Legal and Regulatory Frameworks for Mobile Government

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1 Legal and Regulatory Frameworks for Mobile Government Stuart McMillan Director - McMillan Group Pty Ltd 2/254 Booran Rd Ormond VIC 3204 AUSTRALIA Telephone: stuart@mcmillan.com.au Abstract Mobile Government is an important area for responsible governments to harness and utilise efficiently. The benefits of increased access, in-situ service delivery and increased productivity, make mobile government a worthwhile venture for various levels and agencies of government. This paper suggests greater emphasis be placed on legislative and regulatory considerations during design and implementation of Mobile Government initiatives, and during any post implementation or periodic reviews. The observations apply regardless of jurisdiction or the level of technology utilised. Keywords: Mobile Government, Legal and regulatory frameworks, Governance, Best practice 1. Introduction Mobile Government (MGov) can be used to improve the productivity of public services and the responsiveness of government. However, as suggested by LÃgreid, Verhoest et al (2008), and Corrigan and Joyce (2000), without substantial re-engineering of the organisational relationship to the public, MGov on its own will achieve little. Similarly McDonough (2000) suggests that any MGov initiative must have radical re-engineering of government and services to successfully attain full MGov utilising a whole-of-government or holistic view. An integral component of government reengineering is establishing a legal and regulatory framework that is conducive to successful MGov. In this context, the term legal and regulatory framework incorporates institutional arrangements, legal relationships, powers, rights and obligations in relation to information management and transactions. In a successful MGov environment, that framework will facilitate seamless and unfragmented delivery of government service via mobile computing devices. Whilst MGov has now been implemented by many advanced countries, there are varying degrees of uptake and success. Often, once the initial flurry of MGov implementation has subsided, there is little enthusiasm for further effort and expenditure associated with the review and fine-tuning of legal and regulatory arrangements. It is timely to reflect on the success characteristics of good regulation and to explore the potential relationship between governments attention to the legal and regulatory design and the efficacy, uptake and success of MGov.

2 2. Terminology In this paper, the term legislation applies to statutes and formal rules or regulations of a recognised jurisdiction. Also, this paper adopts the practical definition of regulation suggested by Julia Black (2002):... the sustained and focused attempt to alter the behaviour of others according to defined standards or purposes with the intention of producing a broadly identified outcomes or outcomes... Regulation occurs through wide-ranging regulatory methods and instruments, from statutes and rules, through to standards, licences, and even government funding conditions. The term legal and regulatory framework is used to describe the broad institutional arrangements, legal relationships, statutory objectives, functions, powers, obligations and legal instruments that support and constrain MGov initiatives. 3. Recognition of legal and regulatory environments within MGov research Providing a successful operating environment for MGov poses significant design problems that extend beyond technical considerations. Kushchu and Kuscu (2003) saw regulating and developing legal aspects of mobile applications and usage initially as an implementation issue. They refer to legal issues associated with data and information practices addressing the rights of subjects and the responsibilities of the data holders such as governments. They question the adequacy of laws relating to recognition of mobile documents and transactions, and of laws clarifying the legal status of MGov publications. Lastly, they refer to regulation to facilitate and enable MGov form fillings, digital signatures and MGov taxable transactions. Sandy and McMillan (2005) suggested in their MGov success factors model that a cohesive whole-of-government approach, including in relation to the supporting legal and regulatory design, being paramount to successful MGov. They noted that internal government legal changes generally are necessary to create MGov, to limit demarcation amassed from generations of agency-specific legal arrangements. In particular, a whole of government focus on the legal and regulatory environment supports a one-stop-shop or single portal approach that they consider desirable for effective MGov. Similarly, a whole of government approach reduces the cost and effort associated with establishing rights and obligations to support working relationships between stakeholders. This view is supported by Joia (2008) in relation to Government-to-Government (G2G) intellectual property and permission rights. However, neither Kushchu and Kuscu nor Sandy and McMillan explored the efficacy and adequacy of legal and regulatory framework design, or emphasised the importance of that design in post implementation reviews. In the MGov context, there appear to be three important questions to consider: Why focus on the legal and regulatory framework in MGov design and efficacy reviews? How is a good legal and regulatory framework developed? What institutional and governance arrangements should be considered?

