Mobile Future

Keep Retro to Fashion, Not Innovation Policy

I take no issue with the occasional resurgence of bell bottoms or even the current return of ‘80s fashion and music.  But I must draw the line and object when individuals dust off the tech policy equivalent of the disco ball and claim it as the irreplaceable savior of our innovation economy.

I’m struck by a resurgence of old arguments from some in the policy community that rehash the same old stories from American technology’s long-gone past.  In a new book, and in a recent NY Times interview, one colleague argues that: Wireless is a “unique” market separate from the rest of the connected world.  U.S. communications are in “crisis” because there is no competition.  And—an oldie but a goodie for those who believe government must be more hands-on with U.S. innovation policy—if only we could be more like Europe.

While the claims are contradicted both by data and by consumers’ day-to-day experience, this call for the Europification of US innovation policy is cause for concern.   The analysis also stands in stark contrast to the conversations currently underway in Barcelona at the Mobile World Congress.  A major headline this year is the fall-out of Europe’s aggressive telecom regulations, where price controls and other market-intervening measures have dramatically slowed the arrival of 4G services on that continent.

As Bernstein analyst Robin Bienenstock bluntly explains, “they don’t invest, they just cut costs and tweak pricing, locking themselves in a vicious cycle of selling an increasingly commoditized service.”

To her credit, Neelie Kroes, Vice President of the European Commission, has been earnestly waving her arms, warning that Europe is at risk of being “flattened” by the global competition for its lack of investment in information infrastructure.

Europe’s challenge?  “This attachment to 20th century policy mindsets and business models is hurting Europe’s economy,” Kroes warns.  “We are shooting ourselves in the foot by under-investing.” In other words: If only we could be more like the U.S.

Vodafone CEO Vittorio Coloa was even more blunt:  “The European industry should look very carefully at the American model and more seriously ask ourselves why there is such a successful model for customers, shareholders and governments that we seem not to be able to replicate.”

What’s different here?  Last year, the nation’s competitive wireless companies invested more than $25 billion in mobile networks and infrastructure.  Why?  They have no other choice.  U.S. consumers have a voracious appetite for mobile Internet.  With data usage surging and multiple companies competing for U.S. wireless customers, carriers are in a flat-out race to ensure their networks stay competitive and offer both value and quality service to consumers who can take their business elsewhere.

This is why, for example, the U.S. leads the world in ultra-fast 4G network deployment.  In fact, in a recent test of U.S. speeds of state-of-the-art LTE networks, no less than four U.S. carriers were in this bleeding-edge race.

“Crisis” indeed.

Some of the voices calling for more, not less regulation, like Professor Susan Crawford, are principled advocates for expanding access to high-speed broadband services to all Americans.  Though I agree fervently with her on this important end – as do the members of Mobile Future, including a range of wireless innovators, operators and technology companies both small and large — I diverge with her on what should be the best means for our nation and our innovation economy to achieve this goal.

Fortunately, consumers can assess the arguments for themselves.  Is wireless a “unique” market?  From a network engineering perspective, yes.  But the answer from a consumers’ point of view shows modern technology blurring the lines.  One-third of Americans have made the choice to have no landline at home. Among younger households, half are now wireless only.  Smartphone sales now outpace PCs and will soon be the primary means by which we connect to the Internet.  Competition is hardly a conversation solely about carriers.  It now encompasses search, operating systems, apps stores, devices and more.

It is indeed a new world. What we know from the first two decades of the Internet and the rise of the mobile web is that innovation advances most rapidly when government exercises a certain degree of humility.  Prescriptive rules cannot keep pace with technology’s rapid progress.  As we see in Europe, a government-led approach holds back the innovation and investment at the core of the public and national interest.

Today 3.8 million Americans owe their jobs to mobile innovation.  And, nearly 90% of Americans consider their mobile devices so valuable that they keep them within arm’s reach as they sleep.  From state-of-the-art networks to a mobile innovation community that is the envy of the world, our nation is in prime position to lead the mobile future, and bring the benefits of broadband to every American.  But we should not take for granted what got us here. 

The U.S. too should heed the warnings from across the Atlantic and avoid turning back the clock.  There are many lessons to be learned from the past.  One of the most important is that sometimes it’s best for outmoded ideas to stay there.