Expert says government tech standards needed to spur competition

Governments play a key role in technological innovation by creating standards that spur competition in the private sector, according to Bernard Avishai, adjunct business professor at Hebrew University.

Avishai said during a speech at the Personal Democracy Forum in New York on Friday that the government can enable competition among businesses by creating interoperable standards for both hardware and software. Those standards are crucial to inducing firms to enter new markets such as manufacturing charging points for electrical cars.

"Governments have a role in catalyzing competition by creating the standards that allow networks to be efficient," Avishai said. "People in the private sector understand this, the head of the [Chevy] Volt team said they are looking to the government to make standards to make competition among suppliers possible."

Avishai called the Volt "probably the most advanced mobile device of the coming generation" but said extensive preparations would be needed before America is ready to widely adopt electric cars. For that he said the government would have to create standards for how the power grid collects information and bills drivers recharging their vehicles.

"If you're from Virginia pluggin' into a power grid at Duke, will your bill reflect that?" Avishai asked. "The critical next standard is telecom reporting protocols for electrical power grids. The standardization of billing and claims processing will be huge."

The former editor of the Harvard Business Review noted that companies with an early lead in a particular marketplace have little incentive to standardize, since doing so can allow other firms to chip away at their marketshare. But he said companies are quick to adapt to mandates, such as the European Union's standardization of chargers for cell phones.

"All these steps will require an ecosystem of entrepreneurs to develop middleware. But they won't jump in without standards," Avishai said.

Avishai used the example of automobile diagnostic scanners, for which there is a common port used by all manufacturers. The standard for ports was created by the Environmental Protection Agency to enable scans of emissions, but an unplanned result was that small auto-repair shops are able to service a wider range of vehicles using the same equipment.

"EPA wanted to make it possible for small garages to make checks having to do with pollution, but it actually opened up competition in after-warranty repair," Avishai said. "They didn't need a different piece of hardware for every car."