Weighting the role of regulators to respond to disruption in the ICT industry: a report from ITS Europe 2017

  • 2017•08•02     Passau

    The 28th European Regional Conference of the International Telecommunications Society took place in Passau, Germany, between 30 July and 2 August. Hosted by the Faculty of Economics at the University of Passau, the main theme was “Competition and Regulation in the Information Age” and Ibrahim Rohman, Research Fellow at UNU-EGOV, had the opportunity to present his study on investigating the role of R&D in the ICT sector.

    The 2017 edition marked the fifth time Germany hosted the ITS conference. This year’s event emphasized the role of regulation and competition analysed from the perspective of industry, regulatory bodies, the consumer, and firms. The conference also foresaw the implications of recent competition for Europe’s dynamic information and telecommunications market. Moreover, as a sound multi-disciplinary conference, the papers presented in the conference represent multitude views from academics with various background – economists, engineers, lawyers, policy-makers, users, and operators.

    Nearly ten years after the seminal study by Bart van Ark et al., titled  “The Productivity Gap between Europe and the United States: Trends and Causes”, Ibrahim was interested to see if  the fundamental problem causing the EU-US disparity has been eradicated. Van Ark et al. identified that during the period 1990-2000, the US, for the first time, has outperformed the EU with regards to economic productivity by which the authors addressed as the result of a lower investment made in the EU in the knowledge economy and the ICT sector. Ibrahim expanded the study by looking into the recent data at firms’ level and found that the intensity of R&D among the EU ICT sector is much lower than their counterparts in the US. This factor might be responsible for creating a huge gap, especially in the software and computer services. Lower R&D intensity in the industry has created lower innovative capabilities which are seen as the main factor determining the competitive advantage in the ICT industry.

    Information and Communications Technology (ICT) and particularly the telecommunications sector have experienced massive changes where radical innovations and disruptions happened during the last decade. On the one hand, this requires a more responsive business model from the companies involved in the industry, while on the other hand, such phenomenon also brought consequences on how regulatory measures should be put in place. The recent debate revolves around a discussion on whether a regulation is too soon or too late to be implemented to respond to these changes. Indeed, the new business model should envision to bring about several opportunities and challenges, e.g., for designing a smarter world (e.g., in the context of smart cities and smart grids), for closing the digital divide (e.g., zero-rated information services, zero roaming in Europe), for empowering and protecting consumers (e.g., consumer privacy), telecommunications standardization, the role of new technology, and the competitiveness of country.