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Saturday, February 12, 2005

Government and Standards
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Is competition in standards a good thing? Here at PFF, we're pretty much in favor of competition in any market, and our fellows made the same argument regarding standards.

Senior fellow Tom Lenard, addressing the EU debate regarding patents and open source, said it was important that Europe not preclude competition among standards. That's not a small point to make. As Wall Street Journal Europe editor Brian Carney noted, many in Europe are proud of the fact that the continent worked together to set one wireless standard - GSM - which many say was a major impetus in that industry growing more rapidly than that in the U.S. (To be fair, the EU's Simon Bensasson said another factor in that growth was Europe's adoption of caller-party-pays).

There's no question the adoption of 2G wireless service was much slower in the U.S. It wasn't just the fact that there wre multiple standards, of course; there was an erratic spectrum policy on the part of the FCC, spectrum speculators not greatly interested in deployment, etc.

Left unsaid at the conference was a point made in a recent PFF Progress on Point. Yes, Europe embraced 2G far faster than the U.S. However, the U.S. has a remarkably healthy wireless market - arguably the most competitive, and most profitable - communications market on our side of the pond. Yet CDMA, GSM and iDEN compete as standards, and TDMA made a run at it when AT&T was competing in the market. What is happening in that market of competing standards? Consumer prices for wireless service are much lower in the U.S. than they are in Europe.

It's also important to keep in mind, as Tim Finton and others noted here, that dueling standards doesn't mean incompatibility. FInton said that during the European debate on adopting a wireless standard, he was stunned when a prominent European minister said that if CDMA was deployed in his country, users of that standard wouldn't be able to phone GSM users. His staff hadn't bothered to inform him that handsets could be compatible for both networks, a commonplace reality in the U.S.

As noted earlier, Professor Salin took issue with some attendees' views on the importance of intellectual property. On the importance of competition among standards, however, the libertarian was fully supportive.

posted by Patrick Ross @ 7:30 AM | Digital Europe

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