SPOTLIGHT: How to regulate a digital economy you don't understand

Wednesday, November 30, 2016

One of the key short-term challenges for Latin American telecommunications regulators is to better understand the new business models of the digital economy, according to senior Latin American regulator officials.

This week, Chile took over the presidency of the Latin American telecommunications regulators association Regulatel from Colombia.

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Chilean regulator Subtel has said that over the course of the next year it will seek to encourage international roaming agreements among the region's countries and promote the development of a single digital market in Latin America.

However, there is a more pressing issue than that, according to Subtel head Rodrigo Ramirez.

"The challenge for us leading Regulatel will be to institutionalize knowledge," Ramirez told BNamericas on the sidelines of Regulatel's 19th plenary meeting, held in Santiago (pictured).

This means understanding the new digital services that are emerging and encouraging them rather than trying to build fences around them. "It's important to not think in terms of physical infrastructure but the value chain," Ramírez said.

Ramírez used the example of digital TV, an issue on which he worked for years at Subtel before taking over at the helm of the watchdog in October. He said that Latin America has been slow to adapt digital TV because regulators did not see the value early on and did not clear the spectrum needed for its introduction.

To embrace the digital revolution, regulators should get more involved in encouraging innovation, or at least not getting in the way of it, Ramírez said.


Germán Darío Arías, head of Colombia's telecoms regulatory authority CRC, which handed over the presidency to Chile this week, told BNamericas that 2016 had been a transition year, as watchdogs increasingly adapt to regulating services rather than physical infrastructure.

"We face two tough dilemmas. How do we regulate this new reality; and secondly, how do we continue to regulate the existing services like traditional cable operators, which pay taxes, versus a Netflix that doesn't. What is the limit of our mandate?" Arías told BNamericas.

An oft-cited but ever-present example is ride-sharing service Uber, which has caused headaches for Latin American regulators as it falls in a grey area in terms of legislation between being a private and a public transport service.

"If you try to apply rules from the physical world to the virtual, it doesn't work. We want to try and understand it because you can't regulate what you don't understand. The risk of doing that is you could negatively affect innovation," Arías said.

Arías said that regulating the internet of things (IoT) presents a particular challenge, starting with deciding whether these new devices should use traditional numbering or IP addresses. The other dilemma is which spectrum to use. "We carried out a study on IoT and concluded that we know nothing," Arías said.

Colombia has actually been one of the most progressive countries in Latin America in terms of its exploration into how to regulate IoT and has proposed assigning 50MHz of spectrum specifically for that purpose.


While Latin America has traditionally looked for guidance to Europe and the US on how to regulate emerging technologies, these technologies are now reaching emerging markets just as fast as the developed markets - so there is no precedent, Arías said.

The European Commission is currently proposing a complete revision of digital regulation dealing with issues such as next generation networks but also machine to machine communication.

According to María López Carracelas, head of international telecoms and audiovisual affairs at Spain's competition watchdog CNMC, one of the main proposals being put forward is to allow companies, car manufacturers for example, to be the owners of the SIM cards that are used in their devices. That would free these companies to configure and manage the SIM cards themselves and remotely.

"Today, an automobile operator has to purchase a SIM from a Vodafone or an Orange and the operator is responsible for configuration. If you change operator you have to remove and change the SIM card," López told BNamericas.

The other proposal is to create a specific M2M numbering system that could be used anywhere in the European Community. The proposals are due for vote by the end of 2017 and if approved, it will take a year and a half approximately for the new regulations to be adapted to local markets.