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“Cathryn Ross on the Regulatory Horizons Council and Re-Imagining Regulation” (Two Think Minimum)

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Bob Hahn:

Hello, and welcome to the Technology Policy Institute’s podcast, Two Think Minimum. I’m your host, Bob Hahn, and today we’re very excited to have my colleague and friend Cathryn Ross with us as part of the Re-Imagining Regulation Series. Cathryn has worn many hats during her life. She’s currently Director of Regulatory Affairs at the BT group, which is the largest provider of fixed-line broadband and mobile services in the UK. She’s held key positions in regulation and the UK government and also worked in the private sector. Previously, she served as CEO of the Water Services Regulation Authority in the UK. Cathryn was also recently asked to chair the UK Regulatory Horizons Council, and that’s going to be the subject of today’s discussion or at least some of the work that the Council is doing. Cathryn, welcome, and thanks for joining us remotely. 

Cathryn Ross:

Hi, Bob. Thank you for having me.

Bob Hahn:

I think the last time we were together doing a podcast was in Aspen, and I dare say that the scenery is probably a little bit better than my study. I also dare say that a lot has happened since then, and in the spirit of re-imagining regulation, I was wondering if you could tell our listeners what the Regulatory Horizons Council is about and maybe what you’re thinking about doing as chair or czar of the council.

Cathryn Ross:

Czar, I liked that one. Sure. Happy to talk about that. The Regulatory Horizons Council has a really clear exam question that we’re there to answer, and that’s really about how regulation needs to change if the UK is going to get the best value from technological innovation. So, that kind of tells you what we’re about. We’re about regulation reform. We’re not about the status quo. We’re about how can we make regulation better, but we’re about how we can make regulation better with a view to enabling best value from technological innovation. And I think that that’s a really, really important way of framing the work that we do, because part of that is about enabling the innovation to happen in the first place. And some of that is about, for example, deregulating and just getting out of the way. But part of it is also about encouraging the take-up of that innovation, because if innovation happens, but it’s not actually taken off, if it’s not sort of used by customers or used by society, then it won’t deliver benefit.

And then when I’m also talking about getting the best value out of technological innovation, I am talking about quite a wide range of potential sources of value. So, it might be about straightforward improvement inefficiency. It might be about better use of natural resources. It might be about social inclusivity. It might be about competitiveness. There are a wide variety of different sources of benefit that we want to try and unlock. So, ultimately, we’re about how one can reform regulation to enable that to happen. And the whole thing came out of a White Paper, a sort of a think piece that the UK government put out a couple of years ago, which was entitled “Regulation for the Fourth Industrial Revolution,” and that was part of a bigger piece of work that the UK government was doing to think about how the UK can set itself up more generally to be pro-innovation and really take advantage of the new technologies that are being developed and implemented in the UK. So, we have a small part of the puzzle in our remit, but I think it’s a really important one.

Bob Hahn:

So, I had the privilege of sitting in Oxford for about seven years and visited you in London a few times. And it struck me just in my very narrow sample, which was far from being random, that a lot of innovation was going on there, particularly in FinTech. So, what’s the problem here?

Cathryn Ross:

I mean, there is loads of innovation that is going on in the UK, and it’s not just in FinTech. I mean, there’s some amazing stuff that is going on, for example, in the sphere of health and medical devices. There’s some great stuff, for example, in the whole area of mobility as a service, autonomous vehicles, things like that. So, we’re not really short of good ideas in the UK. I think the challenge really kicks in when you want to go from startup to scale. When you want to get out of proof of concept and you want to start actually marketing your idea and making it commercial and getting people to take it up because that’s usually where you start to collide with some kind of regulation and somebody at some point will pop up and go, “Oh, well actually this thing that you want to do, there’s a bit of a problem, and if you want to do that, you have to do it like this,” and sometimes the “like this” is actually completely contrary to the business model that you had in mind or production process you have in mind, and that can kill the innovation pretty much, not exactly at birth, but it can certainly kill it before it gets off the ground. And that really is the problem that we’re trying to address.

