How Technology and Markets Made Net Neutrality Moot

Before the courts have even ruled on Verizon’s lawsuit against the FCC‘s proposed Net Neutrality regulations, it appears that technological progress will make the wireless device neutrality portion of the FCC rules moot.  One of the key aspects of Net Neutrality was the effort to curb the proliferation of “walled garden” wireless carrier networks.  Internet industry players feared that the proliferation of closed proprietary networks would limit their direct access to customers over the Internet and they supported FCC regulation that would forbid wireless carriers from imposing any network limitations on devices.

Even if the network limitations were requested by the device maker and customers liked the limited but inexpensive 3G access, these devices and services were threatened by FCC Net Neutrality regulation.  When I was interviewed last year by NPR’s Laura Sydell regarding the FCC’s Net Neutrality proposal, I raised the concern that Net Neutrality would essentially outlaw popular devices like the Amazon Kindle e-Reader.  Sydell responded that closed Internet devices like the Kindle should be outlawed by the Government.  I disagreed and argued that the market and technology were the best arbitrators in this dispute and it appears that I was right.

The first three generations of the Kindle e-Reader were limited enough in capability that it was possible to offer limited 3G wireless access to text and low quality images.  Now that the Amazon Kindle Fire has transitioned to a color display and dual-core microprocessor capable of rendering high quality images and High Definition (HD) video, it’s doubtful that future generations of Amazon e-Readers will not come with lifetime access to a limited Internet.  With hot pre-order numbers for the color Kindle Fire and abysmal pre-order numbers for the Kindle Touch 3G, the future of walled garden Internet devices is almost certainly dead.

It’s also notable that the FCC had also considered regulating Apple’s App Store on behalf of Google in 2009.  That discussion came up in my interview with Laura Sydell and she expressed her enthusiasm for app store regulation as well.  But it appears that my faith in a market based approach will be proven correct and that any excessive market control exerted by Apple will be contained by the market place.

When Apple revolutionized the phone and wireless industry in 2007 with the Apple iPhone, Apple appeared untouchable.   Only 4 years later, Apple has slipped to third place with a mere 20% market share in smartphones.

In 2010 when Apple’s iPad succeeded in the Tablet computing space where all others have failed before them, Apple appeared untouchable.  Just one year later Android devices have crept up to a 27% market share.  Even more ominous for the iPad’s dominance is survey data from Retrevo indicating that the Amazon Kindle Fire could outsell Apple’s iPad this holiday season.  The lesson in all of this is that technology and the market can move swiftly and wisely before the ink on any new regulation is dry.