Brookings Institution: Open Networks a Win-Win

The U.S. government should deregulate the mobile telecommunications industry and open mobile networks to more applications and foreign players, according to a new study from The Brookings Institution. Such policy changes would fuel growth and drive business for players along the wireless value chain, despite the fact that Americans appear indifferent to innovation in the wireless industry.

The 18-page study, which was released today, examines consumers’ thoughts about mobile phones in the U.S., UK, Spain and Japan in an effort to determine how government policies affect consumer behavior. They are, author Darrell M. West concludes, heavily impacted by public policy. Japan, for instance, has a low rate of smartphone usage level due to a telecom infrastructure that’s largely closed to foreign manufacturers, while Spain enjoys a high rate of mobile app consumption thanks, in part, to a relatively open architecture in its telecom policies.

Among the more interesting findings from the study:

  • U.S. consumers are far more interested in choosing their own mobile applications than users in other markets, and cited software incompatibilities and service provider restrictions as reasons for not downloading apps more often than other users.

brookings app download chart

  • Nearly 78 percent of Americans view a phone as just a phone, while users in other markets are more likely to view the handset as a standalone, PC-type device.
  • The length of service contracts was the primary source of frustration for U.S. consumers, with more than 46 percent of respondents citing the commitments, followed distantly by cost issues. Americans were notably less frustrated by the slow pace of innovation than their overseas counterparts, however.
  • Nearly one-third of U.S. consumers cited new devices from manufacturers as primary drivers of innovation in mobile, while only 10 percent said new voice services from the carriers are fueling innovation.

Brookings innovation chart

“With the number of applications rising dramatically, this project suggests a ‘win/win’ potential for the wireless industry,” West writes. “Both large and small service providers could do well under policies leading to more widespread consumer usage.”

Such statements are sure to resonate with the FCC, which has opened up an investigation to figure out how to encourage innovation in the wireless industry, and is charged with creating a national broadband policy by Feb. 17, 2010. Just don’t expect any of the U.S. carriers to agree.