Bob Hahn:

Okay. So, help me out here. So, you’re in the UK now, and my understanding is with Brexit, you’re a little bit separate from mainland Europe, but calibrate me in terms of how the UK does things, how Europe does things, how the United States does things, and maybe what you, the UK, needs to do or what the United States needs to do, or what have you, to get their act together in moving a product from sort of the idea stage, to use your word, scale it up in some way to make it really happen for society.

Cathryn Ross:

Yeah. Okay. There’s a lot in that, and I am certainly not going to tell anybody in the US what to do. We are very much in the business of making some recommendations to the UK governments. That’s pretty much our focus, but you are right, by the way, to mention the Brexit context because I do think that’s important. I mean, whatever you think of the pros and cons of Brexit, there are certainly opportunities from Brexit for the UK to think differently about how it does some of this regulatory stuff, particularly some of this regulatory stuff that relates to innovation. So one example, the Regulatory Horizons is looking at, at the moment is in relation to gene editing. One of the things that happened in Europe a little while ago was that there was a huge debate about genetically modified organisms, lots of really quite, quite visceral debate with people being very afraid across the public about what was referred to as, “Frankenstein foods.”

So, the idea that you take a part of a genome from one life form, and you add it to a genome from another life form, and you suddenly create this third life form, hence the concept of, “Frankenstein foods,” and I think it’s safe to say that that whole debate really caught fire across the public sphere, really quickly. There were some quite powerful interest groups that became part of that debate, lobbied very hard. And actually, part of the result of that was that GMOs were banned by European regulations. The EU defines genetically modified organisms very broadly, and they are not committed. Whereas I think what we’re now realizing is perhaps there’s a spectrum here, and the risk is not the same along different parts of the spectrum. So, for example, you might think differently about combining two different genomes in respect to the new organism that could itself reproduce if it went out in the environment. You might think differently about that, to an organism that could not reproduce if it was out in the environment, that essentially sort of had obsolescence, if you like, had its own end built into it. 

So, you might think differently about gene editing, where for example, you might take a tomato that had a predisposition to blight, and you might remove the gene from that tomato that gave it a predisposition to blight. You’ve not created a new species, you’ve just removed something from that genome that predisposes it to blight. So, one of the things we are thinking about as the Regulatory Horizons Council is whether, in the context of Brexit, we might have an opportunity to take a different approach to the definition of genetically modified organisms, and in fact, to maybe regulate them in a slightly different way that is more proportionate to the risk that they actually pose to the natural environment and society, and maybe there’s an opportunity in that. So, it just gives you an example of one of the things that we’re looking at.

Bob Hahn:

Yeah. So, that’s a fabulous example for a lot of reasons. One, if you buy a tomato in a typical grocery store in the United States, it looks like it’s a tomato, but doesn’t taste like one. When I get in England or one I get in France, it actually tastes like a tomato. So, I hope you don’t mess with that part of the equation. 

What I hear you saying is that there may be a way to bring a risk balancing or a balancing of benefits and costs in such a way that you might be able to set up regulations that foster innovation and deliver benefits to the public at large. So, what are the leavers that you’re considering, or the British government might have at its disposal to do this? And how far along are you in your thinking about tomatoes, as you would call them, or any other stuff that I might get at the grocery store or any other stuff that might affect John Q. Public?

Cathryn Ross:

Right. I mean, we have a massive potential remit. I mean, we can look at any technological innovation. We can understand that technological innovation; we can see how it maps onto the regulatory landscape, and we can propose changes to that. In the face of this enormous remit, we have picked a number of priority areas that we’re going to have a look at first. One of them, I’ve already mentioned and hat’s this whole area of gene editing. There is another one that we’re looking at, which is nuclear fusion, the regulation of nuclear fusion. We are very much aware that as people talk about nuclear fusion, and I’ve just done it now, the word “nuclear” comes before the word “fusion”, and that can quite easily put you on a path to saying, “Oh, well, it’s all nuclear. We should regulate fusion in the same way as we regulate fission,” and actually, the risks again are very different. So, we’re trying to unpack that and ask the question, “Actually, is it reasonable to regulate fusion in the same way as we regulate fissions? Should it be done by the same entity, or might it be better off done by someone else?” So, fusion is another one of our priorities. We’re also looking at the whole area of unmanned vehicles, which would of course include drones. And again, that’s a really, really interesting one. In the UK at the moment, for example, it is not legal to fly drones, what they call, “beyond visual line of sight.” So, if you’re flying a drone, you can only be flying the drone as far as you can see it, and you can sort of see why that might be a reasonable starting point, but actually, the technology exists now for you to be able to control the drone way beyond the visual line of sight.

