Regulation 3.0 for Telecom 3.0

Telecommunications infrastructure goes through technology-induced phases, and the regulatory regime follows. Telecom 1.0, based on copper wires, was monopolistic in market structure and led to a Regulation 1.0 with government ownership or control. Wireless long-distance and then mobile technologies enabled the opening of that system to one of multi-carrier provision, with Regulation 2.0 stressing privatization, entry, liberalization, and competition. But now, fiber and high-capacity wireless are raising scale economies and network effects, leading to a more concentrated market. At the same time, the rapidly growing importance of infrastructure, coupled with periodic economic instabilities, increase the importance of upgrade investments. All this leads to the return for a larger role for the state in a Regulation 3.0 which incorporates many elements (though using a different terminology) of the traditional regulatory system--universal service, common carriage, cross-subsidies, structural restrictions, industrial policy, even price and profit controls. At the same time, the growing role of telecommunications networks of carriers of mass media and entertainment content will also lead to increasing obligations on network providers to police their networks and assure the maintenance of various societal objectives tied to mass media. These are predictions, not recommendations.