WiMax, Net Neutrality And Basic Fact Checking

from the need-to-support-your-argument-a-little-better dept

With yesterday's announcement that Sprint was going to offer WiMax over their 2.5 GHz spectrum, it was only a matter of time until someone tied the topic to net neutrality. The Wall Street Journal clocks in as the first one -- though gets its basic facts wrong, destroying the core of its argument. The editorial starts off by claiming that this shows the idea that there's not enough competition is bogus. As we've noted repeatedly, it is that competition question that's the real issue. That's why we've always hoped that wireless technologies would come along and make the issue obsolete. The problem, though, is we've yet to be convinced that any wireless technology is really ready to be true broadband competition. Mesh WiFi so far has had a lot of problems scaling. Cellular 3G networks are cutting off any user who uses the system for real broadband uses and satellite broadband remains a joke in comparison to other broadband systems. WiMax (and other wireless broadband systems) have always held promise, but have always been too far away from any serious deployment. The Sprint announcement will hopefully speed this process up, but we've yet to see a single wireless technology that wasn't over-promised and under-delivered. In fact, equipment based on the WiMax standard that Sprint will be using still hasn't started to go through the certification process -- which takes quite a bit of time. In other words, expect this to be delivered late and with quite a few kinks to be worked out (and performance that doesn't come close to living up to the hype). So, yes, perhaps it will eventually add another competitor to the bunch, but it's far from certain that it's a real competitor who can make a difference. We hope it turns out to work wonderfully and keep the competition in line -- but it's a bit early to declare that so.

At the same time, the WSJ article has some serious other problems -- which weaken its argument. First, it declares: "WiMax, meanwhile, operates in unlicensed spectrum, meaning Sprint doesn't have to shell out money in auctions to deploy the technology." This is basic fact checking that anyone who even looked at Sprint's announcement yesterday knows is 100% false. You'd expect much better from a paper like the WSJ. While WiMax can work in some types of unlicensed spectrum, it's fundamentally meant for licensed bands and Sprint paid handsomely for their spectrum. Hell, it was perhaps the biggest reason for Sprint to merge with Nextel: to get all that 2.5 GHz spectrum. In other words, contrary to the central point of the WSJ editorial, it really isn't that easy for just anyone to throw up a competing service. In the case of Sprint, it cost them billions to get the necessary spectrum, which will only cover a third of the population, and it's still going to cost them another $4 billion to build out the network -- making it quite unlikely that anyone else is going to challenge them on a national level. So, yes, hopefully Sprint's WiMax offering will represent another player in the space, but it's still a long way off from being around or proven, and it's hardly proof that just anyone can show up and compete in this market.

Finally, there's one other big problem with the WSJ piece. The telcos and their supporters all along have insisted that they simply won't invest in any new technology without a guarantee that they can profit from it. However, Sprint is investing billions to build up this network without any such guarantee -- suggesting that whole part of the telcos' argument only seems to apply in markets where (oh, look at that) there isn't any competition and they need extra incentives to innovate. So, let's see what happens. If this Sprint network really represents competition, it seems likely that the telcos suddenly would speed up their new rollouts in areas where WiMax is coming, without necessarily getting those same guarantees. Either that, or maybe they'll just try to buy Sprint, to keep it all in the family.
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  1. icon
    chris (profile), 9 Aug 2006 @ 1:32pm

    it's not competition until...

    it's not competition until i can get a wimax box that plugs into my TV and phone.

    it's not competition until i can get an EVDO box that plugs into my TV and phone.

    it's not competition until my DSL modem can plug into my TV without using a satellite receiver.

    it's not competition until my cable box can plug into my phone, ala time warner.

    it's not competition until my satellite reciever can plug into my computer and my phone.

    it's not competition until i can get TV and phone service over my powerlines the way i can get internet access.

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