Permanet, Nearlynet, And Wireless Data
from the couldn't-have-said-it-better dept
As per usual, an insightful article from Clay Shirky looking at “permanets” vs. “nearlynets”. His argument is that “permanets”, networks built by a few large entities tend to fail when competing against “nearlynets”, networks that are cobbled together randomly by individuals. His argument is that “permanets” are usually high quality – but expensive, and nearlynets are usually lousy but cheap. However, over time, nearlynets improve much faster than permanets get cheap. This makes sense. Any nearlynet has incentive to get better. Permanets, though, have to recover their high initial capital costs, and thus, have less incentive to get cheap quickly. As an example of failed permanets, he talks about airplane phones and Iridium, both of which make his case perfectly. In both cases, lower quality, but cheaper mobile phones took away the ability for the permanet solution to make money. Now, he says, that 3G is the next permanet, and WiFi is its competing nearlynet. Of course, when you think about it, it’s a little odd that mobile phones were the “nearlynets” in his initial examples, but suddenly become the “permanet” in his prediction. There are, though, differences between regular 2G mobile phones and the 3G data plans that carriers are betting on. We’ve said in the past that the 3G providers are likely to price their offerings terribly (toll booth style, rather than flat rate) and Shirky points out that this is likely to push people towards the “nearlynet” of WiFi. Definitely worth reading.