Innovation and Regulation in Telecommunications
Regulation is one of the key factors shaping both supply of and demand for new technologies and services. Consequently, the regulatory framework for utilities – although primarily focused on the introduction of competition – can play an important role for technology and innovation policy. Especially, the diffusion of information and communication technologies (ICT) and new services and applications such as electronic commerce hinges upon the creation of an appropriate regulatory framework, which, i.a., supports technology policy objectives and strategies. The liberalization of telecommunications markets has a number of implications for public policy. The process of regulatory reform is rather complex and requires institutional adjustments as well as the utilization of new regulatory instruments. These are the main lessons we can learn from countries in which the transformation from monopoly to competition started in the mid 1980s. Regulators have to get used to new instruments – such as auctions for frequency allocation – which have implications for the creation of new markets. Institutional learning beyond a theoretical approach will be required. Furthermore, regulators have to take into account the international dimension in terms of markets and suppliers. Technological change in information and communication technologies produces another set of questions for public policy. The shift in the basic paradigm for "electrical" communication networks from closed systems towards open systems as well as the convergence between telecommunications, broadcasting and print will probably have the most striking effects on the future of the industries. In an open system standards create access environments that are not necessarily oriented towards any specific service environment. An open network paradigm includes the user, and significant innovation is not necessarily generated within the supply sector alone. An appropriate policy towards innovation and diffusion of new services has to account for the role of industry consortiums in the standardization process, for users as an important source of innovation and for regulatory activities beyond regulation of the network infrastructure. Recent Austrian initiatives towards the information society suggest that there is some leeway for a broader and more integrated communication policy. However it is far from clear whether regulatory reform can overcome old paradigms.