Chapter 1.

Regulatory governance and independence

Chapter 1 discusses how ICT regulatory governance is adapting to digital development. It covers the
evolution of regulation from traditional telecom to digital tech, regulator roles, and the rise of regulatory
collaboration. It also explores alternative regulatory models like self-regulation and industry-government
partnerships.

1.1 Introduction

Effective regulation requires a robust regulatory framework and independence. Today, regulators and
policymakers face various challenges, including traditional ICT issues and the emergence of new digital
technologies and services. These challenges extend beyond ICTs to sectors like health, finance, education,
transportation, and energy, covering areas like content regulation, privacy, consumer protection,
competition, and artificial intelligence.

Traditional ICT regulators may lack expertise, resources, or clear authority to handle these new issues.
While some countries have begun integrating digital technologies into their regulatory frameworks, others
are still in the early stages. Chapter 1 of the Digital Regulation Handbook offers a forward-looking analysis
of how ICT regulatory governance is evolving. It reviews the history of regulation, addresses the changing
role of regulators, emphasizes the importance of inclusive decision-making, discusses regulatory
collaboration, alternative regulatory models, and factors for developing digital frameworks. Open
consultations and evidence-based decision-making are critical as countries navigate this complex
landscape.
1.2 Policy and implementation
Evolution of regulation
Regulation has evolved over the last 30 years, starting with telecommunication frameworks as countries
opened their markets to competition. It expanded to include ICTs for new technologies and Internet
services. Currently, the shift from ICTs to the digital realm is happening, prompting policymakers and
regulators to consider the broad societal and economic effects of online platforms, 5G, cloud computing,
IoT, and other emerging technologies across all sectors.
From traditional telecommunication environment to digital landscape
The ITU has developed a model to track the evolution of regulation from traditional telecommunication to
the digital landscape. It spans from Generation 1 (G1) with state-owned monopolies, through privatization
and liberalization, investment encouragement, and socioeconomic objectives in Generations 2 to 4.
Generation 5 (G5) is the latest, seen as complementary to previous generations, emphasizing the need for
flexible and collaborative regulatory frameworks to address the wide-reaching impacts of the digital
economy across sectors.
Figure 1.1. Generations of regulation: G1 to G5

Note: Generations 1 through 4 are measured through the ICT Regulatory Tracker. Generation 5 is
measured through the G5 Benchmark.

The OECD emphasizes the need for coordinated digital transformation policies across all relevant
policy domains and actors. They recognize that governance solutions should be adapted to each
country's unique institutions, regulatory culture, and capacity, considering that these structures
evolve over time.

Moving to Generation 5 (G5) regulatory frameworks requires agile regulation. This involves
developing flexible sector-specific legislation and regulation to keep up with rapidly changing
technologies, services, and markets. Policymakers can work collaboratively with industry experts
in this approach.

However, many countries still lack essential elements in their regulatory frameworks. The State of
Broadband 2019 report highlighted that 72 countries are either at a G1 level with state-controlled
monopolies or entering a G2 level with market liberalization. This may hinder their development
and put them behind G3 and G4 countries that have embraced innovation and integrated ICT into
socio-economic policies. Comprehensive digital strategies and updates to underlying systems and
structures are key tools for addressing these challenges.
Implementation of comprehensive and technology-specific digital strategies

Numerous countries, including Colombia, Uruguay, Niger, and Kenya, have adopted digital
strategies, plans, and roadmaps to set policy goals and targets. For instance, Colombia's ICT Plan
2018-2022, "The Digital Future is for Everyone," focuses on inclusive digital transformation.
Uruguay's Digital Agenda 2020 emphasizes "proximity government" to improve citizen-state
interactions. In Nigeria, the Smart Nigeria Digital Economy Project aims to enhance economic
opportunities through ICT initiatives. Kenya's Digital Economy Blueprint, adopted in 2019,
outlines five pillars for digital economy growth.

Moreover, over 118 countries have national development strategies, digital agendas, or economic
stimulus plans that include broadband as a key component.
Figure 1.2. Countries with/without overall national development strategy, digital agenda, or economic
stimulus strategy including broadband

Note: only showing countries with information that is available.

