ICT Policy For Networked Society - Ericsson

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ICT Policy For Networked Society - Ericsson

ICT POLICY for the

Networked

Society

Progressing a transformative ICT Policy Approach


index

Executive Summary ................................................................................................................................................................................................ 5

The role of ICT in the society and the economy................................................................................................................................... 6

The emergence of the networked society ................................................................................................................................................ 9

Why regulate? .........................................................................................................................................................................................................10

What ends in mind? - Regulatory objectives .......................................................................................................................................12

How to regulate? ....................................................................................................................................................................................................16

Key global ICT policy issues ...........................................................................................................................................................................17

- Spectrum Management ................................................................................................................................................................................18

- Network regulation ...........................................................................................................................................................................................18

- Convergence ........................................................................................................................................................................................................18

- Media/content regulation.............................................................................................................................................................................19

- Copyright ...............................................................................................................................................................................................................19

- Information Management ........................................................................................................................................................................... 20

Conclusions .............................................................................................................................................................................................................. 21

References and suggestions for further reading ............................................................................................................................... 22

3


EXECUTIVE SUMMARY

Over the last 30 years a number of different policy

and regulatory approaches have been used to cope

with the challenges encountered at the time. For

instance, many countries have moved away from stateowned

telecommunications monopolies and have

adopted liberalization and deregulation to embrace

a market-based regulatory approach that relies on

competition policy.

No regulatory framework (why, what and how to regulate)

comes with a lifetime warranty. Historically, we have

heard calls for less regulation, better regulation, more

equitable regulation, smarter regulation, and now for

more holistic regulation that focuses on the cumulative

impact of regulation. Each of these calls serves as a

reminder that technology moves faster than regulation

and hence there is a continuous need for keeping

regulatory frameworks aligned with technological,

business, consumer, market, and societal realities.

In this context of constant change, it is worthwhile to

remind ourselves that the networked infrastructure that

blends computing and communication is the largest

construction project in human history. [i] It is also useful

to take a “helicopter view” of the transformative role of

information and communications technology, “ICT”, in

society and its role in accelerating socio-economic wellbeing.

There is an opportunity cost of a narrow or onesided

policy framework that does not adapt to market

realities and stimulate the contribution that commercial

stakeholders can bring to society. [ii] The strategic

benefits of a prudent, forward-looking ICT policy can be

put at risk if policy-makers fail to appreciate the crucial

role of ICT in society.

We are at an inflection point of an ICT-led transformation

of the society we know today. A new productive shift

in economies is expected with the rise of a networked

society. Developing the strategic capability to master

this change in the most advantageous fashion must be

the key priority for policy-makers. Minimizing the gap

between technology and regulation must take center

stage on the agenda of policy makers. The absolute as

well as relative success of societies and economies of

this largest human project in our history is substantially

determined by policy makers and regulators.

Ericsson would like to share its thoughts and ideas on

some of the key elements of a progressive and prudent

future policy and regulatory framework. Nations that will

benefit the most from an ICT-led societal transformation

will be those that adhere to a transformative ICT policy

approach that is holistic and not sector-specific i.e. a

converged regulatory framework. This relative change

of focus in policy approach fundamentally reflects the

desire of societies and nations to maximize their national

competitiveness of their industries and public sector.

Ericsson hopes that this document can be a source of

insight for advancing current policy realities of societies,

economies, businesses, cities and citizens.

5


ThE ROLE Of ICT IN

ThE SOCIETY ANd

ThE ECONOMY

A society that has no wheel and no writing is limited in

what it can achieve. Technology has the ability to remove

limitations on individual, organizational and social

action. Some technological advancements not only

transform economies but also lead to structural changes

affecting production, distribution, communication and

consumption in societies. The capacity for structural

change is a highly valuable skill for a nation. It can be

applied in order to stimulate development and then to

preserve and increase the gains as the context and

opportunities change.[iii] The societal skill to master

change is a key strategic capability, as it shapes

competitiveness at the national level. It defines the

capacity of an economy to shift economic activities and

hence output to more productive activities which in turn

can generate higher levels of real wages.[iv]

ICT enhances productivity and is a key source of economic

growth, job creation, and new business creation which

leads to an increased tax base. Understanding ICT-

induced economic growth beyond the stimulus caused

6

by direct ICT investment is crucial. Some important

effects of ICT investments on productivity that have

been identified are: [v]

• Improvements in human capital: ICT creates demand

for higher skilled labor and eliminates simple and

tedious tasks.

• Multifactor productivity growth, which includes the

impact of intangible investments such as

organizational changes, new distribution and

production processes, and new methods of doing

business related to the use of ICT technology.

For every 10 percentage point increase in broadband

penetration the isolated economic effect on GDP

growth is around 1% of GDP, with estimates varying

between 0.5% - 2%.

For every 1,000 additional broadband users, around

80 jobs are created, with estimates varying between

20 and 130.

• Doubling the average attained broadband speed for

an economy increases GDP by 0.3% points.

A n et w or ked cit y can be seen as a combin at ion of

t h r ee pr in cipal societ y sph er es w h er e ict is an

en abl er f or t r ipl e bot t om l in e devel opmen t

Figure 1: A simplified overview of the interdependencies between ICT and its effects on society

Improved

economic

output

Energy

consumption

Knowledge

intensity

Effect on

education

City

Effect on

healthcare

Social

interaction

Attraction of

talent

Green

development

Traffic

management

Improved

governmental

finances

Income level

Attraction of

capital

Citizen

Change in

consumer behavior

Networked

Society

Attractiveness

Increased usage of ICT

Improved public

sector efficiency

Emission

levels

Improved private

sector efficiency

Productivity

Employment

Creativity/

innovation

Entertainment

Work place

flexibility

Illustrative and simplified

Change in

industry

mix

Self

fulfillment Business

Private

sector

growth

Investments

in ICT

Source: Ericsson Networked Society Index 2011


The 21st century is the first digital century! Digitization

is present in all aspects of our lives, including:

communication, information, collaboration, advertising

and media, as well as in retail commerce and banking,

e-commerce, e-/m-payments, and social networking

The digital information revolution is opening up

an amazing array of information for people to get

access to, particularly through the Internet. But to

see the information revolution as principally about

the ability to more easily access text or video

information is to only see the tip of the iceberg.

