Finance and not to go down the route of a Digital Ministry, which Sweden once introduced and then discarded. The Ministry of Finance is generally the only one that can exercise a lateral control function with its allocation policy for financial resources. A benchmark was set in the UK, when the Competition and Markets Authority (CMA), the Information Commissioner’s Office (ICO), and the Office of Communications (Ofcom) formed the Digital Regulation Cooperation Forum (DRCF) in July 2020. Building on the strong working relationships between these organizations, the forum was established to ensure a greater level of cooperation, given the unique challenges posed by regulation of online platforms.
It is important to keep in mind that such a fundamental conceptual and institutional change cannot be achieved simply by flipping a switch. If the burning platform scenario creates enough urgency to convince key stakeholders of the need for reform, a development path must be established in two dimensions. In terms of the competence scope, at the national level, for example, one could start with a ‘light’ scenario where a public think tank composed of existing entities in the fields of telecom regulation, innovation and research, and industrial policy, etc., advises the decision-making bodies, to a potentially full scenario at a later stage with more powers, including decision-making powers (i.e., regulatory powers).
In the national vs. supra-national dimension, one could gradually develop the institution from the national toward the European level. In this context, BEREC would also need to be further developed, e.g., by having a subgroup dealing specifically with transnational and European issues. In the longer term, under a fully digital single market scenario, the establishment of a European regulatory and digital agency appears to be without alternative. However, there is still a considerable way to go.
Intuitively, one might think that ‘digital’ is a global issue and therefore requires a global or supra-national body to deal with all aspects of digitization. In this sense, responsibility for this matter could be attached to a UN organization, possibly the ITU. For practical reasons, this option is left aside here. At the European Union level, the European Commission can be seen as a European digital authority. To be as specific as possible and to start with, the focus is here on the national level. This also has the side effect that important players in this field, such as the United Kingdom or Switzerland, who are not members of the EU are conceptually included in these considerations. As a first step, the concept of a far-reaching digital policy authority is understood at the national level as described here, but without focusing on a specific country. Further steps toward a European instance need to be developed.
Summary and Areas for Future Research
One of the aims of our proposal for a regulatory system in the 6G ecosystem is to help Europe become more competitive, innovate, and invest in a globalized world. However, this goal can only be achieved inadequately, or at least not efficiently, under the current conditions. Regulators largely operate in a silo, widely detached from innovation policy and industrial policy and they are lacking the mandate and the tools to act in a wider area with adjacent public entities in the research, innovation, and industrial policy fields. Our proposal aims to create a framework so that regulation, industry, and innovation policy can work together to effectively support the above goal.
The concrete operational implementation of such a new framework requires, on the one hand, an even better design of the theoretical underpinning and, on the other hand, an adapted translation into policy practice. This may vary from country to country, but in any case, requires a synchronized approach at the supra-national level (especially the EU) and the national levels.
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eID is a set of services provided by the European Commission to enable the mutual recognition of national electronic identification schemes (eID) across borders. It allows European citizens to use their national eIDs when accessing online services from other European countries.
