Can competition alone produce the best outcomes for consumers of ICT goods and services? If not, why and where is regulation necessary?
The question of placing faith on the concept of competition alone to maintain principles of free-trade as well as serve the consumers well has been a subject of much debate. The divergent trends in various parts of the world economy and the associated promise of social equality need be taken into account in this discussion. This is particularly relevant in the United Kingdom, where Information and Communication Technology (ICT) goods and services are increasingly becoming key contributors to the GDP. Here, powerful and state-of-the art digital technology is being integrated into the marketplace, making the latter undergo a phase of transformation. The rest of this essay will delve into arguments in support of a regulatory framework for this new and crucial ICT industry.
In this digital age, information technology (IT) is providing a new medium to finally unite society and integrate and mould disparate components of industrial organization. According to a British management expert ‘opportunities and demands presented by modern technology promote the convergence of all societies towards a single set of social patterns and individual behaviors, due in part to the requirements of technology for a common set of development and implementation steps, and for common organization constraints”. In this scenario, for future corporate profitability as well as protection of consumer rights, “the boundaries of national identity must be subsumed to the need for quality products and global goodwill” (Kaye & Little, 2000). This can only be achieved through the development and adoption of an international legal code of electronic commerce.
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The governing authorities in the UK intend to maximize the use of information and communications technology (ICT) to “improve the accessibility, quality and cost-effectiveness of public services, as well as to revitalise the relationship between citizens and public bodies working on their behalf”. But the evidence so far suggests that the general public/consumers are unlikely not to see the intended benefits, given the powerful corporate lobby that thwarts most positive policy initiatives. The UK region as a whole is seeing a digital revolution in the delivery of public services. A survey relating to the penetration of ICT products and services in the UK had found that the majority of the populace “lacks computer skills, never mind computer access” (Kaye & Little, 2000). As per the Audit Commission, only less than half of local authorities will have made notable improvements to the way their services are accessed in the next few years, not least because of lack of ICT wielding skills among local authority staff. More importantly, what this implies is that an overwhelming percentage of the ICT consumers are exposed to corporate exploitation in the absence of a protective legal code pertaining to ICT consumption (Kaye & Little, 2000).
The prominence of working-from-home employment models wherein employees work from their location of choice using through the deployment of information and communication technologies (ICT’s), has grown steadily in the United Kingdom during the 1990s. The importance of this in the context of organizational theories, consumers and legislators lies in it standing as an exemplar model of the future of economic organization. Seen in the backdrop of e-commerce and online consumerism, these new forms of societal organization create new legal issues. The core parameters of the qualitative aspects of consumption in an ICT based economy is difficult to fathom. Questions such as – Do consumers prefer this form of consumption? What are the costs and benefits? etc have no concrete answers yet. Though there is some research done on the implications of becoming a e-consumer, in terms of a series of atomized ‘effects’, but this ultimately fails to do full justice to how consumption is experienced. It also does not infer whether the trust placed in free competition alone is sufficient for consumer protection.
Moreover, there is evidence that a move toward ICT based online consumption “often entails target consumers becoming fragmented and stratified. ICT manufacturers may attempt to fragment and vertically disintegrate the online marketplace in order to facilitate measurement and control, which will make consumers more vulnerable to exploitation. Also,
“Voters and the opinion-forming media seem unaware of the potential empowerment that could come to local communities with a transition to e-services, e-debate and e-decision-making, not to mention e-voting. The commission reports that while councils agree with the government that the real driver for change should be new benefits for local people, the strongest incentive is still the need to meet the government’s targets for ICT provision” (Freeman, 2005).
It has to be kept in mind that a transition to ICT aided governance of the region will automatically bring about a stringent legal framework for online commercial enterprises to abide by. Presently, the planning services stand out as one of the most impressive areas of local governance to have taken the crucial first steps. Although a few local planning bodies have done their independent attempts at ICT integration, the national planning portal, which is launched in well-defined phases, “offers a general planning advisory service with links to myriad related websites” (Pauleen, 2003). These are all moves that would bring in associated regulations and hence curb the exploitative tendencies of corporate monopoly. While free competition is said to hinder market monopolies, the powerful and influential corporate lobbies have so far succeeded in thwarting legislations that hinder concentrations of business power and wealth. The ever increasing numbers of mergers and acquisitions in the UK business landscape is strong evidence in support of this assertion (Pauleen, 2003).
Since most of the existing models of ICT marketing and consumption assume “a linearity of development that is incompatible with the opportunities faced by later entrants into the technology”, most late entrants do have access to the development path as well as the industry experience of their competitors. Hence, the playing field for competition is already skewed in favour of business corporations that have had a longer presence in the UK. Also, the new entrant may gain access to the current technologies and applications without recourse to working through the development path. This is why government regulations are necessary to prevent older and larger ICT corporations from decimating the smaller ones out of existence. When a matrix is drawn to represent the different levels of capability in information technology that exists between different social classes within the UK, what is found wanting is the need for suppliers to address the capabilities of ICT consumers. In this scenario, consumer education may be facilitated “with experience of neither the associated organisational structure and task changes nor the primitive technology. The possibility of missing out the early stages and going straight to the latest technologies suggests that access to technology as it develops should increase. However, empirical evidence suggests that late entrants to the technology have not assimilated; instead dysfunctional divisions are appearing between the haves and have nots” (Freeman, 2005).
An interesting alternative to the above mentioned perspective is the concept of “backfrogging” that was propounded by management thinker Okot-Uma. As per Okot-Uma, the Information and Communication Technologies are introduced a little ahead in time, leading to problems in the areas of interface and compatibility. Evidently, in these situations, the newly introduced technology not only fails to deliver on its intended purpose, but also gives rise to new technical issues of its own making. Hence, taking backward steps in development (back-frogging), with respect to concepts of appropriate technology, “is presented as an equally necessary strategy to leapfrogging the competition” (Freeman, 2005).
The limitations of a regulatory framework for the ICT goods and services industry is further illustrated by the inherent nature of this convergence. For example,
“Transportation costs associated with distance and physical barriers create economic limits and inequalities of income. Physical geography, government policy and demographic changes have been shown to influence economic growth in the period 1965-90. While specific policies, such as openness of markets combined with regulation, may overcome some deficiencies, the long-term aspects of physical geography may limit growth” (Sagi et. al., 2008).