Information access on the Internet is an amazing

innovation, but the full breadth and depth of the

digital information revolution goes far beyond

Web surfing, for the digital information revolution

is extending to virtually all aspects of our lives, all

parts of society and all organizations. It is only now,

when a vast array of information is in digital form

and when it is far easier and cheaper to create,

manipulate, organize, transmit, store and act on

information that we can truly speak of being in the

digital information age. [vi]

Digitization is a product created by ICT industries and

is the key driver of convergence. Wireless and fixed

broadband access is the prime enabler of convergence

as it sets the fundamental conditions and boundaries that

determine how we interact with digital information.[vii]

Within just a few years we have moved from a

communications system that provided us individually with

a mere trickle of information (a few kilobits), to a stream

(megabits over broadband), and soon to a veritable flood

(gigabits of ultra broadband communications). It is the

equivalent of moving from horses, to trains, to personal

automobiles, to personal jets all within a few years. [viii]

Societal transformation led by ICT is not just the tale

of the prosperous states doing better. Most developing

countries view the increased use of ICT as a critical

tool in their efforts to eradicate poverty, enhance

human development, and achieve the U.N. Millennium

Development Goals. Recognizing this untapped potential,

infrastructure initiatives and development strategies

incorporating ICT are being increasingly promoted

and launched. [ix] This movement is known as ICT for

development, ICT4D. Access to ICT and particularly the

Internet can provide an even bigger boost to economic

growth than access to mobile voice service and simple

data such as SMS. However, to make the most of the

Internet, users need to have a certain level of education

and literacy. The Internet’s effect on development may be

greater in the long term, but is unlikely to be as sudden

and dramatic as that of the spread of mobile phones in

the first decade of this century.

Throughout the history of telecommunications, mobile

communication has made a bigger difference to the

lives of more people, more quickly, than any previous

technology. [x] What GSM has done for connecting

voice globally will be repeated by 3G and LTE mobile

technologies for the Internet to truly become a global

network for all. In this sense, there is no contradiction

between these two technologies. Rather, they are

reinforcing each other. The mobile Internet will empower

billions of new users who will not otherwise have the

opportunity to use the Internet. It will create new digital

markets and wealth, enable new business models and

innovation, and enable new forms of social activity and

organization.

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Understanding the effects and benefits of ICT on nations

has been the standard way of analyzing the impact of

ICT for decades. However, increasingly the impact of

ICT must be understood within a city, business and

citizen framework because doing so allows for more

meaningful comparisons. [xi] If we take the example of

a city framework we can observe the following. Firstly

cities represent a more universally comparable context

compared to the more commonly used nation based

frameworks. Comparing London with Shanghai makes

more sense than comparing the UK with China. Hence

a city focus provides opportunities for a faster learning

and global best practice sharing. Secondly, already

today more than 50% of the world’s population lives

in urban areas and by 2030 the number is expected to

grow above 60%. There is a steady stream of people

moving from the countryside to the cities. The global

urban population increases by over 5 million people

every month, equivalent to the size of Miami or Sydney.

Today more than 20 cities in the world are classified as

8

mega cities with more than 10 million inhabitants. By

the next decade at least eight additional mega cities

will emerge, with half of them located in the developing

countries. [xii]

No matter the path of economic development

a country has chosen, urbanization remains an

inevitable outcome of this effort across the world. [xiii]

Increased urbanization leads to increasing influence for

cities. According to McKinsey Global Institute, the 600

largest cities account for more than 50% of the world’s

GDP but only 22% of the global population. At the

same time it is the medium-sized cities with populations

ranging from 150 thousand to 10 million that are

predicted to account for the largest growth in terms of

GDP up to 2025. This highlights the fact that it is not only

the mega cities that will drive development but many big

cities will take part in shaping society going forward.


ThE EMERgENCE Of ThE

NETwORkEd SOCIETY

Today’s mobile and digital life is expanding into more

areas of society and business. We now stand on the

brink of transformative innovation opportunities across

industries, public service and private life. The digital

revolution that we today can see all around us is based

on the rise of the Internet, broadband, advanced digital

devices and applications. These have given rise to digital

natives and digital organizations that have adopted and

integrated the tools facilitated by the digital revolution.

As a result, they have quite distinct expectations and

behavior compared to their analogue peers.

Over the coming years, ICT infrastructure performance

will increase rapidly, fuelled by technology advances. This

will bring new opportunities for people and business to

create, learn, sustain and innovate leading to a positive

impact on our world. Ericsson calls this new emerging

society “The Networked Society”.

In the Networked Society people, knowledge,

relationships, information and things are networked

for the enhancement of life, businesses and society.

In the Networked Society the majority of the world’s

population will have grown up with a culture defined by

openness, sharing, networked production/organization,

peer production [see box 1 for more information], and

global self-organization. This will fundamentally change

the way in which we orchestrate capabilities in society to

innovate, to collaborate, to create goods and services, to

govern, and to sustain. Once this social change begins,

it cannot be reversed.

Our world today is at an inflection point. Today people,

enterprises, markets and societies are all benefiting

from real-time connectivity and networking enabled

by broadband. Today, connectivity to the network

everywhere is something taken for granted. Digitization

extends into all possible areas of society and mobility

supports interactions whenever and wherever desired.

With the practices of today’s digital life expanding

into more and more areas of society and business the

Networked Society will take shape and benefit from

fundamental transformation across industries, public

services and in private life.

Information and communications technology is

converging into a single “social infrastructure” critical

for everyday life and for the continued innovation

to build prosperity in the Networked Society. Thus

it becomes a common ‘flat’ infrastructure in which

differences in technology are largely invisible either

because they are not relevant to users or because

the infrastructure has an inherent ability to

choose the ‘best’ technology for each purpose.

It adapts to the situation to which the networking

experience currently relates. It provides seamless

connectivity, and application and content

“cross-over”. It minimizes distinction between

different devices and different usage contexts. Services

and content can deliver the ‘feeling’ of seamlessness,

simplicity and comprehensive reach to end-users.

As individuals across the globe today we collectively

share real-time experiences of a digital world hardly

known just a decade ago. The new ways we have

adopted for interaction, sharing of experiences and

knowledge, as well as for sharing innovation are now set

to fundamentally change the way society evolves.

In the Networked Society things will be made differently,

created with higher efficiency and productivity with new

and enriched experiences. Key traits of the Networked

Society are continuous transformation driven by

collaboration and creativity. Creativity originates in the

interaction between people and businesses and takes

different shapes and forms as it is expressed in the

society we live in. The information age is an input, and

not the outcome along the road towards the transition

to a knowledge society. The Networked society is a

knowledge society that knows how to use information.

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Internal | 2012-03-02 | Page 2

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BOX 1. NETwOrkEd PrOduCTION & OrgANIzATION: - PrOduCTION NETwOrkS vS. PEEr

PrOduCTION whAT IS ThE dIFFErENCE? [XIv]

In the academic fields of economics and sociology,

networks came to mean a mode of governance that

is different from managerial hierarchies or markets.

