APPLICATIONS. Knut Blind. Abstract. Contact:

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1 REGULATORY FORESIGHT: METHODOLOGIES AND SELECTED APPLICATIONS Knut Blind Abstract The paper on regulatory foresight addresses approaches which allow the identification of future fields for regulatory action. We follow a rather wide perception of regulation and include standards and standardisation as elements of the regulatory framework. The paper presents three methodologies adequate for performing regulatory foresight. First, an approach is presented, which makes use of science and technology indicators and enables the identification of possible fields causing challenges for the regulatory framework and the regulatory bodies. Second, survey approaches are displayed which enable regulatory bodies to identify future needs for regulations. Finally, the usability of the Delphi methodology is discussed and results of a Delphi survey in the telecommunication area are presented. The paper concludes with a comparative analysis of the three methodological approaches regarding their effectiveness to conduct regulatory foresight. Contact: Prof. Dr. Knut Blind Head of Department Regulation and New Markets Fraunhofer Institute for Systems and Innovation Research Berlin Office Also: Berlin University of Technology Faculty Economics and Management Chair of Innovation Economics VWS 2 Müller-Breslau-Str. D Berlin Tel.: +49(0) Fax: +49(0) Mob.:+49(0) Knut.Blind@isi.fraunhofer.de - 1 -

2 1 Introduction 1.1 Background In the last few years, the issue of Regulatory Impact Assessment (RIA) has become very attractive, in particular among European policy-makers. In contrast to the longer tradition of impact assessment of public activities in research and development (see the overview of tools in Fahrenkrog (2002) and Ruegg and Feller (2003)), regulatory impact assessment is a policy evaluation mechanism which has a long tradition only in the USA (OECD 1999). However, the United Kingdom started with some cost-benefit analysis of regulations in the 1980s under the heading of Compliance Cost Assessment (CCA). These CCAs were performed by the Deregulation Unit (Deregulation Unit 1996); now the Better Regulation Unit (1997)), and were developed further e.g. by applying quantitative approaches. Other European countries like Sweden (Swedish National Audit Office 1995) or Denmark (Dutch Ministry of Economic Affairs 1995) followed in the mid 1990s. In Germany, Böhret and Konzendorf (2001) provide an overview and examples of regulatory impact assessment conducted in Germany. Among the OECD countries, regulatory impact assessment gained a certain momentum after the publication of the OECD report on best practices in impact assessment (OECD 1997). The growing interest in RIA in other countries, especially in Europe (Löfstedt 2004), reflects inter-related developments emerging over the past few years (OECD 2003). First, within a framework of tighter governmental budgets and stronger international competition, policy-makers involved in regulatory policies are being held more accountable for the significant economic resources, as well as the political capital invested in regulatory management systems now established in most OECD countries. Second, there is a growing interest in exploring how regulatory policies can be more evidence-based and supported by empirical findings. More evidence-based approaches to the assessment of regulatory quality allow a review of the effectiveness of policy tools used in practice, a review of their performance, but also an improvement of the design and implementation of future policies. An OECD survey (OECD 2003) among their member states reveals that RIA evaluation projects are generally broadly based. They are in most cases inquiries into the benefits, effectiveness, and cost efficiency of the regulations. In countries with established RIA systems, the evaluations also asked questions about the continuing appropriateness and the need for the existence of the system. The correctness of ex ante assessments was investigated only in a minority of cases. RIA evaluations employ a great diversity of methodological tools, with indicators, case studies and surveys as the most commonly used approaches. Evaluation often looked at processes, outputs and inputs at the same time. In terms of lessons and challenges, countries most frequently mention problems to obtain data, difficulties with developing and applying methodologies, time and resource demands and lack of political support. A further distinction can be made between ex ante and ex post impact assessment. So far, we observed a strong focus on ex ante impact assessments, because they have been required in the USA for a long time, and are meanwhile also required in the European Union (European Commission 2002) and some other industrialised countries prior to the final release of a new regulation. A rather new and not yet widely spread trend is the move toward ex post evaluation of regulations, which is part of the progressive development of regulatory policies, complementing ex-ante evaluations (OECD 2003). Ex ante impact assessment is required to check all possible impact dimensions and to evaluate the likelihood of their realisation and their strengths. Ex post impact assessments are able to evaluate the efficacy and the efficiency of - 2 -

