I received a note from a researcher in the UK over the weekend who offered an interesting observation about open access initiatives.
The researcher was dismayed with the “lack of objectivity” in recent university branded reports on the state of telecommunications. In the case of the Harvard report commissioned by the FCC, the bias is evident that the report was to endorse an open network agenda.
Unbundling might have been an effective strategy to maximise consumer benefits from the existing copper infrastructure, but it is a positive hurdle to next-generation investment, unless one can set the access pricing formula correctly. And that’s the whole trouble because one can’t.
In the pharmaceutical sector, once a new drug has been developed, it would be better for consumers if the government took that drug off-patent immediately, and allow generics to compete with it. But if the government did that, then it would need to consider the effect on the pharmaceutical sector’s incentives to invest in R&D.;
The warning from abroad: opening next generation networks to mandated sharing could yield short term consumer dividends without appropriate incentives for innovation in the future.
Policy makers may choose to follow that route, but they should do so based on sound economic evidence, not by fiddling with the numbers.