Wharton Chapter 5

This chapter focuses on the role of government and its relationship to emerging technologies. The whole chapter used the history of the Internet and the communications industry as the basis to exemplify ten important lessons. Sometimes the government has a very satisfactory role in emerging technologies, as described by their development of the ARPANet and the privatization of the Internet backbone network from the National Science Foundation. But sometimes the government can take on a non-satisfactory role for a company with additional regulations or the provisioning of a universal service obligation. The idea of a monopoly and how these work was brought up many times in the chapter, including the role for government to regulate natural monopolies where a current market has only room for one competitor and to prevent a company from getting monopoly by stifling competition like Microsoft has been accused of doing, and treating their customers poorly or overcharging can also bring about governmental regulations. Whether a company expects supportive, adversarial, or no governmental effect at all, they should be prepared to deal and adapt to all scenarios with their emerging technologies. With this chapters’ focus on the Internet and its global outreach, very good examples were made of the challenges a company will have with overlapping jurisdictions of federal, state, and local laws, as well as global regulation. The idea of a conduit and content and vertical integration are very important, as to avoid a “closed” architecture that does not allow other companies to compete, the government may become involved to resolve this bottleneck to competition, and thus stifle the company’s ability to vertically integrate. It was interesting to read that most of the lessons (two, three, five, nine and ten) either directly or indirectly point to lobbying for favorable positions for the company’s perspective. Lobbying can be a very effective and powerful negotiator that can lead to substantial success for a company. Would Enron have become the powerhouse it was had it not contributed $572,350 to the campaign of George W. Bush and gotten Kenneth Lay to spend an evening in the White House with Mr. Bush? Even before Mr. Bush came to power, throughout the nineties “…Enron needed help in Washington, and it got it in a series of actions by Congress and the Federal Energy Regulatory Commission (FERC) that undermined the traditional monopoly of utility companies over power plants and transmission lines.” (“Campaign Gifts, Lobbying Built Enron’s Power in Washington”, Washington Post, December 25, 2001). Sometimes Lobbying can give a company the influence it needs to succeed…and beyond.