Shapiro Says His ‘Nuanced’ View on Net Neutrality at Odds With ‘Official’ CEA Policy
LA JOLLA, Calif. -- CEA’s “official policy” is that net neutrality “is a good thing,” but CEA President Gary Shapiro has a “more nuanced” view of the net neutrality debate, and he thinks the debate is obscuring “bigger” issues like the spectrum shortage, he said in a keynote Wednesday at the “INFLECTIONPoint 2014” conference sponsored by search marketing agency Covario. Contrary to CEA’s official position on net neutrality, Shapiro said, “I have no problem charging people for greater bandwidth usage,” as long as those people have a competitive choice in Internet providers. But bottom line, Shapiro said, is that “I don’t get excited” about the net neutrality debate “the way people do passionately on both sides.”
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As an example of the “nuance” Shapiro brings to the debate, he said, “Netflix uses a lot of bandwidth, and I guess between Netflix and YouTube, you're using up a lot of space on the Internet. Video uses a lot of bits and bytes. If there is competition, if when you sign up as a consumer you understand it in simple English what can be discriminated against, and if you can opt out if the terms change, I see no reason why the Internet provider cannot discriminate. They built the system, they should have the right to discriminate.” But if competition is lacking or the consumer can’t opt out when the terms change, “then it doesn’t seem fair to me that that type of thing go on,” Shapiro said. “I'm a big believer, in most things, of consumer choice and business choice, as long as people understand what they're getting into, or can get out of it."
Shapiro’s personal view of net neutrality is that “there are bigger things in Washington,” he said. “No one has shown any harm yet,” since the Verizon decision, he said. “The players haven’t been bad, and Verizon and AT&T have committed that they're not going to violate the terms. I believe they're sincere. I'll disclose that they're members of mine as well, as are Amazon and the others. So we have members on both sides.”
Though CEA “has a position favoring net neutrality, it is not the number one issue for this country right now,” Shapiro said. “There are bigger, bigger, more significant issues right now,” with “spectrum availability” chief among them, he said. “We've shifted to a wireless world, and we need spectrum. The data shows we're clogging up our systems, and we need spectrum. We need broadcasters to participate in a voluntary auction, and we need their spectrum for our devices to work in the future. The shift, as you know, to wireless devices as a source for almost everything the last few years has been nothing short of phenomenal.”
Too many companies in the CE industry look at the present economic and commercial situation “and assume it’s going to stay that way,” Shapiro said, repeating several of the themes of his last two books on innovation policy. “They plan factories on the basis that there is a demand for a product, and they think none of their competitors are looking at the same thing. So the history of the consumer electronics industry is a history of where companies basically jump into areas that everyone else jumps into. They follow their competition. Everyone does the same thing. The consumer benefits. Prices go down dramatically, but companies don’t focus on some niches that they're really, really good at. They don’t try to foresee five, 10 years out.”
The U.S. excels because “we have a culture of innovation,” Shapiro said. That in turn is because “we're the most diverse, heterogeneous society in the world,” he said. “No one comes even close. Whether you look around the room or look around most parts of the country, you have every ethnicity represented because we're an immigrant culture by definition.” Diversify matters, Shapiro said, because “in a lot of Asian cultures, I've been in the room with Asian companies, where everyone just agrees” with one another. “We don’t do that here in the United States. We push back against one another. We're allowed to have our own opinions. We just don’t defer to the authority figure in the room. I think we're more valued in our companies to the extent we disagree in a reasonable and rational way.”
Shapiro thinks the U.S. and the world are “on the cusp of a phenomenal innovation transformation,” as evidenced by the technologies on display at last CES. For example, “we're heading toward this concept called the driverless car,” he said. “The driverless car is a reality. We had three companies demonstrating it at CES.” Still, Shapiro has spoken with top executives at the major automakers and thinks they're “a little reluctant to jump out” and lead with the technology, he said. If an automaker has “a bad day” with a driverless car, “it affects their entire reputation as a car company,” Shapiro said. “But they're all working on the technology, and it’s gotten really sophisticated.”