3 regulatory instruments by measuring and monitoring their performance (i.e. data gathering and reporting strategies) and practices to review existing regulations. In order to justify a similar treatment of regulation and standards, we have to mention another phenomenon which links more strongly standardisation and regulatory policies at the European level. For over twenty years, the New Approach has been the most prominent and successful approach to link standardisation and regulatory policy. Its launch, which spelled out the regulatory role of standardisation in Europe, was accompanied by a formal recognition of the need to involve public interest in the standard-setting process. This was put forth in 1984 in a joint memorandum 1 between regulators and the European Standards Organisations (ESOs). This important document has only recently been updated. 2 A White Paper on European governance (European Commission 2001) confirms the even more intensive use of standards for shaping the regulatory framework. Although standardisation processes are driven by industry, standards are now becoming an even more important element of the regulatory infrastructure. The New Approach, confirmed by the recent ideas on European governance, requires the considerations of those standards which complement or even substitute governmental regulations in comprehensive regulatory impact assessments, even if the standardisation processes are only moderated by the formal standardisation development organisations and not funded or performed by public organisations. The convergence between governmental regulation and private standardisation justifies, and indeed requires, the inclusion of standards in the discussion. Regarding the impact assessment of standards, it has to be noted that the evaluation of standardisation processes or standards themselves is a rather rare and only recent phenomenon in the United States (Tassey 2003), where standard impact assessment is part of RTD evaluation, because of the assumption that standards are part of the technological infrastructure, which is provided by public institutions (e.g. National Institute for Standards and Technology (NIST)). Based on this general background of impact assessments regarding standards, we have also to consider the impact assessments conducted on behalf of NIST by the Research Triangle Institute (Research Triangle Institute 1999; Research Triangle Institute 2002) or by Gallaher et al. (2002). The experience and assessment of NIST itself are documented by Tassey (Tassey 1999; Tassey 2003). The scope of this paper will be not on ex post impact assessment of regulations and standards, but also not explicitly on ex ante impact assessments of specific options of regulatory instruments. The paper tries to address especially approaches which allow the identification of future fields for regulatory action, regulatory foresight in the narrow sense, which was derived as a necessary policy strategy also in order to foster the development of new markets by Blind et al. (2004)

4 Figure 1: Types of Regulatory Foresight Regulatory foresight in the wide sense IIdentification of future regulatory challenges = Regulatoriy foresight in th Ex ante regulatory impact assessment Ex post regulatory impact assessment 1.2 Methodology The analysis of regulatory foresight in the narrow sense is based, first, on a broad survey of literature databases and the internet regarding regulatory impact assessments in general, but also regulatory foresight in the narrower sense, which also allows an identification of the institutions most active in the field. Here, we have a certain focus on those exercises conducted in the field of information and communication technology, as in this field standards play a major role. 3 We take the distinction between standards and regulatory impact assessment into account. However, it has to be noted that in the field of standardisation we observe only some single ex ante impact assessments, whereas for regulatory impact assessments we find mainly ex ante exercises, which reflects also the results of OECD (2003). However, regulatory foresight in the narrow sense is still the exception and often part of larger foresight exercises. Moreover, national SDOs, including some in the USA and in Japan, have been contacted to ask about ongoing impact assessment and foresight activities, which may not be available on their websites or from their printing offices. However, it seems that only some informal small impact assessments have been conducted (e.g., within informal discussions of participants in standardisation processes). Nevertheless, we could identify some activities trying to determine the future demand for standards. In addition, we developed methodologies and approaches, which represent revisions or adjustments of existing foresight methodologies, but also completely new approaches to identify ex ante major future challenges for regulatory policies. 1.3 Structure of the Methodology Overview The overview of methodologies in Chapter 2 starts with a list of possible methodologies, which are also relevant for assessing the impact of public R&D policies. At first we briefly describe the selected methods and concentrate then on a specific empirical validation of the methods. Finally, we conclude with a brief critical evaluation of the method, based on the experiences collected in the project or reported in the literature

5 The chapters on regulatory foresight methodologies follow the structure applied in the RTD Evaluation Toolbox edited by Fahrenkrog et al. (2002): 2 General description: the section will provide a general description of the foresight and impact assessment methodology, including the operational steps for method application. Good practice examples: the section will illustrate with practical examples of how the methodology has been used at different levels (firm, industry, aggregated). General assessment Conditions for methodology application: the section will provide indications of the costs of implementation, complexity of use, degree of methodology acceptance. Data requirements/indicators: the section will provide an indication of the input, output, outcome/impact indicators available to measure the future needs for regulations and standards. General assessment of the scope and limits of methodology: the section discusses the scope and limitations of the methodology used in regulatory foresight

