Home Asia-Pacific IV 2001 New Rules for the Freedom Economy

New Rules for the Freedom Economy

by david.nunes
A Lee Gilbert Issue: Asia-Pacific IV 2001
Article no.: 5
Topic: New Rules for the Freedom Economy
Author: A Lee Gilbert
Title: Information Management Research Centre (IMARC)
Organisation: Nanyang Business School, Singapore
PDF size: 24KB

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Article abstract

A whole spectrum of rules, laws, policies and social norms influence our interactions to converged technologies. The need for new rules remains unproven. The social and behavioural issues relating to the use of convergent technology is of far greater significance for the researchers of the Singaporean Information Management Research Centre. This in-depth research casts doubt on many of the conventionally held perspectives on how users actually react to the digital revolution.

Full Article

Sixty years ago, Erich Fromm defined personal freedom as the central characteristic of human nature. Yet without rules, life descends into chaos. Rules shape the conduct of states, private enterprises and ordinary individuals engaged in everyday life. Not all rules are good for everyone: some conflict with the needs of specific institutions or individuals and, in some cases, the welfare of the general public. For example, policies governing the network interconnections among competing suppliers of telecommunications services tend to favour incumbents at the expense of new entrants and subscribers. This article examines the nature of rules, their relationships to the kinds of new values and freedoms created by mobile data services, and the potential governance implications of the rapid diffusion of the mobile Internet. Rules prescribe, control and alter behaviour, but only of the actors with choices. Thus, natural laws aren’t rules: we don’t have an option. Neither are guidelines, unless there are certain consequences. Three different types of interrelated rules shape telecommunications markets and global operating environments (Spar 1998): 1. Laws and policies are rules created by political processes within states, 2. Norms are rules flowing directly from society, and 3. Standards are precise, often technical, criteria created by private actors, which may be adopted by states to gain the force of law. All three types of rules respond, at varying rates, to changes in the political and economic environment and to the emergence of ‘disruptive technologies’ (such as the Internet, fax machines and photocopiers) that create new value propositions and thus challenge the current order. Laws and regulations change slowly. Those drafted on industry assertions that telephone service was a ‘natural monopoly’ protected incumbents long after it became clear that this policy was no longer in the public interest. Norms, such as the ‘home phone number’, reflect our usual behaviour. Shifts in norms may begin slowly, masking the strategic impact of a disruptive technology, even to industry leaders. This is partly because early versions tend to be imperfect and expensive, and offer a limited feature set appealing only to a small market segment, as with broadcast radio. Yet by creating new value, such technologies create entirely new markets and customer segments. As its performance improved and costs dropped, the radio rapidly captured listeners and advertisers, and reached a critical mass before competitors could react. Standards emerge from interactions among the interests of parties involved in standard-setting, behavioural norms, and the emergence of new technologies. For example, GSM and WAP standards mirror the interests of terminal makers and network operators, while the competing 802.11b standard is closely aligned with the computer industry. Technology, as an extension of human capability, alters the boundaries formed by natural laws such as gravity and the speed of sound only within the bounds of our rules. Disruptive technologies create new capabilities. When they enable behaviours beyond those governed by the current rule set, new norms, standards and laws emerge. Morse’s telegraph service rested on two standards: one to regulate physical devices and current flows, another to define the logic of Morse code. The new service greatly increased the speed at which the parties to a transaction could offer and accept agreements. Soon, traders defined new norms. These were followed at ‘a respectful distance’ by laws governing the legality of such agreements. Note that two separate rule sets are involved: one governs telegraph services (carriage), another the agreements (content) formed by users of the service. Freedom and Transformation: First Principles 1. Freedom flows from ‘changes in the structures of everyday life,’ as distinguished from mere convenience (Braudel, cited in Keen et al, 2001). 2. Convergent services, enabled by digitalisation, compression and pervasive access through wireless networks, are a powerful source of new freedoms. 3. Convergent mobile data services create four new types of freedoms(1): Relationship Freedoms Big city life is stimulating but often lonely. In Tokyo, it is possible to subscribe to a cellphone-based service that signals if you are within, say, 500 m of one of your group of friends, all members of the same service. This creates an opportunity for an impromptu rendezvous. In a very different scenario, imagine that you stop along the road in Colorado to admire the winter night’s starry sky. Realising that snow is beginning to fall, you return to your rental car, only to find the doors locked, with the keys visible on the console. You could look for a stone and break a window, or if this is a General Motors car equipped with On Star, you can call a 1-800 number with your cellphone and have the doors unlocked by satellite. Such examples aren’t conveniences: there aren’t other ways to do them. Logistics Freedoms Imagine that the label on every shipping box includes a thin ‘mu-chip’ containing a small memory and a short-range radio frequency device. The box identification and list of its contents are both printed on and stored in this smart label, then communicated during the loading process to a more powerful device on the shipping container. The container now knows its contents, which it can upload to the truck or ship that carries it to the next point. The GPS-equipped truck or vessel knows every detail of its cargo, and the shipper or receiver can track each shipment along the route to its destination. A bill of lading can be produced on demand. This emerging system, elements of which are already in place in ports such as Singapore, simultaneously reduces uncertainty and cost, and thus delivers more than convenience. Knowledge Mobilisation Freedoms Britain’s National Health Service supports its health care professionals by delivering Electronic Patient Record (EPR) data to mobile terminals at the bedside. This system delivers to