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A fresh look at communications regulation

Richard Adler | Dec. 10, 2014
Any new regulatory regime must recognise today’s realities while accommodating the changes we can’t foresee now.

A similar but even more far-reaching proposal for a new regulatory scheme for the digital age comes from Richard Whitt, an attorney who originally worked for MCI Communications and currently works for Google. In a 2009 article in the Federal Communications Law Journal, Whitt makes a case for what he calls "adaptive policymaking." He begins by arguing that classical "old school" economics is no longer a reliable guide to the realities of the new digital environment. He proposes to replace it with what he calls Emergence Economics, which incorporates insights from cutting-edge fields such as complexity science, behavioral economics, game theory, network science, new growth theory and competition theory. A key insight is that "we live in an emergence economy [in which] individual agents, acting through interconnected networks, engage in evolutionary market processes ... which generate a host of emergent economic phenomena." In such an environment, different economic sectors -- such as telecommunications -- are best understood as complex adaptive systems (i.e., ecosystems) made up of multiple entities (including private enterprises, public interest groups and government agencies) that are "each shaping, but not fully determining, the other."

This complex, dynamic and unpredictable environment requires a new approach, which Whitt calls "adaptive regulation," and which shifts focus from attempting to achieve a "static optimization of parameters to an evolutionary paradigm that emphasizes adaptability." He outlines a series of principles that should guide practitioners of this new approach. For example, adaptive policymakers should be experimentalbecause "the combination of uncertainty and constraints on predictability creates the necessity to experiment." They should also be flexible in making rules since "deep uncertainty about complex systems like markets, or especially the Internet, implies the need for flexibility." And any actions taken should be provisional: "adaptive policymakers should favor reversibility."

Rather than attempting to constrain or direct the outcomes of market processes, the goal of adaptive regulation should be to "improve the market's ability to formulate and present options to agents while leaving the selection process undisturbed." Whitt describes four strategies that policymakers should follow in order to contribute to the effectiveness of markets by "tinkering not tampering" with their functions (strategies that should be applicable to the regulation of other economic sectors as well as to telecommunications):

Congressional policymakers have their work cut out for them in updating the law governing communications. But they have an exciting opportunity to bring regulation fully into the 21st century to ensure that Americans continue to enjoy the benefits that rampant innovation has produced. The fact that a bipartisan group of policymakers in both houses of Congress has acknowledged this issue as a top legislative priority is an encouraging sign.

 

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