Our blog

Regulation is a curate’s egg. Discuss.

There was an interesting story from Telecoms.com last week, which discussed the topic of likely future regulation, and the impact it may have on innovation. In the article, Bengt Nordstrom from Northstream was quoted as saying: “The very idea that these companies [such as WhatsApp, Skype] must be regulated because they compete with operators is a step against innovation. The truth is that operators have not been innovative enough or fast enough, and in a competitive market that’s their loss. Increasing regulation on OTTs will damage the innovative climate that is very much needed in mobile industry.”

That’s true. But while it’s true, it does miss a key point, which is often overlooked these days. Sometimes regulation exists for a good reason. It’s why access to spectrum is restricted and allocated among authorised users, so critical services aren’t disrupted or subject to interference. It’s also why location information is required to be delivered from an operator’s network, so that emergency services can use it.

Some regulation exists to protect users. It’s how all emergency services function. It’s all very well to glibly state that regulation may stifle innovation but there are some cases where it is essential. Skype et al avoid the question of regulation because they set themselves up in such a way that they can dodge the responsibilities that come with owning and operating a national network. That’s fine, but the closer they get to ubiquity and the more users default to using their services (I know plenty of people now defaulting to such a provider for voice services over WiFi, for example), then the closer they must get to the purview of the regulator.

You can’t have it both ways. Offering these services is great – and they have been and continue to be innovative, both in terms of how they are delivered and the features they have brought to us. But equally, if you seek to play in waters that are regulated, then you must expect to have to deal with it.

The role of the regulator is to ensure a level-playing field. This means that they can and should step in when the occasion demands. We’re all for a light touch in regard to these services, but please don’t suggest that they can avoid a certain amount of regulation forever. Hiding behind the pretext that regulation will kill innovation is neither honest nor reasonable.

At a certain point, some regulation will be necessary and it will then be up to these agile companies to innovate again. Regulation is indeed a curate’s egg – good in parts. Legacy operators have often been hamstrung by the amount of regulation they face, but they must comply with stringent rules governing public safety and security. Newer operators sidestep this (although many, of course, have covertly complied with the more nebulous area of security). Neither position is right – but equally, it is muddleheaded to suggest that all regulation is, a priori, a bad thing. It is not – that’s worth remembering the next time you call the emergency services, use a GSM / UMTS device or connect to WiFi*.

*Yes, before you ask, we know that WiFi uses unlicensed spectrum. But it is unlicensed precisely because spectrum access is regulated in general. As a consequence, through the regulation of access to spectrum, certain bands have been left free, so it’s the regulation that has helped. Discuss.