Countries are increasingly implementing comprehensive digital strategies that cover multiple
sectors and international development goals. These plans serve as essential tools for setting
connectivity targets and emphasizing the role of the digital space in a nation's economic and social
development. They also promote collaborative regulation and engagement with various
stakeholders for a holistic approach to digital development.
A recent trend is the adoption of strategies tailored to specific technologies or issues, like
automation, robotics, 5G, AI, and IoT. For instance, Malaysia's National IoT Strategic Roadmap
focuses on IoT industry development. Many countries, including Germany, have AI strategies,
while Australia, Germany, the UK, and Singapore have adopted 5G policies. Japan issued a New
Robot Strategy in 2015, outlining measures for the "robot revolution" and addressing cross-cutting
and sector-specific issues.
Assessing the need to modernize and streamline

As policy-makers implement their digital plans and adapt regulatory frameworks to the digital
economy, they must avoid simply expanding outdated laws and regulations to new players or
topics. Instead, they should consider measures like deregulation, self-regulation, or co-regulation
to encourage innovation, facilitate the deployment of new technologies, incentivize investment,
and promote inclusivity and collaboration.

This approach requires a regulatory impact assessment and a thorough review of past, current,
and emerging risks to align with the country's targets. Shifting from a rules-based to a principles-
based approach is also recommended in the digital era. High-level principles can lead to balanced
and effective solutions in complex areas. For instance, the United Kingdom's House of Lords
proposed ten principles for digital regulation in 2019, including parity, accountability, privacy,
and ethical design.
1.3 Role and institutional design of regulator
Institutional structure of regulator
There are three primary institutional design models for regulators in the ICT sector: sector-specific
regulators, multisector regulators, and converged regulators.

Traditionally, sector-specific regulators were common for telecommunications. However, in today's

ICT and digital landscapes, regulators responsible solely for telecommunications are less common.
They often oversee other areas such as postal services and spectrum management. For instance,
Afghanistan Telecom Regulatory Authority (ATRA) and Barbados Telecoms Unit (TU) manage both
telecommunications and spectrum matters.

Multisector regulators, usually utilities-based regulatory authorities, existed before liberalization in

telecommunications. For example, the Office of Utilities Regulation (OUR) in Jamaica oversees
telecommunications, power, water, and transportation, while separate agencies handle spectrum
and broadcasting. Jamaica has been working towards creating a converged ICT regulator. Other
countries with multisector regulators include Denmark, the Bahamas, and Belize.

There is a global trend towards converged regulatory authorities responsible for telecommunications,
spectrum, and broadcasting/media. In 2007, about one-third of regulators worldwide were converged, and
by 2017, over 70% of regulators followed this model. Recent examples include Botswana and Singapore,
where the creation of converged regulators helped adapt to technology advances that blurred the
distinction between broadcasting and telecommunications. Botswana, for instance, established the
Botswana Communications Regulatory Authority (BOCRA) to address all matters related to ICTs,
broadcasting, Internet, spectrum, and postal services by merging the Botswana Telecommunications
Authority and the National Broadcasting Board.
Traditional areas of responsibilities
In the first three generations of regulation (G1-G3), and somewhat in G4, telecommunications and
ICT regulators primarily focused on establishing and enforcing strict rules aimed at safeguarding
 competition and consumers as countries moved away from monopolistic telecommunications
markets. Licensing played a central role, involving thorough application processes to ensure new
entrants possessed the necessary technical and financial capabilities for success.

Regulators also traditionally imposed various obligations. Tariff-filing requirements involved

providers submitting prices and rates for regulatory approval to protect consumers from unfair
charges. Interconnection obligations and termination rates were enforced to enable operators,
especially new entrants, to access each other's networks, ensuring consumers could connect
regardless of their service provider. Regulators often served as dispute resolution bodies for
interconnection disputes and consumer complaints.

Additionally, traditional regulatory areas included spectrum management and broadcasting, although
these functions might be handled by separate authorities outside of the ICT regulator. Spectrum regulation
was crucial for preventing interference and promoting efficient spectrum resource usage, while
broadcasting focused primarily on content-related issues.

Shifting mandate/roles of regulators and policy-makers in the digital era

In the digital era, regulators and policymakers need to maintain their traditional roles while
becoming more flexible. The mandate and responsibilities of regulators must evolve to address new
challenges arising in the digital landscape. These include regulating online services like VoIP and
digital platforms, navigating IoT, AI, data privacy, competition, and cybersecurity.

