Tech Strategy Trends

Apr 10 2011   9:43AM GMT

The Stifling ‘Investment and Innovation’ Bogeyman

Tony Bradley Tony Bradley Profile: Tony Bradley

‘Investment and innovation’ is the bogeyman of the tech world. If a rival company makes a move that gives it an advantage, competitors cry foul and claim it will stifle ‘investment and innovation’. If a government agency has the audacity to suggest some ground rules for fair play for an industry, the industry proclaims that the regulatory oversight will stifle ‘investment and innovation’.

Two recent examples are AT&T’s move to acquire T-Mobile, and the FCC efforts to establish a framework of Net Neutrality rules. In response to the news that AT&T is purchaisng T-Mobile–simultaneously making it  the biggest wireless provider and the only GSM-based wireless provider in the United States, Sprint–which will then be a distant third (a.k.a. “last place) for major wireless providers in the United States claimed that allowing the acquisition will stifle innovation in the wireless industry.

The major players in the broadband industry have played the ‘stifle investment and innovation’ card in trying to fend off efforts by the FCC to establish rules for net neutrality, while the proponents have played the same ‘stifle investment and innovation’ card in arguing for why net neutrality rules are necessary.

The other side of the investment and innovation coin is where–in the same breath–the affected companies claim that no regulation or oversight is needed because they are already operating fairly in a way that is healthy for competition. This week, the FCC mandated that major wireless broadband providers like AT&T and Verizon open their data towers to smaller competitors. The response from AT&T and Verizon was that they are already playing nicely just fine, and that the additional regulatory oppression will stifle investment and innovation.

It is all just a smoke and mirrors distraction. It is a rallying cry that makes for a nice soundbite and grabs a headline or two, but I have a card of my own to play–the ‘BS’ card.

Listen–if companies were investing and innovating, they wouldn’t have anything to worry about. The fruits of the investment and innovation would speak for themselves. If the broadband industry was investing and innovating, we wouldn’t have major portions of the country without adequate high-speed broadband, and we wouldn’t consider 10mbps or 20mbps, or even 50mbps to be all that ‘high-speed’.

Want to know what real investment and innovation look like? Check out Google’s GIGABIT broadband. Google is investing in pilot networks delivering gigabit-per-second broadband (1000mbps) just to prove it can be done. Google is not an ISP and won’t profit directly from providing broadband service, but it is investing in innovative technologies just to set a bar that the rest of the industry–which isn’t investing or innovating to any degree worth talking about–can follow.

And, if companies are already playing nice–not throttling specific types of network traffic, entering into reasonably priced peering agreements to share wireless data networks, etc.–then they have nothing to be concerned about with the rules. What they are saying, in effect, is “we don’t need your rules because that is the way we already operate,” to which I respond “if that is the way you already operate, then you won’t mind if we put that down in writing just in case some other less scrupulous competitors of yours don’t share your sense of ethics and fair play, right?”

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