6 Overview of Regulatory Foresight Methodologies In order to provide a first overview of methods to conduct regulatory foresight methodologies, we start with an evaluation matrix (Table 2.1) presenting methodologies to assess the impacts of different policy instruments. Here, legal frameworks as object of assessment are part of the set of other policy instruments, like R&D funding, and are put in the context of possible evaluation and assessment technologies. Table 2.1: Evaluation Matrix: Matching policy instruments and methodologies Source: Fahrenkrog et al. (2002) The assessment of the relevance of the methodologies is not made on the basis of a rigorous analysis of existing evaluation or impact assessments, but based on the subjective evaluation of the authors. Within the RTD Evaluation Toolbox published by Fahrenkrog et al. (2002) standards and regulations are mentioned only in one chapter (Kuhlmann 2002), which confirms that on the one hand not many experiences exist with the evaluation of these policy instruments, and that the authors ignored even these few studies. The OECD once tried to collect information about the diffusion of various methodologies of ex post regulatory impact assessments among their member states. Yet, this was obviously not successful, as no results were subsequently published by the OECD (2003). However, the list of possible methodologies which the OECD proposed in its survey, but also the methods Ruegg and Feller (2003) presented in their toolkit for evaluating public R&D investment are very similar to the methodologies in Table 2.1. Finally, Böhret and Konzendorf (2001) published a handbook on prospective, accompanying and retrospective regulatory impact assessment, which concentrates on a subsample of the methodologies presented above and presents respective examples from Germany

7 Since our focus is mainly on regulatory foresight in the narrower sense, we will not discuss all methodologies being adequate for performing ex ante impact assessments of regulations and standards. Instead we focus on those methodologies, on which we are able to provide original empirical evidence, but which are also adequate for performing regulatory foresight. Consequently, we will consider the following methodologies in the remainder of the paper: indicator-based approaches surveys foresight studies (incl. Delphi methodology and scenarios)

8 3 Methodologies 3.1 Indicator-based approaches Introduction and Definition New developments in science and technology often cause challenges for the existing regulatory framework or call the creation of new regulatory frameworks. Changes and dynamics in science and technology can be identified and traced by different indicators. These indicators allow the creation of comparisons between scientific and technological fields, between countries, organisations, and over time. The most important science and technology indicators are publications in scientific journals and patents (see for an overviewmoed et al. 2004). The former indicator reflects better the activities in basic research, whereas the latter covers the performance in applied research and development. A rather new indicator (Blind 2004) are technical standards released by formal standardisation bodies. Since standardisation is a kind of industry self-regulation it may be substitutive to, complementary to or even part of the regulatory framework. Figure gives an overview of the science and technology indicators. The use of indicators to perform regulatory foresight exercises is at its very beginning. Since research activities only going on in basic research are less likely to create challenges for the regulatory framework in the near or mid-term future, patent indicators are better suited to perform regulatory foresight exercises in the sense of identifying dynamic fields of technology, since patents indicate the emergence of possible technologies to get introduced in the market in the near future. The shortcoming of patents is that completely new fields of technology like biotechnology and software created at first discussion on its patentability, before they appeared in the patent classifications. However, the use of time series of patent applications either differentiated by fields of technology, especially high technology, or by industrial classifications (Schmoch et al. 2003) allows us to define the most dynamic fields both world-wide and at the national level. The need for regulatory adjustment is highest in those fields with a rather low level of activity at the starting point, which is an indicator for an emerging field. Since there are numerous regulatory challenges triggered by the dynamics in science and technology, one has to differentiate the analysis in those fields of high dynamics. Regulatory challenges in the sense of controlling dominant players can be detected by calculating concentration indices of patent applications. Threats for heath, safety and the environment can be identified by searches both in the patent data for related patent applications and in literature databases for articles addressing the various risk aspects. The above mentioned aspect of the requirement to adjust the IPR or better the patent regime can be identified by respective discussions in the literature or by the creation of new classes in the international patent classification IPC. This procedure allows a rough assessment of the possible regulatory challenges caused by the dynamics in science and technology