The concept of networked organization emerged

within the transactions-cost economics (Coase 1937,

1960 and Williamson 1975, 1985) and was originally

intended to explain the organization of economic

production. The sociologist Walter Powell argued in

a famous paper the break with the transaction-cost

theory. Powell concluded that networks constitute a

distinctive “organizational form” or type of governance

that was neither market nor hierarchy. A network

is a relationship rather than a transaction and it is

based on long term bonds of reciprocity and trust

among economic actors. A more recent, Internetrelated

argument about networked production starts

with the presence of ubiquitous, powerful networked

information technology (Paul Adler, Yochai Benkler). It

then continues, with the availability of this technology

that significantly reduces costs and magnifies the

whY REgULATE?

A regulatory framework consists typically of three key

elements as depicted in figure 2. Its parts aim to answer

the following three questions;

• Why Regulate? – The policy rationale and legitimacy

of interventions.

• With what ends in mind? – What regulatory

objectives and desired outcomes are being pursued?

• How to regulate? – The matching of regulatory

instruments to regulatory objectives and choosing of

implementation strategies.

Figure 2: key elements of a regulatory framework

hOw

regulatory

Framework

whAT

why

Source; Ericsson, inspired by weatherill, Better regulation, Oxford

2007 and Prosser, The regulatory Enterprise, Oxford, 2010.

scope of establishing relationships based on the

reciprocal benefits of association, i.e. peer production.

Yochai Benkler, the author of The Wealth of Networks,

has a concept of peer production which is very similar

to Powell’s networked organization. But there is one

important difference. While both recognize the benefits

of reciprocity obtained without a market or a hierarchy,

the roles of trust and depth/strength in relationships

between actors significantly differ between them.

In peer production, relationships are mostly based

on relatively anonymous and automated encounters

with no particular expectation of trust and long-lived

relationships. Trust provides a level of certainty in

planning, execution, performance, cost control (and

hence liability) and above all in receiving cash and noncash

compensation. This single but vital difference

is extremely significant in understanding what to

expect from networked and peered productions or

organizations.

As a starting point one can assume that wealthy

economies can be developed under a variety of policy

and regulatory frameworks. [xv] These economies meet

a threshold of institutional quality that ensures political

and economic stability, reasonable state capacity,

enforcement of property rights and contracts, sufficient

provision of public goods and limits on government

predation and corruption. Weak institutions are not only

an inequitable burden on citizens—they also act as

brake on economic growth by undermining incentives

in the private sector. [xvi] This important aspect of policy

making is beyond the scope of this paper. Instead the

paper assumes that the institutional threshold has

been reached and that legitimacy of policy makers and

regulators is established. This means that the state can

identify relevant regulatory approaches, understand

their key objectives, highlight the importance of

implementation and identify key industry issues. In

present circumstances, the state will do this in the context

of ICT policy and will master all necessary elements with

the aims to improve the capability of society to make the

most of the ICT led societal transformation with the aim

to maximize the associated expected net benefits.


For this paper, we assume that regulatory objectives

and desired outcomes of an intervention are enough to

legitimize the cost of intervention. In other words, the

justification rests on the premise that regulators are

doing the right thing. In addition, one can argue that

legitimacy can be further enhanced if interventions are

effective. That is, they are working as intended and deliver

an adequate net benefit (the cost of an intervention is

sufficiently lower than its benefits).

A related why question is “why” the “why-regulate”

changes over time? There are a number of explanations

[see box 2 for more information] in the academic field of

political economy that aim to answer this question. The

four most recognized theories are variants on: power,

technological determinism, ideas and domestic policy.

All four explanations have important elements but also

have their individual fallings. [xvii]

Recognized economic and social benefits of an ICT-led

societal transformation as well as the expected benefits

BOX 2. POlITICAl ECONOmIC ThEOry - why ThE why ChANgES OvEr TImE?

Power: theory focuses on the distribution of global power

of a single power or a power club. The theory puts

focus on the level of alignment of interests, the

incentives and the ability of a power or power club

to advance achievements. The power theory does

not explain what the powerful seeks in terms of

outcomes nor does it recognize the importance of

the decision making process affecting the outcomes

as such.

Technology: is the polar opposite of the power theory.

It assumes that technology has a logic built into it

that dictates the path forward. Important shifts in

technology frontiers alter the costs and benefits for

all stakeholders concerning market opportunities,

competition and regulation. This approach has been

critiqued to be too deterministic and missing the

important role of the society and governments in the

adoption (and rejection) process of new technologies.

Ideas: some stakeholders shape the collective agenda

regarding ideas about cause and effect and about

desirable outcomes. Some ideas emerge and evolve to

of the rising Networked Society presented above, not

only provide a strong socio-econonmical but also a

technological based justification, i.e. why the whyregulate

must change in a certain direction.

This absolute necessity to continuously adopt regulatory

frameworks as new technology advancements change

the context is also captured in Manuell Castells work:

The dilemma of technological determinism is

probably a false problem, since technology is

society and society cannot be understood or

represented without its technological tools. Yet,

if society does not determine technology, it can,

mainly through the state, suffocate its development.

Or alternatively, again mainly by state intervention,

it can embark on an accelerated process of

technological modernization able to change the

fate of economy and social well-being in a few

years. [xviii]

become powerful enough to sharply redirect policy, goals

and outcomes, or in the words of the French poet Victor

Hugo: “there is nothing more powerful than an idea

whose time has come”. A rights based regulatory

approach is one good example of an idea based

theory explaining shift in policy frameworks.

Domestic politics typically focuses on interest-group

politics or bureaucratic politics. The former puts

emphasis on the privileged position of concentrated

interests because they are well organized and have

higher stakes and hence incentives in shaping

the outcomes compared to the interests of other

stakeholders. The latter, also known as the publicchoice

theory, views public officials as careerpromoting

and power enhancing entrepreneurs who

strive to further they private agendas. Policies and

outcomes reflect conflicts and cooperation among

the bureaucratic players. Both these two theories

are challenged on the basis that top politicians seek

effective control over office and their governments and

need to respond in a competitive election process to

the interests of voters.

11


whAT ENdS IN MINd?

Regulatory objectives.

A number of distinct regulatory approaches have

emerged over time, each with a focus on specific

regulatory goals with certain desired outcomes:

• Market efficiency

• Public interest

• Rights based

Networked governance

• Transformative

It should be noted that in most cases regulators do not

typically pursue just one regulatory objective at any

given point in time, which means that regulators aim

to balance a number of regulatory objectives within a

specific framework such as telecom regulation.