So again, we’re trying to step back and ask the question, “Well, what are the risks associated with this? And is there a way of regulating that’s more proportionate to that risk?” For example, are the risks different in a central London location, where there are lots of tall buildings, maybe lots of things, and that sort of drone space, all the risks different and that sort of environment, as compared to, let’s say, drone flying over a farmer’s field in the North of England, where there aren’t any buildings where they’re really offering many people and might you be able to be more permissive in that environment, for example? So again, just an example of something that we’re looking at in the area of unmanned aircraft, and then the last one, which I have a feeling we’re going to take a little bit of time, is this whole area of medical devices.

Now, obviously, we are looking initially at whether there are some lessons that we can learn from the COVID crisis about how innovative medical devices using new technologies get into the marketplace, and one example there has been in the UK when the COVID pandemic hit, we were finding a lot of strain on our hospital resources. One aspect of that was we were running out of ventilators, and so the government put out a plea and said, “If anybody can manufacture ventilators to go into our hospitals, would you please do so?” Unsurprisingly, quite a lot of people who put their hand up and said, “Yes, we can help,” didn’t necessarily want to manufacture ventilators that looked exactly like the ventilators we’ve always had because they are working in the Formula 1 car industry, or they’re working on vacuum cleaners or some other kind of technology, and so that has led to innovation in the way that these ventilators are produced, and there are certain lessons to be learned about how those different types of ventilators got into the market. There were a few hiccups, for example, at the beginning, where the manufacturers weren’t clear enough about what the standards were for those ventilators, and the standards translated really easily into the old type of ventilators but were actually quite difficult to make work for new types of ventilators. So, one thing we’re looking at when we’re looking at medical devices is lessons learned from COVID, it’s kind of an obvious thing that we should think about, but there is a longer-term piece of work in relation to medical devices, which I think is super interesting, which is about the use of AI, big data and machine learning in a health context, and for example, about the extent to which, or might wish to start regulating wearable technologies and integrating those technologies, including the software in relation to those technologies into medical devices, type regulation. I think that piece of work is bigger. It’s more complicated, and I think it’s going to take us a little bit more time. 

So, those give you a feel for the four priority areas we’ve picked. I think it is also worth mentioning that there are some systemic issues in regulation that make regulation a little difficult, sometimes a little bit too gritty when it comes to embracing new technologies. So, the four examples I’ve given you overall, what you might call verticals, they’re all particular types of technology. You can look at the technology, you can look at the regulation and you can say, “Is this going to work or is it not gonna work, and how do we need to change it?” But we are running up against some more sort of horizontal cross-cutting issues about how regulation happens. That might mean that it’s not as great for innovation as it could be.

So, you know, very, very simple things, like if you’re sitting in a regulator and you’re designing new regulation, funnily enough, you tend to talk to the people who are the incumbents in your sector because they know you and you know them, and you’ve got a good conversation going. How do you get that outside the box thinking, you know? How do you challenge yourself to make sure that the regulations that you’re designing and implementing doesn’t just work for the people you know and love today, but works for different people? So that’s one potential bias, if you like, in the system. I think there are others. I mean, you and I have talked before in the context of competition policy about how it’s very easy for regulators to look through the rearview mirror and to look at evidence. Evidence is good, and evidence is useful, but kind of by definition, evidence is what happened in the past, and actually how regulators should apply their brain and think forward and not be afraid of making judgments about what might happen in the future and try and enable some of those future states of the world.

So, as well as looking at particular types of technology in particular types of innovation, we’re also interested in picking up some of those more horizontal cross-cutting things.

