There has been three great consumer revolutions of the past 20 years that we all enjoy today. These are the World Wide Web, the Personal Computer (PC) and the GSM mobile phone. What they have in common is that they are all global. The World Wide Web hit 1.5 billion connected PC’s in the world in 2010, the PC itself was several billion in 2010 and of course the GSM mobile phone had passed 4 billion. What they also all have in common is that their success flows from rigid adherence to a common technical standard and the benefit of this only became so transformational when that common standard became both pervasive and global.
But what is even more insightful is that all three took radically different routes to their global standardisation success:
The history of the World Wide Web is well known. It was a lucky accident of history. A talented individual took time out from his day job (of helping to smash atoms) to work on an idea that did not even have anything to do with the organisation he worked for. This happened just at the critical time when the Internet was at a juncture between heading towards a series of large walled gardens or a fully open space and the champions for an open Internet could not get hold of and propagate the new World Wide Web standard fast enough. It was a lucky “one in a million” shot!
The problem with lucky one in a million shots is that it does not form a sound basis to reproduce it in other areas. This is where the PC and the GSM mobile phone offer models with much more reasonable odds of success.
The PC was the imposition of a proprietary standard on the market by a dominant global company. It began with IBM, the overwhelmingly dominant computer company at the time, imposing the PC architecture on the global market. The story is then followed up by Microsoft, the dominant supplier of operating systems for the desk top PC. Technology cycle after technology cycle for the operating system Microsoft has used its massive market dominance to impose its technology as a global standard on the market. As uncomfortable as many Europeans are with market dominance – it has to be said that Microsoft has created an enormous public good in respect of global interoperability. Tens of thousands of software companies have been able to deliver thousands of PC software applications with the scale economies to make them affordable to a large number of consumers and businesses. In addition the dominance of Microsoft has led to the success of Word, Excel, Power Point – which have all been vital to commerce and industry improving their competitiveness. The model works.
GSM was a political/regulatory intervention by governments on a co-operative basis. It was cooperation between the Governments and the private sector and between EU countries. It was driven by senior government officials who had a technical background who were in constant touch with the centres of innovation. The actual mechanism used was government’s offering new spectrum “with strings attached” to deliver new infrastructure that provided a public good (European roaming) and new opportunities for growth and jobs. Whether in standardisation or presenting the Memorandum of Understanding for mobile operators to sign – the governments were promoting co-operation. It led to the most successful communications network in the world.The model works.
Having created this huge success European government then walked away from this third viable model of network innovation. Government thinking was taken over by Economists with strong beliefs in competition and market forces. Spectrum was no longer allocated by governments to serve national infrastructure purposes but sold at spectrum auctions to the highest bidder. Independent regulators took over responsibilities for the mobile market with a short term focus of driving down prices. These regulators go to great lengths to forestall any mobile operator from becoming dominant – thus blocking off the PC model whereby a dominant player drives big scale innovation.
Where does this leave Europe today (2013)? Well if Europe is determined to not to have any dominant players and has walked away from the government sponsored industry co-operative model…by a process of elimination this only leaves the “lucky on chance in a million” option for Europe to lead the global race in mobile network innovation. Long odds indeed. That is likely to remain all the while competition trumps cooperation in the thinking of governments and we stay with the current European model for the mobile radio market of a single minded regulatory pursuit of ever lower prices – where mobile operator profits are not only competed away and but also regulated away. This happens without regard to where the money is going to come from for substantial investments in R&D, new generations of mobile networks and universal coverage from those new networks.
But if European Governments want to re-discover leadership in cellular radio revolutions, it is back to the “cooperative model” with tried and tested steps to leading a global mobile revolution:
1. Create (or borrow) a good idea for the next leap forwards that is viable in the time-scale and marketable.
2. Share the idea from the outset in all the relevant international bodies.
3. Start running immediately to be among the first to implement it (the first mover advantage is critical),
4. Ensure that spectrum is available for it at the point of implementation
The Government’s role is to set an infrastructure ambition, catalyze the essential cooperation, remove the barriers and have the right framework that incentives investments. The game is work with industry to “bake the next generation cake” then the government should leave the kitchen for that infrastructure up-grade and the private sector and the competitive market take over in fighting for the biggest share of “the next generation cake”.