9 Figure 3.1.1: Science and Technology Indicators (Souce: Blind (2004) modifying Grupp (1998)) Science Technology Knowledge stock Fundamental research Applied research Experimental development Standardization Resource indicators R&D personnel Internal R&D expenditures External R&D, technical consulting Expenditures for knowledge transfer, fees, licences, standards documents Investment in R&D-intensive equipment, materials, components Scientific publication Literature Literature citation citation R&D results indicators Patent application Patent citation Idea, theory, discovery Technical design Product design, innovation Imitation, improvement, diffusion, exploitation, disposal Intangible functions Measurable functions Measurable feed-back Progress indicators (Technometric) characteristics, innovation counts R&D-intensive goods: employment, production growth, factor productivity Various foreign trade indicators, market shares Examples So far, there are not many exercises, which use science and technology indicators in order to explain future challenges for regulatory authorities, including standardisation organisations. Blind (2002) shows based on international and inter-sectoral cross section data that the output of formal standardisation bodies can be significantly explained by the patent applications as a reliable indicator for the dynamics in the respective technologies. For Germany, he even able to show in time series models that the dynamics in patent applications is reflected in the output of standardisation documents (Blind 2004). Based on these historical evidences, one can derive that dynamics in technology is reflected at least in standardisation activities as part of the regulatory framework in the European Union. Empirical studies, which confirm the relationship between the dynamics of technology and the adaptation of the regulatory framework based on quantitative approaches, are missing. Some studies based on OECD data and other internationally comparable data investigated the influence of the regulatory framework on R&D activities (Koch et al. 2004) or product innovation (Bassanini, Ernst 2002). These studies do not consider that the outcome of R&D and innovation activities may challenge the existing regulatory framework and call for adjustments or even for a completely new framework. However, there is plenty of anecdotal evidence that the regulatory framework has been adapted to the emergence of new technologies, like bio- or nanotechnology. However, the proved link between science and technology on the one hand and changes in existing regulations or new regulations on the other hand underlines that the former can in general be used to determine possible challenges for the regulatory framework in the future. Nevertheless, only an indicator-based approach is able to be the basis for systematic regulatory foresight activities. Whereas standardisation activities are meanwhile connected to science and technology indicators in a reliable way (Blind 2004), the link between science and technology indicators and indicators describing the regulatory framework is not established yet. This deficit is caused by a significant lack of regulatory indicators and especially of respective time series - 9 -

10 and of rather differentiated subcategories. Furthermore, not all new developments in science and technology, but especially those with possible impacts on health, safety, the environment and on the functioning of markets require an adjustment of the regulatory framework. However, the identification of those regulation-relevant new technologies or new specifications within mature technologies is only at the very beginning and requires further methodological efforts General Assessment Science and especially technology indicators are a possible source to detect challenges for the regulatory framework in the future. However, this is a rather new approach, which cannot rely on a broad range of experiences. Furthermore, simple quantitative approaches by constructing time series of science and technology indicators are not sufficient. It is necessary to focus in a second step on the regulation-relevant aspects and also to make use of the information about the stakeholders active in a potential new field for regulatory action. Conditions for methodology application: o Science and technology indicators are easily available in publicly provided or commercially distributed databases. However, the methodological challenge is to meet the adequate level of specification and differentiation of the technology indicators, which fits to the differentiation of the regulatory landscape. The methodological approach is rather innovative and therefore neither broadly applied nor accepted. In the area of standardisation, it is already applied in various contexts. Data requirements/indicators: o The simple quantitative use of science and technology indicators in order to detect future challenges for the regulatory framework is not sufficient. Within potential technological fields relevant for future regulation, regulation-relevant contents and possible stakeholders have to be identified in order to be able to provide lists of challenges and areas for future regulatory action. General assessment of the scope and limits of methodology: o The scope of science and technology based indicator approaches is certainly in detecting possible fields which require in the future regulatory action. However, the identification of specific regulatory issues and even solutions can not be achieved by applying simple indicator-based approaches. Nevertheless complementing content and stakeholders analyses allow a further specification of possible fields of future regulation and the identification of stakeholders. These insights can then be used as input for other methodological approaches in regulatory foresight, e.g. surveys or Delphi studies

11 3.2 Surveys Introduction and Definition Whereas in Table 2.1 the first methodology is too narrowly focused on innovation surveys 4, in this first section we cover surveys which aim to identify future needs regarding regulations and standards. The following operational steps for the performance of surveys to identify future demand for regulations and standards have to be distinguished: Construction of questionnaire (including the definition of questions on participation in standardisation and the involvement of setting regulatory frameworks, the relevance of regulations, the use of existing standards, the relevance of current regulations, future needs for standards and regulations and possible impact dimensions); Definition / Construction of target population in terms of type of organisation, sectors, size classes, and regions Collection of survey and preparation of data set; Definition of goal variables of the organisation depending on the possible requirements for regulations and standards; Construction of an econometric model based on theoretically defined relation of regulations and standards and goal variables; Statistical or econometric data analysis and interpretation of results Examples Although we can not recur on a large number of regulation- and standard-related surveys, we are able to report on some surveys, whose data permits the assessment of the future needs for and impacts of regulations and standards. We start with some studies performed in Germany or German-speaking countries. In a survey conducted in 1998 among companies of 12 manufacturing sectors in Germany, Austria and Switzerland, Blum et al. (2000) covered a variety of possible impacts of both company-specific, informal industry and formal standards. Another large-scale study was conducted in the Netherlands by Meeus et al. (2002), who used the data to analyse the interrelationship between standardisation, research and export activities, taking into account subjective attitudes. However, they did not consider a causal relationship between the implementation of standards and economic performance in their analysis. The survey approach by Blum et al. was replicated for Denmark, integrating also service companies. First results are published by Vad (2004) on the impacts of standards as trade barriers for Danish service companies. Whereas legal barriers are among the most important barriers, standards in the narrow sense are not reported. However, this observation can also be explained by the fact that standards relevant for the service sector are only emerging. This leads us to the studies on standards focusing on services or service companies. The start of standardisation activities within services is rather recent. De Vries (1997; 1999) was one of the first researchers who conducted first case studies on standards for services and developed a first taxonomy of service standards, which is now widely accepted by the research community. A systematic and strategic approach to develop standards for the service sector was initiated in

