With Billions of Internet-Enabled Devices, Why is the FCC Talking about Regulations and Subsidies?

Much of the discussion over Internet regulation today revolves around the need for more broadband and the increase of traffic that we’ll see in the future as more and more is being done on the Internet. But what discussion might be missing is the fact that the FCC recently stopped counting or paying attention to most Internet enabled devices, opting instead to only take into consideration wireless Internet devices for which you pay a monthly fee. This includes devices that connect in other ways, such as WiFi. While the revision resulted in undercounting the number of Internet devices millions at the time, that number is likely to have increased many times over today.

According to a report by IMS Research in 2010, there are now over 5 billion devices that connect to the Internet, a very small percentage of which are currently being counted by the FCC. This includes iPods, tablets, wireless phones, set-top boxes, televisions, and yes, computers. According to the same study, they expect Internet-enabled devices to explode to 22 billion within 10 years. This will include cars with Internet connectivity as well as home appliances and other devices.

The implications of this could be huge. If the FCC isn’t taking into account a major portion of the Internet device world, they could be making policy based on outdated technology and standards. For instance, if the Universal Service Fund (USF) decides that money will be put towards desktop computers for low-income communities, who’s to say that this will be the preferred method of Internet connectivity in a few short years? There are new Internet devices popping up everyday—even your refrigerator or microwave could be Internet enabled in a few years. The FCC’s own data showed that wireless enabled devices eclipsed wireless devices in 2008. Who would have guessed, even a few years ago, that more people would use a mobile device to browse the Internet than a PC? Well, it’s true, according to a study by mobile apps firm Flurry. According to this study, users spend 9% more time browsing the web with a mobile device that by using a PC. By codifying laws and regulations surrounding certain devices, while ignoring others, the FCC could risk impeding innovation and progress in the field of Internet enabled devices.

Many are calling for computer subsidies, USF and broadband minimum speeds to be set in place–rules that could be disjointed with future computing.  Desktops and laptops may not be a preferred connection for those “unconnected” or low-income consumers. Regulations presume too much, because they harden rules based on today’s paradigm.   Technology changes, but these rules don’t.

By trying to forecast the future and trying to decide which devices will be favored by consumers over others, the FCC risks slowing down the accelerated progress of the Internet and Internet device industry. We’ve seen what happens when the FCC attempts to pick winners in the technology industry—CableCARD is a great example, which I outlined at length in a previous post. The FCC made an attempt to mandate cable companies use certain set top boxes, to what all now see was a disastrous result. Net Neutrality could be held up as another example, where the FCC sided against broadband networks, which they are now considering subsidizing through the USF. The FCC would be smart to understand that technology moves fast, and staying out of the way might be the best option.