Bob Hahn:

You’re reminding me about the old *inaudible* or whatever about economists successfully predicting nine of the last two recessions or something. Let me ask you a couple of things related to sort of generalities or generalizations here. You’ve picked three or four areas which sound very exciting and dynamic and stuff that the UK could play a leadership role in for other developed countries. Are you trying to come up with general principles here that might be useful to policymakers? Are you just going to do it sector by sector because you believe everything’s really different? What are you trying to do?

Cathryn Ross:

It’s both. It has to be both. I think our initial approach is to try and look at particular technologies, but actually what I’m anticipating is that as we look at particular technologies, we will pull out some themes, and actually, that’s happening already. And then we should pull those themes into some more sort of generalizable principles as to what pro-innovation regulation might look like. Part of that is going to be probably for regulators themselves, but part of that might be for the government and government policy as well.

Bob Hahn:

One of the things that you were talking about was not favoring incumbents and thinking about potentially new entrants into a business who might deliver a completely different kind of mass trap or ventilator, or what have you. So, that’s clearly very important since you’ve had an incredible wealth of experience as a regulator, and thinking about some of these issues, what are your views on how regulation should be allowed to evolve over time or regulators should take in new information or whatever to allow for a more dynamic sector in terms of innovation?

Cathryn Ross:

I genuinely think it’s hard. I mean, there is a reason that the government has created a distinct, small, but equal Regulatory Horizons Council to do horizon scanning and recommend regulatory changes. That there’s a reason that we are a separate institution. The reason for that is that it is actually hard for regulators to do that stuff for lots of reasons, right? So, we talked about that. That you talk to the people that you talked to, and the people you talk to tend to be incumbents, and that takes you down a particular road, but actually, there’s an awful lot of danger in being a regulator. And it gets in the way, the horizon scanning stuff, the thinking forward stuff, it all too often ends up on the nice-to-do lists, and that is subordinate to the must-do lists. Then somehow, you never quite get there to the same extent that you would like to.

It is tricky, but yes, there are some things that regulators can do. And I think, for example, one of the things we did when I was Ofwat, the water regulator. We moved away from, for example, telling the water companies, what they actually had to deliver in terms of relining however many kilometers of trunk mains and refurbishing however many treatment works. We started to talk to them about delivering outcomes for their customers and actually giving them more freedom about how they delivered those outcomes for their customers, and the difference between output and outcome is that output tends to be an engineering measurable thing and an outcome tends to be something that a customer would recognize as something they want. So, an outcome might be a reliable water supply, a reliable supply of clean water, whereas an output might be a refurbished treatment works and just that move from outputs to outcomes enables innovation. You can think about different ways of doing things. 

There’s another thing that the regulators could do as well, which is, I think also to recognize that innovation quite often does not come from the usual suspects, the people that they know and love like to do things that they like to do in the way that they know how to do them. So, actually, one of the things that regulators can do is use their convening power in their sectors to just disrupt, you know, bring in different people, bring in somebody with a different experience from a different sector, bring in disruptors and just change the conversation and sometimes it’s simply by doing that, you can spark innovation. So, I think they’re all things that regulators could do, but one must not underestimate the difficulty of it because there is one hell of a day job they have to get on with.

Bob Hahn:

Okay. So, let me move on to more controversial turf, and I’ll give you the option or privilege of punting on any of these questions, but my experience in the UK, and again, very limited, was that the British people love the National Health Service, and my experience in the United States is most people don’t like certain aspects of our health care service. I, at the risk of generalizing, but many people feel that there is incredible room for innovation globally in the healthcare sector, and you mentioned, I think medical devices or whatever, but how do we get to the point where we can allow either these big tech companies or people in garages to really begin to help revolutionize different aspects of healthcare? 

And I’ll give you one example in the United States, which I think the British have solved better than we have, but I’m not sure. It has to do with when you walk into a new doctor’s office, just having your records right at the person’s fingertips. So, we haven’t solved that problem very well here. I mean, Mr. Obama had health care reform, and I’m just talking as a customer here, I walk into a new doctor’s office and some young person has to say, “Mr. Hahn, can I take your life’s history for the past 50 years?” 

