Governments are keen to encourage innovation in the infrastructure sector and ensure public and private services are properly managed.
Governments are keen to encourage innovation in the infrastructure sector. But as the solutions being brought to the market become more radical, some have challenged the traditional role of authorities and raised questions over what constitutes appropriate regulation.
Many governments have struggled to keep up and be clear about their role. But, recently, we have seen a reassertion of control, as authorities focus on the governance and delivery of services and their right to regulate activities and actors within their jurisdiction.
In last year's Emerging Trends, we correctly predicted that the lines between public infrastructure and private infrastructure would blur as nimble upstarts sought to capitalize on new customer expectations, shifts in demand and underserved populations.
Now, however, the implications of these changes are becoming clearer. Consider, for example, how new ride-sharing apps have disrupted public transit models. It’s not just that these new apps are challenging the existing order by changing ridership patterns and investment plans; they are also creating unexpected congestion and (according to some cities) safety concerns.
This year, we expect to see governments at all levels start to become much more assertive. Many will take a more proactive approach to defining the rules for private sector infrastructure provision, both traditional and nontraditional.
Ride-sharing apps are just the start; many governments are also now starting to consider how they will oversee a range of new and emerging models across the infrastructure world – from distributed power generation through to nascent technologies such as hyperloops and drones.
While we agree that government must maintain (and the public expects it to maintain) a level of control and oversight over the provision of infrastructure, the reality is that the pace of technological and social change has moved faster than the pace of regulatory change. Many governments also seem to be facing growing pressure from existing service providers (many with vested interests) keen to hold back new start-ups and disruptors.
On the one hand, this means that – while most governments want to take a strategic approach to managing new technologies – many are stuck in a tactical loop of discovery and regulation. But, at the same time, we are also starting to see new tools and new regulatory structures being developed among early public sector adopters.
Over the coming year, we expect to see governments focus on creating regulatory frameworks that are flexible and durable in the face of technological change. The most successful, in our view, will be the ones that are able to recognize the need to find the right balance between control and innovation, rather than choosing one over the other.