The Role of Regulation in 5G Market Design
28 Pages Posted: 17 Jul 2019
Date Written: July 15, 2019
The emergence of new technologies forces policy makers to decide whether the existing legal and regulatory framework is appropriate or whether a different approach might better realize their potential benefits for society. While there is broad agreement on the desirability of competition in future 5G markets, national and regional models differ widely regarding the envisioned role of policy and regulation. This paper explores the rationales, strengths, and weaknesses of specific policies that are currently debated, including the regulation of backhaul services, network rollout targets, MVNO obligations, network neutrality rules, and open platform safeguards. It assesses the effects of these regulatory options on investment and innovation in a theoretical framework that considers the strong interdependencies and complementarities between players in the 5G value system explicitly. This reveals the presence of traditional forms of market failure and the possibility of new ones related to coordination requirements of advanced wireless technologies. The analysis suggests that multiple policy equilibria exist, each corresponding to a specific constellation of 5G policy, that are associated with different innovation and investment trajectories of the sector.
Keywords: 5G, regulation, complementary innovation, investment, market design, competition policy
JEL Classification: L51, L86, L96, O38
Suggested Citation: Suggested Citation