Which way does new FCC Chairman Michael Powell jump as he ponders wireless deregulation and technology disruption?
Should the FCC, for example, eliminate the spectrum cap as requested by top cellular carriers? Or should it relax the cap- an antitrust safeguard enacted in the mid-1990s-as a more cautious approach? And what about other regulatory relief industry claims it needs to roll out the Next Big Thing: 3G?
For Powell, this is truly a regulator’s dilemma.
Mobile and fixed wireless technologies have the potential to disrupt the status quo. The Internet, uneasily discovering a path over the airwaves, is the ultimate disruptive technology. Such technologies create new growth, productivity and efficiencies. Disruptive technologies thrive in open markets, free of corruption and cronyism.
But too much wireless deregulation too fast could lead to a level of industry concentration that would be anathema to creative disruption. Therein lies the challenge for Powell. It’s uncharted territory.
In the March-April issue of Foreign Affairs magazine, Clayton Christensen, Thomas Craig and Stuart Hart explain that destructive technologies “create major new growth in the industries they penetrate-even when they cause traditionally entrenched firms to fail-by allowing less-skilled and less-affluent people to do things previously done only by expensive specialists in centralized, inconvenient locations.” They say a big reason for Japan’s fall from economic grace and America’s technological rise the past decade was the United States’ ability and Japan’s inability to repeat the disruption cycle.
Christensen, a professor of business administration at Harvard Business School, knows about disruptive technologies. He wrote the book. It’s called The Innovator’s Dilemma.
At first blush, given what we know about disruptive technologies, it would appear crystal clear what wireless regulatory policy Powell should embrace: deregulation. Get out of the way and let the disruption begin. Why not? The 1996 telecom act has failed to create local competition for U.S. residents. And the little local business competition that exists today may be about to succumb to financial meltdown.
Mobile and fixed wireless technologies need the kind of deregulatory empowerment enjoyed by the Internet to have a chance at unseating entrenched local and long-distance telecom giants. Deregulation, perhaps aided by campaign finance reform, might do the trick.
On the other hand, wholesale repeal of the spectrum cap could potentially turn a competitive, disruptive mobile-phone industry into a nondisruptive oligopoly. Indeed, true believers of The Great Disruption theory say disruptive technologies can set their own trap. This could be one.
