Summary
Ivan Seidenberg is correct. The FCC and the Federal Government cannot and should not regulate innovation.
Analysis
I had recently blogged about the need for the FCC to stay out of regulating the handset industry and prohibiting exclusivity deals. Let me repeat part of an old posting.
During the 1990s and early 2000s, the US cellular industry was often ridiculed by foreign technology companies as being a chaotic marketplace because of the plethora of technologies and the massive amount of carrier competition. I lost track of the number of times foreign vendors would complain about the number of wireless technologies; often stating that sticking to one technology would be best for the vendors (and supposedly the consumers). The one wireless technology that many foreign vendors had advocated was GSM; which made sense since their entire manufacturing complex was already in position to supply GSM. Their arguments did not support competition but rather supported a dictated technology environment. If not for the CDMA crowd, there would not have been the mad dash to improve and enhance GSM.
Thanks to the intense US competitive environment, GSM evolved to UMTS and now to LTE.
Policy makers need to focus on who exactly is promoting which technology initiative before they start screaming
I don’t believe that dictating technology initiatives encourages competition but hampers it by stifling innovation. By comparison, the US marketplace is intensely competitive. The industry is currently undergoing consolidation but that is being driven by the investment community and not the carriers per se. If the last 20 years can be used as an example, then we shall see the entire industry undergo fragmentation (once again) within a couple of years.
Low cell phone call pricing does not necessarily equate to an intense competitive environment but more likely a highly regulated environment. The higher prices probably have more to do with the high cost of technology and the need for the investment community to see a return on investment – all signs of a competitive environment.
When your country’s government advocates a single technology it is easy to maintain low pricing and to control the marketplace. However, you end up with an environment of zero innovation or even worse, innovation within the hands of a dictated few. What a national government needs to do is encourage a technology dialogue and encourage multiple development paths.
P.J. Louis consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
