Negative Impact of Regulations on Innovation

In mobile wireless and Internet markets, consumers deserve the final say on which constructive innovations, new product features and infrastructure should survive. In those markets, consumers notice the rapid pace of change and while they may not use every innovation that comes along, they welcome the steady stream of appealing changes and increased value from new technologies.

Based on consumer’s enthusiasm, PC Mag’s lists the “best apps for smartphones in 2014.”  They include Google Maps, Flixster (movie and theater information), IMDb (movie and TV information), Weather Underground (hyper-local weather information), Wikipedia (for fact checking), WolframAlpha (for learning and mathematics), Any.Do (task and team manager), and Awesome Note (note and list manager), plus another 92 that earned a place in consumer’s smartphones.  As well, there are 50 free apps that are very popular. PC Mag deals with real software, real content and real hardware. Mercifully, the P and C have nothing to do with political correctness.

Making our super-fast communications possible are massive cable and telecommunication investments in spectrum build-out, mobile 4th generation LTE (4G), extensive encryption upgrades, and fiber to neighborhoods and homes. Where there are chronic spectrum shortages, innovations such as VoLTE are harnessed to move voice calls from less efficient 2G spectrum onto highly efficient 4G spectrum. The Internet and mobile wireless are not advanced by bread and circus politics. Rather, they need engineering ingenuity, willingness to take big risks and mountains of cash.

Consumers are realists. They understand that revenues from apps products, and infrastructure are essential to recover the costs of past innovations, and to make risky investments that might yield future innovations. When asked about advert-sponsored services or even something as Spartan as a $12 wireless service that allows only voice, texting and Facebook, 72% of consumers are open to such new business models.

Savvy consumers respect other consumers who may have different needs and expectations. They question forcing everyone to pay for the latest, most sophisticated products if they neither need nor want to pay for them. Consumers are uncomfortable with one-size-fits-all products. They see the fairness in paying more if they use more electricity, or more water, or more natural gas, and they would rather let wasteful people pay their own way instead of leaning on a subsidy. Consumers know that reliable services and innovations don’t come from slick campaign speeches, and 90% of consumers believe that regulation at today’s level or less would help spur more innovation. They understand that regulations imposes costs on products.

In the October 2014 Mobile Future Survey, consumers voiced distaste toward regulation because they feel regulation is at odds with meaningful innovation. Their aversion to regulation is not new. In a May 2014 survey of mobile wireless consumers, only 23% thought “more regulation” would make their mobile service better. Their opinion stems from their experience with years of useful and amusing apps, and the spectacular Internet speeds available for those who need them. Neither the apps nor the lightening speeds are encouraged by regulations.

There are some government roles that consumers welcome. For example, protection and prosecution from malicious hackers or individuals, unwanted marketers, and US government agencies and foreign governments, all of which can degrade consumer privacy. Consumers also welcome government assigning more spectrum for mobile wireless applications. But consumers neither need nor want new regulations whose effects limit innovation, or set prices, or that create new entitlements or subsidies.

Alan Daley is a retired businessman who writes for The American Consumer Institute Center for Citizen Research