Whenever new substitute products arise in the Internet and communications ecosystem, and especially when the new products threaten to cannibalize the legacy products, regulatory strife is inevitable. And the issue always boils down to one question: more or less?
Should existing regulatory burdens on legacy services be lightened, or should challengers be brough under the existing frametworks?
What is not inevitable are the solutions, which broadly fall into several buckets. In the Internet era, substitute products tend to be over the top apps or services, while legacy products tend to be carrier managed services.
So one solution that always seems “obvious” to regulators and policymakers is to impose legacy regulations on the new products and services.
The equally-plausible, but comparatively rarely chosen path is to remove regulations from carrier managed services, and let consumers decide the outcome.
In India and the United States, regulators seem to prefer the former approach rather than the latter: extending legacy regulations to new platforms rather than removing restraints from legacy platforms.
In India, one example is a preference for regulating OTT messaging under legacy telecom regulations, while likely rejecting a Bharti Airtel plan to offer streaming video as a managed service.
In the United States, one example is a recent Federal Communications Commission proposal to bring cable TV operators under common carrier rules for wholesale special access for the first time in history.
There are effects--on investment, revenues, market shares, innovation--no matter which course is taken. But if one policy goal is innovation, extending regulation arguably reduces the amount of innovation, because incentives to do so are reduced.