EarthLink appears to be getting out of the muni wi-fi business for good. The company is at least is abandoning the major Philadelphia experiment it was in charge of. According to today’s press release:
“After thorough review and analysis of our municipal wireless business we have decided that making significant further investments in this business could be inconsistent with our objective of maximizing shareholder value,” said Rolla P. Huff, EarthLink president and CEO. “Accordingly, at this time, we are considering our strategic alternatives with respect to this business,” Huff added. EarthLink will seek to work closely with the municipalities in which it has operations as it considers these alternatives. The net book value of the assets attributable to EarthLink’s municipal wireless business is approximately $40 million.
A few years ago, many folks were telling us that muni wi-fi was like manna from heaven; the ultimate free lunch that would give us a broadband nirvana. As some of us predicted–reality often proves more complicated. Indeed, one lesson from this experiment is that demand counts. There was always a bit of “if-you-build-it-they-will-come” reasoning behind the Philly deal and other muni wi-fi proposals. But you can’t build a network without a customer base, and recent news reports indicated that demand was lacking.
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When and how does ICT interoperability drive innovation? This is the subject of a new paper on interoperability by the Harvard Berkman Center for Internet & Society (the webcast of yesterday’s launch event at the Reagan Building is now available).
Co-authors Urs Gasser and John Palfrey have published a thoughtful and well-balanced study. There’s a lot to agree with, especially their essential conclusion: that interoperability is important for innovation in the IT sector and the market, not government, is the preferred mechanism for achieving interoperability.
But I also think this paper achieves something more, even if unintentionally. It helps debunk the rhetoric we’re hearing about "openness" (and there are many definitions) as the best and only way to achieve interoperability.
First of all, according to the paper, "interoperability is not an unqualified good and is not an end in itself." Furthermore, just because interoperability is not present doesn’t mean there’s a "market failure" — the authors cite DRM-protected music distribution and the growing shift toward unprotected music as a response to interoperability concerns voiced by consumers.
Importantly, the paper identifies that interoperability can be achieved by multiple means: IP licensing, APIs, standards (including "open" standards), and industry consortia.
As it affects innovation, interoperability can help some types of innovation, especially incremental innovations. But higher levels of interoperability may diminish incentives for radical innovations if the network effects of interoperable systems increase switching costs for consumers.
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The brilliant Fake Steve Jobs has a great post on Google’s announcement of its new Open Handset Alliance. You should go read it right now because it’s all priceless, but I love this particular bit about openness:
Finally, has anyone else noticed the way Google is kind of desperately grasping at straws lately? They spend years trying to do something other than search and nothing works. Then, despite their big brains and IQ tests, they get totally blindsided by Facebook and have to gin up this ridiculous OpenSocial thing. Just like with this phone thing, they round up all the losers in that social networking space to form some dumbass alliance. You know how it looks? It looks weak. Companies don’t form alliances and consortia when they’re winning. Also, whenever you see companies start talking about being “open,” it means they’re getting their ass kicked. You think Google will be forming an OpenSearch alliance any time soon, to help also-rans in search get a share of the spoils? Me neither.
I love that Kevin Martin put out a press release (PDF because the FCC has apparently never heard of HTML) praising the Open Handset Alliance. So we’ll see press releases from now on each time a communications company announces vaporware?
I felt like I was reading a story from the future when I read this lead from a news article about a Microsoft exec. pleading why desktop software is still relevant:
A top Microsoft executive defended desktop application software, the
source of the company’s revenue for three decades, arguing on Tuesday
that even services-based companies such as Google still need it.
But then I just realized that I’m old, and time and the competitive software marketplace has moved quickly the past few years.
Nevertheless, I’m so intrigued by all the new business models that are vying for both the business customer and consumers like you and me that I’m currently writing a paper on it. My public policy bent is nuanced, but relevant: do new business models (not a single technology, not a specific technology, but a particular way of doing business like licensing, services, ad-based) need a regulatory helping hand to compete? I’m talking about interoperability mandates, spectrum auction rules, standards…you get the drift. Of course, I’m going to have to say that even if you can think of a reason for antitrust regulation, FCC intervention, etc., there are countervailing reasons against government regulation that are likely more compelling. Back to paper writing….
Last week was a whirlwind of activity for the telecommunications, media and technology project with which I had been engaged since August 2006.
The folks at the Berkman Center for Internet and Society at Harvard were kind enough to invite me to speak in their luncheon series on Tuesday, October 9. I discussed “Media Tracker, FCC Watch, and the Politics of Telecom, Media and Technology.” I’m happy to report that the event is now archived on Media Berkman as a webcast.
