August 3, 2014
Last week, Congress passed an act that is destined to restore consumer freedom to the wireless market, leading to lower prices and more competition. The Unlock Consumer Choice and Wireless Competition Act was signed in by President Obama and will have a comparable impact upon the market.
Further, this is the first bill passed as the direct result of an online campaign, specifically with a White House “We The People” petition that achieved 113,000 signatures. This presents a blueprint of a new generation of policy making.
I sat down with Derek Khanna, one of the people who spearheaded the campaign, to get the inside scoop on just how much this will affect the market:
Tech Cocktail: What does this mean for the mobile phone industry?
Derek Khanna: This legislation will lead to more competition in the wireless industry which will ultimately result in more innovation and better, and cheaper, service service for customers. There are over 100 wireless carriers in this country, and the smaller players each got a boost today to be able to compete with the big players. Further this will help the phone resale market allowing for individuals to sell their old phones for a higher value.
Tech Cocktail: Will big corporations like Verizon, AT&T, and T-Mobile hurt financially from this?
Khanna: Restoring a free market for wireless is good for both the industry and the consumer. There may be some dominant firms opposed to more competition that refuse to innovate and compete and then will lose out under the “innovators dilemma,” but if Verizon and AT&T invest in better technology, service and cheaper prices then they will likely continue to stay strong players in the market. However, big companies potentially losing is generally not a public policy concern, rather it’s often evidence of creative destruction working which is the process that drives robust economic growth and innovation.
Tech Cocktail: How might this open the doors for smaller mobile focused startups to disrupt the space?
Khanna: Small mobile companies like Republic Wireless, which offers an innovative market model of unlimited talk and text on wi-fi and 3G service for $10 a month, can have difficulty competing with the large companies because they often can’t offer the latest devices. The legislation signed today will create an even playing field by allowing consumers to bring their old phones to these new carriers that can then compete on service and price.
Tech Cocktail: Can you predict what this means for the future of smartphone OEMs like HTC, LG, and Apple?
Khanna: As we enter a new generation of devices where innovation in the mobile space may slow down (a phone from 2014 may be very similar, at least to the average consumer, as a phone in 2016), consumers will likely become increasingly price discerning on monthly service bills and we may see a renaissance in the wireless space of new companies competing more strongly, strictly on service and cost. Such dynamic competition will lead to massive price reductions and improvement in service. As an example one can look to the online storage wars among Box, Skydrive, Onedrive, Google Drive, and Amazon S3 driving the cost of cloud storage to lower levels every year (sometimes every few months!).
Ultimately this competition will help the consumer and lead to more innovative business models and technologies that will help US business compete abroad.
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