The FCC’s Unintended Consequences Problem

Too often the agency’s rules end up stifling innovation.

by Mike Montgomery

The Federal Communications Commission (FCC) is developing a nasty habit of passing rules that end up doing more harm than good. These rules may initially be well intentioned but the end result is that some certainly stifle innovation. We’re seeing a very clear example of that right now in the Wi-Fi router industry.

Last year, the FCC put rules in place to stop people from messing with the radio frequencies (RF) inside Wi-Fi routers. They wanted to make sure that the RFs didn’t interfere with things like medical devices and weather radars. They didn’t mandate that router boxes be locked to all modifications, but they also didn’t think through the potential ripple effects of the mandate.

In response to the new rules, a router company called TP-Link went ahead and locked its boxes to all outside modifications, which could have a chilling effect on future innovation. The reason — it was too difficult to block users from one part of the box (the radio frequencies) and give them access to other parts of the box. It was easier and cheaper to just block users from tampering with the software all together. When customers complained, TP-Link told them to call the FCC.

This might seem like an obscure incident that only hard-core tech enthusiasts would care about but it points to a larger problem. The FCC is quick to make decisions that might work politically but don’t work practically.

The consequences of the commission’s actions are that thousands of tech entrepreneurs who are working on new business plans have to think twice before launching new and innovative platforms and solutions given the way in which the FCC’s words don’t always match their actions.

There’s a huge risk for unintended consequences around another issue the FCC put on its plate recently — your television’s set-top box. This is a scheme to put television set-top boxes on shelves in online or physical retail stores so that instead of getting a box from your provider, you instead have the option of getting your own — much like you can today with a TiVo box.

Yet, there is no public outcry for retail cable boxes in the first place so why is the FCC even considering this move? Furthermore, the future is an app-based world, not a set-top box world. But if the FCC adopts its proposal, the consequences will extend well beyond retail shelves. It would destroy the ecosystem that has created the TV renaissance we are experiencing today that is built on carefully structured deals between studios, networks and content providers. The FCC’s proposed set-top boxes could become akin to watching YouTube — pop up ads and all. There are simply too many unanswered questions and not enough clarity from the FCC to sort out the truth.

The FCC needs to move more slowly and deliberately here. Often times the tech community wants regulatory agencies to move at the speed of innovation, but in the case of Wi-Fi routers and set-top boxes, the FCC should be spending more time contemplating the consequences of its actions. By not understanding the inner workings of Wi-Fi routers, the commission foreclosed a thriving area of innovation and creativity. If the FCC doesn’t reconsider its set-top box idea, it risks doing untold harm to the massive tech and entertainment industries that exist around television and deliver the very shows that have led to the current golden age of television.

Mike Montgomery is executive director of CALinnovates.

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