The Regulatory Imbalance of Telecommunications

The levels of concentration of services, providers, consumption and content on the web have reached unprecedented historical figures [1], while thousands of traditional media are in crisis due to the unbalanced competition that Facebook and Google [2] have with the advertising market [3].

The documentary published by Netflix The Great Hack [4] explains the details behind the Cambridge Analytica and Facebook scandal, heated up the global public debate regarding privacy on the Internet, while Mark Zuckerberg’s social media is strongly questioned by all the privacy scandals surrounding it. He was even recently punished with the highest ever fine imposed by US authorities on an Internet company [5].

An analysis published by the MIT Technology Review [6], based on research by the United States Institute of Technology Policy [7], showed that, contrary to the figures presented by the FCC, the end of network neutrality policies has not improved the indicators of Internet access in that country.

The most recent report on the Inclusive Internet (3i), by The Economist Intelligence Unit (EIU), showed that the narrowing of the digital divide is stagnating at the global level, but especially in Latin America [8].

And all this is happening at the same time, in what we could call “a predictable crisis”[9].

Should the Regulatory Direction of Telecommunications be changed?

The regulatory model that prevails in the West, which we could call corporatist, is undoubtedly the greatest promoter of the exponential growth of the Telecommunications sector in the three decades following its implementation. During this period, the markets for national and international long-distance calls were created, and the costs of the service collapsed; Internet, mobile telephony, video calls, teleconferences and, subsequently, smartphones appeared. Text messages, multimedia and mobile data, apps and an infinite universe of hyperconnected elements emerged.

All of the above allowed the constitution of a new post-industrial society that some have called the fourth industrial revolution, which essentially allows practically unlimited access to the information society.

But while this corporatist model has been functional, has generated much wealth and transformed the world as we know it, many fallacies have been built around it and many regulatory shortcomings have become evident, which are probably the genesis of the current crisis we are witnessing in the sector.

From the Defeat of Policies to the Policies of Defeat

In an academic document published in 1996, called “Deregulation or re-regulation: From the defeat of policies to the policies of defeat“, Argentine researcher and professor Guillermo Mastrini stated that under the discursive umbrella of the free market and the deregulation of public services, promoted by the neoconservative axis Reagan-Tatcher-Khol, a planned strategy was disguised to promote the withdrawal of the States in essential regulatory issues, while increasing State control in issues that favored large economic groups:

“In the use of the concept of deregulation we find the attempt to disguise a new direction in intervention faced by a large number of national governments. We maintain that the use of the concept of deregulation constitutes a constructed fallacy or starting from presenting states in retreat, when these states are instead in the front line of the battle.

Thus, while there is a supposed opening to a hypothetical free market, the foundations are actually being laid to regulate in the wake of a new ownership structure increasingly dominated by concentrated capital. In this regard, as the Euromedia Research Group3 has argued, the term deregulation must be replaced by re-regulation, a new logic in media policy”.

Guillermo Mastrini – 1996

It is clear that the deregulation of telecommunications, or the re-regulation suggested by Mastrini, has been sold by conservative governments as the best strategy to boost the growth of this sector. This, although is not completely true, is not completely false either, resulting in a very complex issue to intervene and with many possible scenarios.

On the one hand, as Mastrini states, it is a fallacy that the model that we could call corporatist telecommunications has meant the absolute withdrawal of the State, since the State in some issues effectively left the future of the sector in the hands of individuals, but in many others it remained to guarantee the protection of the interests of certain agents, which frequently corresponds to large transnationals in an oligopolistic condition for the provision of services.

The withdrawal of the State in the neuralgic social issues has brought as a consequence the emergence, consolidation and growth of the so-called Digital Divide, while its calculated, discreet but incisive presence within the market has consolidated the concentration and the monopolistic and oligopolistic positions in favor of certain transnational agents. All of the above is the predictable cause of the crisis we are currently facing.

What changes should be made to the contemporary regulatory scheme?

Although there is no global political environment to think about a change in the regulatory model, there is an urgent need to take new measures to correct the current perversions of the model, before the current crisis evolves into an uncontrollable situation:

  • Balancing the Regulatory Playing Field

Although the debate about the parasitic position of the OTTs in relation to the telecommunications companies has many edges, it is indisputable that an important symbiosis between both industry models exists in many areas. Therefore, it is necessary to find a regulatory balance that distributes oxygen in both sectors and that takes into account the characteristics that make each model unique, as recommended by the ITU [10], when it states that:

“The proliferation of content and application services should be welcomed, as it adds value to the user experience, so change is an inevitable constant and it becomes necessary to adapt the regulatory environment by achieving a balance between innovation, investment and competition”.

International Telecommunications Union: Regulation Toolkit

Therefore, it is not a question of levelling the ground, but of balancing it by virtue of the characteristics of each agent that makes up the value chain, something that, although it sounds very logical, has not been developed so far and it is urgent that it happens before the damage to both ecosystems becomes irreparable.

Convergent Regulation for Multiple Convergences

Perhaps the most significant change that we have witnessed as a result of the computerization of practically all communication devices is the technological convergence that generated the integration of multiple levels of services in the same device, frequently with the same provider, which transformed social dynamics, a topic widely studied by the American academic Henry Jenkins, who highlighted the emergence of social and cultural convergence [11].

New forms of convergence emerged with the consolidation of the so-called “Information Society” and the “Fourth Industrial Revolution”, such as the media, networks, content and the most neuralgic form: markets.