A market efficiency-oriented regulatory approach is

primarily based on competition policy that is focused on

promotion of consumer welfare through maximization

of market efficiency (allocative [xix], productive [xx] and

dynamic [xxi]) and maximization of consumer choice

and thus consumer sovereignty [see box 3 for more

information on efficient markets]. What is understood

with efficiency is the transfer from suppliers to consumers

of qualitative improvements and cost reductions without

12

BOX 3. A PErFECTly EFFICIENT mArkET

A perfectly efficient market is one in which:

a) Consumers and producers have access to all

possible relevant information to base their

decisions on, i.e. market failure ‘information

asymmetry’ is absent.

b) Prices reflect all costs including costs to third

parties, i.e. the market failure ‘externality’ is absent.

c) Firms cannot profitably charge a price in excess of

‘marginal’ cost, i.e. the market failure ‘market

power’ is absent.

d) There is an absence of ‘public goods/services’,

i.e. the market does not have to provide goods

and services whose marginal cost is zero and

whose enjoyment is impossible to exclude

individuals from.

e) There are no ‘missing markets’, i.e. there are no

goods and services absent from the market whose

cost of provision is less than consumers’

willingness to pay.

restricting the market. [xxii] In addition, keeping markets

open to new entry, competition policy can also be seen

as a form of accountability for the exercise of economic

power and hence maximization of consumer choice.

However, opening up markets for more competition

(market liberalization) or keeping markets open to the

extent of protecting competitors, can also restrict

consumer choice, by ending cross-subsidies which have

supported uneconomic services, customer segments or

regions. Liberalization of the fixed telecom market that

started around 1990 constituted a move away from a

public interest regulatory approach to a market efficiency

regulatory approach. The introduction of multiple mobile

spectrum licenses rather than relying on an exclusive

license arrangement and liberalization of fixed telecom

market are two examples of how the market efficiency

approach has entered the grounds of ICT policy.

A public interest-oriented policy approach argues that

there are serious limitations to a market efficiency

approach as the latter one treats all citizens equally and

views all citizens solely in their capacity as consumers.

Since we do not come to market as equals, our market

power as consumers is determined by our position in

the existing distribution of wealth and information.

Since no market is perfectly efficient (all markets are

exposed to some degree of market failure(s)) the case

of a regulatory intervention cannot rest only on the

prospect that an intervention will yield an economic

benefit (increased efficiency of the market in question).

A consideration to intervene must also factor in that a

regulatory intervention has a cost and a probability of

regulatory failure. Only when an intervention to correct

a market failure is expected to yield net economic

benefit (benefit of intervention being greater than

the cost of intervention adjusted for probability of a

regulatory failure) should an intervention be considered.

In other words, identification of a market failure should

not lead to the assumption that regulatory failure is

less likely or less costly. This ought to be an open and

empirical question, which needs analysis on a case by

case basis. [xxiii]


This fact determines our ability to satisfy our preferences

in a market. The public interest approach is a move away

from market-based principles and may also imply a

move away from competition policy and a loss of market

efficiency. [xxiv] This move towards increased social

solidarity is based on the idea that the state has a duty

to ensure equal treatment of citizens irrespective of their

economic resources. In ICT policy and regulation this

approach is manifested by regulatory interventions that

attempt to ensure equal access for all consumers (urban

and rural) to vital services by requiring geographically

averaged tariffs, rural subsidies, uniform standards of

services across all served areas and requirements on a

certain level of population service coverage.

Society values also other aspects apart from simple

maximization of consumer welfare. Society-building

relies on the promotion of culture, social values and

national identity. In countries such as Canada, most

of Europe and parts of Asia Pacific like Australia and

New Zealand, regulation of broadcasting services is to

some or a significant extent based on a public service

media principle. Public service is typically associated

with privileged access to scarce resources, limits to

competition and privileged access to state aid financing

or public ownership. Support for a strong public service

media continues to prevail in some jurisdictions while

in others it is almost completely rejected on the claims

of an inefficient monopoly and preference for a market

based solution.

A rights-based regulatory approach is not premised on

a collective view but examines the individual’s rights in

a society or market. The regulatory rationale to protect

some basic rights is less familiar than the competition

or public interest-based rationale. The rights-based

approach starts with the premise that all individuals

have unconditional rights to certain levels of protection

and that some risks may be unacceptable whatever

their benefits. [xxv] The rights-based approach to

regulation can be encountered in a number of different

policy domains, such as human rights, occupational

health and safety, and environmental rights regulation.

There are also private property rights, limitations on

regulators’ rights to expropriate private assets and

procedural rights which are concerned with how public

authorities, regulators, and courts operate. [xxvi]

It is also fair to say that there is some element of overlap

between the public interest and the rights-based

regulatory approaches, particularly in access regimes.

ICT policy has a number of touch points with a rightsbased

approach; issues such as data privacy, the right to

be forgotten, net neutrality and open Internet concerns all

contain elements of a rights-based regulatory approach.

The networked governance approach is increasingly

gaining attention especially its applicability in an

international context [see box 4 for more information on

policy challenges in a Networked Society]. The main idea

with this approach is to find ways to bridge the gaps

between national institutions and the growing number

of policy issues that are becoming global in their nature.

The main focus of this approach is procedural but since

it is also context specific, such as trade- or Internetspecific,

it will also incorporate certain objectives and

desired outcomes, such as harmonization, coherence,

etc. Governance networks combine state and non-state

actors and procedural means for resolving issues to

BOX 4. POlICy ANd rEgulATOry ChAllENgES IN ThE NETwOrkEd SOCIETy [XXvII]

• The global nature of connectivity and the nature of

borderless communication make imposition of

national or territorial interventions more costly.

• The large growth in volume of data communications

and transactions overwhelms the capacity of a

traditional regulatory process in terms of the

ability to collect, process and respond to events

and issues.

• The distributed nature of control, participation and

authority of global communications and connectivity

challenges the territorial approach and sovereignty

of nation states in policy and regulations.

• The interactive nature of the networked society with

dramatically lowered costs and increased capability

for group action will result in new forms of

collaboration and organization of activities,

including those relevant for policy and regulation

(formulation, implementation and enforcement).

13


overcome some of the limitations of governance based

on territorial sovereignty. From an ICT perspective,

the ITU’s World Radio Conference, CITEL, APT-WG,

CEPT, ICANN and WTO are examples of networked

governance approaches. From a nation state perspective

a networked governance approach to policy and

regulation contains elements such as multi-stakeholder

participation in consultations, forums that seek to learn

and reach industry consensus, and increased attention

to co-regulation and voluntary industry codes of praxis.

In other words this approach is also applicable in a

territorial context.

A transformative policy is an approach that focuses on

transformation of an industry or a society at large and more

specifically on the conduct of stakeholders in that process

[see box 5 on how innovation and forces of competitive

economy transform firms, industries and societies].