3 This paper offers a high level examination of each of these questions, to raise awareness of this dimension of MGov. 4. Why focus on the legal and regulatory framework Any MGov model is only feasible if it is capable of being implemented and enforced, that is it is applied within an efficient and effective legal and regulatory context. MGov topics considered in regulatory design include taxation equity, copyright, compatible encryption standards, and contract laws affecting transactions between service providers and recipients. A whole-of-government approach generally requires well-drafted legislation to ensure successful delivery of the technology, while protecting stakeholders interests. For example, Singapore s legislative approach to MGov acknowledges mobile records and signatures through whole-of-government legislation. Similarly, Canadian legislators have made it possible to create financial contracts from overseas via mobile service delivery. While the legal and regulatory framework can enhance MGov services, it may also need to address issues of cross-jurisdictional demarcation. Onken, Fischer et al (2005) expressed this view on the impacts of government regulation in the transfer to technology based systems, and surmised that regulation must be taken into account to achieve a competitive advantage through better management. In the MGov context, literature and experience suggest that legislation or regulation may be necessary to achieve the outcomes listed in Table 1 below. Table 1 Indicative outcomes for MGov legal and regulatory framework Establish governance arrangements, that is accountability, reporting and if appropriate, regulatory oversight Change existing service obligations to enable them to be delivered or met through a portable mobile platform Establish service delivery standards Give service providers the powers to access and use supporting information Create mobile contracts (Documents, signatures) Safeguard consumers (e.g. privacy; limiting collection, use and sharing of data) Ensure financial transaction security Define and constrain the role of intermediary service providers Provide dispute resolution and enforcement mechanisms Deal with cross-jurisdictional issues Deal with taxation implications Source: S McMillan 2010 All of the outcomes will be important in certain MGov contexts; the first outcome - appropriate governance arrangements - affects all initiatives. The meaning of good governance is discussed further below.

4 5. How should an MGov legal and regulatory framework be developed? Good policy follows a methodical approach to developing regulation. That approach looks at: objectives, behaviours, and outcomes sought the regulatory space i.e. the physical context, participants and stakeholders, commercial and regulatory relationships, etc. options, both regulatory and non-regulatory, to achieve desired outcomes or address problems. Though the articulation of this process differs across jurisdictions, there are common themes emerging from most developed jurisdictions and the OECD. A consensus of these regulation principles is reflected in the seven OECD guiding principles for regulatory quality and performance (2005) and are summarised in table 2. Table 2 Summarised principles for regulatory quality and performance 1. Adopt at the political level broad programmes of regulatory reform that establish clear objectives and frameworks for implementation 2. Assess impacts and review regulations systematically to ensure that they meet their intended objectives efficiently and effectively in a changing and complex economic and social environment 3. Ensure that regulations, regulatory institutions charged with implementation, and regulatory processes are transparent and non-discriminatory 4. Review and strengthen where necessary the scope, effectiveness and enforcement of competition policy 5. Design economic regulations in all sectors to stimulate competition and efficiency, and eliminate them except where clear evidence demonstrates that they are the best way to serve broad public interests 6. Eliminate unnecessary regulatory barriers to trade and investment through continued liberalisation and enhance the consideration and better integration of market openness throughout the regulatory process, thus strengthening economic efficiency and competitiveness 7. Identify important linkages with other policy objectives and develop policies to achieve those objectives in ways that support reform Source: OECD guiding principles for regulatory quality and performance 2005 In a mobile government environment, failure to follow such a regulatory approach exposes governments and project proponents to criticism, and risks inefficient outcomes. Importantly, implementing new technology without considering associated legal rights, obligations and protections increases the risk that unnecessary costs will be incurred; may undermine technical feasibility and rates of uptake; and may result in societal costs and risks that outweigh the potential benefits of an overall MGov project or initiative.

