Regulation, public policy, and investment in communications infrastructure

A growing number of countries are reexamining telecommunications policies in search of approaches that better support investment and innovation in advanced communication networks and services. In addition to regulatory instruments, a broad range of fiscal and industrial policy measures are being revitalized. These instruments affect regulated and unregulated firms in the ICT ecosystem in multifaceted ways and sometimes have counterintuitive effects on aggregate performance. The design of policies is further complicated by trade-offs between short-term and long-term policy objectives. This article examines individual and joint effects of regulatory and other policy instruments on the investment incentives in advanced communications. It conceptualizes governance as a problem of “tuning” a highly dynamic, adaptive system. Alternative consistent combinations of regulation and public policy are feasible but they have different implications for sector outcomes, most importantly the balance between static and dynamic performance.