Should Consumers Be in the Driver’s Seat of Innovation?

This California official says that yes, regulators should put consumers in charge.

by Mike Montgomery, executive director of CALinnovates / February 11, 2013

There is no question that Internet Protocol (IP) enabled devices have revolutionized our lives. Whether it’s the family using the Hipmunk agony index to weigh a low fare against the frustration of a long layover at O’Hare or the nomad hipster using one finger to find vacation crash pad on Airbnb, imaginative users and app developers have enabled greater convenience and fostered community in ways we never imagined.

Some apps have even gone beyond tackling the inconvenient to doing the impossible, like helping a tardy business traveler get a ride in Manhattan at 5pm. The mobile app Uber has spared many from madly waving one’s arms on a random street corner, hoping a cab with a lit up rooftop will drive by. Instead, we are able to hail a car with one click. Sidecar delivers the same convenience and encourages sustainability by facilitating shared rides among those nearby hoping to get to the same area.

These tech-startups innovate to meet changing demands of parents, PBR drinkers and taxicab procrastinators. However, the service providers that enable these applications have to fight to break through a system of regulations not equipped to evolve at the same speed as user driven innovations. The result is a series of so-called consumer protections that do little to help consumers. As New York Times contributor Tim Wu aptly pointed out in his recent column on this topic, “cities think they’re protecting consumers…[but] banning Airbnb helps hotels more than homeowners; and banning Uber helps taxi companies more than passengers.”  Wu continues that, “regulators can do their job and protect consumers against harm without being so heavy-handed.”

While users have embraced a reality that is mobile, digital and always changing, government policies have remained decidedly 20th century. “Modern” telecommunications law was born in the 1930s and put regulators in charge of a single, national copper-wire telephone network.  The system was designed to protect consumers against a monopoly and to guarantee universal access to a basic voice connection at a time when instant phone service was a luxury not an expectation. Today, mobile devices now outnumber people. Consumers have thousands of choices for devices, services and products, and a phone application is just one of many icons on their smartphone.

Just as the Checker Taxi has given way to Uber towncars, it is time for copper era regulations to get out of the way of newer, faster IP networks.  Policymakers can work to bring communications policy into the 21st century and ensure outdated regulations do not hinder the growth of digital infrastructure and the development and functionality of new technologies.

The FCC acknowledged this need in December announcing it is forming a task force that will work on creating a “forward-looking regulatory framework” to accelerate the IP transition and encourage technological advancement.

These are encouraging first steps, but old systems are resistant and slow to change. Until policymakers sit down together with network providers and app developers, regulations are likely to slow progress rather than help pave the way to our technology future.

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