China Regulates SMS Spam, Taxi Apps
When in doubt, regulate. That seems to be the growing attitude in Beijing these days towards China’s tech sector, following the latest media reports that one government agency is getting ready to tackle the problem of mobile spam, while another prepares rules for the newly emerging industry of apps that help people call taxis. I do agree that many problems like mobile spam need to be controlled, and that emerging sectors like taxi apps could always use some guidance to promote orderly development. But China’s growing tendency to try to regulate all things in the tech realm is a bit worrisome, and reflects a broader national love of rules, regulations and bureaucracy. (previous post)Now that I’ve given that nice introduction, let’s take a look at the latest headlines starting with word that the telecoms regulator is preparing measures to try and curb the rampant problem of mobile spam. (Chinese article) According to the reports, the Ministry of Information and Industry Technology (MIIT) issued its latest rules on the issue last week, stating that mobile marketers can’t send mass messages unless cellular subscribers first confirm that they want to receive such messages.
As a China Mobile (HKEx: 941; NYSE: CHL) subscriber, I can testify that the spam message problem has worsened considerably over the last 2 years, and that I now regularly get bombarded by a wide array of unwanted messages. Much of the problem stems from Beijing’s lax privacy protection policies, with the result that companies often sell lists of people’s phone numbers to third-party marketing companies and fraudsters. Perhaps somewhat ironically, many of the unwanted messages I now received are from China Mobile itself and providers of related mobile services, which lead me to believe that China Mobile is probably one of the major culprits behind the recent spam explosion.
While I commend Beijing for trying to protect consumer privacy through regulation, I do think the MIIT is probably taking the wrong approach by adding its own layer to existing privacy protection rules in this case involving mobile spam. For starters, many marketers that send spam messages are unlikely to heed such regulations and the new rules could end up having unintended effects that actually end up impeding development in the mobile messaging space.
Instead of this kind of approach, the MIIT should work more closely with the nation’s big 3 telcos to develop and install software and other checks that can filter out unwanted mass messages. Such an industry-led approach has worked well for big companies like Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO), which have developed sophisticated systems to filter out spam on their popular email services.
From mobile spam, let’s move quickly to the second news bit that has media reporting Beijing is preparing new regulations for the emerging field of GPS-based apps that help people to quickly call a taxi. (English article) I previously reported about this emerging group of entrepreneurial companies, and expect we’ll see a lot more similar start-ups developing services that take advantage of mobile GPS capabilities, usually called location based services (LBS). (previous post)
The latest reports cite a Beijing official saying the city is planning to set up a unified platform for mobile taxi apps, and that some companies could be “cleaned up” from the business. I do understand why the city is taking this step, as China has a long track record of unruly development in this kind of emerging industry.
But similar to the case with SMS spam, I have to say once again that I’m not sure if new regulations are the solution to avoid disorderly industry development. Instead, I would make a similar argument that I made above, namely that regulators and government officials should work together with these companies to try and ensure orderly development for these new taxi services.
That could include creating some service standards for the entire sector, setting up complaint hotlines and even requiring companies to report limited operating information to the government. That kind of public-private cooperation could help to promote healthy development of emerging sectors, without creating burdensome new rules that could have unforeseen side effects that end up stifling growth and harming these emerging industries.
Bottom line: Beijing needs to resist its urge address all industry problems with new regulations, and instead work more closely with businesses to tackle such issues.
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