From Google, Verizon and the FCC to BlackBerry in India, we’re seeing technology companies interfacing with policymakers more than ever today—and for good reason. Technology—particularly mobile and web technology—factors heavily into almost every facet of society, from education and research to commerce and national security. But one of the greatest strengths of cutting edge technology has been the exaggerated survival of the fittest vetting process. If a new gadget, application or web service didn’t provide a killer solution for its users, it died. So far, it’s been the classic "build a better mousetrap” challenge in overdrive. And this new pervasiveness of technology and big tech companies threatens to undermine the reign of innovation.
That’s because when an industry begins deeply affecting the economy and the worldwide social fabric, it means that the government has a duty to regulate it more heavily. And once politics becomes a factor in the survival of an industry, product or service, things get messy. Corporate lobbies, special interest groups and elected officials now play as much a role in the fate of tech products as consumer demand. Instead of seeing lines out the door at Best Buy, we are seeing organized protests on the lawn outside Google offices and CTOs invited into the smoky backrooms of political headquarters. It’s all in the name of reaching a compromise between the gargantuan interests that are riding on the way technology unfolds—be it the way bandwidth is distributed among broadband users or how an advertising module appears in a smartphone app.
The net result of such convoluted dealmaking are often government regulations and industry moves that simply don’t make sense to the consumer. Case in point: the proposed deal that would enact a federal law requiring that all smartphones be equipped with FM receivers.
This notion seems like a complete non-sequitir from both a consumer viewpoint and a product development perspective. Currently, very few smartphones have FM receivers, simply because better technology exists. iPhone, Android and BlackBerry users can tune into Rhapsody, Pandora or XM radio for a more personalized, less ad-ridden listening experience—not to mention that today’s smartphones are capable of holding hours of digital music locally. Demand for a smartphone that picks up FM radio broadcasts simply doesn’t exist—especially since many radio stations already offer streaming broadcasts via the Internet. Meanwhile, if the government did require smartphones to include FM chips, it would mean added weight, less battery life and higher costs for all subsequent models.
But there are two important lobbies who think that an FM antennae in an iPhone is a good idea: the recording industry and the broadcasting industry. These two industries have been in a slow and steady decline now that a majority of listeners have transitioned to a diet of digital media. Record sales are down and on-air advertising revenue is down and both broadcasters and record labels are grasping at straws for a way to reclaim these lost profits. The record labels have a solution—take a bigger cut of royalties from broadcasters. Currently, broadcasters only have to pay songwriters royalties for music played on-air. Meanwhile, Internet broadcasters—such as Pandora and Rhapsody—have to pay performance royalties (money that goes to the record labels). The music industry wants to close this gap by revising the royalty structure so that broadcasters fork over more money to the labels. Legislation that would enact these changes has made progress on Capitol Hill, but has reached an impasse, since it’s essentially a win-lose situation for broadcasters. And that’s how the idea of including FM receivers on cell phones came about.
The FM receiver is the policymakers’ and lobbyists’ idea of throwing the broadcasting industry a bone. With a n FM receiver in every cell phone, radio listenership would undoubtedly skyrocket, which would help broadcasters attract more advertising dollars and perhaps save them from certain doom. But while this "compromise” makes record labels and broadcasters happy, it ultimately hands the burden off to the likes of Apple, HTC, Samsung and other mobile technology developers. Understandably, these manufacturers may not be interested in dumbing down and cluttering up their devices so that they can serve as life support for a wheezing industry.
Federal law requiring FM receivers on cell phones won’t likely see the light of day. But the very utterance of such an idea highlights what can happen if critical interests are not represented in the lawmaking process. This preposterous compromise on the horizon will likely galvanize the cellular lobby to join the clash between the record labels and the broadcasters, further complicating the dealmaking and political horsetrading. Chances are, the groups with the least amount of lobbying power likely be left with the rawest deal and the symbolic FM chip on a smartphone.