Monday, May 5, 2014

"Freedom for Me, Regulation for Thou"

“Permissionless innovation” is one way of describing the reason innovation in the Internet app space has been so rapid.

But some might argue that freedom for me, regulation for you is the way beneficiaries of “permissionless innovation” want providers of enabling services to be treated. To be sure, every business, and every industry, has vested interests where it comes to each specific revenue and business model.

The other way of putting this is to note that every business wants high prices for its own products, and low prices for all the inputs it sources from ecosystem partners.

That is why many application industry executives want the U.S. Federal government to regulate Internet access in ways that essentially would limit market prices and revenue models for the providers of a key Internet revenue model input.

Expecting industries and firms to do otherwise is unrealistic. But our history with highly-regulated access services does not offer lots of hope that innovation will be high, and prices competitive, under such conditions.

Some will argue that such outcomes were produced by highly-regulated but monopolistic access markets, but will not apply to highly-regulated suppliers in competitive markets.

Some might argue this is tantamount to arguing that managed information services should be regulated.

That is a key concept, as it essentially attempts to revise the historic treatment of traditional data services, which have been considered unregulated information services.

Generally speaking, the trend in regulatory thinking has been not to regulate, or regulate with a light touch, managed services and information services. Cable TV, over a process of 50 years, has been treated in an oscillating way, sometimes more regulated, sometimes less regulated.

But the main trend has been deregulatory. Network-delivered satellite video has tended to benefit even more than cable TV providers have, in such matters. Telcos tend to be covered by most of the rules applying to cable TV entities.

Recently, with the advent of Google Fiber, local regulators have tended to want to relax rules to entice Google Fiber to build networks, not requiring network facilities to be built citywide, for example, but allowing spot builds only in parts of a city or community.

“Permissionless innovation” has worked very well. One might argue it also would provide benefits in the access services business as well, even if some for whom such service otherwise would be a cost of doing business, it could raise the cost of doing business.

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