Future of Digital Communications

Regulatory Trade-offs

Mapping Trade-offs in Communications Policy and Regulation

Communications policy and regulatory objectives are wide ranging and complex. Countries seek affordable, diverse, widely available and used services of a high quality, but virtually all regulatory decisions involve trade-offs between these objectives. A given decision may support one policy objective, but perhaps impede another, or come at a cash cost to be borne by the treasury. International comparisons of communications markets have often focused on league tables. While useful, these are less helpful for understanding regulatory trade-offs. To address this, we offer a new “spirit level” dynamic tool, which emphasizes the balance struck between different objectives. (This page is a summary of a longer report here).

There are several league tables ranking international communications markets, such as the World Economic Forum’s Networked Readiness Index, the European Commission’s Digital Economy and Society Index (DESI) and the Fibre to the Home (FTTH) Council’s reports on fibre deployment. (These league tables typically draw on raw data from the International Telecommunication Union (ITU), US Federal Communications Commission (FCC), UK’s Office of Communications (Ofcom), Economic Co-operation and Development Organisation (OECD), Akamai and others.

Such league tables undoubtedly have impact. Rankings are easy to understand and are particularly powerful as a stimulus to competition between countries, for example. However, they also have disadvantages:

  • Rankings often substantially driven by wealth. Country X may have a higher score than country Y, but this may primarily be driven by country X’s higher GDP per capita.
  • More is not necessarily better. In some cases, there may have been overinvestment. If so, a slightly lower ranking may be preferable to a top ranking
  • Decision-making involves trade-offs. League tables can be read to imply that countries should make progress on all fronts. However, very often the practical decisions facing regulators and policy-makers involve trade-offs between such metrics. For instance, greater superfast coverage may reduce affordability. A single aggregate score may obscure rather than illuminate such critical trade-offs.

Spirit Levels

The spirit level tool maps the impact of different countries’ regulatory decisions on their relative performance. For a given country set and three metrics chosen by the user, this tool generates a set of charts (one triangle plot per country) showing how performance compares to the best, worst and median performer for each metric.

This illuminates the different balances struck by different countries. For instance, a given country may have a stronger performance in affordability than its peers, but a weaker one in next-generation access (NGA) coverage. Based on this, the country may wish to rebalance, favouring trade-offs which are positive for coverage. Alternatively, such a skew may be in line with the country’s policy objectives.

Available data

The tool draws on multiple data sources, providing raw data for topics such as pricing, coverage, speeds, usage, adoption, industry financials, demographics and economic data. The tool uses these to create a set of output metrics. Some are pulled directly from the relevant underlying data while others involve minor recalibration. For example, underlying price figures are converted to affordability by dividing into GDP per capita. This ensures that for all metrics a higher figure is better. Data availability varies significantly. The range of metrics available for developed countries is much higher than that for developing countries.

Country sets

A country set is a group of counties, such as Africa, the OECD or high income. The spirit level tool allows the user to select which group comparisons should be applied to. This affects both the countries to be included and the benchmark for best performance within the country set. In practice, comparisons of a country to a relevant peer group are likely to be most helpful.


Each spirit level is based on a set of three metrics, for example NGA coverage, affordability of 30-100 Mbps broadband and broadband competitive intensity. Each metric in a spirit level is rebased relative to the best and worst performers for that metric from the country set. The best performer sits at the outer end of the axis, and the worst performer at the inside end (the maximum and minimum values from the country set are provided in the key). For each metric, the median performance within the country set is shown by a dotted line.

Interpreting country plots

The area of a country’s triangle can be taken as a very crude measure of overall performance across the three selected metrics. Overall performance is clearly driven in part by GDP per capita, which enables a country to afford better outcomes. All else being equal, it is expected that dark red triangles (those for top quartile countries within the country set) would be larger, for example.

