Regulating for resilience: Reigniting ICT markets and economies post-COVID-19

As the COVID-19 pandemic continues its relentless spread, governments, regulators, academics, and the global information and communication technology (ICT) community keep rethinking policy and regulatory frameworks to mitigate the effects of the crisis and chart a way out of it.

The 7th Economic Experts Roundtable convened by ITU provided a platform to generate ideas and solutions to render ICT markets an even more important contributor to social and economic resilience in the face of COVID-19.

The current crisis has brought new challenges to the ICT sector. Regulatory frameworks need to be adjusted to stimulate investment while maintaining a moderate level of competition. Markets and consumer benefits are now examined by decision-makers through the lens of financial adversity and uncertain outlooks.

Amid disruption, policy-makers and regulators need evidence-based guidance that provides a solid ground for their reforms.

A new study released at the Roundtable provides fresh insights backed by authoritative data on the evolution of ICT regulation since 2007, the ICT Regulatory Tracker, and a global dataset on ICT markets economics.

The study shows that ICT regulation has had a measurable impact on the growth of global ICT markets over the past decade.

The analysis uses econometric modelling to pinpoint the impact of the regulatory and institutional frameworks on the performance of the ICT sector and its contribution to national economies.

It provides policy-makers and regulators with evidence to advance regulatory reform and address the challenges and gaps in current regulatory frameworks for digital services and applications.

Upgrading regulatory frameworks: What matters?

The new analysis points to regulatory features that can have a multiplier effect on ICT markets and consumer benefits.

• ICT regulation is positively linked with increases in telecommunication investment. An improvement of 10 per cent in the maturity of national ICT regulatory frameworks is associated with an increase of fixed and mobile investment of over 7 per cent. For this to happen, a country needs a separate, autonomous ICT regulator with a broad mandate, promoting competition and adopting best regulatory practices in ICT licencing, service quality monitoring, and spectrum sharing.

• Tax cuts are associated with a significant boost in capital investment, as they increase available financial resources for network deployment. Reducing profit tax by half leads to an increase of fixed and mobile investment of nearly 14 per cent.

• Streamlining government administrative processes is linked to a significant increase in capital investment, highlighting the importance of minimizing time to obtain network deployment permits, handling municipal network construction requirements, and reducing red tape costs. Slashing administrative processing times by half is linked to an increase in fixed and mobile investment of 17 per cent.

For the mobile sector, open and collaborative regulatory policies appear to have a strong positive impact on investment. In turn, more investment triggers coverage gains and lower consumer prices, boosts ICT adoption and generates growth in national economies around two years after policy adoption.

• A digital agenda is crucial to accelerating innovation and boosting investment. The introduction of a national broadband plan with a strong implementation framework and leadership increases mobile investment and network coverage by some 15 per cent.

• Converged licensing frameworks maximize the financial returns of investments as they provide a flexible policy approach adapted to technological advances. Such frameworks are associated with a 10 per cent increase in mobile investment and network coverage.

• Allowing voluntary spectrum sharing agreements, thereby helping operators to maximize the opportunities to make investments profitable, creates strong incentives for network deployment. Such collaborative regulatory regimes see an 18 per cent increase in mobile investment and network coverage, and price reduction by close to 10 per cent compared to countries where this is not allowed.

• Openness to foreign operators increases access to capital for network development and modernization and enables technology and know-how transfer. An open mobile market can stimulate capital investment with increases of 14 per cent along with network coverage.

Policy-makers are encouraged to use this report as an evidence base underpinned by a deeper understanding of the linkages between regulatory and institutional contexts and ICT market outcomes, and of which policies can lead markets, consumers, and economies out of the current crisis.