So, I guess what I’m asking you is, how do we begin to think about revolutionizing some of those sectors in the same way Mr. Sam Walton did for Walmart?

Cathryn Ross:

That is a bigger question than I think we’re going to manage to answer on this podcast. I mean, I wish I could say the UK has solved that problem of medical records better than the US, but I’d suspect not, from what you say. And in fact, there’s been various attempts here in the UK to revolutionize the NHS’s IT systems, and I think they’ve had very limited success. And part of that has been because our system is very fragmented. So, individual doctor surgeries will keep their own records. Individual hospitals and hospital trusts will keep their own records, and it is notoriously difficult to get one part of the system to talk to another part of the system. So, you know, you stand the chance of showing up at your local doctor and your local doctor knowing who you are, but God help you if you move somewhere else.

So, we’re a long way off solving that problem. But I mean, I think they’re all different ways into this though, aren’t there? And I think part of it is about really understanding where the assets are in the system, and I think data is huge. And I think if we could harness the power of organizations who we know can do this stuff, who actually do data collection, data storage, the extraction of information and insights from data… If we could harness the power of that in relation to health data, whilst making sure that public concerns are adequately and transparently dealt with—I think that’s absolutely critical—then I think we’ve got an asset that can be leveraged and something that can be used, and there is an organization in the UK called NHSX and NHSX is that to try to facilitate these kinds of innovative approaches in the NHS, and there’s been a lot of discussion about how we can create conditions through the NHS to do precisely that, but we’re not there yet. And I do think it’s going to be absolutely critical when we do get to that point that somebody says, “Okay, we’re interested. We can help you do this stuff, and we can help you do it better,” that we do have the ways of making sure that public concerns are adequately and transparently dealt with, because if there is a loss of public trust, it goes back to what I was talking about right at the beginning. If there is a loss of public trust and the public just do not see this stuff as legitimate, and there is a mass boycott of it, it will kill it at birth. We’ve got to keep both of those sort of limbs moving together, enabling the harnessing of that kind of private sector innovation and discipline with the public trust. They’ve got to be in parallel, but I genuinely do think we’ll get there. I really do, but it will take a little bit of time. And I think the other thing we’ve got to think about as well, and this links into this whole question, which is very sort of current about the economics of platforms, we need to be careful as we create these systems or enable these systems to be created, that we don’t end up creating massive platforms with massive market power, but then in terms of the second and third generation, go on to preclude innovation. So, this point about open data and open platforms and setting this up in a way that doesn’t create barriers to entry and expansion down the line. I think it’s also important.

Bob Hahn:

So, you and I have talked about this before, but so what should we be doing with a Facebook or a Google when they want to buy another big company like a YouTube or an Instagram or something that, I don’t know, that teenagers are using or whatever, either here in China. I mean, should we be thinking about that differently or how should we be thinking about this if our interest is in promoting innovation?

Cathryn Ross:

Look, it’s a good question, and we have spoken about this before. I’m actually less concerned about Google or Facebook buying a YouTube. I mean, I think to some extent that ship’s already sailed, all of them, a merger, or a big company with a big company, is probably going to get appropriate attention, but it’s more the sort of deals where you have one of these sort of platform companies, perhaps Hoovering up a smaller company whose potential has not yet been realized, but who could otherwise be the innovator or the disruptor, and maybe that’s why they’re buying them in the first place. And we’ve spoken about this before, there’s nothing wrong with competition economics, right? We do not need a whole new branch of competition economics to deal with this, but what we do need our competition regulators who actually understand the dynamics of market competition in the sort of sectors, inherent economic properties of two cited buckets, tipping effects, what happens when people expand into adjacencies, who actually understand the importance of the assets that these companies have and the leverage that those assets can give them and then apply the tools that they already have in the toolbox. So, we don’t need a new competition economics, and I’m not sure we need a new set of tools in the toolkit, but we do need competition regulators to apply that those economics and those tools differently and in a more forward-looking way.