12 Germany in the year 2000 with a large project Service Standards for Global Markets funded by the German Ministry for Education and Research (DIN 2002). However in other countries, like the United Kingdom, France and the Netherlands (Vad 2004), the national SDOs set up similar agendas. In October 2003, the European Commission addressed a programming mandate to CEN, CENELEC and ETSI in the field of services in order to respond in a more adequate way to the increasing demand for service-related standards and to coordinate the different national activities better. In a survey among German service companies Mörschel and Schwengels (2002) present a ranking of future standardisation areas according to their priority, which reveals that standards for safety aspects, data security, data formats and customer interaction are most important for the surveyed German service companies. Figure 3.2.1: Importance of standards for service-related aspects (3 = medium importance to 5 = very high importance) Data security (customer interaction) Quality management Data security (internal interaction) Customer satisfaction Qualifications and skills Evaluation of services by customers Information systems Service process Code of conduct (customer contact) Data flows formats (internal interaction) Health and safety management Data flows formats (customer interaction) Customer and consumer information Further education Equipment supporting service delivery Service description Code of conduct (internal interaction) Accessibility General terminology Classification of services Organisation models Environmental management Ergonomics 3 3,5 4 4,5 5 Source: Blind

13 This result reveals indirectly that there are strong expectations that those standards will obviously have a high positive impact to improve the former aspects. The answers on a question on the potential use and benefit of standards reveal that standards are important internally for cost reduction, optimisation of processes and improving service quality and externally for signalling a company s competence to customers, fulfilling legal obligations and for fostering domestic and international trade of services. Blind (2003) extended and modified the approach above and was able to rely on the answers of a sample of more than 350 service companies in the European Union, also in order to identify their future needs regarding service standards (see Figure 3.2.1). As most important aspects, one has to mention standards for quality management in general and customer satisfaction in a narrower sense, furthermore standards to improve data security and information systems in general. Furthermore, the impacts of standards on central issues and assets of service companies have also been asked for and the answers confirm their general importance, but also that standards can support companies in fulfilling the needs of their customers and in securing a certain quality of the services provided. Both studies on service standards present mainly descriptive statistics, only Blind (2006) applied a factor analysis approach to determine groups of service aspects relevant for standardisation, which correspond very well to the classification developed by De Vries (1997, 1999). However, one outcome of the second study was the publication of a programming mandate addressed to CEN, CENELEC and ETSI published by the European Commission (European Commission Enterprise Directorate-General 2003) to develop a standardisation work programme to support the internal market for the service sectors The Future Needs for Standards in Nanotechnology based on a Survey among Stakeholders of Germany s Nanotechnology Community Besides the examples reported above, we present another example of a survey, which allows to identify future needs for standards in an emerging technology. Blind and Gauch (Blind, Gauch 2006) conducted a survey among the stakeholders of nanotechnology research and standardisation in Germany. Based on a conceptual framework on the role of standards in the innovation process, they derive that in a new emerging technology at first terminology standards, then measurement and testing standards and only later in the innovation cycle quality, safety and compatibility standards are required. In Figure 3.2.2, we present the shares of those 30% involved in standardisation, differentiated by the four types of standards. The figure confirms that in current standardisation activities, the respondents still deal with terminology, but more especially with measurement and testing issues, whereas only a small share is already involved in the production of quality and compatibility standards. The division of the sample into companies and research organisations reveals that companies are already much more involved in the elaboration of quality and compatibility standards than research organisations. This pattern supports again our conceptual model by highlighting that terminology and measurement and testing standards are especially relevant for the organisations focusing on basic research, whereas quality, but particularly compatibility standards are central for applied research and experimental development. In addition to the distribution of current standardisation activities related to nanotechnology, they asked the whole sample also for the general assessment of the various types of standards for their research work (Fig ). In contrast to the clear pattern of the actual involvement in standardisation, the general assessment of the relevance of the four different standard types, differentiated by companies and research institutes, reveals a rather equal distribution at first