However, integrating these new areas into existing regulatory frameworks can be complex, and many
countries are debating whether their ICT and broadcasting regulators have the authority to regulate digital
services and emerging technologies. Determining the scope of regulatory authority can be challenging
without clear legislative guidance.
Box 1.1. Jurisdictional challenges for OTT video in India
In India, there have been jurisdictional challenges regarding the regulation of over-the-top (OTT) video
content under the Cinematograph Act. The High Court of Karnataka ruled in August 2019 that OTT video
is not subject to the Cinematograph Act, dismissing a case against several OTT video providers. Instead of
implementing a regulatory framework, the Ministry of Information and Broadcasting (MIB) suggested in
March 2020 that the OTT video industry should establish a code of conduct and an adjudicatory authority
by mid-2020, as discussed in the section on "Self-regulatory models."

Countries employ various strategies to ensure regulators have jurisdictional authority. Some update
legislative frameworks to include digital services, like the European Electronic Communications Code
(EECC). Another approach is to assess regulators' competencies and consider expanding their mandate or
creating a new digital regulator, as discussed in the section on "Digital regulators."

Regardless of the approach, it's crucial to ensure regulators have the necessary resources, including
qualified staff. Merging existing authorities into a converged regulator can facilitate this process, bringing
together experienced personnel from different areas. Expanding a regulator's mandate requires training
and capacity-building to understand stakeholder perspectives and legal and market issues. Open
consultations, stakeholder engagement, and evidence-based decision-making mechanisms are essential for
building effective regulatory teams. When expanding the regulator's mandate is not feasible, collaboration
with other agencies can be an alternative to enhance knowledge and resources.
Advancing the regulator’s skills, independence, and accountability
 Over 80% of countries, according to ITU data, have regulatory authorities for telecommunications
and ICTs that are financially, structurally, and decision-making independent from the sectoral
ministry, as of the end of 2018. The regulator's financial independence is a critical factor influencing
its autonomy. Independent regulators typically receive direct funding through legislative and
budgetary allocations, which ensures transparent budgeting. They may also be funded by licensing
and other fees. However, if licensing fees are the sole funding source, setting appropriate fees for
cost recovery while not burdening licensees becomes a challenge. Another mechanism is for the
government to allocate funds to the ministry overseeing the regulator, which then distributes the
funding. This approach, though, risks compromising the regulator's independence by introducing
political influence.

In traditional, converged, and digital regulatory settings, having an independent regulator is

essential for objective, well-reasoned, and predictable decision-making. In the digital era,
independence is crucial for effective collaboration with cross-sector agencies and conducting open
consultations.

Accountability is another vital aspect. Regulators should remain free from undue political or market
influence and should publish all laws, rules, guidelines, and legal texts, both in draft and final form.
In the digital landscape, online publication is the primary mechanism for inclusion and
collaborative decision-making.

For an independent and accountable regulator, the staff should have the necessary skills, stay updated on
sector developments, and draw on experience to respond to new challenges. Effective leadership is
essential to foster innovation and benefit consumers through decision-making and rule-making in a
multistakeholder environment.
Appropriate institutional structure for digital environment
Several governments are in the early stages of evaluating their regulatory authorities' preparedness for
digital issues. They are considering whether to establish a separate regulatory body solely dedicated to
digital matters, expand the functions of an existing ICT regulator, or adopt a model involving an ICT
regulator with other government bodies handling consumer protection, privacy, and cybersecurity. This
trend is exemplified in countries like Australia, Ireland, and the United Kingdom, as discussed in Box 1.2.
It's possible that more countries will follow suit in reviewing their regulators' mandates in response to
digital transformation.
Box 1.2. Review of digital regulators in Australia, Ireland, and the United Kingdom

**Australia**: In 2018, the Australian Competition and Consumer Commission (ACCC) initiated a
digital platforms inquiry, focusing on market power issues related to digital platforms like social
media and search engines. In the final report released in July 2019, the ACCC aimed to address
competition concerns within digital platforms and assigned several key roles to the Australian
Communications and Media Authority (ACMA).

**Ireland**: In January 2020, the Irish government introduced the draft Online Safety and Media
Regulation Bill, which proposed replacing the Broadcasting Authority of Ireland (BAI) with a new
Media Commission. This Media Commission would regulate broadcasting and extend its
responsibilities to the audiovisual media sector, including online video.

**United Kingdom**: In April 2019, the UK's Department for Digital, Culture, Media, and Sport (DCMS)
launched a consultation seeking an independent regulator to implement and enforce a new regulatory
framework for addressing illegal or harmful online content. In February 2020, the DCMS responded to the
consultation by identifying the existing ICT regulator, Ofcom, as the most suitable candidate for the online
harms regulator. The rationale behind this decision was to leverage Ofcom's expertise, prevent
fragmentation in the regulatory landscape, and expedite progress on the issue.9o