Bob Hahn:

So, let me ask you, you mentioned the phrase “Fourth Industrial Revolution,” and I’m not asking you to defend it as your own, but when I think of the Industrial Revolution, I think of particularly in the UK happening a hundred or 200 years ago, you know, roughly speaking, where people were working in factories and moving off the land and whatever, and may have been getting paid low wages, but more than they were getting on the farm or what have you. And that made a big difference over time in the average person’s well-being. What do you think when you hear that phrase, what does it mean to you and how should we be thinking about regulating this stuff if our goal is to promote innovation?

Cathryn Ross:

Yeah. I mean the whole phrase of the “Fourth Industrial Revolution” is in some senses overused, but I mean, to my mind where the rubber hits the road is where we’re talking about things that will fundamentally change how all sorts of things that we know and love today get done. And I’m particularly thinking about, we talked about it already, data, AI, machine learning. Actually, I think that the next thing that is coming, but he’s really going to turbocharge that is a combination of quantum computing and competent matter physics because that’s when the iPhone that we didn’t have 10 years ago becomes a quantum iPhone, and that will just turbocharge all of this. So, where’s it going to take us? I have no idea. I mean, you know, it’s going to be some sort of basis for interacting with the world in which data creation and data insights and the connectedness of people and devices and machines are so much more prevalent than it is at the moment.

And I think that sort of dividing line between human beings and the human brain and devices is going to get a lot more blurred. And quite what specific applications that we’ll come up with? I have no clue, and if I did, I wouldn’t be talking to you, Bob. I’d be sitting back counting my Bitcoin billions, but I think that does tell us something about how we need to regulate this stuff. And we need to be really slow to regulate in ways that close off the development of those applications because some of them will be amazing. Some of them will be awful. Some of them will be both, but if they don’t happen at all, we don’t get to choose. We don’t get to make those choices. So, we have to keep our eyes on the prize of regulating in a way that enables the innovation, but also gives us the leaders to deal with public trust issues as and when they come up, and there are different tools in the toolkit for this, right?

So, one of the debates we are having in the context of the Regulatory Horizons Council, for example, is about how we need to take a more systemic view of regulation, different forms of regulation. Now, the fact that all those different forms of regulation are not implemented by the same institution often means it’s difficult to choose the right tool for the job, but go back to that principle about, you need to regulate to risk. You need to regulate in a way that is proportionate to the risk. If the risk is really, really, really bad stuff will happen in an irreversible way to lots of people or to people we really, really care about. Then maybe the right answer is you just kind of stop it happening, but actually, a lot of risk isn’t like that. A lot of risk is reversible, or smaller scale, or happens to people who can buy on the ledge, take care of themselves. And in situations like that, maybe we just accept that this stuff is going to happen, but we put in place appropriate redress or appropriate learning and feedback loops. And we’ve got to take that systemic approach to regulation if we’re actually going to pull off that regulation to risk the technology to have.

Bob Hahn:

So, let me ask you one more tough question. I’ve been giving you a couple of softballs, a couple of hard balls here.

Cathryn Ross:

I didn’t notice the softballs. 

Bob Hahn:

To use a baseball….  I was also going to make a comment for an American audience about “hoovering.” That means vacuuming up in British speak, but anyway, Justice Briar, who was a professor at Harvard, and he sits on the Supreme court once gave a lecture at a center that I was running many years ago, where he made an argument that because a lot of these issues may be complicated, we need to sort of develop, and I think he used the phrase or modeled it after something that went on in France, “a technocratic elite,” people who had a lot of technical expertise and economic expertise to think about some of the kinds of risk issues that you were talking about and could give you their best judgment. And then he also raised the issues that you did today of how you communicate those things in an effective way to the public. So, you give them a sense of what they might want to be worrying about and maybe things that aren’t such a big issue. 

What’s your take on that and striking the balance between legislators making decisions on some of the details of these things versus people who might spend a little bit more time being informed and a little less time worrying about the soundbite on the evening news?