It typically focuses on supply side policy issues i.e.

the stimulation of innovations, R&D and investments in

new technologies and infrastructures, including publicprivate

partnerships. Increasingly there is also a focus

on demand side policy issues i.e. the adoption of new

technologies and applications by various groups of

end users – including consumers, small and medium

enterprises and public authorities. The aim is to enable

innovation: in new products and services; in the market

place, consumer behavior and value; and in organizational

skills, activities and capabilities. In the context of ICT,

national digital economy initiatives that focus on the

adoption and use of new technologies serve as good

examples of an increasing focus on the importance of a

transformative policy that aims to disseminate crucial ICT

technologies to all essential sectors of an economy. The

fundamental objectives of a transformational approach

are to further a society’s capacity for a structural

change in the most advantageous direction and the

ability to preserve and increase the associated gains as

the societal context changes. Some typical key policy

goals are; competitiveness, productivity, competence,

knowledge intensive and sustainable economic growth,

and digital inclusion.

14

Finally, the answer to the question: “with what ends in

mind?” has changed over time and hence we should

expect it to continue to do so. Over time we have

also witnessed an increased regulatory complexity

as concurrent regulatory approaches have been

moulded into coexistence. Their relative influence varies

depending on context, market maturity and jurisdiction.

Often the cumulative impact of regulation is complex

and hard to predict. The situation is further aggravated

by the ICT-enabled convergence process facilitated by

digitization and broadband communications between

information, communication, broadcast, media and

entertainment that conflates previously sector-specific

circumstances into one common context. This process

at some stage will call for a policy framework overhaul

a.k.a. converged policy reforms. This is why calls for a

more holistic regulatory approach that reconciles at least

some of the main contradictions that may arise from

different regulatory and sector-specific approaches/

objectives are being heard from time to time.

Ericsson believes nations that will benefit the most

from an ICT-led societal transformation will do so by

increasingly adhering to a transformative ICT policy

approach, which is more holistic and less sectorspecific,

i.e. converged in a regulatory sense. This

change in policy and regulatory approach fundamentally

reflects the desire of societies to maximize their national

competitiveness and the efficiency of their economy,

industries and public sector. Compared to other

regulatory approaches the transformative approach

maximizes the economic and social benefits of an ICTled

transformation. The other regulatory approaches

will continue to coexist to certain degrees since some

societal goals and desired outcomes will continue to

be important and relevant in most jurisdictions and are

better served by these regulatory approaches.


BOX 5. CrEATIvE dESTruCTION - ThE ECONOmICS OF TrANSFOrmATIvE rEmAkINg OF FIrmS,

INduSTrIES ANd SOCIETIES

Schumpeter’s process of creative destruction is a

process in which technological advances are the

main source of economic growth and improvement

in the quality of life. Entrepreneurship and dynamic

competition fuel creative destruction [xviii] in a

process that forces firms and industries to streamline

their processes and develop new tools (technology

leapfrogging) to make them more productive. Firms

also have to cope with changing consumer demand

and offer what end-users want at competitive prices

or alternatively lose customers, and eventually fail. The

market’s “invisible hand”—a phrase of Adam Smith—

shifts resources from declining sectors to more

valuable uses as workers, inputs, and financial capital

seek their highest returns.

A society cannot reap the benefits of creative

destruction without accepting that some firms might

be worse off, not just in the short term, but perhaps

forever. At the same time, attempts to soften the harsher

aspects of creative destruction by trying to preserve

firms and jobs or protect industries will ultimately lead

to stagnation and decline, short-circuiting the march

of progress.

While Schumpeter and his followers were occupied

with dynamic vs. static (price) competition and relative

significance of innovation in big vs. small firms,

Christensen in his book “Innovator’s Dilemma” (1997)

concluded that impact from technological change

comes in two significantly different shapes, with

different effects on firms and industries. Technology

advances of the first sort sustained the industry’s

rate of improvement in product performance and

ranged in difficulty from incremental to radical. The

industry’s dominant firms always led in developing and

adopting these technologies. By contrast, innovations

typically by non-incumbents (e.g. start-ups or from

incumbent firms in adjacent industries) of the second

sort disrupted or redefined performance trajectories

- and consistently resulted in the failure of the

industry’s leading firms. In other words, technological

transformation is definitely not only about big vs. small

and static vs. dynamic but even more about the kinds

of innovations that are introduced to the market and

how these technologies streamline operations, create

new tools, enable new business models and create

new business opportunities in relation to continuously

changing end user demands.

15


hOw TO

REgULATE?

It is obvious from above that there is no one-size fits all

approach to regulate ICT but rather that a number of

different regulatory objectives and goals are important in

different situations, times and jurisdictions. Legitimizing

the interventions and their associated goals in a given

context requires a convincing justification. This aspect of

policy making is a complex and sometimes controversial

matter that will continue to consume policy makers’,

regulators’ and other stakeholders’ attention. Given

that this challenge has been adequately addressed, the

next obvious question is “how to regulate?” However

this challenge is to some degree more straightforward

and can be more objectively analyzed on the merits of

identifiable facts.

Much of the discussion on policy and regulation has

historically been concerned with the formulation phase

of policy and regulation, the why and what. However,

increasingly attention has been paid to implementation

of policy and regulation. [xxix] That is, making the choice

and design of regulatory instruments and the degree

of appropriate targeting of these instruments to the

regulatory objectives and ultimately about achieving

desired outcomes. The focus on implementation

and enforcement has also put more pressure on the

formulation phase to more clearly define the primary

objectives of a policy intervention.

It is important that the implementation phase includes

an economic analysis of all relevant implementation

options. This should not be limited to assessment of

administrative costs. Instead it should assess all of the

associated implementation costs that will be borne by

public administrations as well as the market; businesses

and/or consumers and/or society. Finally, the concept of

regulatory failure requires attention by policy makers and

regulators. The risk of a regulatory failure should be taken

every bit as seriously as a risk of a market failure. [xxx]

Most stakeholders accept that the method of

implementing regulation need not be confined to the

conventional top-down command and control type of

implementation strategy. Every single implementation

strategy and every single regulatory tool has its own

strengths and weaknesses and none of them is sufficiently

flexible and resilient to successfully address all relevant

issues in all possible contexts. Four types of regulation

implementation strategies have been identified offering

distinct routes to implement regulation. [xxvii]

16

These routes are not mutually exclusive and provide

a regulatory choice. [xxxi] These are:

• Law/Hierarchy

• Social Norms/Community

• Market/Competition

• Architecture (or code)/Design

A famous example to illustrate these modes states:

…the government may want citizens to wear

seatbelts more often. It could pass a law to

require the wearing of seatbelts (law regulating the

behavior directly). Or it could fund public education

campaigns to create a stigma against those who do

not wear seatbelts (law regulating social norms as

a means to regulate behavior). Or it could subsidize

insurance companies to offer reduced rates to

seatbelt wearers (law regulating the market as a

way of regulating the behavior). Law could mandate

automatic seatbelts or ignition blocking systems

(changing the architecture or code of the automobile

as a means of regulating behavior). [xxxii]

Finally, the regulatory process needs to be considered as

a whole – formulation, implementation and enforcement.

