Updated on August 4th, 2010
Until recently, the Digital Millennium Copyright Act prohibited most digital locks on copyrighted material, including the computer firmware and software in wireless handsets. Last week, the Library of Congress published an Order exempting several classes of copyrighted works from this prohibition, including wireless handset operating systems and firmware or software “locks.” (See Order at pages 4-7.) Advocates that favor a regulated broadband access device market hailed this as a victory. (See Free Press statement here and Public Knowledge statement here.) These advocates believe that imposing Carterfone and Computer Inquiry obligations on wireless devices will produce results that are superior to those consumers currently enjoy in the competitive wireless market. Unfortunately for these advocates, the actual data (as opposed to ideology) supports the opposite conclusion.
It’s usually quite difficult to prove a negative – i.e., that consumers would actually be worse-off if Carterfone and Computer Inquiry regulations had been applied to wireless devices. But, because Carterfone and Computer Inquiry regulations do apply to wireline service providers, we have an analogous market to which we can compare the development of devices pursuant to Carterfone and Computer Inquiry regulations with the market-based approach applicable to wireless devices. That comparison indicates that the lightly-regulated mobile device market is more competitive and consumer friendly than the heavily-regulated Carterfone and Computer Inquiry era wired Internet and PC markets have ever been. Read the rest of this entry »
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carterfone competition device exclusivity Innovation smartphone
Updated on January 8th, 2010
“I’m Luke Skywalker, I’m here to rescue you.” Luke Skywalker, Star Wars (1977).
What’s the difference between innovation and investment? I find myself pondering this question frequently these days. Over the past ten years or so, the FCC focused on encouraging “investment” in “infrastructure” based on the previously fashionable view that the United States needed to build more broadband infrastructure. Lately, however, the FCC seems more concerned about “innovation” than the other two little “i” words, investment and infrastructure. So the FCC has decided to rescue “innovation” through prescriptive net neutrality rules.
But, what is “innovation” (and is it really in trouble)? The dictionary included with OS X says innovation is “a new method, idea, product, etc.” In other words, an “innovation” is anything that is “new.” For the pro-net neutrality folks, however, innovation isn’t defined nearly so broadly. No, for the pro-net neutrality folks, innovation means new Internet applications. In their way of thinking, the billions of dollars of investment being made to develop and deploy new OFDM-based (WiMAX and LTE) wireless broadband infrastructure is not innovative. Let me show you what I mean.
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FCC Infrastructure Innovation Internet Applications Investment Net Neutrality NPRM
Updated on January 5th, 2010
“You don’t know how hard I found it, signing the order to terminate your life.” Governor Tarkin, Star Wars (1977).
With all of the emphasis on technology innovation in the net neutrality NPRM, it hardly mentions innovation in business models. Perhaps business model innovation is simply underappreciated in an era in which shiny new technologies are introduced so frequently. Knowledge@Wharton has said that “[o]ne of the most common misconceptions is that innovation is primarily, if not exclusively, about changing technology.” As the FCC recognized in its Wireless Innovation NOI, however, companies innovate with their business models as well as with their products and services, and use business model innovation (“BMI”) to achieve and sustain competitive advantage. Indeed, a majority of executives now believe that BMI is even more important to creating new and differentiated value than product or service innovation. According to Samuel Palmisano, “with product [or service] innovation, it’s a certainty that your competition is shortly going to copy what you have done. . . . With business-model innovation, though, if you can come up with a unique way of doing things, it’s much tougher to react to.” Technology alone is not the fundamental engine of innovation.
Technology and business model innovation typically occur together. This can be seen in the mobile wireless broadband market, where the technological transition to next generation mobile wireless broadband is driving tremendous business model innovation and experimentation. As a result, mobile wireless broadband platform providers are experimenting with many different business models as they try to determine how to best leverage new mobile wireless broadband technologies and differentiate their services from competitors. The (non-exhaustive) mobile wireless broadband business models outlined below demonstrate the diversity in innovative business approaches to this market. Read the rest of this entry »
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AT&T Wireless Clearwire FCC Innovation NPRM Sprint-Nextel Verizon Wireless Mobile Broadband