Cathryn Ross:

Yeah, it’s a complex question. There’s I, obviously, and I kind of would say this wouldn’t I? I do think there is an important role for expertise, right? I think people who know, understand, technologies, you know, understand how things put together, they understand what’s possible, what’s not possible. People who actually understand the regulatory toolkit. I mean, you know, there is a genuine value to people who really do know what they’re talking about in terms of what needs to be done and how to do it. However, I have to say that the phrase, technocratic elite, slightly strikes me…

Bob Hahn:

It’s an off-putting phrase…

Cathryn Ross:

A deeply off-putting phrase and part of the reason I think I’ve got a bit of an allergic reaction to it is that I think although expertise is a really good thing, and we need people who know what they’re talking about. If I can sort of segue into this idea of expert culture, that I’m not sure is desperately helpful, because where you get regulatory authorities in government who think that all they need is more information and they will come up with the right answer, and then they will tell everybody what the right answer is and beat them off with that. I guess that’s not a dreadfully sustainable process over the long-term. It doesn’t learn. It doesn’t adapt. It doesn’t evolve. And it builds in this really horrible time lag into regulatory processes where the regulatory system can’t adapt to change unless and until, and let me borrow that phrase, the technocratic elite has noticed that something has changed, has done lots of research to find out what the right answer is, has decided what the right answer isn’t has told everybody what the right answer is and it’s getting them to do it. And my experience of working with regulators is, is that can take years. I mean, genuinely, that whole process can take years. So, if you follow a process like that, your regulation is almost by definition going to lag the market, and depending on what’s going on in the market, that could be really, really unfortunate. 

So, we’ve got to have the expertise and we’ve got to get the benefit out of the expertise, but we need regulators who are open and curious and humble and who value learning and who value disruption so that they are predisposed to help the system that they preside over to evolve and change with changes in the market and changes in technology, and in fact, changes with what society expects as well. So, I think yes to expertise, but no to expert culture.

Bob Hahn:

I like that. I like that. So, is it reasonable to suggest here that if we’re either advising regulators, as I do with my pen and paper or keyboard, or a person is a regulator say high up that you want to have an enabling legal framework, in America, we call it a statutory framework that picks and chooses very carefully where you dip your toe in the water. So, you don’t try to do too much, but you just try to create sort of this framework in which you allow a lot of flexibility and dynamism to occur.

Cathryn Ross:

Yeah. I think that’s a really good starting point. And I have to say, I mean, the UK regulatory regime is a long way from being perfect, but one of the things I think is good about it is that by and large regulators are set up with a very clear set of statutory duties. So, things that you’re supposed to go after and achieve, which are pretty high level. I mean, they’re usually things like protecting consumers and promoting competition, and you actually have quite a lot of freedom to deploy your tools and your resources in pursuit of those statutory duties. And I think that’s not a bad way of approaching the framework, to be honest, be clear at the macro level, what your regulator is trying to achieve, but then give them quite a lot of freedom and adaptability as to how that toolkit is deployed and how they can evolve their toolkit over time. Too much prescription in stuff that is hard to change, like primary legislation, is not really very helpful.

Bob Hahn:

So, is your council going to produce a report or set of recommendations?

Cathryn Ross:

Yeah. We’re going to produce several. So, I told you that the four priority areas that we’ve got, and I think probably the first off the blocks will be our report on nuclear fusion. Quite what will come thereafter? I’m not sure, but really in the next six months, you should expect to see the next three come out with some recommendations. And I’m also thinking that at some point, probably on a similar time scale, we should say something about the horizontal, cross-cutting, more systemic themes we are picking up about how pro-innovation regulation needs to work, but with you, and you’re very much at the start of the conversation. So, I mean, we’ve only existed for a little over a year. We’ll put out some thinking, people will tell us what they make of what we’ve said, whether they think we’ve done a good job, or whether we haven’t, and we need to take our own medicine and listen to that feedback, learn and adapt and improve as we go.

Bob Hahn:

Great. We’ve been speaking with Cathryn Ross, who is Director of Regulatory Affairs at BT and also Chair of the Regulatory Horizons Council in the UK. Cathryn, thanks very much for sharing your thoughts and ideas on rethinking regulatory innovation.

Cathryn Ross:

Thanks, Bob. It’s been a pleasure.