The Effects of Rapid Technological Change on Regulatory Policies in the Communications Sector

Abstract

Predicting what future changes in technology may occur is often an impossible endeavor. Designing effective regulatory policies around changing technologies is even more difficult, as it requires understanding how those changes may alter market conditions that often render such policies obsolete or even counterproductive. This report draws on a sizable history of past regulatory and antitrust interventions whose results demonstrate that: • In a fast-changing industry, it is often very difficult to predict developments that dramatically change the market. • In industries characterized by rapid technological change, regulation often leads to counterproductive constraints on firms. Moreover, history shows that such counterproductive regulations are often hard to lift and stay in place for a long time. • The wireless industry is in the midst of a major technological change, a move to 5G, and competitors have already successfully entered with new business models (cable companies, DISH, and others, including Google and other tech companies). As a result, predicting future market conditions is particularly difficult. • Therefore, at this time the regulators should be particularly cautious intervening.