An Innovation-Centric Approach of Telecommunications Infrastructure Regulation
32 Pages Posted: 19 Feb 2011 Last revised: 25 Jun 2014
Date Written: January 25, 2011
This paper considers the mechanics and role of innovation in telecommunications networks, and explains how regulation can be designed to maximize innovation. To better focus on the relationship between innovation and regulation an effort is made to distinguish innovation from competition, although the two concepts are closely related, and several reasons are presented on why the fast changing, networked and technical nature of telecommunications offers a very favorable environment for innovation to thrive, as well as why innovation benefits from a large number of actors. Moreover, the paper further explains that even small players are useful in the innovation process and that a decentralized polyarchic system of innovation can work, without that meaning that it is superior to centralized innovation. The two systems can and do coexist.
With that in mind, the paper suggests that the goal of a diverse and populous innovation pool of actors is reconcilable with both the high entry barriers in telecommunications and the disincentives sharing obligations may create. The key is to properly evaluate the disincentives – which appear to be lower than generally assumed - and apply a dynamic model of regulation whereby regulation oscillates between heavy intervention and forbearance depending on the competitive conditions at the time a new technology or service is introduced, and on the nature of the innovation. Lastly, it is further acknowledged that wireless networks differ in many respects from wireline networks, and this allows for more relaxed regulation of wireless networks. However we start to notice an approximation between wireless and wireline technologies and the prediction is that market forces will pull wireless networks closer to the regulatory culture surrounding wireline networks.
Keywords: Telecommunications, Innovation, Regulation, Telecoms, Competition, Sharing
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