14 glance. In the context of the current standardisation activities, it becomes obvious that there is a stronger need for quality and compatibility standards among Germany s nanotechnology researchers in the future. Figure 3.2.2: Shares of Involvement in Producing Different Types of Standards Differentiated by Type of Organisation Terminology Measurement & Testing Quality & Safety Compatibility & Interface Research Organisations Companies Figure 3.2.3: Relevance of Different Types of Standards (share of respondents reporting high or very high relevance) Terminology Measurement & testing Quality & safety Compatibility & interface Research Organisations Companies

15 Summarising the results of the survey and relating them to the conceptual framework, we can draw the following main conclusions. Nanotechnology is still in an emerging phase, according to our conceptual model. The current standardisation activities are still focused on terminology and measurement and testing standards. The comparison between actual standardisation activities and the general assessment of the future relevance of the different types of standards exposes some discrepancies, especially regarding quality and compatibility standards General Assessment In general, there is only limited experience about the use of surveys for the identification of future for standards and regulation Hence this assessment mainly depends on the experiences collected during the recent past and some previous studies cited above: Conditions for methodology application: o Surveys are rather time intensive, since they require the development of a questionnaire, the performance of a survey either via traditional postal mail or via online survey, the collecting and cleaning of the data and finally the analysis of the data. Surveys can be used for asking stakeholders for future needs for standardisation and regulation activities. Finally, surveys have a high acceptance as a methodology if certain aspects and shortcomings are adequately considered. Data requirements/indicators: o The main advantage of surveys is that surveys allow the consideration of very specific regulatory challenges in the future, which cannot be covered by indicatorbased methodologies. Hence, they are able to provide unique data in this respect. o Depending on the size of these surveys, there should be the possibility to distinguish the future needs for standards and regulations differentiated into different types of stakeholder groups, which allows comparative analyses.. o If surveys address the universe of organisations, e.g. firms, and lead to representative results, the data can be combined with indicator-based approaches representing the universe in science and technology. General assessment of the scope and limits of methodology o In contrast to other strategic aspects of organisations, assessing the future needs for standards and regulations and their possible future impacts is rather difficult even for experts, because standards and regulations contain technical, strategic and legal aspects and most experts in organisations cover just one dimension. This leads to rather moderate and low response rates. o Surveys are probably not the best tool to collect information about the future needs for standards and regulations. However, they can be further improved to become a more reliable instrument in regulatory foresight, i. e. helping to identify needs for regulatory policy intervention

16 3.3 Foresight Studies Introduction and Definition Science and technology foresight exercises are becoming increasingly attractive for governments, national research agencies and businesses in their efforts at coping with the increasing complexity of new technologies and decision environments, in an increased technoeconomic competition world-wide (see e.g. Martin (1995)). Since the 1990s, quite a number of major foresight exercises have been launched in many European countries. The majority of experts consider foresight essentially as a collective and consultative process, with the process itself being equally or even more important than the outcome. Foresight exercises are ways of obtaining opinions about future developments. Foresight is different from prognosis or prediction. Implicitly, it means taking an active role in shaping the future (Cuhls 2003). As a possible result our prognosis of today may be falsified in the future because of a new orientation resulting from foresight. Older attempts at "planning" the future by developing heuristic models (in the sense of futurology) were based on the assumption that the future is predefined as a linear continuation of present trends (Helmer (1966); Flechtheim (1968)). Although these approaches largely failed, due to the in-built simplification of the actual dynamics of social, economic and technological developments, some studies nevertheless evoked a vivid discussion about the future (e.g. Forrester (1971); Meadows et al. (1972)). In reality, future developments underlie reciprocal influences which cannot be assessed exhaustively in advance, thus not predicted. There is, nevertheless, a need to "monitor the future prospectively": the accelerating changes that individuals as well as societies have to adapt to socially and psychologically, make it necessary to anticipate these changes before they become reality (Helmer (1967)). A new understanding of foresight gaining acceptance in the 1990s (starting with Irvine and Martin (1984)) made clear that a targeted shaping of future developments is strictly limited and that the potential impacts of decisions can only partially be estimated. In the context of policy-making, the most important intentions of foresight exercises are to find out changes in consumer preferences and to detect new technological opportunities, to identify a choice of technological opportunities, set policy, e.g. regulatory, priorities and assess potential impacts and chances, to discuss desirable and undesirable futures, to prospect the potential impacts of current research, technology and regulatory policy, to focus selectively on economic, technological, social and ecological areas as well as to start monitoring and detailed research in these fields. Consequently, foresight activities can also applied to regulation, in order to identify both promising areas for regulation and possible impacts. In the following we report some foresight studies, which focus directly or indirectly on the future need and role of regulations

