Modernising Regulatory Frameworks

1. Modernising Regulatory Frameworks Veena Rawat, Senior Policy Advisor, GSMA

2. Mobile Is at the Heart of the Digital Experience Messaging Voice calling Apps and services E-government Personal finance Transportation Gaming Community E-commerce

3. Characteristics of the Digital Ecosystem • Network Effects • Dynamic Competition • Modularity • The digital sector is a single, integrated ecosystem, not a collection of related-but- separate markets • Digital players engage each other in a variety of roles across the value chain • Competition is forthe market, not inthe market • Consumers benefit from the internet’s natural economies of scale and scope • Regulation should not obstruct scale and scope • Transformative innovation generates choice and value for consumers • Static ‘dominant’ positions are contestable • Regulation should not inhibit innovation and investment

4. Costs and Consequences of legacy regulation Regulating well is always difficult … … and more so in the digital ecosystem Discriminatory, prescriptive regulations inhibit the growth of the digital ecosystem and reduce consumer welfare • Information gaps can lead to regulatory errors, distorting markets and competition • Market conditions and technologies can change in unpredictable ways • Regulations often create substantial compliance burdens • Regulation always benefits some interests over others • The complexity of digital markets increases regulatory error • Rapid change accelerates regulatory obsolescence • Innovation and entry are distorted by regulatory burdens and risks • Higher regulatory distortions raise returns to rent-seeking

5. Regulatory Discrimination Impedes Competition Unregulated Competitor • Business innovation • Implementation Disclosure to competitors Longer time to market Regulated Competitor Business innovation • Filing with regulator • Regulatory approval Implementation • Regulatory analysis Innovations discarded Risk of rejection

6. Principles of a New Regulatory Framework • Functionality-based • Pursue regulatory goals based on achieving regulatory objectives, not legacy structures based on industries or technologies The new framework will reduce regulatory asymmetries, promote dynamic competition and innovation, and allow regulatory objectives to be achieved more effectively at lower cost • Dynamic • Give preference to performance-based regulation through ex post enforcement over prescriptive, ex ante rules • Bottom-up • Consider new approaches to regulation — including the need for regulation — in light of current market realities

7. Conclusions • The spread of connectivity, and particularly mobile broadband, has enabled new services and products to come to market. • Changes to the digital ecosystem have been wide ranging and have benefited consumers and businesses. • Regulation has failed to keep pace with innovation and change. • Now is the time to put in place new, future-proof regulatory regimes that: • Ensure the right incentives are in place to continue to roll out and upgrade mobile networks • Apply rules consistently to all relevant players in the digital ecosystem

8. About the GSMA