When looking at business model innovation, the role of regulation is an important brake, but also can be an enabler of change. I suspect that 2016 will be a year in which regulatory models will be central to the speed and direction of some potential growth markets.
Take for instance commercial drones. In the US, there is an attempt to stop federal government from regulating drones, and a proposed fee for registering drones is being described as a drone tax.
I have seen a wonderful rant which argues that government should not regulate at all as the free market will sort out the issues if left to its own devices. This seems to me to be incredibly naïve.
First, should an unregistered drone be allowed in the UK to deliver a parcel to 10 Downing Street?
Second, how does the free market resolve drones flying over airports?
There is an important principle here that ‘hard cases make bad law’. Rather than argue about too much or too little regulation, I think it is important to ask about appropriate regulation.
Just before Christmas a camera drone nearly collided with a skier. What would happen if it had? The difficulty observed many times is a tendency to overreact after a serious incident. What would happen if a drone dropped its payload onto a pram?
What I believe is needed is an open debate on the framework for optimising the value of drones while minimising potential harm. Minimum specs, maximum payloads and an air corridor for registered drones seem sensible along with principles for liability.
The sharing economy is another area of interest. In the case of Uber, Lyft et al. I suspect that IR35 will become an interesting challenge to the self-employment status of drivers. More importantly, who is responsible for ensuring that drivers have appropriate insurance? Consider a driver who loses his license but carries on driving commercially through an app-based service and is involved in a serious accident. Who can an injured passenger sue?
I would argue that the current taxi regulations do need to be reformed, but that certain public interest matters are still needed. Does the driver have a license and insurance? Do they have a criminal record which may make them unsafe to drive passengers?
One area for debate is the issue of the ‘knowledge’. It is true that modern sat navs have reduced the need for such a comprehensive base, but I don’t believe that it’s been eliminated. Two recent examples illustrate my experience.
I was in London in December and hailed a cab to get me to a station for the last train. I thought I had plenty of time, but there was an accident in road works. I told the driver about my predicament once we got stuck got me to the station with a few minutes’ spare via a tortuous route. Without the knowledge I’m sure I’d have missed my train. Last week I was driving home from Cambridge. As I approached the M1/M6 junction from the A14, there was an overhead sign saying ignore the SAT NAV, the first time I’ve seen such a warning. The problem I faced was the road split in 2 saying M1 North or South. Neither pointed to the M6, which I wanted. If I had followed the SAT NAV I would have had experienced an unnecessary 10 mile round trip.
With Airbnb, we have had reports of the trashing of a house during a New Year/birthday party in London. My home insurance does not cover the use of my home for commercial purposes. Who is responsible for ensuring that appropriate insurance is in place to protect both owner and guest?
Another area is around autonomous vehicles. California has issued draft guidelines for autonomous and driverless cars for discussion. It is arguing that initially all cars will still require a qualified driver and steering wheel and full driver controls. Advocates of the self-driving cars are said to be ‘disappointed’ with this approach. It may well be that in time that such regulations will be as odd as the man walking with a red flag, but this cautious approach seems sensible, to me at least, till we understand the realities at scale of this technology.
Add to this the privacy debates around the internet of things, including wearables, the level of complexity of the societal issues that need to be addressed to optimise the potential of these and other technologies is quite daunting.
Finally, there is an area of social media that seems to be going in two different directions.
Kim Dotcom lost his case, recently, against deportation on charges that Megaupload was not simply a platform and had no responsibility for users breaking copyright. As an aside, after Michael Jackson’s death there was a picture going round the net which argued ‘Kill Michael Jackson = 4 years, Download his music illegally = 10 years’. If the case is that a platform has responsibility for what it is used for, why are social media platforms not being sued for allowing the dissemination of terrorist videos, child pornography and so on?
This cannot be ignored or wished away. It has the power to enable or block some really interesting technology potential. I hope we won’t get to the position where hard cases make bad regulatory frameworks.
