Telecommunications has enjoyed rapid growth following continuous demands for improved services and corresponding technological advancement to meet these demands. The changing environment of the sector, in terms of technological developments and advancement, has significantly increased the complexity and the challenges faced by the industry regulators. Hence, the management of innovation is becoming a strategic issue both for the regulators, operators and the industry as a whole.
The most recent challenge is posed by the fast technological developments, which have resulted in the emergence of new telecommunications technologies and growth markets. New players, mostly medium size companies and enterprises, are leading the way. Vonage, Skype, Facebook, Net2phone etc. are increasing their market shares in the internet telephony market.
Voice-over-Internet Protocol (VoIP) allows users to make phone calls over the internet almost free of any charges. The technology has all the characteristics of a radical innovation, and its diffusion is growing rapidly, at a global scale. The long term threat of this technology may redefine existing telecommunications regulatory policies as well as business models of incumbent operators. This is partly because telecommunications services are shifting toward internet platforms in which voice and data services are being offered to consumers and/or subscribers. Also, substitute technologies, such as VoIP, are enabling communications services at a much more competitive price than the tradition fixed line network.
The market share of internet telephony is predicated to grow exponentially in the coming years. As these emerging technologies will diffuse further and new applications will enhance voice quality, the core business of incumbent operators may be at risk as it will translate into a decrease in revenues and market shares in the voice markets. There is therefore an urgent need for the industry regulators to identify, evaluate and address policy issues that will arise from the gradual transition of telecommunications services to internet based platforms. The impact of emerging technologies places a burden on the regulatory authority to reassess the current existing regulatory framework as new entrants are modifying and changing certain issues such as competition or market definition. Currently, the regulator does not consider these new entrants offering communication services via substitute technologies as direct competitors to incumbent operators in the telecommunications industry.
Given the pace at which emerging technologies are being developed and evolved in the telecommunications industry, it is simply not feasible to regulate these new technologies adequately and comprehensively at the "front end," before we can possibly know the future direction of the technologies and the problems they may present. It is critical for the regulators to implement processes that permit frequent and ongoing re-evaluation and revisions of regulatory policies to address changing facts and circumstances in the industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.