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.
7

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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10
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.

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