The implementation strategies however face the

additional challenge associated with the separation of

regulatory process from regulatory content. Both process

and content will continue to be important. [xxxiii] In other

words, a perfect process cannot compensate for poor

quality of regulatory content. The challenges associated

with agency dilemma [xxxiv], institutional (dis)incentives

and the level of competence of a regulator still apply.

The OECD has been working over the last two decades

on providing advice on how to improve the quality of

a regulatory process and provides us with seven main

regulatory improvement tools: [xxxv]

• Regulatory impact assessment

• Consultation and transparency

• Reduction of administrative burdens and red tape

(i.e. regulatory simplification)

• Enforcement guidelines

• Alternatives to traditional top down implementation

strategies (self-regulation, market-based

instruments, standards, etc )

• Sunset provisions

• Regulatory policies and reviews


kEY gLObAL ICT

POLICY ISSUES

Ericsson’s view on some key global ICT issues areas are

given in the following;

• Spectrum Management

• Network Regulation

• Convergence

• Media/Content Regulation

• Copyright

• Information Management (such as data privacy and

cyber security)

These issues have significant impact on R&D investments

and innovation in ICT technologies. They affect the cost,

performance and capability of new ICT technologies.

A number of ICT sectors such as telecom, broadcast,

media, entertainment, software and Internet online

platforms exhibit similar economic realities of high fixed

costs, low marginal costs, economies of scale and network

effects, and hence all face similar investment risks and

uncertainties. Furthermore, these policy issues impact

the timing and scale of the willingness to invest in ICT

hardware, software and applications. They also determine

end users’ ability to benefit from the use of ICT-based

services as these policy issues define the speed, scale and

intensity of ICT services adoption.

17


Spectrum management.

Ericsson’s positions for each issue including a brief

introduction is provided below; detailed information on

each specific issue can be provided on request.

To identify new spectrum bands in the ITU and license

them nationally is a ten-year process. The work carried

out by regional bodies, such as CEPT for Europe, CITEL

for the Americas, the Asia Pacific Telecommunity and the

African Telecommunication Union lays the foundations for

the introduction of products with standardized connectivity

that can meet the requirements of businesses and

consumers with respect to performance and affordability.

The policy goals of global and regional harmonization

efforts should be to enable:

• Economies of scale

• Easy cross-border coordination

• Cross-border operation

• Global roaming capabilities

• Interoperability, choice and affordability

• Efficient use of spectrum, also in border areas

• Maximizing the economic and societal benefits of

spectrum usage

Network regulation.

Investments in network infrastructure are long-term,

large-scale undertakings that rely on confidence in the

existence of stable market rules that stimulate such

investments and the usage of broadband services. A

typical national network costs billions of € to deploy and

maintain, and has a payback time that can be greater

than a decade. The continuous technological evolution

gradually risks making past investments obsolete.

Network investments are also upfront heavy, irreversible

and once deployed the investments exhibit sunk cost

characteristics. National market rules differ between

countries due to legacy concerns. Active infrastructure

competition should however be promoted as the primary

tool to achieve competition in the provision of and usage

of broadband services. In some situations open access

publicly financed network deployments are necessary to

change the dynamics of a market and/or to compensate

for market characteristics such as low population

density. Global standards should be the basis for all

regulatory measures.

Consumer and property rights need to be respected

and should be balanced. Consumers should be entitled

to access the lawful Internet content of their choice

and run applications and services of their choice that

comply with the terms of their service plans, including

bandwidth limits and quality of service considerations,

so long as it does not harm the network.

18

Network operators must be allowed the commercial

freedom to offer tiered service plans in a competitive

market and to tailor service offerings to meet consumer

demands. Network operators must be permitted to

employ transparent, reasonable, competitively neutral

network management techniques, which may include

prioritization or differentiation of classes of traffic, and to

otherwise adjust network resources to ensure coverage,

quality of service, and quality of consumer experience.

Network Neutrality principles should not apply to

competitive wireless networks since these are subject

to capacity constraints due to varying demand and

limitations in spectrum availability which have significant

implications on network performance.

Convergence.

Convergence is a process that breaks up existing vertical

service-specific value chains and technologies into a

multitude of horizontal service offerings. Convergence is

about services and about new ways of doing business

and of interacting with society. [xxxvi] This technologically

driven process can be understood by considering the

new possibilities it brings to end-users, businesses and

society. Convergence changes markets by transforming

industry sectors, blurring historical market boundaries,

changing the composition and range of possible

market offerings and challenging the robustness of

previously successful business strategies. From a policy

perspective, converges enables increased demandside

and/or supply-side substitution that can ultimately

deliver more choice, competition and innovation.

In a converging environment, a regulatory framework

that treats similar services differently, for example on the

basis of the technical platform, leads to inconsistencies

and uncertainties that limit substitution. This prevents

the market from fully benefiting from the opportunities

provided by technological progress. A vertical and sectorspecific

regulatory approach in an increasingly converged

business environment amplifies the risk for unintended

and dysfunctional market outcomes, suboptimal resource

utilization and decreasing end-user value. Policy makers

should increasingly consider a technology-neutral

framework that treats the underlying platforms equally.

Furthermore, as a principle the starting point of a

regulatory implementation strategy should be the service

in question not the platform that delivers the service. This

should not be interpreted as a need to regulate all services

but rather that those that do need to be regulated should

be so based on the justification and desirability of certain

goals and outcomes. The implementation strategy should

be service-specific rather than platform-specific.


media/Content regulation.

A multi-platform audiovisual policy approach needs to

recognize the fast-growing availability and accessibility

of audiovisual content in an environment with various

complementary and alternative networks. In a multiplatform

environment, the same rules and principles

should apply to all technologies and distribution

platforms. Media policy regulation should be technologyneutral

and platform-independent. In other words,

regulation of audiovisual media services should function

irrespective of the underlying platform or means of

distribution.

The key elements that need to be present in a multiplatform

approach are:

• Support of open industry-wide standards for IP

based media distribution via Set-Top Boxes,

Connected TVs and IPTV.

• A platform-neutral approach to regulation of

audiovisual services.

• Clear definitions of what constitutes an audiovisual

service and a definition of audiovisual media service

providers, along with a delineation of their

responsibilities and obligations.

• Mechanisms for fairly managing the competition

within audiovisual distribution markets with tools that

ensure the efficiency of program/content aggregation

for the distribution market.

• Copyright reforms that unlock barriers to multi

platform, anytime, anywhere digital distribution.

Internet content regulation is increasingly becoming a

contentious issue. All regions and nations have their

different norms, systems, values and sensitivities.

