11.29.2018Enterprise Tech

Xynteo 2018: Connectivity in a regulated world

By: Tom Dailey

The regulatory and policy landscape is one to which I pay particular attention in my role as Verizon’s chief international legal and regulatory officer. Indeed, I expressed my thoughts on this topic in a recent interview, following my participation in the recent IIC annual conference in Mexico. But it’s a really important topic for everyone given the ubiquity of connectivity in today's digital economy and society, and so I’m delighted it’s being explored at the Xynteo Exchange this week.

A key challenge for stakeholders the world over is that technological development has outpaced regulatory development particularly over recent years. Many countries are still bound by regulations developed decades ago, which are just not fit for purpose in today's digital economy where innovations like the 5G-enabled Internet of Things (IoT), artificial intelligence, virtual reality and advanced robotics are powering the Fourth Industrial Revolution.

The Fourth Industrial Revolution is a revolution enabled by connectivity, and one that will fundamentally change how we live, work and play. This connectivity is both wireless – the high speed and low latency of 5G, built on deep fiber; and wireline, with intelligent, virtual and software defined networks (SDN) offering secure, high performance, and adaptable capacity that can flex to support changing business needs.

This connectivity-driven revolution is all about innovation, and many of its use cases literally haven’t yet been invented, but it has tremendous potential when it comes to a positive social impact on the big issues of sustainability, public safety, healthcare and education. However, the regulatory environment today poses a significant challenge to this innovation.

Regulatory challenges

Firstly, service providers offering enterprise services are too often bound by the same regulatory framework that protects consumers. Why does this matter? Well, services that cater to enterprise customers are categorically different from those offered to consumers. Enterprise customers often select a provider on a competitive tender basis, and then negotiate specific terms and packages under a service level agreement for a tailored contract. This contrasts with the "off the shelf" tailored contracts that consumers rely on. Yet the same rules apply.

Secondly, patchwork regulation makes life extremely complicated for companies providing services cross-border and for users of such services. Consistent policy approaches and regulator frameworks are essential to ensure legal certainty and clarity for all stakeholders. Work is being done at the EU level, but the fact is that regulation is complex and multi-layer.

Thirdly, as I said earlier, new technologies are often forced to operate in a regulatory regime that was developed decades ago. SDN is a good example. A virtualized network is no longer about the telephone line or point to point connectivity. It’s about changing information and ideas into bits and bytes, and using software to create an environment in which those bits and bytes can be shared. But if SDN is a software solution that sits on top of the underlying network, from a regulatory perspective, what does this mean? Should SDN be classified as a telecommunications service, or as an information service?

In my view, where regulatory involvement is necessary, policy-makers should look at policies that promote innovation. A 21st century digital economy, driven by state-of-the-art networks, can only exist with a 21st century regulatory agenda. That agenda should aim to protect consumers, encourage investment and harmonization, and avoid the patchwork of regulation and uncertainty that stifles investment and innovation. The payback will be cycles of innovation that generate opportunity and economic growth.

Regulatory solutions

So what does this mean? Firstly, regulators need to consider the unique characteristics of enterprise services, and should look to eliminate outdated regulations in this space. Verizon believes that light-touch (and in most cases, no-touch) regulation is vital if new technologies like 5G and software defined networking are to flourish.

One change in approach that could have a hugely positive impact is the simplification of regulatory frameworks. Simplification would mean deregulation where appropriate, rather than incrementally building on historic—and often outdated—sector-specific laws and regulations. It would deliver a pro-investment and pro-innovation climate relying mainly on existing horizontal competition and consumer protection rules. And the benefits would be clear: greater regulatory certainty and predictability; regulatory outcomes that minimize compliance costs and inefficiencies; a more prosperous environment in which innovation thrives; and a boost to economic competitiveness.

I’m looking forward to seeing the results of the discussion at the Xynteo Exchange. I believe that the technology-led disruption and innovation of the Fourth Industrial Revolution has the potential to transform communications around the world, and open up business and collaboration opportunities that we can't yet imagine. Network connectivity is key to supporting this revolution, and delivering the new services it will enable. But the right regulatory and public policy environment is critical for driving continued investment in this innovation across the board. And there is no question that we need to move quickly, and think differently, to realize the power of the Fourth Industrial Revolution.

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About the author(s): 

Tom Dailey is Verizon's chief international legal and regulatory officer.