17 3.3.2 Examples We start with some so-called Delphi studies, a foresight approach, which achieved a high popularity in Europe in the 1990s (Blind et al. 1999; Landeta 2006). The Delphi method was originally developed in the USA already in the 1960s (Gordon, Helmer (1964); Helmer (1983)) and regularly implemented by the Japanese government since 1970s (Cuhls 1998). Delphi belongs to the subjective and intuitive methods of foresight. Issues are assessed, on which only unsure and incomplete knowledge exists. Delphi is based on a structured survey of expert groups and makes use of the implicit knowledge of participants. Hence, the Delphi method has both quantitative and qualitative dimensions. There is not a single method, but all agree that a Delphi study requires an expert survey in at least two or more rounds. Starting from the second round, a feedback is given about the results of previous rounds: the same experts assess the same matters once more, influenced by the opinions of the other experts. Delphi facilitates a relatively strongly structured group communication process, revealing conflicting as well as consensus areas. Delphi-based foresight exercises, therefore, were used repeatedly and increasingly in the context of policy-making, building on their capacity to facilitate an alignment of actors expectations through interactions. Although Delphi studies are also adequate to identify promising fields or future needs for regulation, the issue of regulation was only taken into account in the large national Delphi exercises in Japan (National Institute of Science and Technology Policy (NISTEP) 1993), which has been applied in Germany (Bundesministerium für Forschung und Technologie (BMFT) 1993). Regulation was included in a set of possible obstacles, like lack of capital or human resources, for the development of science and technology. In the following Sixth Japanese and Second German Delphi studies ((National Institute of Science and Technology Policy (NISTEP), Science and Technology Agency 1997) (Cuhls et al. 1998)), all the obstacles categories were changed in policy measures and the obstacles regulations were transformed into changes in regulations. The survey results could be used to identify those areas which are either hampered by regulation or which can be promoted by adjustments of the regulatory framework. In the first German Delphi survey, the field communication was characterised by the most negative values regarding the impact of the regulatory framework 5 because of the former monopolistic structures in the telecommunication markets and the massive public intervention in the radio and television markets. In Japan, the regulatory framework in communication technology is also crucial, compared to most other technological areas (Cuhls, Kuwahara 1994). The relatively little importance of the regulatory framework compared to other policy instruments is confirmed in the follow-up studies, but the liberalisation especially of the communication markets in Germany is reflected in the little need to readjust the regulatory framework in comparison to other fields, like the environment or in services (Cuhls et al. 1998). In contrast, the Japanese experts call for adjustments in the regulatory framework, especially in the information and communication field, like for the widespread use of electronic money, electronic voting or automated trading systems in their Sixth Japanese Delphi Report (National Institute of Science and Technology Policy (NISTEP), Science and Technology Agency 1997). This general pattern is confirmed by the results of the Seventh Japanese Delphi Report (Science and Technology Foresight Center (NISTEP) 2001), not only in the field information, but also in the field Business regarding e- commerce-related issues. 6 In summary, Delphi exercises take the general regulatory framework as one kind of obstacle, but also as one possible policy measure into account. However, the role of regulatory frameworks for the realisation of future technologies compared to other types of obstacles is rather limited. However, regulations enjoy still a rather high importance in the information and communication fields. From these experiences one can also derive that the Delphi methodology can be used to set priorities in regulation and to assess the future impacts of regulations. However, surveying