More importantly than the area of the plots, the skew can also be compared. A country may have much stronger performance in one metric compared to the other two – it as “skewed toward” that metric. Conversely, it may have much weaker performance in one compared to the other two – it is “skewed away” from that metric.

Spirit levels generally show great variation in skew. This suggests that the differences between countries are not simply a matter of wealth – if they were, one might expect the countries’ triangles to have different sizes but similar shapes.

Such skews may be by accident or design, and are not inherently good or bad. For instance, they may stem from a deliberate targeting of certain goals to gain an international competitive advantage. (Qatar’s FTTH national broadband network would be an example). They also may be driven by historical circumstances. For instance, Malta has long had good cable network coverage, which has supported a comprehensive NGA deployment.

Note that countries in the sprit level are ordered based on their skew, so that countries with similar skew are grouped together. A spirit level report can also suggest whether there is a trade-off between different metrics. For instance, if there are one or no countries that exceed the median on all three metrics, this suggests that the metrics may be in tension with each other.

Using the tool: To use the tool, simply select the country set and the three metrics that is of interest and press “generate”. Note that in some cases there may be insufficient data for a given country set/metric combination.



Policy and Regulatory Trade-offs

In making the decisions that drive outcomes, regulators and policy-makers face many types of trade-off – between immediate policy objectives, between the short and the long term, and between telecoms and other sectors of the economy. Different countries may, for good reason, make different trade-offs. They may have different views of the future; different industry, geographic or economic starting points; or they may prioritize outcomes differently.

Types of trade-offs

  • Direct trade-offs are those between elements of communications, where there is a direct link between those elements. For example, a universal service obligation funded by an industry levy may improve coverage but conversely increase prices.
  • Long-term trade-offs are those which may have immediate benefits, but which will likely carry costs in the longer term (or vice versa). For instance, a decision to impose stringent retail price controls will enhance affordability but might deter future investment.
  • External trade-offs are those with consequences outside communications, and in particular those involving government funds. For instance, state subsidies for FTTH require a trade-off between the benefits of enhanced broadband vs other ways in which the government could spend its money.

Differences in trade-off decisions

  • Different views of the future lead to different choices being made today. For example, some countries have anticipated an imminent need for ultrafast broadband speeds, and have subsidised FTTH/B. Other countries taking a different view of future bandwidth demand have not.
  • Different industry starting points lead to different next steps. For example, if the incumbent has the only fixed network in a country, then local loop unbundling (LLU) may be essential for services competition. Conversely, if a country has widespread competition from cable networks then LLU may be unnecessary.
  • Different economic and geographic starting points, such as widespread FTTH, might be simply unaffordable for a less developed country. Satellite broadband might be useful for a country with low population density, but not for a city-state.
  • Different priorities will lead to different decisions. These priorities may relate to a specific issue (for example, Germany’s emphasis on data privacy) or broad philosophy (a preference for free market or statist approaches)

While countries may make different decisions, the directional impacts of those decisions will generally be similar. For example, countries may or may not impose coverage obligations in spectrum auctions, but if they do, it will increase coverage but supress auction proceeds.

These trade-offs are set for different decisions in decision matrices – tables linking a set of decisions to the various outputs they influence. These decision matrices allow a regulator to look at a given output they wish to improve, and immediately identify the relevant “levers to pull” (regulatory decisions) that may have positive impact, but also to identify the trade-offs those levers involve.

Existing research

Perhaps surprisingly, this is an area with relatively little existing research. Much literature focuses on only one element of the consequences of a given decision. For example, while it is useful to know that additional mobile operators keep prices lower, a regulator must consider the trade-off that those low prices and market fragmentation may deter investment. (See the full spirit level paper for a list of some academic research on regulatory decisions).

Mapping regulatory decisions and outcomes

Decision matrices have been created to explore trade-offs (one for fixed and one for mobile). For a range of decisions – such as “increase spectrum availability” or “apply NGA wholesale active access” – these matrices offer a view of the dimensions affected by that decision. For NGA active access, for example, the affected dimensions include NGA investment, competition, affordability, coverage and uptake.

