Thursday, August 25, 2011

Address Problems with Wireless Applications, Not Regulations

News outlets have recently covered New York Senator Charles Schumer's urging wireless providers to deactivate stolen cellphones. The Senator is also reported to have sent letters urging the FCC and DOJ to study the United Kingdom's policies for deactivating stolen cellphones.

It's one thing for policymakers to merely urge wireless providers to take certain concerns into account in their business practices. But it's quite another thing to impose new regulations. Urging the FCC and DOJ to consider UK policies sounds like setting the groundwork for new regulations.

Considering the dramatic and dynamic innovation and growth of wireless in recent years has taken place in a light-touch regulatory environment, one should always think twice before imposing new regulations on wireless. When markets are characterized by rapidly changing technology, even well-meaning regulation has the potential to stifle innovative and impose costly controls.

And when it comes to wireless, the lesson for policymakers is that they should never underestimate the app. Wireless apps offer consumers countless ways to obtain functionalities for their own needs. As the FCC's latest Wireless Competition Report points out, "several application stores have launched within the last three years, with each offering thousands of applications for download." The total number of apps downloaded from the Apple App Store surpassed 6.5 billion by September 2010, and by that same time, "the Android Market had over 80,000 available applications and had passed one billion downloads." Ubiquitous, creative, and customizable wireless apps thus provide useful tools as well as ready solutions to problems, rendering well-intentioned regulatory mandates pointless, if not harmful.

Prior calls for FM chipset mandates in wireless devices or "bill shock" regulations miss the fact that wireless apps can deliver many of the same functionalities in an individualized manner that proposed regulations supposedly promise. Similarly, while advanced wireless devices may be attractive items to thieves, those devices also provide their own capabilities to for wireless consumers to protect themselves. There are a number of wireless apps available for consumers to password protect their devices and data, to lock down their devices remotely, and to track the location of their devices.

It's also worth remembering that once a wireless device is reported stolen, typically wireless providers terminate the customer's service to that device. That protects the consumer from incurring charges on the stolen device and sharply reduces the value to the thief who then has a device lacking service though the customer’s account.

When a wireless app can do the job, regulation becomes redundant and perhaps even irresponsible. So in the case of stolen cellphones, policymakers should always consider the ready consumer protections offered by wireless applications before taking a more heavy-handed approach by imposing new regulations.