OECD: Regulatory Reform as a Tool for Bridging the Digital Divide

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Regulatory Reform as a Tool for Bridging the Digital Divide

http://www.oecd.org/dataoecd/40/11/34487084.pdf (261Kb)

The digital divide touches all regions and economies of the world and threatens to slow progress towards the goal of an all-inclusive information society. Policy makers are faced with the divide’s daunting complexity but have a range of policy tools that have proven effective in expanding access throughout the world. Of these tools, regulatory reform has had perhaps the largest impact in both developed and developing economies alike.

The severity of the digital divide in OECD countries is much less than in other parts of the world, due partially to higher income levels, but also as a result of important regulatory reforms initiated over the past several decades. These reforms have paved the way for competitive markets to develop and flourish with minimal intervention.

Regulatory reform can play a key role in non-OECD economies. Policy makers in developing economies should consider the regulatory reforms that have proven the most successful in the OECD, namely liberalizing telecommunication markets, creating a separate telecommunications regulator, opening spectrum for new wireless technologies and promoting the development of human ICT capacity.

As regulatory reforms take effect, telecommunication markets become more efficient and social and economic welfare are enhanced for all stakeholders in an economy via positive externalities. Telecommunications infrastructure can play a key role in economic development, which can create a virtuous cycle where incomes improve and access increases. Telecommunication technologies have also played an important role in enhancing total factor productivity in OECD economies and in employment growth.

As recent events have shown, telecommunication networks can also play a key public safety role in an economy, especially as a tool for disaster warning and recovery efforts. Economies with under-developed telecommunication markets and networks may face higher risks in the face of future catastrophes than economies with extensive networks and public safety systems in place. As a result, this paper includes a section on the need to examine the role of regulatory reform of emergency telecommunication services as a cost-effective and essential way to ensure the optimum contribution of ICTs to disaster warning and recovery.

This paper examines one narrow aspect of the digital divide, the effects of regulatory reform on telecommunication networks. While regulatory reform is only one part of the global digital divide problem, it can play a key role in helping telecommunication markets bridge some of the gaps on their own. It is therefore imperative that policy makers consider regulatory reform as a necessary but not sufficient step towards overcoming the digital divide.