Sunday, January 25, 2009

What can the Obama administration do to jump start digital innovation? Be a catalyst

There's no doubt the U.S. is one of the most creative and innovative cultures in the world. One needs to look no further than the role we played in creating and nurturing the growth of the Internet.

That said, it's amazing how we as a country have fallen behind the rest of the developed world on some of the basics. For example, our decline in broadband penetration, speed and price has been well documented. And we all know about the sorry state of our infrastructure.

Is the U.S. falling behind in digital innovation?

Another example is how far we are behind both Japan and some European countries in the integration of credit card technology in cellphones that allows consumers to pass through the checkout counter with nothing more than a swipe of of their device over an electronic reader.

The enabling technology exists and is in wide use in several countries. And, all the key U.S. stakeholders have an interest in making this happen:
  • Consumers get convenience
  • The credit card companies and wireless carriers get transaction fees
  • Merchants have the potential to get a greater share of U.S. consumers' collective wallet

With so much to be gained by so many you would think there would be momentum behind making this a reality. Think again. The fact is that because there are so many stakeholders, and because this is such a complex undertaking, the coordination needed to bring this to market is daunting.

Sometimes innovation needs a nudge
To me what's needed is some supra-like entity to intervene and provide the leadership needed to cut through the morass of regulations and technical standards that makes this such a vexing problem as there are just some things the proverbial invisible hand of the free market can't do. Who better to play this role than the federal government.

While rolling out this technology on a national scale won't come close to solving all of our economic problems, it certainly will have some positive impact as this will be a considerable undertaking. And the cost to the treasury, as far as I can tell, should be minimal.

Not a bad way for the feds to help stimulate the economy: no bailout funds, no deficit spending, just being a catalyst for a bunch of industry groups that haven't been able to crack the code on their own. Now that's the kind of activist government I can live with.

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