Fairly examined, truly understood No standardisation is wholly bad, nor wholly good*

In early June, the European Commission presented a proposal for a regulation on European Standardisation intending to “accelerate, simplify and modernise standardisation procedures”. In this document, the Commission has singled out ICT as a sector where standards are important, playing a role in stimulating innovation, cutting administrative burdens and encouraging interoperability. It also highlighted that European standards should be developed with the help of those most concerned, including small businesses.

At ACT we fully agree that standards can be a driver of innovation as they allow products and services to accomplish such goals as improving product safety or productivity. We also share the European Commission’s concern about the impact of standards on SMEs. However, and as always, the devil will be in the details…

In our view, for ICT standardisation to function as an “enabler of innovation” it needs to be based on an objective, market-driven approach, which, as much as possible, avoids direct governmental intervention. In a fast-moving sector like ICT, regulatory intervention may accidentally result in hindering, rather than enhancing fair competition and rapid innovation. Contrary to popular belief, standardisation does not always benefit SMEs. In fact, the business models of innovative SMEs in the ICT sector are frequently based in differentiation rather than standardisation. This is because standardisation may lead to a commoditisation of technology, which generally tends to benefit larger players. On the other hand, SMEs typically create value outside the technological mainstream and therefore thrive in niche markets for specialised premium solutions.

Regarding the participation of SMEs in standards development, it is a classic case of “easier said than done”. Often, and rightly so, innovative SMEs are concerned that active participation in standards development may negatively affect their IP rights. For SMEs to actively participate in the development of standards, it is of utmost importance that standards development organisations promote flexible IP policies that fairly remunerate innovative SMEs and enable them to get a return on their R&D costs.

The bottom line is that for small businesses in the ICT sector, standardisation can do as much harm as it can do good. Small business innovation flourishes best in an environment that rewards the development of novel, cutting-edge technology. Hereby hoping that this will be the guiding principle of future European standards development.

* Original quote:

“Fairly examined, truly understood,No man is wholly bad, nor wholly good.”

Theognis of Megara, Fragment XL