Towards an (Electronic) Communications Act 2011

January 27, 2009

Initially I was asked to consider what the most appropriate UK ‘Web legislation’ should be in the future. I started wondering if the expression was not in fact an oxymoron. It is indeed widely acknowledged that the very reason for its success is that the Internet has been largely unregulated. Although not everyone likes it and it is possibly not something that human nature easily agrees with,  the concepts of the Web and of legislation (or regulation) do not seem to marry well.

The Rise of the Web

It is in fact undeniable that it is the Internet’s decentralised, bottom-up, collaborative nature – apart maybe from the domain name system’s structure – that has enabled the phenomenal rise of the Web as an engine for economic and social progress. The pace of innovation generated by the Internet since the early 1990s is unrivalled in history. If anything, its pace is ever-increasing. The Internet has now evolved from a simple ‘printing press on steroids’ to an engine for the free flow of information and knowledge over pipes to multiple smart endpoints.

There have been massive, incremental changes over this short period, punctuated by occasional disruptive innovation, from the creation of the worldwide Web by CERN to the rise of Google, Facebook and Skype. These overnight successes were chosen directly by consumers, with the parallel, almost overnight, failures of other ventures, thanks to the inherently competitive nature of the Web platform –  with relatively low costs of entry, pretty much anyone, from individuals to corporates, can put their creation, idea or new business model online for immediate and global consumption. It is a major shift from most innovations of the industrial era which were very much driven by what could be produced by existing conglomerates and pushed to the masses. It is only in the last 20 years or so that marketing – identifying the existing or latent needs of the consumer – has truly started to guide what was being produced, as opposed to what product or technology the engineers could envision themselves; and the Internet has mirrored this recent shift in business strategy. These phenomena replicate eerily the predictions made in the 1920s by Soviet economist Kondratieff who defined the 1990s and later as the economic cycle of ‘information and knowledge technologies’. How was the Internet able to embrace this people-driven innovative dynamic? I believe it is very much due to it lacking the constraints of being regulated, because it allowed innovation without the prior permission of either existing established industries or governments and regulators. Its transnational nature and the basic concept of ‘open access’ to the Net only reinforced this trend, which resulted in the explosion of innovation and competition on the so-called content layer, where the consumer/user always wins by being able to decide which Web site, Web application or service succeeds on the Internet. This is arguably at odds with other layers of the ICT Value chain, such as networks and hardware, where established industries managed to retain their dominance and kept new, innovative entrants away to a large extent.

Future Developments

Looking ahead, many in the Internet industry see a move from a hardware-centric to a software-centric Internet ecosystem. Over the next few years, we are pretty sure to witness multi-modal communications becoming a reality (chat, video, file sending, etc), with a multitude of devices able to connect to the Internet for a variety of uses, from identifying stock in movement to enabling person-to-person communication or gaming, This is likely to be combined with a clearer separation between network access and application, with market structures and market definitions vastly altered.

The Implications of Developments for Regulatory Policy

From a policy perspective, there are new and often unclear competition and consumer protection challenges, but these likely evolutions over the coming years will reinforce the principle that old-style regulations cannot simply be extended to cover the diversity and wealth of innovations brought about by the Internet. Although telecom, media or intellectual property regulations still have a role, they need to be applied in an enlightened manner when confronted with the Internet world. A reality check is needed. Basic principles of law, principally around consumer protection and competition, must guide the debate, not sector-specific regulations, because the Internet is far too broad a policy area to be simply, easily amalgamated with the ‘converging’ worlds of telecoms or the media; it reaches all sectors of the economy and society. It is this reality which policymakers need to grasp and act on when and if necessary, with the interests of society and the economy as a whole in mind, rather than the interests and considerations of specific sectors.

For the UK therefore, enacting ‘Web legislation’ should perhaps remain an oxymoron, like in some Asian countries where ICT policy is guided by long-term goals of achieving certain increases of productivity, GDP and innovation (through number of patents developed, for instance). British policymakers can and should look at the wider picture to determine the best policy to get the most from the advent of the Internet and its ramifications. Government goals in this field should be centred around a broad and future-looking mission of enabling and achieving good value – multi-modal, consumer-driven and consumer-oriented, with efficient and state of the art communications – in order to improve social welfare and social interaction, and further economic growth and productivity.

