Exploring the Significance of Regulatory Sandboxes for Satellite and Emerging Technologies

by Matthew Evans

Isle of Man, November 1, 2024--The satellite industry is experiencing an unprecedented surge in innovation and activity, with new satellite technologies being developed and launched at a record pace. As a result, regulators face significant challenges in keeping up.

Traditional regulatory frameworks often struggle to accommodate these fast-evolving technologies. Updating existing rules can take many months, if not years. This has prompted a global shift towards more agile and adaptable approaches. One such innovative method is the 'sandbox' approach – a flexible regulatory environment designed to test and refine new technologies before they reach the market.

The Sandbox Concept: a New Paradigm for Regulation

The regulatory sandbox concept, initially popularised in the Middle East, has gained more traction globally. This approach allows regulators to engage with emerging technologies in their developmental stages, rather than waiting for official launches. 

By providing a controlled environment for testing new concepts locally, sandboxes enable regulators to dynamically customise licensing exemptions, market access conditions, and other regulatory aspects, such as access to radio spectrum. This mechanism also allows innovators to explore and evaluate their ideas without the immediate constraints of traditional regulations, facilitating a faster and more efficient path to market. 

Regulators in a number of Middle Eastern countries have been at the forefront of the regulatory sandbox movement within the communications and technology sectors. The success of earlier sandboxes, particularly in the area of fintech, has now inspired regulators to expand the concept into other areas. 

Global Adoption of the Sandbox Approach

In 2021, the Telecommunications Regulatory Authority of Oman (TRA) issued “Guidelines of Regulatory Sandbox Rules for Telecommunications”, and in 2022, Saudi Arabia’s Communications Space, & Technology Commission (CST) launched its own “Emerging Technologies Regulatory Sandbox”. In line with Saudi Arabia’s “Vision 2030”, the latter aimed to support investors and companies interested in the country’s tech industry. Alongside a range of technologies, space services were at the centre, with several satellite players taking part.

While not focusing solely on satellite, these types of initiatives have served as valuable models for other regions, demonstrating how flexible regulation can coexist with consumer protection and economic stability.  

Looking beyond the Middle East, Brazil's National Telecommunications Agency (ANATEL) introduced its own regulatory sandbox earlier this year to support the development of satellite direct-to-device (D2D) applications. This enables satellites to connect directly with mobile handset devices without relying on ground infrastructure. Because of the sandbox, ANATEL can authorise temporary use of certain spectrum bands for D2D, and for longer than the existing regulations allow. By providing a controlled environment for testing these innovative applications, ANATEL hopes to accelerate their deployment and ensure they meet regulatory standards. 

In March 2024, the Government of Mongolia announced its plans to establish a regulatory sandbox in order to support its burgeoning domestic space sector. As Mongolia seeks to expand its space capabilities and attract investment, the sandbox will play a crucial role in facilitating the development and testing of new satellite technologies.

The Telecom Regulatory Authority of India (TRAI) has also recently embraced the sandbox concept. In April 2024, TRAI released its recommendations on "Encouraging Innovative Technologies, Services, Use Cases, and Business Models through Regulatory Sandbox in the Digital Communication Sector”, which demonstrated its commitment to fostering innovation while balancing regulatory oversight. This adoption, which followed a consultation process launched in June 2023, was particularly ground-breaking given India's traditionally stringent regulatory environment.

The Impact of Sandboxes on Satellite Innovation

The sandbox approach offers several key benefits for satellite innovators. It provides a controlled yet flexible environment where foreign operators can more easily test their products and services with the local market, allowing real-time evaluation and adjustment while doing so. This setting helps innovators gain valuable insights into consumer preferences and technology performance, ultimately reducing the time to market and potentially lowering costs. Additionally, the sandbox framework is instrumental in identifying and addressing user protection issues early in the development process, ensuring that new technologies are both safe and reliable.

The approach also serves to promote cross-sector collaboration by offering a single window for obtaining clearances and encouraging cooperation between various ministries and departments. Under normal regulatory procedures different bodies can be involved which adds complexity to the timeline. This integrated model fosters a more cohesive and innovative ecosystem, driving progress and efficiency in the sector.

For companies like River Advisers, which specialise in international spectrum regulation and market access, the sandbox approach allows for close engagement with regulatory developments as they happen locally, helping stakeholders to get their new products and technologies to market faster. 

The Future of Satellite Regulation

The global trend towards regulatory sandboxes represents a significant shift towards more adaptive and collaborative regulatory practices. Regulators are developing more intricate mechanisms in the wake of unprecedented technological progress, particularly in the area of “Non-Terrestrial Networks” (NTN) that is driving the seamless integration of satellite connectivity into terrestrial systems across direct-to-device and IoT ecosystems. 

The sandbox approach offers regulators a balanced solution to effectively manage new technology risks, and implement necessary safeguards, while also creating an environment conducive to innovation and growth. The traditional lag between innovation and regulation is greatly reduced as a result. The success stories from the Middle East, and more widely, highlight the merits of this approach, with early adopters of this regulatory innovation paving the way for technological progress. It can be expected that many other countries will follow suit.  

-------------------------------------------------------                       

Matthew Evans, Director of Regulatory Affairs at River Advisers (www.riveradvisers.com), has over 10 years’ global market access experience in the satellite industry, including several years licensing the world’s first hybrid satellite/ terrestrial, pan-continental aviation connectivity network, and the industry’s largest European licensing initiative of the last two decades, involving multiple stakeholders and national regulators. He can be reached at: mevans@riveradvisers.com