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    During exam period this past spring, I took a break from studying to check out student projects at NYU's Interactive Telecommunications Program Spring Show. If you're not familiar with ITP, I can't do much to describe it briefly here, check out their site. Suffice it to say that their classes are a whole lot more fun than Contracts. I wandered the packed rooms, my backpack full of outlines and study guides rudely bumping passersby as around me LEDs flickered and projects clicked, hummed and sang.

    About a third of the projects (perhaps hoping to be the next Dodgeball) used mobile phones and SMS, either regular text messaging, or MMS, which can send pictures, audio or even video via a cellular network. The best ideas were simple yet brilliant, a massive photo scavenger hunt, shared subway delay messages, a shared list of places to do. They used social-network style collaboration (tagging/folksonomy) and play, and the toolbox of the latest wave of web innovation: blogs, the Google maps and flickr APIs. These, along with ubiquitous rounded corners, white space and bright pastel graphic design invoked the current Web 2.0 explosion/bubble. I think I've seen people using “Mobile 2.0.” But you probably haven't heard of many of these SMS-based services, much less used them to share, learn and play.

    Cell phone use is at historically unprecedented levels, and phones have truly incredible functionality, with built-in GPS, still and video cameras, bluetooth, and more and more storage. We have ubiquitous, incredibly versatile devices that people carry with them everywhere they go , and a supporting network that gets faster and faster. Why is there so little innovation in SMS applications and services?

    Maybe it has something to do with the nature of the network.

    The folks over at NewsForge have a great article describing the barriers to entry for third-party SMS applications on cell phones. The author, James Glass (a pseudonym), draws a connection between net neutrality regulation and the lack of innovation in SMS:

    It turns out that we have a privately owned and controlled network all around us, one that closely mirrors the technical functionality of the Internet, but where there has never been a requirement for net neutrality: the US cellular phone network.

    If you want to start an application or service on the neutral Internet, you set up a website and code away. But if you wanted to do the same on the cell phone network . . .

    The first step would be to contact a company known as an aggregator. This company manages your relationships with the cell phone carriers — and that's carriers, plural, because making an agreement with just one carrier ensures that your service will fail because it cannot effectively spread via word of mouth. The first requirement from an aggregator is a service charge, which starts at $1,000 per month. Then, you must buy a shortcode (which kind of serves as your Web site name) for an additional $500-$1,000 per month. But you're not done.

    He then describes the array of regulations imposed by carriers, prohibitions on fund raising, technical restrictions on what users can do with ringtones, and in some cases decency restrictions that are stricter than broadcast television. But that's not all.

    Even if you could slip your service past the censors, you would already have been set back eight weeks and many thousands of dollars — and this is just the beginning. Next, the carrier will charge you a fee (a few cents, typically) for every message you send to your users, and charge your users to receive your messages — and charge them to send you messages. Just imagine where would be if it had to pay a few cents every time someone browsed an ad, and you had to pay as well. It's no wonder SMS services are overpriced and haven't grown beyond a niche market for ringtones and horoscopes.

    We can argue about the wisdom of government regulation, but granting companies absolute control over the content moving across their networks clearly discourages innovation at the edges. Companies–especially large companies with the market power to capture secondary markets–are just as capable of creating a morass of red tape and expense as the government.