On the verge of a new IT era, regulators are tightening the reins on innovation

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[Commentary] We are on the cusp of a new era in information technology. While consumers and entrepreneurs are excited to explore the potential capabilities and applications that lie within it, regulators in the US and Europe are fighting back. Fueled by strong skepticism of technological progress, at least by established tech companies, these regulators could end up banishing western economies into the backwaters of the information age. Internet marketing researcher Mark Schaefer explains that the impact of the Internet on our lives has gone through three phases and is now entering its fourth. The first phase was the World Wide Web, which emphasized being present on the Internet. Then came the search-engine phase, which emphasized being discovered. The third, and current, phase is the utility phase, where social media and mobility provide extra value to what people already want in their lives. The fourth phase is the “immersion phase,” where tech learns about a person from many aspects of life and work and uses this knowledge to actually anticipate needs.

Regulations emerging in Europe and the US are in conflict with this technological progress. These regulations will effectively prohibit ISP involvement in these new innovative services. This is a significant loss, as ISPs are willing and able to provide customers (on both sides of the market!) with network capabilities optimized for the individual company or consumer. The FCC’s tendency to extract economic rents in exchange for merger approvals raises the cost of technological change. It also increases risk as companies wonder whether the regulator will extract payments when companies try to innovate through mergers.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida]


On the verge of a new IT era, regulators are tightening the reins on innovation