This is why it is necessary to adjust the regulatory frameworks by integrating The Convergences in their multiple dimensions, an issue that goes far beyond the institutional, or the figure of the convergent regulator – which has demonstrated lack of relevance, as the French model has shown -, since it requires comprehensive policies and regulatory strategies in accordance with all the dimensions derived from the multiple convergences, dimensioning the scopes, impacts and imbalances, especially in the markets. Adequate convergent regulation must involve traditional, digital and emerging actors alike.

Respect and Effective Application of Network Neutrality

The concept of Network Neutrality refers to an implicit agreement between the agents (especially companies) that make up the Internet, promoted and protected by most regulatory bodies at a global level, recognizing all IP connections (Internet access points) as equal, without allowing providers and operators to qualify, nor to sanction or privilege one service over another. This forces all machines with a unique address to be treated as equal when connected to the Internet.

It is important to remember that the Trump government formally broke with this category and is allowing operators that provide telecommunications services to categorize services, allowing the “unpacking” of the Internet, that is, that a customer is no longer only concerned about the speed and volume of data, but also about the type of content available on a connection.

The Trump government and the FCC have argued that this measure was necessary to decrease the digital divide and increase citizen access and connectivity to the Internet. Although Ajit Pai, president of the FCC, states that this approach is working, several social organizations detected errors in the document published by the FCC, which forced the Commission to readjust the results.  Subsequently, studies by the prestigious academic John Horrigan of the Technology Policy Institute, assure that there is no strong evidence that this measure has improved connectivity [12].

For all these reasons, and taking into account the poor results obtained with this measure and the risk it represents for the entire Internet ecosystem, it is necessary that the countries that have not yet withdrawn this protection maintain it in order to guarantee that the network continues to be one with opportunities, plural and democratic.

Respect for the Freedom of Content

One of the biggest debates regarding content regulation is whether there should be any limits or state control. In general, such control over content that could put the rights of children and national security at risk is accepted by convention around the world. But some governments regulate, censor or seek to regulate “content of contents” on other sensitive issues such as xenophobia, sexuality, religion or certain degrees of political demonstration.

The experience of recent decades has shown that all state attempts to control the content of contents, especially audiovisuals, through regulatory bodies, contribute little or nothing to the protection of the values they seek to reinforce, while they do generate censorship, oppression, limits to pluralism and even strengthen hate speech from the hegemony of certain points of view.

Therefore, as has been repeatedly recommended by entities such as UNESCO and the Rapporteurships for Freedom of Expression, attempts to regulate such content in its substance should be avoided, but can be done in its disposition. For example, broadcast programming, screen quotas, and the promotion of inclusive and pluralistic content do benefit the audiovisual ecosystem without harming freedom of expression and enterprise.

Protection of National Cultural Industries

Another regulatory function in the contemporary context must be the protection of the essential place that cultural industries have in the economic, social and cultural development of countries and regions. Without the participation of the State, the networks and devices of the citizens of our countries would possibly be flooded with foreign content, which is very profitable but has little to do with the identity and cultural wealth of countries as complex as those of Latin America.

It is essential that regulatory mechanisms such as screen quotas exist to encourage co-productions and, above all, that compensations exist for the transnationals to maintain vigorous local funds that finance the production and dissemination of cultural content and technological applications. Most importantly, these compensations must exist not only for the telecommunications companies, but also for the OTTs.

Deconcentration of Media and Services

The commonplace of perversions between telecommunications companies, traditional media and new OTTs is concentration, i.e. the monopolization of infrastructure, content production and distribution in the hands of a few transnational economic groups, which generate dominant market positions, restrict diversity and competition, exercise price control and alter the democratic balance thanks to their oligopolistic position.

For all these reasons, perhaps the greatest challenge facing regulatory bodies at the global level is to broaden the spectrum of providers throughout the telecommunications value chain, guaranteeing the greatest social, economic, geographic and political diversity, in order to promote true free competition and a robust market that does not depend on the whims of a few players.

Information Privacy and Protection

However, the biggest challenge is undoubtedly to ensure that the most valuable asset in the 21st century: Information, especially private and sensitive information, is protected by real regulatory mechanisms that prevent companies like Facebook from intentionally or unintentionally continuing to continuing to influence the democratic balance at the global level and that economic interests do not take precedence over the rights of individuals.

This last point is perhaps the one that has demanded the most effort from the European Union, which through its new directive sets out some notable guidelines, and has also set alarms in the United States, to the point that the authorities were forced to impose sanctions due to the seriousness of the events.

Although this is the most visible issue in the entire global regulatory agenda, it is clear that the efforts being made are not sufficient and urge greater attention by regulators, governments, civil society and all actors in the communications value chain in general.

In conclusion, while it is not possible to think of a change in the current regulatory architecture that we have called corporatist, it is necessary to make some changes and improvements aimed at ensuring that regulation responds to the democratic needs of contemporary societies, focusing its efforts on strengthening the cultural industries, balancing the markets, protecting the privacy of individuals, truly reducing the concentration of power in the sector and guaranteeing freedom of expression.










[10] ICT Regulation Toolkit: Regulating ‘Over-the-Top’ services

[11] Convergence Culture: Where Old and New Media Collide, New York University Press, Henry Jenkins. Illustrated, reprinted, revised edition. Editor NYU Press, 2008 ISBN 0814742955, 9780814742952, 353 pages




Gabriel E. Levy B.

Sergio A. Urquijo M.