When these norms are challenged by the progress of

technology or development in society a rights-based

policy approach typically challenges the established

views. In addition, media convergence is another related

development sometimes confused with Internet content

regulation. However, converged media regulation is

focused on the issue of how to systematically regulate

the different types of professionally produced content

classes in a converged environment: entertainment,

current affairs reporting and cultural works. In this case

the issue of editorial responsibility of a professional

media publisher is of main concern. While Internet

content regulation is fundamentally about free speech,

the level of legitimate individual responsibility of a citizen

(that is, legitimate limitations to free speech) and the level

of expected responsibility of intermediaries enforcing

these limitations are some examples of key concerns.

Copyright.

A revision in most countries of the current digitally

restrictive copyright approach offers a unique

opportunity for nations to set and lead by example. This

is an opportunity that should not be missed. Through

National Digital Agendas, policy makers can update

the current state of play in the digital creative market

by tearing down key structural barriers to making lawful

(licensed and exempt) digital content widely available in

an appealing, timely and user-friendly way.

Policy makers need to address some of the fundamental

barriers that hinder the possibility to reap and share the

digital productivity and creativity gains that societies

need. It is time to tear down barriers and solve the

market supply failure of lawful (licensed and exempt)

digital content. This failure is caused mainly by three

structural barriers:

• Limited availability of lawful digital content caused by

“windowing”, exclusive licensing and territoriality

Windowing refers to selling and re-selling products

over time using various distribution channels, for

example the film industry using cinemas, home

video, rentals, cable, video-on-demand, and free-to

air broadcasting.

• Technology-specific copyright conditions including

licensing, exceptions, safe harbors and exhaustion

that limits or delays innovation of new services.

• Unreasonable transaction costs make digital content

unnecessarily expensive.

A competitive and consumer-friendly digital content

market and an appropriate legal framework to enable

easy lawful (licensed) access to digital content are

essential preconditions for the creation of a culture of

lawful, rather than unlawful, consumption. Copyright

enforcement policy should be developed from a clear

evidence-based approach that is:

• Fact-based.

• Balanced to include all relevant stakeholders.

• Focused on end-user demand.

• Respects the right to privacy and freedom

of communication.

• Supports continued innovation in new technologies

and services.

• Promotes growth of lawful licensed digital services,

and market efficiency.

• Respects the relative nature of property rights such

as copyright.

• Avoids outsourcing, e.g. to ISPs, of private

property enforcement.

19


Information management.

The value of information as well as its strategic risks, such

as cyber security, rises with the growth of broadband

networks and the expansion of attention economy [see

box 6]. This value/risk is amplified by the use of networked

applications offered on a multi-territorial basis, such as

social networking, cloud architectures and proliferation

of access points. This leads to a need for coherent

analysis of the roles, relationships, responsibilities and

liabilities of all involved stakeholders:

• End–users: consumer, businesses and

public authorities.

• Service providers: controllers of information

and its use.

• Data/information processors, including cloud

providers, and

• Technology providers.

20

BOX 6. ATTENTION ECONOmICS

The rapid growth of information causes scarcity

of attention:

“...in an information-rich world, the wealth of information

means a dearth of something else: a scarcity of whatever

it is that information consumes. What information

consumes is rather obvious: it consumes the attention

of its recipients. Hence a wealth of information creates a

poverty of attention and a need to allocate that attention

efficiently among the overabundance of information

sources that might consume it” [xxxvii]

From a consumer perspective information management

has been concerned with issues like spam, data privacy,

identity theft and Internet bullying. From a national

security perspective, cybercrime, such as phishing,

trade with counterfeited and stolen goods, corporate

espionage, botnets and DoS (Denial of Service) attacks

pose threats to commercial and civic society. Enduser

confidence in using networked applications is

crucial and hence consumer protection will become

even more essential. Keeping the emerging Networked

Society sufficiently secure will require new approaches

to criminal enforcement that can deal with cyber

security problems that can be highly scalable, difficult

to trace, distributed across multiple territories and often

exceeding the capacity of national approaches.

The fundamental idea behind the attention economy

is to facilitate a marketplace where consumers agree

to receive services in exchange for their attention. The

ultimate purpose is of course to sell something to the

consumer, but the selling does not need to be direct

and does not need to be instant. The most important

factor in attention economy is relevancy. The more one

knows about consumers the more relevant and hence

successful one can be in the attention economy.

“Personal data is the new oil of the Internet and the new

currency of the Digital World.” [xxxviii]


CONCLUSIONS

The networked infrastructure that blends computing

and communication is the largest construction project

in human history. We are at an inflection point where a

significant change in competitive opportunities of nations,

industries, firms and cities is expected. The emergence of

a Networked Society holds the promise of an economic

shift and of significant societal benefits. This is possible

if we can adopt national and global policies and create a

regulatory framework that can accommodate and

nurture this desired change.

In this context, as policy makers and regulators take

on some of the key issues, such as spectrum, network

regulation, media regulation and convergence, some

crucial questions will continue to be at the center

stage of national and global ICT policy and regulatory

development:

• Why Regulate? – The policy rationale and legitimacy

of interventions.

• With what ends in mind? – Regulatory objectives and

desired outcomes being pursued.

• How to regulate? – The matching of regulatory

instruments to regulatory objectives and choice of

implementation strategy.

The constantly changing market and business

conditions mean that ICT policy and regulatory

frameworks (why, what, how) must also continue to

evolve to reflect new realities, and to allow the potential

offered by the constant influx of new ICT innovations

and developments to be realized. No successful

policy framework comes with a lifetime warranty. In

the continuously ongoing transformation process,

the least desirable outcome of an ICT policy framework

would be the protection and conservation of the past

and a delay of the future.

To master the societal change of an ICT-led transformation

in the most advantageous direction, future ICT policy

and regulatory frameworks will need to carefully consider

how they shape the structures of industries, the conduct

of stakeholders and how they set in motion major shifts

in economic value. Increasingly, a conventional supply

side policy focus will also have to be complemented

with demand-side policy considerations – e.g. the

adoption process of new technologies and applications

by various groups of end-users – including consumers,

small and medium enterprises and public authorities.

This adoption enables innovation in new products and

services, innovation in the market place, new consumer

behavior and value, and innovation in organizational

skills, activities and capabilities.

Ericsson believes that an ICT policy approach that

not only recognizes but also elevates the strategic

importance of ICT technologies will enable nations and

societies to master the ongoing transformation in the

most advantageous way and thereby enable a distinct

and sustainable productive shift in their economies.

This will release all of the associated positive benefits

and Ericsson therefore believes that the future ICT

policy approach should shift towards a transformative

approach which is more holistic and less sector- specific.

This relative change of gravity in policy approach

fundamentally supports the desire of societies and

nations to maximize their national competitiveness to the

benefit of their economy, industries and public sector.

