Metcalfe's Law and a Memorandum of Understanding between the FCC and the FDA
There has been surprisingly little (any at all?) buzz in the entrepreneurial and venture community around the joint meeting of the FCC and the FDA at the end of last week.
There is surprisingly little buzz around the combination of broadband and medical devices.
But, there is surprisingly much R&D in the space (and it will grow massively, I predict). There are today heart monitoring, glucose monitoring and responsive intervention devices that use broadband. All these devices, and many more that exist or will exist, are subject to regulation from the FCC and the FDA. If these two agencies don’t coordinate, it will be really bad news for med device entrepreneurs and investors.
Well, they (the FCC and the FDA) are trying. The joint meeting (a first of its kind between these two agencies) is a start. But here is something even more stunning: The FCC and the FDA have announced and published a memorandum of understanding between them. This is the beginning of a collaboration in which they “agree to work together to promote initiatives related to the review and use of FDA regulated medical devices…that utilize radiofrequency emissions or otherwise fall under the jurisdiction of the FCC.” The purpose of this collaboration is to “increase regulatory predictability and understating of regulatory requirements for medical device providers.”
This is an excellent example of where regulation can do some good and actually grow the market for these new medical technologies. If there is a clear regulatory process that makes the approval process for these types of so-called convergent devices predictable and (hopefully) short, it will reduce uncertainty and risk and, as a result, the cost of innovation in this space. It will also mean more access for more people sooner. In effect, it will grow the market. But no regulation or uncoordinated regulation will lead to chaos, increased uncertainty and increased risk. All of which is anathema to entrepreneurs and investors.
According to Wikipedia, Metcalfe’s Law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2). Done right, this regulatory process can enable Metcalfe's law to operate and grow the power and value of the network; done wrong it can stifle growth and innovation.
Stuart Brotman referred to this MOU as an “historic” event. There might be a touch of hyperbole in there, but he is probably not far off.
This type of cross agency collaboration is rare, but given the fact that so many industries will be using broadband for more and more activities, collaboration will be needed across way more agencies in the near future.
If you are innovating in the medical device space, the educational space, the security space, and others or, if your revenue model involves targeted mobile (or on-line) advertising, watch out the regulatory wave is coming.