SMART Letter #50
CHAIRMAN POWELL'S FCC
December 26, 2000
SMART Letter #50 -- December 26, 2000
Copyright 2000 by David S. Isenberg
isen.com -- "supreme stupidity"
firstname.lastname@example.org -- http://isen.com/ -- 1-888-isen-com
CHAIRMAN POWELL'S FCC -- by David S. Isenberg
I'm no fan of President-apparent Bush. I say 'President-apparent' because
'President-elect' is too healing.
Gore is no prize though. I was in the room in 1995 when Al karate chopped
the podium to emphasize that the Clinton Administration would veto any
Communications Act that allowed monopolies to grow stronger. Yeah, right.
Tell it to SBC/PacTel/Ameritech and BellAtlantic/NYNEX/GTE.
Here's a view of the election I like:
As Saint Stupid says, "If it's funny it's true."
Which brings us back to W's Washington. Fortunately, some potential Bush
appointees get it. Mike Powell, for example. Mike, son of Colin, is an FCC
Commissioner, a former member of Joel Klein's anti-trust staff, and a SMART
People say that Mike Powell will be W's FCC Chairman. This is good news.
Powell gets that it's not "Communications as Usual" these days. He gets
that there's something huge and unprecedented happening here, and what it is
ain't exactly clear.
Powell knows that technology changes are driving waves of creative
destruction, and he believes that legislative and regulatory changes should
be in response to them. (Contrast former FCC Chair Reed Hundt, who was handy
with a political hammer so he saw technology as yet another nail.)
People who I trust -- such as Dale Hatfield and Dave Farber who worked with
Powell at the FCC -- like Mike Powell. So I'm looking forward to a Powell
FCC that materially appreciates what technology is doing, and what it can
Clearly Mike Powell values the role of new, small companies in wealth
creation. In a recent speech (see
http://www.fcc.gov/Speeches/Powell/2000/spmkp003.html) Mike Powell spoke of
innovation and entrepreneurship as "engines of prosperity." And he said
that the FCC, "must foster competitive markets, unencumbered by intrusions
and distortions from inapt regulations".
But tellingly, Powell also spoke of Clayton Christensen's "disrupting
technologies" (sic) and Joseph Schumpeter's concept of creative destruction
in the same breath. Perhaps it escaped Powell that Christensen radically
extends Shumpeter's thinking. Christensen says, "The vertical axis [in a
Shumpeter-style S-curve diagram] for a disruptive innovation, by definition,
must measure *different* attributes of performance than those relevant in
established value networks."
Christensen tells of a meeting with Andy Grove in which Grove interrupted
Christensen to exclaim, "I get it! It's not the *technology* that's
disruptive, it is how the technology disrupts the *business*model*!"
Christensen's book goes on to point out that even incumbents can engage in
creative destruction when the net effect is to sustain their core business
Christensen has studied hundreds of technology introductions, and found that
incumbent companies are expert at bringing new technology to market if it
sustains the existing value proposition, but they are horrible at bringing
disruptive technology to market. For example, if we were depending on
incumbent disk drive makers to bring us hard disks for laptops, we'd
probably still be waiting. Fortunately, regulatory barriers in the computer
industry are thinner and more permeable than they are in communications.
When Republicans say "pro-business" they're usually talking about big,
established businesses (ka-ching!), rather than tiny emerging ones. I hope
that Republican Mike Powell understands that progress in telecommunications
will not come from the pro-Cretaceous wing of his party.
I hope that Mike Powell gets that the Communications Revolution is not just
about competition, but about new ways that competition happens.
(Supermarkets compete, but there's no revolution there.) The kind of
aggressive regulatory forbearance (*and* action) we need from Powell's FCC
is the kind that will allow not only new technologies, but new business
It would be a frictionless slide for FCC Chairman Powell to play poker with
the big boys. It'd be far more difficult for him to preside over their
disempowerment. Powell has pledged to remove the encumbrance of inapt
regulation -- but from who?.
It is a good sign that Powell favors certain new technologies that make new
kinds of competition possible. These include deregulated -- and even
unlicensed -- forms of radio transmission, and unbundled -- and perhaps even
publicly accessible -- rights of way for fiber.
The era of Customer Owned Networks is arriving. Once upon a time it was
unthinkable for companies to own computers. Computers were too big and
expensive. Then, speaking of engines of prosperity, suddenly companies, and
then individuals, owned them. We are entering an age in which corporate,
and even individual, ownership of networks is becoming practical. But there
is a difference -- there was no pre-existing regulatory infrastructure for
the age of computers to be born into. Forbear aggressively if you dare, Mr.
Mike Powell's FCC could usher an era in which the engines of networked
prosperity are supercharged. Alternatively, he could preside over rampant
trampling of small creatures pursuant to dinosaur fights. Here's hoping
that FCC Chairman Powell does the right thing.
CONFERENCES ON MY CALENDAR
February 24 - March 2, 2001, Kuala Lumpur, Malaysia. APRICOT is the Asia
Pacific Regional Internet Conference on Operating Technologies, and I'll be
giving one of the keynotes. The Asian Internet is on the steepest part of
the S-curve these days! For information, see http://www.apricot2001.net
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Copyright 2000 by David S. Isenberg
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