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wireless takeover

sgs | wireless | Saturday, August 4th, 2007

Lack of sleep makes me stupid. I was reminded of this last week, right around 6 am, when I was on a conference call and was asked my opinion on making wireless networks more open. As my brain struggled to right itself, my mouth moved its way through, “It’s a big positive because it will speed-up innovation in the industry.”

I would like to retract that little inanity. Not just because it’s vacuous (what’s new) but because it’s flat-out wrong, and misses the real, very important story that is currently unfolding.

First, let’s be clear that we’re talking here about two related things: a groundswell of criticism over the closed- and proprietary- wireless carrier business model, largely following from Tim Wu’s Feb-2006 paper, “Wireless Net Neutrality”, and Google’s two open letters to the FCC concerning requirements they want imposed on the upcoming 700 Mhz auctions.

(And you’re desperately naïve if you don’t think the first was orchestrated by the second.  For what is an essentially technical issue, this has reached the highest level of politicization I’ve ever seen, with vituperative academic papers about the upcoming spectrum auction that, buried in the footnotes, disclose they were funded by the CTIA, and an entire IEEE wireless standards committee shut down due to ballot stuffing.)

The correct lesson to draw from these criticisms of the wireless carriers, is not that the wireless guys are about to enter a world of hurt, as FCC regulators successfully declaw them and force them to play nice on the good ship USS Open.  (‘Cuz, for starters, that ain’t gonna happen.) The correct lesson is that the wireless carriers have, with heretofore minimal fanfare, positioned themselves to seize control of the Net.  What’s important is not that the wireless carriers are facing criticism from Google and fellow travelers, it’s that what had once seemed like a hidebound business well on its way to fading into irrelevancy,  is now seen by Google as their greatest threat.

Take a step back and marvel. Five years ago, the idea that cell phone companies would come to control the Internet would have been instantly dismissed.  That was the cable companies’ role!  Even two years ago, when a Canadian computer scientist published an influential paper entitled, “Why Cell Phones Will Dominate the Future Internet”, he felt it necessary to include lengthy explanations and rationales. Now, if hearing that title isn’t enough to strike fear into your heart, you haven’t been paying attention.

(OK, fine, some remedial math:  Mobility + Volume economics will help assure that cell phones become the dominant means of accessing the internet. Since the power conferred by those users will accrue to just four national carriers, they will be able to extend their traditionally vertically integrated (read: bellhead) model of a fully provisioned- and managed- network. And while control of the Net’s access and backbone is scary enough, it’s the rich precedent they have set of walling off their world (remember i-Mode?) that makes the scale of their ambition so terrifying.)

Sure, the carriers may have to put up with some small bites and stings from regulators. But what matters is that … the set of significant providers is going to go from a thousand ISPs, to four wireless conglomerates … From a loosely interconnected network of networks, to a walled garden … From best-effort and abundance, to QOS and scarcity.

When you look at recent events through this reference frame, everything falls into place. Google’s actions make perfect sense. Given the onerous slotting fees wireless carriers currently force network content providers to pay, of course Google is willing to throw $5 billion at creating a wireless alternative. It also explains more counter-intuitive events, like why carriers such as Verizon have been so quick to embrace WiFi. Sure, it may bring down prices for their traditional voice business, but they have their eye on something much larger. A certain amount of agnosticism on wireless standards seems like a small price to pay. The virulence of the carrier’s response to the municipal wireless movement -which they appear to have now effectively discredited, a remarkable feat utterly in keeping with the history of the telcos – is no surprise, since it was the only credible alternative method for ubiquitous access. Etc.

My reflexive remark about how all of this will “speed up innovation in the marketplace” was inane for another reason: it was profoundly ahistorical.

First, because prior attempts at forcing networks to open up have been disastrous. Remember UNE and “loop unbundling”? The ILECs were required to open up their networks and let new entrants use their existing infrastructure. This was supposed to let a thousand flowers of innovation bloom.  But there was something fundamentally un-American about this – it smacked of State-led privatizing – and the ILECs resisted in every way possible, from dragging their feet to sabotaging CLEC equipment.  It’s safe to assume that Google’s successfully imposed auction requirements – such as mandatory wholesale access – will be ferociously resisted in the back-office, even while carrier execs make supportive noises about openness,

Besides, one of the great unspoken truths here is that, as naturally sympathetic the case for (wireless) network neutrality always sounds, it doesn’t actually have a legal leg to stand on. Using market power to your advantage is not somehow morally suspect – it’s a fundamental tenet of capitalism. And discriminating against content providers based on how much they are willing to pay isn’t unfair, it’s business as usual. As the wireless carriers love to point out, what do you think Google is doing when they charge content companies more to appear higher up in search results?

All of which is to say that expecting the FCC or US Senate to arrive like some kind of regulatory Deus Ex Machina and save the Internet is to fundamentally misunderstand the laws (normative and otherwise) of the land.

Of course, declaring the “imminent end of the Internet as we know it” is an old tradition, already considered a cliché by the 1980s, when only a few thousand people even knew about the internet. Usually, the fears turn out to be misguided. Often, some technical innovation sends the internet industry sliding in a new direction, breaking the reigns of control in the process.

This hasn’t provided me much solace recently. Because when I look at the technological horizon, the most significant innovations – femtocells, IMS, and deep packet inspection – all appear most likely to break in the wireless carriers favor. Femtocells, a sort of 3G access point, could help displace WiFi’s role in the home; IMS (IP Multimedia Systems), a complex fretwork of standards by the 3GPP will serve to drive IP deeper into the cell phone, and deep packet inspection from companies like Cavium will allow for ever more subtle biases to be implemented, making any attempt at mandating network neutrality essentially unenforceable.

The bottom-line – and I don’t like it either – is that just because the idea of an Internet controlled by wireless Bellheads is repugnant, doesn’t mean it won’t happen. It will.


  1. When I embarked on a career in television, the promise of the future was the advent of narrowcasting. We would still have the commercially supported national networks, but there would also be a veritable profusion of programming written and produced for specific, smaller audiences. This proposed programming would be provided by cable at a moderate charge for the channels you would care to select. However, like the loss of network neutrality is described, the imagined cable that was to provide this wonderful entertainment/educational programming was all of a sudden in the hands of Community Antenna Television (CATV), operators of a large antenna in rural communities to provide reception of the 3-networks. It almost seems that while viewers were being wowed by color t.v., everyone had to get cable to see more stations, and heck, sure you paid a little but they were commercial free. Then you had to pay a lot more, you had to take all of the shopping, religious, sporting, old network shows, paid advertisement programs, and commercials. The CATV operations have all gone to the same companies that are taking over the internet. I haven’t worked in television for a long time, only subscribe to a basic 8 channel package, and enjoy broadband Internet—for as long as it lasts. What’s next for me? 8 & 16 mm film, and an old reel-to-reel tape deck. And they still call the frequencies being sold for billion$, “the peoples airwaves.”

    Comment by BlueDart — April 5, 2008 @ 7:28 am

  2. Very interesting and unorthodox analysis.

    Yet, it is not because something is ineluctable that it is immediate. So, let’s hope that some black swan will change the rules.

    Comment by JeanHuguesRobert — April 5, 2008 @ 3:00 pm

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