up-to-the-minute patient data, such as medical records, treatment and therapy regimes, and treatment scheduling information. In California, patient information and lab test results are delivered through wireless links to critical-care surgeons. Armed with relevant patient data, doctors and nurses can make informed decisions and ensure that each patient receives the correct treatment at the right time. In Florida, building inspectors have wireless-enable access to building-permit data at the building site, simultaneously saving a trip back to the office and avoiding unnecessary work stoppage. Again, these applications alter the structures of everyday life, in that they free people and resources and create new opportunities. Freedoms of the Collective Consider the ‘hive mind’ derived by mining cellular networks for data on the current location of millions of subscribers, in which directions they are moving, and at what speeds. This real-time intelligence might be used to guide groups of tourists, control traffic signals or respond to natural disasters. Combined with information about individual subscribers, the hive mind model creates intriguing market research and surveillance capabilities. New technology-enabled freedoms will interact with the three types of rules, as portrayed in the Rules and Freedoms model, above. One interesting feature of this model is its inherent instability, with multiple positive feedback loops. For example, markets fund research and standards development, and also influence the laws and regulations governing markets and individual behaviour. New core technology enables new freedoms: consider the mobility created by voice-mail, compared to an answering machine. Use of these new freedoms will be shaped by shifting social norms, and may be regulated by tariffs. However, in many cases, emerging governance issues are unclear, as with Internet taxation and content regulation. When the existing rules are no longer appropriate, they can be relaxed, adjusted or replaced by new rules over time. Such a system never reaches equilibrium, an implication that resonates with our experience in the digital era. Of course, each new freedom casts a shadow. Privacy will be a critical issue for some participants. Others will be reluctant to conduct transactions until new rules are in place to address liability or warranty concerns. The pace at which these freedoms diffuse also depends on managing perceived value, price and service quality. The latter, which demands integrating internal Quality of Service (QoS) and client-focused perspectives, will be an especially difficult challenge. A Perspective from the Field: Preliminary IMARC Findings The general pattern revealed by the Rules and Freedoms model is confirmed by exploratory research here at IMARC. A survey of Singapore cellphone users reveals significant differences between WAP subscribers and non-subscribers, and other patterns that are relevant to marketing mobile data services (MDS). Subscribers in our survey panel were likely to be male, and to perceive themselves as technologically savvy persons to whom others turn for guidance. They were also more likely to use SMS and personal organiser functions. Subscribers were far more likely to use cable and wireless modems to connect their personal computers to the Internet. For access to information about technology and technology-based services, WAP subscribers were significantly more dependent on mass-media channels, and less dependent on advice from family, friends, and colleagues compared to non-subscribers. These findings confirm the need to match the communications channel to the intended target (Rogers 1995), over time. Factor analysis revealed relationships among subscriber intentions to use mobile data services (MDS) within one year, requirements for specific service, and demographic variables, resulting in our identification of those segments likely to be early adopters. Needs-based segments were: Mobile Professionals: these MDS services fill needs related to work life, including calendaring, access to mobile e-mail, and intranet/extranet services. Sophisticates: mobile data services fill needs for status, in terms of material style. Socialites: MDS fill needs to keep in touch with family and friends while on the go. TechnoToy: Here, MDS fills needs for hands-on knowledge about technological developments. Lifestyle: these MDS services, overlapping partly with those listed above, fill needs related to mobile lifestyles, such as delivering information or directions to people who are in an unfamiliar location, and helping people fill ‘dead time’ with time-critical tasks. Examples of such tasks include bill paying while queuing or on public transport, and facilitating meetings among friends who are on the move. Many of these services are essentially conveniences, rather than freedoms. Other segments, containing those who were unlikely to adopt, emerged from our analysis: Misers: members of this segment were unwilling to pay for MDS services, even after exposure to a free WAP trial. Laggards: these were the last to know about and to adopt new technologies. Although we were able to identify members of these revealed segments through the intersections among their demographics, preferences and specific behaviours, our results should be viewed as a preliminary, and perhaps local, glimpse of emerging markets for MDS. The picture will no doubt evolve as subscribers learn more about the MDS potential to create new freedoms. Conclusion: What Rules Do We Really Need? The conventional wisdom is that converged technology creates needs for new rules to govern property rights, means of exchange, and enforcement. Although our panellists were interested in these legal issues to some extent, they were much more immediately concerned with rules that were directly linked to the social context in which use takes place. These included behavioural norms such as how many of their friends used SMS, and whether their terminals were normally switched on. Uncertainty regarding standards was an issue for some, who expressed doubt that the cellphone would become the dominant mode of access for mobile data services. Our research also suggests that the success of any mobile data services initiative will require a constantly evolving array of services that create both freedoms and conveniences, and rapid attainment of a critical mass of users. The technically savvy early adopter might be an ally in both areas and could help diffuse the new norms necessary for successful adoption and rapid diffusion. The combination of a lack of interest in the legal issues and the unstable nature of social norms surrounding use creates a challenge for regulators. On the one hand, a lack of governance will discourage high-value applications. On the other, it would perhaps be wiser to let user norms evolve before establishing laws and regulations.

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