Collaborative Standardization and Disruptive Innovation: The Case of Wireless Telecommunication Standards

Abstract

Collaborative standardization, an efficient and inclusive form of organised innovation under the auspices of standard setting organisations (SSOs), has demonstrated significant technological achievements in the field of wireless telecommunications. At the core of collaborative standardization is a working balance of interests and incentives of all stakeholders involved, i.e. contributors of technology and users of standards, epitomised by licensing on FRAND terms. Standardization contributes to significant gains in consumer welfare, in the form of lower prices, more innovation and more consumer choice and convenience. At the same time, standardization fosters competitive markets, upstream and downstream. However, its character as a process of disruptive innovation is widely disregarded; its contribution to the process of creative destruction and its spill-overs to remote sectors of the economy are ignored. Competition policy and enforcement could play a meaningful and beneficial role only insofar as they are firmly based on a realistic view of standardization, its economic significance and its impact to innovation and growth.