What made the cellphone revolution possible

Competition, not regulation, has fueled the way to 4 billion mobile connections.


Numbers will paint the big picture this year.

They will signal whether the global financial crisis is shrinking or broadening. They will tell us if the US stimulus package is working, and they will quantify the magnitude of economic suffering.

There isn't much to be sanguine about, but lost in the past month's dismal array of facts and figures was another number that actually tells a remarkably positive story.

The world now has 4 billion mobile phone connections, according to the group that represents virtually all of the world's mobile phone carriers, the GSM Association. That number is up from just 100 million a decade ago, and most of that growth is in developing countries. Keep in mind that there are 6.8 billion people on the planet.

Why is 4 billion an important number? For starters, it represents the majority of humankind talking to one another, sharing ideas and buying things. Second, amid the current "whither capitalism" headlines and calls for heightened regulation, it is a reminder of what can be achieved in free and open markets that promote competition.

We didn't reach 4 billion connections by accident. We got there because governments implemented market reforms that allowed new carriers to enter previously protected telecom markets and to compete on price, service, and coverage. By opening up their markets to innovation and competition, developing countries attracted investors. Those investors put their money into infrastructure and training, resulting in millions of new jobs.

Ministers at the recent G-7 meeting committed to avoiding protectionism. At the Organization for Economic Cooperation and Development's ministerial meeting last year in South Korea, it was agreed that all countries should "stimulate sustainable economic growth and prosperity by means of policy and regulatory environments that support innovation, investment, and competition in the information and communications technology (ICT) sector."

Some oversight is certainly necessary, but knee-jerk overregulation won't protect us, and it won't promote innovation – two things we sorely need at this moment in history. Returning to the old days of highly regulated rate regulation would be a tragic mistake.

It is through competition, not regulation, that billions of cellphone connections will soon be joined by billions of wireless Internet connections – connections to critical services such as medicine and education.

If governments continue to promote these developments by allocating sufficient new spectrum and allowing entrepreneurs to build and operate competitive networks, millions of jobs will be created, economies will grow, and the free flow of information will empower those seeking a better future for themselves and their children.

That's a welcome picture.

David A. Gross is a former US ambassador, serving as the US Coordinator for International Communications and Information Policy. On March 16 he will join the Washington law firm Wiley Rein LLP.

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