I spoke about the work of the “Well Connected” Project at the Center for Public Integrity for which I was responsible. I devoted most of my time in the lecture to the Media Tracker, the interactive database at the heart of the project. The Media Tracker combines data from publicly available sources in a new and unique way, mapping out media and telecom ownership at the ZIP code level. Ownership is linked to lobbying expenditures and campaign contributions by company. The level of contribution by a telecom, media or technology company to any federal candidate can be viewed – documenting who has received what from whom.
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The WSJ reports that the French government has “rejected the sole bid it had received for the so-called third-generation, or 3G license, from French Internet start-up Iliad SA, on the grounds that it didn’t meet required financial criteria.” It also says that the “failed auction for a fourth mobile-operator license could forestall new competition and keep prices at their lofty levels for consumers[.]”
It seems like the French government is going to try to remove the technical roadblocks stopping the deal, and that desire for more competition is certainly gratifying. But what I’m more curious about is why there aren’t more bidders? After all the WSJ also says, “France is one of the more desirable markets in Europe for operators. Prices have remained high and competition — limited to the three operators — isn’t as brutal as elsewhere. Italy, for example, has four mobile operators and is set to roll out more.”
It wouldn’t have anything to do with forced business models, would it?
In an interesting post today, Glenn Fleishman explores what AT&T’s purchase of 700 MHz spectrum from Aloha Partners today means for Verizon. While my conspiracy theory radar tingles a bit, I had this same thought earlier today. No point in paraphrasing; enter the blockquote.
AT&T spends $2.5b for 12 MHz across 200m people in the 700 MHz band: Let’s talk two-steps-ahead. In the terms for the C Block licenses that Google wanted very open and Verizon and AT&T wanted to have cell-spectrum-like restrictions, AT&T did a volte-face and said it would agree to most of the openness that Google wanted. Huh, I said, I wonder what made them do that? Well, it’s gamesmanship. AT&T was obviously already in a position to acquire Aloha Partners’s licenses.
This means that AT&T is reverse-encumbering the other band. While the C Block involves more bandwidth and greater coverage, Verizon is now in a worse position because of the lack of device and application lock-in if they choose to bid in 700 MHz as AT&T will already have holdings. AT&T can have the flexibility to deploy different services in the different 700 MHz blocks. I think.
AT&T can now focus on bidding on the A and B blocks, which can compliment their Aloha acquisition and which don’t come with open-access restrictions. So did AT&T pull off a Machiavellian ploy to saddle Verizon with an open access mandate?
On a note related to Jerry’s post on “L’iPhone” I’d like to point out Thomas Hazlett’s “How the ‘walled garden’ promotes innovation” in the September 26 Financial Times. The piece discusses the virtues of closed and controlled technological ecosystems and how the “walled garden” can often be a prosperous and vibrant one. Best paragraph from the piece:
Unbundling phones from networks is suggested as a policy fix in the US. European phones, working with different Sim cards across carriers and borders, are the model. Innovation in the European Union is said to flourish. But the iPhone came first to the US, as did the BlackBerry and advanced broadband networks using CDMA data formats. That is not surprising given that US networks are afforded wide latitude in designing their systems. Licenses in the EU mandate a GSM standard. What is recommended as “open” in fact deprives customers of a most basic cellular choice: technology.
Of course the real closed vs. open debate is whether we want an open economy. Open, that is, to varying business models–rather than one that is closed to any service or product that technophiles might describe with the now-curse-words “proprietary” or “closed source.” The techno-intelligentsia may value the notion of taking a phone from network to network, or being able to install Skype on anything with processor, but it turns out that most people couldn’t care less. Ultimately that’s what matters. The systems that are adopted shouldn’t be chosen by uber-geeks and regulators, but by every-day consumers.
I love my iPhone. Despite what others might say, it is the most innovative mobile phone in a decade. I also think innovators should be rewarded, which is why I’m fine with the iPhone being locked to AT&T’s network. As a result, Apple gets a cut of my (and every other iPhone owner’s) wireless bill.
France might be left behind when it comes to this innovation, however. That country has laws similar to the wireless Carterfone rules Tim Wu, Skype, and others have advocated for the U.S. Locked phones in France must be unlocked by the carrier upon user request, and wireless carriers must also sell unlocked versions of their mobile phones. As a result, Apple is considering keeping the iPhones off French shelves indefinitely.
To me it’s clear that forced access laws limit innovation. I think folks who propose such rules want to have their cake and eat it, too. That is, they want the innovation that comes from entrepreneurs acting in a free market (and often fueled by exclusive deals such as the one between Apple and AT&T), and they also want the forced openness of networks. They think that the latter will have no impact on the former; that innovators will innovate regardless of the incentives. The iPhone snag in France, however, shows that incentives do matter.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.