21


EFErENCES ANd SuggESTIONS FOr FurThEr rEAdINg

i Cowhey and Aronson, Transforming Global Information and Communication Market, the Political Economy

of Innovation, 2009.

ii A policy framework includes following elements: a) formulation of legitimacy of a regulator and

interventions (why regulate) b) clear specification of regulatory goals and objectives (what ends in mind) and

c) how to best target regulatory instruments with regulatory objectives (how to regulate?). It also includes

all phases of a policy/regulatory process; policy definition, policy design, implementation, enforcement

and policy review.

iii Carlota Perez, Technological Revolutions and Financial Capital, chapter 2, 2005.

iv Stephen Cohen et al. Global Competition: New Reality vol. 3 of John Young Competitiveness: the Report

of the President’s Commission on Industrial Competitiveness, Washington DC, 1985.

v The literature is enormous for some prominent examples see; Wired For Innovation – How IT is Reshaping

the Economy, Brynjolfsson and Saunders; MIT 2010. The Economics of the Digital Society, Soete and

Wheel, 2005. The Rise of the Network Society, Second Edition, Castells 2010. Boston Consulting Group,

Socio-economic impact of allocating 700 MHz band to mobile in Asia Pacific, 2010, EPC/Copenhagen

Economics –The Economic Impact of a European Digital Single Market, 2010. ADL, Socioeconomic impact

of broadband network investments, 2010. See also http://www.ericsson.com/news/1550083 Ericsson

Press Release: “New study quantifies the impact of broadband speed on GDP”.

vi Digital Quality of Life, October, ITIF, page 3, 2008.

vii To read more about digitalization and ICT technology advancements, see for example: Competing for the

Future- how digital innovations are changing the World, Henry Kressel, 2007.

viii TV or not TV - Three Screens one Regulation?, Eli M Noam, 2008. http://www.crtc.gc.ca/eng/media/

noam2008.htm

ix ICT Policy Formulation and e-Strategy Development U.N. DP, Asian-Pacific Development Information

Programme, 2005

x The Economist, Finishing the Job, 24th of September 2009.

xi Ericsson’s Networked Society City Index, Triple bottom line effects of accelerated ICT Maturity in world

wide Cities, 2011.

xii World’s top global mega trends to 2020 and implications to business, society and cultures , Frost &

Sullivan

xiii UN-habitats, State of the World cities 2010/2011

xiv Source: Networks and States, The global politics of internet governance, Mueller, 2010.

xv To offer a precise definition is to risk arguments at the margin. Policy and Regulation are used

interchangeably, with a broad meaning; policy/regulation is the sustained and focused attempt to alter the

behaviour of others according to defined standards or purposes with the intention of producing a broadly

identified outcome or outcomes, which may involve mechanisms of standard-setting, information gathering

and behaviour modification. For further reading see: Regulation: Legal Form and Economic Theory, Ogus,

1994. Also the relation between regulation and legislation is relevant to address. If regulation is about

altering behaviour, then legislation is a subset of regulation. On the other hand, to the extent that regulation

does not encompass task such as constitution making and dispute-resolution the law is broader than

regulation, in other words law and regulation intersect with one another but are not co-extensive. For further

reading: Rights, Regulation, and the Technological Revolution, Brownsword page 7, 2008.

xvi The World Bank Policy Research: A Historical Overview, Jean-Jacques Dethier, 2009

xvii Transforming Global Information and Communication Markets, the Political Economy of Innovation,

Cowhey and Aronson, 2009.

xviii Manuel Castells, The Rise of the Networked Society, Second Edition, page 5-7, 2010

22

xix Allocative efficiency: a situation when conditions of perfect competition prevail and where goods and

services are allocated between consumers according to the price they are prepared to pay and price never

rises above the marginal cost of production. (Some times also called static efficiency)

xx Productive efficiency: a situation when as little of society’s wealth is expended in the production of

goods as necessary, so goods are produced at the lowest possible cost. (the emphasis in on the internal

management of a firm’s resources)

xxi Dynamic efficiency: refers to market conditions that appropriately balance short run concerns (allocative

static efficiency) with concerns in the long run (focusing on encouraging research and development).

Through dynamic efficiency, an economy is able to further improve efficiency over time by making

investments in R&D, Education and Innovation that act as forms of new market and demand discovery.

xxii Further reading see, Chicago School literature and its influence on US Antitrust law, Amato (1997)

Bork (1993).

xxiii Financial Risk Outlook, London Financial Services Authority, C McCarthy 2005.

xxiv For more expanded discussion see for example: The limits of competition law, markets and public

services, Prosser, 2005

xxv For further reading see; Rights, Regulation and the Technological Revolution, Brownsword, 2008 and

The Intersection of Rights and Regulation, Morgan, 2007.

xxvi After the Rights Revolution – Reconceiving the Regulatory State, Sunstein, 1990.

xxvii Inspired by: Networks and States, The Global Politics of Internet Governance, Mueller, 2010.

xxviii Originally the term creative destruction was derived from Marxist economic theory, The Communist

Manifesto, Marx & Engels 1848 and later in “Das Kapital” 1863. However the term has been popularised by

John Schumpeter who further developed the concept in his theory of economic innovation in “Capitalism,

Socialism and Democracy” (1942).

xxix To get an overview of the state of the art of the Public Policy Implementation Research an Introduction

to the Study of Operational Governance; Hill and Hupe, Implementing Public Policy, 2009.

xxx Better Regulation, Weatherill, page 7 and 58, 2007.

xxxi Controlling the New Media, Hybrid response to New Forms of Power, Murray & Scott, 2002 and The

Regulation of Cyberspace, Murray 2007.

xxxii Code and other Laws of Cyberspace, Lessing, chapter 7, 1999

xxxiii Better Regulation, Weatherill, 2007.

xxxiv Principal–agent problem or agency dilemma treats the difficulties that arise under conditions of

incomplete and asymmetric information when a principal hires an agent, such as the problem of potential

moral hazard and conflict of interest, in as much as the principal is—presumably—hiring the agent to pursue

the principal’s interests. For more information: http://en.wikipedia.org/wiki/Principal%E2%80%93agent_

problem

xxxv The reference list is extensive, some examples see: OECD, Regulating Policies in OECD Countries,

2002. OECD, Improving the quality of government regulation OECD 1995, OECD Regulatory Reform OECD

1997, OECD Regulatory Impact Analysis, OECD 1997.

xxxvi EC Green Paper on the convergence of the Telecommunication, Media and Information Technology

sectors and the implications for regulation, COM (97)623.

xxxvii Herbert Simon, “Designing Organizations for an Information-Rich World” 1971 pp 40-41.

xxxviii Maglena Kuneva, European Consumer Protection Commissioner, March 2009.


ABOuT ErICSSON

Ericsson is the world’s leading provider of communications technology and services. We are enabling the

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