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Creating a wireless free market… through regulation.

I think my friend Mark Goldberg is pulling my leg.  After all, Mark has pointed to a NY Times op-ed about the FCC's decision to deliver half of the Open Access requirements asked for by Google, and said "apparently, the US wireless market is primitive, and doomed to stay that way".  Mark favours unrestricted use of the spectrum by the winner(s) of the auction.  He comments as follows:

An open auction means that anyone can purchase spectrum and use it in a way that allows them to determine how to best get a return on their investment. Adding rules amounts to constraining the flexibility for companies risking billions of dollars on a business plan, thereby increasing risk. Increased risk translates into an increased cost of capital. 

Consider these two points, however:

First, spectrum is a public asset.  It's not limitless.  Unlike terrestrial networks, we cannot just lay more fibre in the ground and create more capacity. Because spectrum is a public asset the regulator has a fiduciary duty to consider the needs of the public in an auction precisely because the auction creates a monopoly over that public asset.  In this particular case, Google's request for open access requirements benefits the public by allowing developers to attach new applications to the wireless network, and by allowing consumers to bring their own devices to the network. The two other requests by Google — that an open wholesale market be enabled, and that open network interconnections be mandated — would have created a regime where a mobile CLEC could be easily created or mobile services could piggy back on the existing spectrum without having to pass through the carrier's approval process.  Taken together, all of these rule changes would have created a more competitive environment, with more consumer choice, and spurred more innovation. 

Second, when compared to European or Asian markets, the US lags dramatically. One of the reasons for that has been the laissez faire view of the US regulator.  By not imposing use of spectrum rules, allowing consumers choice, and demanding that consumer be treated fairly by the very monopolies which they have created through their auction process, the US regulator has allowed a confusing mish-mash of technologies and anti-consumer behaviors to hold back the progress of the wireless industry.  It's ironic, given the US viewpoint that they are technology and free market leaders.  It's doubly ironic since the mobile industry was invented in the United States.

So Mark, it's not a question of technology but rather creating conditions where innovation can flourish.  Today's telecom oligarchy is very similar to the railway cartels of the 19th century. Deemed illegal, railways were ultimately forced to provide open access to their customers allowing free markets to dictate choice rather than the coercive and cosy policies of the railway barons.  The wireless companies should be held to the same standard as the railways. 

And oh, what we Canadians would give for just an ounce of the freedoms and competition that US customers enjoy today.  If their market is primitive, ours is surely in the stone age

{ 2 comments… add one }

  • Mark Goldberg August 9, 2007, 6:43 pm

    I do enjoy engaging with you on this dialog. I was being sarcastic in refering to the US as being primitive – but reading the NYT editorial, that is the impression one would have, despite FCC Commissioner Deborah Tate's recent comments [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-275669A5.doc] that:

    We should not forget that the U.S. wireless market that has so effectively served American consumers is one of the most competitive in the world, with prices lower, and usage higher, than any country in Europe and almost any country in the world.

  • Alec August 9, 2007, 11:01 pm

    Ah, my apologies. I missed the sarcasm entirely. Thanks for the pointer to commissioner Tate's comments.

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