18 the activities in the last years, we can only list some exercises, like surveys and trend workshops, which tried to identify future needs in regulation. Already in the 1980s the international standardisation bodies perceived the general requirement to detect and monitor early on the future challenges for their standardisation activities, in order to adapt both their fields of activities and even their processes. Therefore, the two working groups ABTT (ISO/IEC Presidents Advisory Board on Technological Trends) and LRPG (ISO/IEC ad hoc Group on Long Range Planning) were installed (ISO, IEC 1990). ABTT concluded that the fundamental changes in the innovation processes, especially their increased dynamics, represent new challenges for standardisation in general, which calls for more flexible and simpler standardisation processes. The LRPG tried to set priorities in standardisation activities based on an international survey in twelve fields with a high scientific and economic importance. Information technology, biotechnology, and the protection of health and the environment achieved the highest scores. It was recommended to implement the results in the actual standardisation activities. 7 A further methodological approach within foresight studies is the organisation of trend analysis workshops. This approach is regularly applied by CEN STAR, the CEN Standardisation and Research Working Group tasked with establishing a more efficient link between European cooperative R&D and European standardisation, improving the speed, quality and completeness of the standardisation process. One example was a trend analysis workshop on service standards in October Following presentations by representatives of standardisation bodies and researchers, companies had the opportunity to express their needs with respect to future standards, including standards for e-commerce, e-government and e-learning. In general, trend analysis workshops can be an important element within a foresight process to identify future needs for regulations and standards and to assess their possible impacts. However, trend analysis workshops as implemented today, as stand-alone events, are not very efficient. They should be integrated in a broader foresight approach with the application of creativity methods, like brainstorming, and include broader surveys among standards developers and users. A further foresight methodology, which can in principle be used for the identification of future needs for regulations and for their assessment is scenario analysis. There exist several scenario studies in the ICT sector (Australian Communications Authority 2005; Welfens et al. 2005). The role of regulations plays an important role among the factors influencing the future of the ICT sector. In Welfens et al. (2005), regulation, e.g competition rules, IPR regimes and the ICT related education system, and standardisation were four of 48 condensed impact factors, which was perceived to have a major influence on the future development on the German Internet economy until the year The policy and regulatory framework had in these scenarios the role of a buffering factor with a limited driving force, but also only influenced to a limited extent by the other factors. This confirms its role as framework condition, which has probably more influence in the long run. However, the two medium-term scenarios show explicitly different options regarding the future of the Internet economy depending also on different alternatives of the regulatory framework. In contrast to the Delphi-method and also to the trend analysis, which lead mostly to consensual assessments of the future, scenario analyses require explicitly the development of different and often contradicting views about the future

19 3.3.3 A Delphi Survey among Telecommunication Experts Whereas most of the previous selected results focus on an ex post impact assessment, in the final section we will present some results of a small-scale Delphi-study among participants of an ITU (International Telecommunication Union) expert workshop on "Adjusting Forecasting Methods to the Needs of the Telecommunication Sector" organized in September The questionnaire was divided into two sections. In the first section, the respondents were asked to assess a selection of future technical and business developments taken from the Seventh Japanese Technology Foresight Report (Science and Technology Foresight Center (NISTEP) 2001), published already in 2001 their expected time of realisation, their importance, the effectiveness of policy measures including standardisation. Besides their expected time of realisation and their importance, the experts were asked to assess the effectiveness of policy measures, like R&D support, which includes R&D funding and improving the framework conditions for R&D, regulation (i.e. reinforcing or establishing regulations); deregulation (relaxing or abolishing related regulations), and standardisation within formal standards development organisations for the implementation of these visions. Table presents the assessment of the 21 telecommunication-related future technologies. The role of standardisation is highest for the realisation of "highly reliable network systems capable of protecting the privacy and secrecy of individuals and groups from the intrusion of illintentioned network intruders" followed by "online seal-free (signature-free) document preparation services for various official documents such as con-tracts which are provided via a network based on security technology capable of achieving both privacy protection and verification". In contrast, the change of e-commerce based retail shops from simple goods sellers to services (consulting, agent, etc.) providers does obviously not require the support by standardisation and standards

20 Table Future Needs for Standardisation in Information and CommunicationTechnology (Source: NO-REST ITU Survey Fraunhofer ISI 2005) (1 = low importance to 5 =high importance) Widespread use of highly reliable network systems capable of protecting the privacy and secrecy of individuals and groups from the intrusion of illintentioned network intruders. Realization of an environment in which the unlimited utilization of high-capacity networks (150 Mbps) for around 15 /month or less is possible. Widespread use of online seal-free (signature-free) document preparation services for various official documents such as contracts which are provided via a network based on security technology capable of achieving both privacy protection and verification. Widespread use of systems which facilitate multimedia communication from anywhere in the world using pocketbook-size portable terminals. Development of an optical transmission system capable of high-volume transmission of 1 Peta bps per optical fiber. Widespread use of a SCM (supply chain management) system to handle data management (orders, design, manufacturing, operations, and maintenance) uniformly among related companies. Development of a super high-speed computer communication protocol capable of achieving a throughput of tens of Gbps. Development of technology capable of automatically detecting viruses and automatically producing corresponding vaccines. The number of recycled parts in new personal computers, including displays, exceeds 90% of all component parts. Widespread use of a security technology that automatically monitors illicit activities involving network ethics, such as copyright infringement concerning multimedia software use over a network and the violation of privacy. Practical use of systems capable of understanding and automatically checking the content of image data Year Importance R&D Regulation Deregulation Standardisation