IT and Telecom: Extremes in regulation

Enterprises spend as much with telecom vendors as they do the total of all IT vendors - hardware, software and services. And yet the convergence between tech and telecoms accelerates with Apple and Google driving mobile trends, Microsoft with Unified Communications, Intel with WiMax. And telephone companies getting more into IT infrastructure outsourcing services.

But this interview with the FCC Chairman Kevin Martin gave me pause. Amazing the amount of influence the government has on telecom, compared to hardly regulated IT vendors. Some would argue though with telecoms, it's not regulation, it's protection. Telecom companies  know the lobbying, regulatory approval processes cold.

So, if anything I would re-balance the regulation. Get the government out of many telecom areas and open up more competition in many telecom sectors. And give it  a bit more of a role in IT. Some IT  areas I would like to see some basic level of regulation:

a) Require software vendors to open up maintenance to third party providers. It is cynical that vendors have ecosystems of service partners for implementations, but pretend that annual maintenance is too complex for others to support

b) Require outsourcers to disclose what percent of services are delivered from outside the customer's home country. Most western firms have grown sizable labor pools in India and elsewhere but refuse to disclose to customers how much delivery comes from there, so they can protect their margins

c) Require software vendors to improve quality standards and warranties. Shocking the bugs and security holes that vendors deliver and get away with.

d) Require systems integrators to be truthful when discussing "rapid" implementations - to share details of dimensions of projects and effort and timelines rather than puff statements of efficiency

e) Set more standards for energy efficiency, tech waste disposal - other green standards

Ideally, the IT industry does this on its own without any government interference, but  in my 2 decades in the industry I have seen vendors pay lip service to the issues, so a threat of outside review may just help. The key is just enough regulation - because as we see in telecoms, the regulation can go too far and still not necessarily help consumers.

Comments

[Nitin Goyal]

Nice list Vinnie. Another one comes to my mind as a honorable mention as well:
- Regulate the advertising or hold vendors accountable for what they claim regarding profitability and efficiency. Vendors claim the moon - I cannot see any other industry where there is so much FUD and bogus claims.

Sadly sounds more like a wish list .......... I wonder if even one of these can see the light of the day.

[Uday Kumar]

Vinnie - First off, I have been following you blog for sometime and find your ideas/musings useful. However, this is the first time I am commenting on any of your postings.

I would have to respectfully disagree with the overall idea you are proposing here. Government regulation (i.e. meddling/intervention) of any kind should always be looked upon with a high degree of scepticism. There are places where regulation most definitely makes sense - energy, environment, health, etc. But regulations in the IT space, specially in the instances that you have mentioned (barring "e") are definitely not needed. All they will do is get in way of the IT firms efforts of becoming more lean, efficient, cost-competetive, and innovative.

Let the customers and the market at large spell out the need for things like more collaboration/partnership, transparency/disclosure, service/solution maturity/quality, etc. Bullets a) through d) have a direct impact on an IT firm's competetiveness and I would hate the government to tell me how to run my IT business.

[vinnie mirchandani]

Uday, I am no fan of regulation...I have railed against SarBox for 2 years now

but with convergence between tech and telecom, naive to expect tech will stay as under regulated as it is...and if i had to be regulated I listed some areas which would help keep the industry more competitive and also offer some level of consumer protection...ideally the industry fixes the issues themselves with no outside meddling but after 20 years am not holding my breath

[Thomas Otter]

Hi Vinnie,
Trust that all is well.
Trackback between wordpress and typepad is not behaving.

but I've written a response here.
http://theotherthomasotter.wordpress.com/2008/01/17/carbolic-smokeballs-and-software-salesmen/