For each of these dimensions, a tentative view is offered as to whether the impact is positive or negative. For instance, NGA active access might have a positive impact on NGA competition, but a negative impact on NGA investment. In some cases, the view is “+/-“, where the impact may vary across players or depend on local circumstances.

Fixed decision matrix

Decision Intermediary dimensions Output dimensions External dimensions
Competition Investment Affordability Coverage NGA Uptake/ usage Service innovation QoS Content
Copper NGA NGA Copper NGA Voice
Increase copper access prices - + +? - +?
Apply NGA wholesale active access + -? +? - +
Apply passive infra access + + +
Structural separation + + -? -?
NGA supply-side subsidies + + - subsidy
NGA demand-side subsidies +? + + - subsidy
Increased BB USO (Govt funded) + + - subsidy, - mobile
Increased BB USO (Indust funded) + - - + - - mobile investment
Strong Net Neutrality -? -? -? +? +/- -? +
Merger blocks + + - +? +? -?
FTTH co-investment -? + + + -?
Enterprise wholesale prods + + - +?
Telecoms specific taxes & fees - - - - -? -? +/- Tax revenues
+ Decision has positive impact on this dimension (+? indicates a limited or less certain positive impact)
- Decision has negative impact on this dimension (-? Indicates a limited or less certain negative impact)
Dimension affected by greatest number of decisions
Dimension affected by many decisions

Mobile decision matrix

Decision Intermediary dimensions Output dimensions External dimensions
Competition Investment Affordability Coverage Penetration Usage volume Service innovation QoS Content
Data Voice
Spectrum set-aside for entrants + -? -? - proceeds
Increased spectrum availability + + + +? +? + + - expense to release
Spectrum coverage mandates + + - proceeds
Extended spectrum licence term + +? - proceeds
Merger blocks + - +? +? -?
Strong Net Neutrality -? -? +? +? +?- -? +
Passive infrastructure sharing -? +? +? +?
Backhaul price control + +? +? +? + - Fixed lost revs
Mobile used for universal service + - Fixed lost revs
'Mobile first' regs + + + - Fixed lost revs
National mobile plans + +? + -subsidy?
Telecoms specific taxes & fees - - - -? -? -? +/- Tax revenues
+ Decision has positive impact on this dimension (+? indicates a limited or less certain positive impact)
- Decision has negative impact on this dimension (-? Indicates a limited or less certain negative impact)
Dimension affected by greatest number of decisions
Dimension affected by many decisions

Note: For definitions of the decisions, see the spirit level paper

Using the matrices to identify “levers to pull”

The matrices have been built starting from decisions and considering the outputs affected. However, they can also be used in the opposite direction. By considering all the decisions that are linked to a given output, one can readily see the regulatory levers that are likely to be most relevant.

For example, if a regulator has a particular concern about the level of competition in its mobile market, the matrix highlights spectrum set-aside and availability and merger blocks as choices, which might improve matters on that particular dimension. (Though, as the matrix notes, these choices might have other adverse consequences).


Spirit levels provide perspective on the aggregate impact of regulatory decisions made to date, putting a given market in the context of its peers. This, combined with the decision matrices, then allows a focus on the key decisions to support the rebalancing of a market or (alternatively) to support the pursuit of international competitive advantage on a particular dimension.

The spirit level approach, however, is constrained by the available data; a number of metrics have very incomplete data. In addition, some metrics that would be extremely relevant to understanding trade-offs are barely tracked at all, such as industry return on investment by country. This is a potential area for international bodies to consider.

Finally, the spirit levels make very clear that there is not a single path to communications development. The various countries are not improving networks and usage in a common way, separated only by time and wealth. Rather, different countries have very different emphases, reflecting both their own priorities and the technologies available to them at various stages of their development.

