Mandated Interoperability: The Cure is Worse than the Disease

Interoperability is an essential mechanism of modern communication. However, not all interoperability is benign or efficiency-enhancing. Interoperability has an alternative role as a tool of regulatory policy for granting access to a closed network. Mandatory interoperability comes loaded with regulations that supplant market prices. Network access price regulation and the no self-preference rule are two such regulations. These regulations are necessary for an effective mandatory interoperability regime. However, network access price regulation and the no self-preference rule also harm consumers by increasing prices, reducing output, stifling innovation, and degrading network service quality. Taken together, these two elements of mandatory interoperability are likely to produce far more harm than any potential benefit of mandatory interoperability.

By Jay Ezrielev^[1]

I. INTRODUCTION

Roughly speaking, interoperability is the ability of different systems, devices, and applications to work together. Interoperability enables calls between users of Android and iOS cell phones and between customers of different cellular networks. It is also what allows Internet users to share data between different countries, operating systems, devices, and applications. Interoperability is an essential mechanism of modern communication. It works by adopting standard communication protocols that different systems or applications use to transmit and receive data.

However, not all interoperab