126
COMMUNICATIONS
«.STRATEGIES
No. 64, 4th Q. 2006
■ Preliminary issue: the nature of regulatory decisions
Before dealing with the Article 7 and Article 4 procedures, however, it is
useful to reflect on the nature of the decisions taken in regulatory procedures
concerning electronic communications.
These decisions take place against a context of uncertainty regarding the
evolution of the sector. Uncertainty is common in many sectors of the
economy, but there is a general consensus that the evolution of
communications is especially hard to predict. This is certainly the case with
respect to technology. Indeed, besides the few cases of "calculated
success" (GSM), recent history is littered with instances of unforeseen
technological developments that shook up the sector (the rise of the
internet), as well as predictions that failed to materialize (convergence
stories of the early 1990s) or were outright failures (work on HDTV
standards in the 1990s). Technological uncertainty is compounded, in the
current context, by the liberalization wave of the 1990s, which led to more
open markets. This implies firstly that technological progress is now a
competitive factor, thus increasing the chances that operators and providers
will try to introduce differentiated technological solutions and leave the
market (i.e. customers) to choose what it prefers 3. Moreover, competitive
pressures might accelerate the rate of technological evolution 4. Secondly,
as a consequence, marketing might now be as important a factor as intrinsic
technical quality in determining technological evolution 5.
The main challenge for lawmakers and regulatory authorities is to factor
uncertainty properly into their course of action. The current EC electronic
3
Alternatively, if it is thought that a single solution should be adopted beforehand, market
players (equipment and software manufacturers, operators, providers) might fight a standards
battle behind the scenes before a technological advance is brought to the market. Witness the
high-stake game that surrounded the specification of the 3G standard.
4 Pressure to salvage existing copper pair local loops in the face of impending competition from
cable might have played a role in research leading to the various xDSL standards in the past 10
years (the authors do not have any evidence regarding this point). Certainly, in retrospect, it
would have been a massive waste to embark on a large-scale program of laying fiber in the
local loop in the 1990s, as was advocated before xDSL arrived to give a new lease of life to
copper pairs. That experience would dictate caution before enacting any legal measure that
would mandate the laying of fiber in the local loops throughout a given territory, at least before
this technology has proven its usefulness and attractiveness to customers (in the form of
demand for services that can only be provided via local fiber networks).
5 Witness the golden age of ISDN as a beefed-up internet access technology in the 1990s and
the prevalence of SMSs today: none of these two technologies were designed for the respective
uses which made them famous. Good marketing and network effects did the trick.