Within a highly competitive, globalised economy, the telecoms industry plays a pioneering role in innovation and productivity growth across sectors. However, as a result of this tendency towards innovation, telecoms face significant challenges in regard to regulations. For instance, the recent introduction of the General Data Protection Regulation – alias GDPR – has created numerous challenges for the telecoms and digital space, resulting in significant time and capital investments to change data handling processes. As such, the role of a regulatory affairs professional has become more complex.
However, it isn’t only directives coming from legislative bodies that present obstacles; in many respects, current regulatory affairs are a two-way street. Due to the speed of development in the telecoms industry, many regulatory frameworks become outdated almost as soon as they’re introduced. Thus, regulatory affairs professionals face challenges from two perspectives. On the one hand, new legislation demands that they implement new plans for compliance; on the other, outdated legislation impedes innovation in the industry that’s so important for the wider economy. In this article, we discuss the regulatory challenges the telecoms industry faces.
Table of Contents
Defining regulatory affairs
Before introducing some of the key challenges facing regulatory affairs professionals in telecoms today, we will briefly summarise the role. Regulatory affairs positions are particularly prominent in pharmaceuticals, agrochemicals, cosmetics, telecoms and finance, or any other industry where state or transnational regulatory bodies have a stake in protecting public health or interests. As such, these industries need to hire professionals to keep track of the regulatory landscape. Their responsibilities include:
- Monitoring legislation across regions.
- Advising on legal requirements and industry standards to C-levels.
- Collecting and analysing market data.
- Preparing legal documents and negotiating with regulatory bodies in order to obtain licenses.
- Ensuring proper record keeping and data.
Furthermore, regulatory affairs occasionally participate in advertising campaigns and packaging design to ensure these marketing tools are compliant. They will also frequently act as consultants to policymakers themselves, which we will discuss in more detail below.
Key regulatory affairs facing the telecoms industry
Primarily, the constant flux in the regulatory landscape is the overarching challenge that regulatory affairs departments face. As introduced, the speed of innovation in telecoms makes regulatory frameworks volatile, whether it be because new legislation is rapidly introduced or because current rules are facing obsolescence. Moreover, legislation can become ill-defined in an attempt to account for the pace of change, making the landscape even more difficult to navigate. Below, we look at five specific regulatory challenges currently facing the telecoms sector.
1. The transition from traditional telecoms to Internet-based networks
The entrance of OTT players into the telecoms industry presents challenges for regulators and businesses alike. Whereas previously telecoms companies were the gatekeepers of communications technologies, now, networks controlled by Internet giants (the Facebook/WhatsApp conglomerate, Google, etc.) have the lion’s share of the market. The size, power, and transnational influence of these organisations present significant challenges for regulators, meanwhile, traditional telecoms providers need to develop plans to get a slice of the action. For regulatory affairs departments, this means keeping up with whether or not legislators choose traditional approaches in regard to the stratification of wholesalers and resellers, or if they decide to take a completely new strategy.
2. Changing market definitions
In light of the entrance of OTT providers into the telecoms space, it’s likely that legislators and competition authorities will change how they define markets. Considering the reach of mega-corporations like Facebook/WhatsApp, the definition of a market needs to be far more flexible, extending beyond borders or indeed, defined at a highly localised level. Therefore, regulatory affairs officers will need to keep track of how previously separated vertical markets morph or merge.
3. Spectrum and the Digital Single Market
GDPR is by no means the end of harmonisation plans in the European Union. Plans for the Digital Single Market are certain to bring challenges. This is particularly the case for spectrum allocation; currently, Europe has one of the least efficient spectrum allocation systems in the world. It’s possible that the Digital Single Market will create a Europe-wide license, which will standardise how radio frequencies are awarded, used, and traded. This shift is likely to happen imminently, as the objective to allocate the 700MHz band exclusively for mobile broadband is set for completion this year.
4. Net neutrality and 5G
Since the introduction of European net neutrality laws in 2016, the introduction of 5G has thrown up significant questions about how this new high-speed network will interact with existing legislation. This is essentially because 5G could allow telecom providers to exert more influence over the flow of information, as “network slicing” could differentiate the quality of certain services. This could indicate better service for say, premium subscribers at the expense of others. This, of course, flies in the face of net neutrality – and in light of debates that took place last year, it’s likely that the verdict will be delivered soon. What’s more, since the US moved away from its Open Internet rules in 2015, the shift in the EU market could cause dissonance globally, making the job of regulatory affairs officers yet more complex.
5. Influencing policymakers
As touched on above, the telecoms industry is a key space for innovation. Therefore regulatory frameworks either quickly become outdated, or worse, stifle technological advancements. Subsequently, a significant challenge for regulatory affairs officers will be liaising with legislators to support innovation and protect return on investment. Take 5G, which we’ve already mentioned, as an example. In spite of regulatory concerns about net neutrality, it’s undeniable that 5G presents substantial advantages across sectors, from speeding up consumer mobile networks to supporting complex IoT frameworks in manufacturing. As such, it is essential that regulatory affairs officers lead the charge when it comes to convincing regulators that the industry needs space to innovate, adapt and optimise its services for the benefit of the wider economy.
Nurturing innovation and ensuring regulatory affairs compliance
In conclusion, regulatory affairs departments certainly have their work cut out. Considering the pace of technological development, it’s likely that the regulatory landscape is going to be in significant flux over the coming years. As such, regulatory affairs officers need to develop complex plans to navigate unclear or shifting legislation, ensure compliance, and create an environment where innovation can thrive in spite of regulations. As such, spear-headed by regulatory affairs departments, telecoms companies need to have a clear line of communication with legislative bodies.
Alex Collart, CFO & Co-founder at Outvise. Serial entrepreneur and management consultant, with a focus on strategy and marketing. Has co-founded and exited several companies. Former McKinsey&Co associate. Industrial Engineer + MBA (IESE/Kellogg).