Hazlett in Financial Times: On the Innovation Commons

The May venture between Sprint and Clearwire (complete with a retinue of corporate partners like Google, Comcast, TimeWarner, Bright House, Intel, Motorola, Bell Canada, and cellular billionaire Craig McCaw)  "blasts away barriers to broadband and a flock of public policy myths," says Professor Thomas Hazlett, writing in the Financial Times. "This wireless broadband innovation aims to do what no one has done in unlicensed -- and betting $14bn on it," says Hazlett.

Hazlett points out in his article that the chief advocates of municipal networks are building private networks instead, and the proponents of net neutrality are getting preferential non-neutral customer access by buying the internet service provider. This is an economic choice, says Hazlett. "Only with the control afforded by exclusivity will these companies invest in the networks that, they hope, will make consumers sing."

On a Clearwire, you can see everything, The Financial Times, July 23, 2008. By Thomas Hazlett.

"Municipal Wi-Fi Adieu. When local government networks were the rage, circa 2003, their loudest corporate backer was Google. Broadband for all via 'free' unlicensed spectrum, smart radios and just a gentle nudge from City Hall. Politicians from Philadephia to Portland drank the Kool-Aid. But Google just paid $500m to jump to the Clearwire ship. The change in strategy speaks volumes: municipal wi-fi is considered small opportunity for Google and no threat to Clearwire.

"Fleeing the 'Spectrum Commons'. Five years ago, Intel was pressuring US regulators for more unlicensed bands. It won – the Federal Communications Commission dumped hundreds of MHz into the market. The bump was little noticed – short-range apps continued to work, but not much else developed. Meanwhile, wireless phone networks – providing wide area, mobile service – were booming. But regulators held off new allocations for a decade, starving the sector just when it was upgrading to high-speed data networks.

"Net Neutrality Not. Clearwire consortium members are not passive investors. Buying in, they become network friends with benefits. The cable ops will retail service. McCaw’s NextNet is the lead gear maker. Motorola supplies handsets. Intel’s chips are plugged in. And Google’s search engine gets its own button on the phones, a cute efficiency copied from the wildly popular DoCoMo network in Japan. If the NTT model, where the carrier extracts payment from mobile apps for a preferred spot on the wireless web, is 'open' – then 'open' all capitalists must be. Richly, NTT is a member in good standing in Google’s Open Handset Alliance.

"New Clearwire tells us that a 'fully-open, third pipe' has arrived in the broadband market – and their corporate network, crafted with exclusive spectrum and preferential access, and gobs of private capital -- will deliver it. That, truly, is a great leap forward. Thank goodness for the 'innovation commons'. The Chicago School could not have said it better."

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