The integrated sphere of coopetition of digital services and the regulatory approach of diagonal equity

Telecommunications Service providers (TSPs) and Content and Application Providers (CAPs) that operate over the Internet are traditionally regarded as complementary. However, the growth of 5G technologies has led to the emergence of an integrated sphere of competition and cooperation between TSPs and CAPs.The new elements of this competitive landscape stem from the hybridization of network provisioning, the growth of substitute services, and the emergence of end to end value networks comprising of devices, connectivity solutions, and a variety of content and application services. Simultaneously, the regulatory drivers that occasioned a differential treatment of TSP in their role as providers of essential utility communication services are converging with the features observed with respect to certain CAPs. These dynamics warrant the application of a new regulatory framework in the form of Diagonal Equity, that recognizes the need for similar regulatory principles to be applied to TSPs and CAPs, while acknowledging that with respect to certain issues a differential treatment will continue to be required. •Posits the growth of an integrated sphere of competition and cooperation between Telecommunications service providers (TSPs) and Content and Application Providers (CAPs).•The new element of competition between these entities stems from the hybridization of network provision, the growth of substitute services, and the jostling for a share of the pie earned by ‘walled gardens'- end to end value networks comprising devices, connectivity services, and a variety of content and application companies.•Defines a new regulatory approach – Diagonal Equity that recognizes the need for similar regulatory principles to be applied to TSPs and CAPs, hitherto regarded as dissimilar on account of the ‘essential service’ nature of telecom.oContrasts diagonal equity with classical approaches of vertical and horizontal equity•Illustrates the application of Diagonal Equity to net neutrality, interconnection and data portability, universal service obligation, and regulatory levies