Business unusual in ICT regulations

How regulating ICT should evolve in the digital era

Viewpoint

Information and communications technology (ICT) regulators in the GCC countries would benefit from redefining their mandate in order to ensure they keep pace with the fast-changing regulatory environment. ICT regulators’ aim is for their regulations and associated instruments to adapt quickly to the needs of ICT providers, consumers, investors, and national development plans while keeping up with rapid developments in industry subsectors.

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There are many reasons for current regulatory challenges. One is increased market complexity as sector boundaries have become blurred by the way that digital services and ICT are woven into the fabric of all socioeconomic activity as drivers of economic growth. The market is also more complex as there are more market participants, new forms of competition, and because of the interest shown by hyperscale technology providers. Other reasons include a capabilities deficit in the workforce affecting ICT companies and regulators, and regulations in ICT subsectors that are inconsistent and outdated.

Simultaneously, telecom operators, which are significant ICT players in the GCC, have limited growth prospects in their core markets because of shifting customer needs; increased competition, including from new digital service providers; and the migration of some services to digital platforms. These changes can stifle innovation and increase the need for regulations that allow access to new growth opportunities.

Already, ICT regulators in the GCC are introducing new frameworks to regulate emerging technologies, formulating active measures to expand digital infrastructure and enhance service quality, enacting protection policies for telecommunications consumers, and establishing multiple entities to regulate the sectors adjacent to ICT. Even so, they have struggled to keep up with the rapid structural changes in the ICT ecosystem, as well as the insatiable demand for ICT services.

There is an opportunity for regulators to increase their impact if they adopt a new mindset. Regulators can incentivize innovation and investment, enable sector ambitions, and remain relevant, by prioritizing digital infrastructure development, closing the digital skills gap, and accelerating digital adoption.

Broaden the mandate

Modernize regulatory instruments and approaches

Redefine success metrics

1.1 Expand mandate into adjacent industries to cover gaps if native regulators are not present or governance is ineffective
1.2 Expand mandate vertically into ICT sector development and enhance collaboration with adjacent regulators where available

2.1 Update market definitions, taking into consideration the dissolved boundaries and new forms of competition
2.2 Phase out rules-based regulations and reduce reliance on ex ante remedies
2.3 Shift toward ex post instruments and principlesbased and adaptive approaches
2.4 Choose symmetrical remedies to address local imbalances
2.5 Incentivize infrastructure sharing through wholesale interconnection and local access
2.6 Liberalize pricing to encourage investment and enable innovative commercial models
2.7 Innovate in licensing to boost experiments through temporary licenses, special innovation licenses, etc.
2.8 Stimulate demand through targeted literacy programs, subsidies, voucher schemes, etc.
2.9 Expand adoption of regulatory technology to increase automation and reliance on data, streamline violations management, etc.

3.1 Service availability and uptake (e.g., 5G, fiber broadband)
3.2 Service quality, customer experience, and satisfaction indices
3.3 Data privacy and security effectiveness (e.g., global cybersecurity index)
3.4 Innovation index (e.g., number of patents, sandboxes)
3.5 Investment friendliness (e.g., FDI levels, ROCE of listed ICT players)
3.6 Digital transformation (e.g., percentage of digitized government services, usage rates)
3.7 ICT sector size, growth, and contribution to GDP
3.8 Increased cross-collaboration (e.g., hyperscalers’ investment, localization levels, partnerships with local players)
3.9 Broader economic indicators (e.g., workforce localization, digital literacy)digital literacy)

Conclusion

Modernized ICT regulation should be ahead of developments in the sector and in sectors directly affected by ICT. Such regulation should set the pace of innovation. Regulators should set players free to innovate and enable them to succeed, rather than control them. When regulators act in this manner, they encourage the development of the ICT sector and of its broader positive impact on the economy, making them in effect partners in growth and innovation. In that way, modern regulators can provide consumers with enhanced protection, expanded choice, better quality, and more affordable services—all of which inspire their trust and in turn increase ICT service adoption. More broadly, such modern regulation can lead to a thriving, growing industry, which enables the digital economy and provides an essential catalyst for realizing the economic ambitions of GCC countries.