The Policy Mission in Practice

What would this policy mission mean in practice? I suggest that the strategy to achieve the long-term aim should focus on basic, achievable but courageous and genuine aims: (i) transparency, competition and consumer protection should be the basic legal principles focused on, and (ii) policy approaches and initiatives should be aimed at enabling innovation through smart (horizontal) regulation.

In the short term (perhaps), policy tactics should be a mix of ex ante and ex post regulation, with innovation facilitated in particular through genuine competition. Some regulation is indeed still needed for the foreseeable future so as to ensure that barriers to entry and competitive concentration actually decrease in the medium term. Competition law should be enforced swiftly, with a focus on market bottlenecks (in the layered network architecture of the Internet) likely to deliver the most effective results from the start. An instrument of that policy could be regular study by the appropriate regulator of both competitive conditions and consumer welfare, followed by swift enforcement as required, for instance with a focus on bottlenecks with high concentration such as access provision, and with information gathered routinely on traffic data and traffic management procedures that affect the competitive access to the Internet. This will be especially important in the NGN environment.

Over the long term, and despite the gloomy and pro-regulatory noises of the ‘credit crunch’ period, the UK should still pursue a model of better and principles-based regulation, not the burdensome, inflexible rules-based system that still plagues much sectoral regulation in the UK and wider EU and which is ill-suited to the dynamic and fast-moving Internet economy. This long-term view should be accompanied with a recognition and ‘benefit maximisation’ of the transnational nature of Internet in national and EU laws and in international approaches

Whilst properly recognising the market tensions that exist, and the various industry layers that are in direct and indirect competition, better and principles-based regulation should be applied to the Internet access, services, content and applications industry itself, with genuine, effective self-regulation and co-regulation as a preference (ie policymakers should refrain from instructing dominant market players to develop self-regulation while forgetting the minor players and/or other industry segments and further marginalising them, to the ultimate detriment of the competitiveness and dynamism of the wider sector).

Another principle which should remain at the forefront of considerations, at least in the short term, is the need successfully to balance privacy and security, improving confidence and safety while respecting fundamental human rights ; addressing real problems with pragmatic resourcing and genuine public-private cooperation, across all ICT policy areas; better enforcement, and making the most, of existing ‘offline’ legislation; clear powers for the ICO and other agencies involved (such as Ofcom, the Office of Fair Trading, or SOCA), coupled with ‘intelligent’, real resourcing and stronger inter-agency coordination and cross-border efforts.

As for the institutional set-up and evaluation, together with genuine and reality-rooted competition and consumer protection, the aims of innovation and better regulation should be added clearly and as priorities to the mandate of the regulator (whether Ofcom or ICO or others). Regulators should focus on purely ‘regulatory’ policy whilst Government should remain the long-term policy driver, taking into account the wider economic and social needs of the country. Genuine, balanced multi-stakeholder consultation and involvement should become the norm in both policy and regulation. Importantly, Parliament and Government should apply clear, informed and effective supervision of the regulators. Appropriate resources should be allocated to the realization of these long-term, ‘real’ goals, whilst legislation should be cognisant of the budget realities of governments that have needed to reduce public spending for years, and are now confronted with the exigencies of difficult economic times.


In short, an Electronic Communications Act 2011 should look to the future and focus on what matters in reality (in the short and the long term) and on what is realistically achievable given technical and economic constraints, away from scare-mongering and the (unintentional?) support of vested interests, as the key to deliver the best for the economy and society through legislation.

Jean-Jacques Sahel is Director, Government and Regulatory Affairs, Europe-Skype. The author notes that this article arises from a presentation on 22 September 2008 to the SCL Policy Forum in London. He feels that such a vast and important question would deserve much more reasoning and detail than this short article, and hopes that the occasion will present itself for him to elaborate on it in the future.