5 Table 1 suggests possible outcomes of an MGov legal and regulatory framework. Best practice regulatory design principles and processes should be applied to achieve the best framework outcome. The process followed should demonstrate that the societal benefits of any legislation or regulation outweigh the costs, and that the option chosen will yield the greatest net benefits. As noted, good governance is important in any MGov initiative. In designing a legal and regulatory framework that incorporates good governance objective analysis would focus on activities, not on current players such as governments, agencies, intermediaries and regulators. It would describe and test roles, functions and decisions generically, rather than referring to existing stakeholders. 6. What aspects of governance should be considered? The term governance often is used loosely, with different ascribed by different people. In the MGov context, governance seems to have elements of institutional design; roles, responsibilities and accountabilities; and corporate governance of entities providing services. In the institutional design of governance arrangements, having determined the functions that need to be performed, governments must design structures and institutions to perform those functions, and rules that bind or guide them. Indicatively, this phase involves: structural decisions around whether a function is performed by a single person or entity, board, agency or private sector entity statutory framework, instrument design and adjustment. The term governance also has a broader meaning that extends to roles, responsibilities and accountabilities both to government, and to other stakeholders. These include reporting, procedures, and related processes. Similarly, it includes the standard principles of risk allocation in assigning rights, obligations, and accountabilities to all parties, government or non-government. These elements are distinct from corporate governance, which relates to how an individual organisation is managed; its functional structures; its cultures, policies and strategies; and the way in which it deals with various stakeholders. Examples of the accepted elements of good corporate governance are 1 : values and codes of conduct; business planning; audit committees; control structures, including risk management performance monitoring and assessment, evaluation and review. Though MGov statutory and regulatory frameworks differ across jurisdictions and circumstances, there is sound argument that the theory that underpins that delegation or devolving of roles and responsibilities should be linked to consideration of transaction costs and benefits 2. In other words, cost/ benefit considerations should drive entity structure and institutional design; the level of independence of entities; and even procedural issues 3. 2 See for example, Political Process and the Formation of Economic Policy, Robin Johnson, Economic Affairs, 2003, vol. 23, issue 1, pages 27-32; or Delegation to Independent

6 The principle of net benefit should be incorporated in institutional design and governance models. As such, four broad tests can be applied to promote successful MGov governance. Possible tests for effective MGov governance Drawing on the governance literature and the author s experience with MGov, some indicative tests are suggested in Table 3. Table 3 Indicative tests for effective governance of MGov initiatives Test 1 The formal institutional design and governance arrangements should deliver and maximise benefits to the MGov community. In practice, there can be some judgements and trade-offs required to facilitate this outcome. Test 2 Where the legal and regulatory framework allocates roles of a regulatory nature, the regulatory roles should conform to best practice regulation principles, by promoting transparency and accountability; and regulation that is targeted, applied consistently, and that is proportionate to the harm or problem addressed. Test 3 The legal and regulatory framework should promote a clear separation of government s interests, that is its policy role, shareholder interests, and political interests. Test 4 Where there are different models for provision of commercial functions (such as public, private, outsourced, or public private partnerships), the choice should follow accepted policies and methods for choosing the appropriate model. Source: S McMillan Conclusions Due to the evolutionary nature of MGov as a subset of EGovernment, it has been primarily the domain of technocrats. However, this paper suggests that, when implementing or reviewing MGov initiatives, governments worldwide should also focus more on effective legal and regulatory arrangements to support MGov. There is consistent international knowledge about good regulation, including good governance, that is applied routinely in diverse industry sectors and contexts. That knowledge can also be usefully applied in the MGov context to promote successful MGov environments, and ultimately, more efficient, effective service delivery. Over time, the Regulatory Agencies in Western Europe, Mark Thatcher, Department of Government, London School of Economics, 2001] 3 For example, the level of involvement of others in government /regulator/ agency decision making processes.

7 application of common legal and regulatory design principles across jurisdictions may reduce inconsistencies and demarcation issues. This paper describes legal and regulatory design considerations at a high level, to raise awareness of this dimension of MGov. It suggests that in many MGov implementations, it may be timely to review the efficacy and adequacy of the supporting legal and regulatory framework, and that greater emphasis should be given to such design in developing new MGov initiatives. 8. References Black, J. (2002). Crirtical Reflections on Regulation. Australian Journal of Legal Philosophy, 27, Corrigan, P. and P. Joyce (2000). "Reconnecting to the public." Urban Studies 37(10): Joia, L. (2008). "The impact of government-to-government endeavors on the intellectual capital of public organizations." Government Information Quarterly 25(2): Kushchu, I. and Kuscu, H. (2003), From E-Government to M-Government: Facing the Inevitable, in the proceedings of European Conference on E-Government (ECEG 2003), Trinity College, Dublin. LÃgreid, P., K. Verhoest, et al. (2008). "The Governance, Autonomy and Coordination of Public Sector Organizations." Public Organization Review 8(2): McDonough, F. (2000). "Tomorrow's reinvented government: Futurist 34(2): changes ahead." The OECD (2005), Guiding Principles for Regulatory Quality and Performance, Paris: OECD, accessed on 1 August 2010 at Onken, M., C. Fisher, et al. (2005). "Perceived Impacts of Government Regulations on Technology Transfers." Journal of Nonprofit & Public Sector Marketing 13(1/2): Sandy, G. and McMillan, S. (2005). A Success Factors Model For M-Government, in the proceedings of First European Conference on M-Government, Sussex University, UK.

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