Acknowledgments & Disclaimer

The opinions offered herein are purely those of the author. They do not necessarily represent the views of the individuals who contributed.

About the Author
Robert Kenny is a media and telecommunications consultant, and a member of Communications Chambers. He has more than 20 year of senior experience in these industries, and is a globally recognized expert on a range of sector policy issues. His clients include government departments and agencies in the UK, Australia, Ireland and Nigeria; virtually all of the UK’s leading fixed and mobile telcos; the UK’s largest broadcasters and pay TV operators; some of the world’s largest online businesses; and a wide range of trade associations.

Global Agenda Council on the Future of Digital Communications

Risto Siilasmaa, Chairman of the Board of Directors, Nokia, Finland

Houlin Zhao, Secretary-General, International Telecommunication Union (ITU), Geneva

Council Members
Rodrigo Abreu, Chief Executive Officer, Chief Executive Officer, Tim Participações, Brazil

Anat Bar-Gera, Chairperson, YooMee Africa, Switzerland
David Dean, Independent Consultant
Jeff Evans, Director, Georgia Tech Research Institute, USA
Mohamed N. Al Ghanim, Adviser to the Board, Telecommunications Regulatory Authority (TRA), United Arab Emirates
Ken Hu, Deputy Chairman and Rotating Chief Executive Officer, Huawei Technologies, People’s Republic of China
Matthew Kirk, Group Director, External Affairs and Member of the Executive Committee, Vodafone Group, United Kingdom
Leslie W. Maasdorp, Vice-President and Chief Financial Officer, New Development Bank, People’s Republic of China

Jun Murai, Dean and Professor, Faculty of Environment and Information Studies, Keio University, Japan
Sean P. Murphy, Vice-President and Legal Counsel, International Government Affairs, Qualcomm, USA
Niu Zhisheng, Deputy Dean, School of Information Science and Technology, Tsinghua University, People’s Republic of China
Robert Pepper, Vice-President, Global Technology Policy, Cisco, USA
Tom Phillips, Special Advisor to Director General, GSMA, United Kingdom
Jerry Power, Executive Director, Institute for Communications Technology Management, Marshall School of Business, USA

Romano Righetti, Deputy Chief Operating Officer Wind Telecomunicazioni, Italy
Hamadoun I. Touré, Executive Director, Smart Africa, Rwanda

Additional Working Group Members
Leo Baumann, Head of EU Representative Office, Nokia, Belgium
Matthew Bloxham, Head of Connected Society, GSMA, United Kingdom
Wolfgang Bock, Senior Partner and Managing Director, The Boston Consulting Group, Germany
Inmaculada De La Cruz, Director, Corporate Regulatory Strategy, Telefonica, Spain
Vincenzo Ferraiuolo, Antitrust and Regulatory Affairs Director, VimpelCom, Italy
Jerónimo González, Director, Regulatory Strategy, Telefonica, Spain

Ivan Huang, Director, Marketing, Huawei Technologies, People’s Republic of China

Bailey Ingram, Senior Manager Global Public Policy, Vodafone, United Kingdom
Hans Kuipers, Partner and Managing Director, The Boston Consulting Group, South Africa
Tomas Lamanauskas, Head, Corporate Strategy Division, International Telecommunication Union (ITU), Geneva

Eric Loeb, Senior Vice-President, International External and Regulatory Affairs, AT&T, USA
Sofie Maddens, Head, Regulatory and Market Environment, International Telecommunication Union (ITU), Geneva

Preetam Maloor, General Secretariat and Expert on International Internet-Related Public Policy Matters, International Telecommunication Union (ITU), Geneva
Maikel Wilms, Associate Director, The Boston Consulting Group, Netherlands

World Economic Forum Telecommunications Industry Team
Isabelle Mauro, Head, Telecommunications, Information & Communication Technology Industries
Rodrigo Arias, Content Lead, Telecommunications Industry, Global Leadership Fellow
Michael Garabet, Project Manager, Future of Digital Communications