WiMAX, Google, Sprint, Clearwire
Someone asked me a question today about Google's new partnership with Sprint.
Sprint/Nextel is the third largest wireless carrier in the U.S., falling far behind Verizon and AT&T - who together control 51% of the wireless market. (Sprint services are also resold by Comcast and Time Warner as part of their packages.)
Sprint has announced it won't bid in the 700 MHz auction. Sprint has other plans.
About a year ago, Sprint announced that it would “invest up to three billion dollars over the next few years in a joint venture with Intel, Motorola, and Samsung in the development of a mobile Worldwide Interoperability for Microwave Access, or WiMAX network.” (From this research paper by Christopher Glaser.) Sprint has been hard at work on the standard for mobile WiMAX, which is an IEEE 802.16e standard.
Mobile WiMAX is a big deal (if it could work) because it would allow a lot more data to move much more quickly than it does over traditional wireless networks. It's slower than DSL or cable modem service, but it's mobile and much faster than what our cellphones can offer now. As the Glaser paper points out, because the waves are shorter there will need to be a lot more base stations put up — and there are other downsides (you should read his paper).
Sprint bought up (cheaply, I understand) licenses to transmit using spectrum in the 2.5 GHz area — much higher frequencies, shorter wave-lengths than 700 MHz. Sprint and Clearwire announced last week that they will they “will link their respective WiMax wireless broadband networks to
give subscribers a seamless roaming experience across territories that
eventually will cover 300 million U.S. residents. The network will
deliver between 2M bps (bits per second) and 4M bps downstream and
about half that speed upstream, they said.”
The idea is that this would cost about $50 a month.
Here's another advantage to 2.5 GHz - not only do Sprint and Clearwire have big holdings in this area, but I understand that other countries are also looking at 2.5 GHz as the place for WiMAX deployment. So that means that equipment etc. could work (potentially) worldwide. That isn't the case with 700 MHz, where only the U.S. is deploying it (so far) for wireless services. Everyone else is still using 700 MHz for television.
Now Sprint and Google have announced they're working together. Here's the press-release-speak:
Sprint network bandwidth, location detection and
presence capabilities will be matched with Google’s popular communications
suite – Google AppsTM – that combines the GmailTM, Google CalendarTM and Google
TalkTM services. Customers will be able to experience a new form of interactive
communications, high speed Internet browsing, local and location-centric
services, and multimedia services including music, video, TV and on-demand
products.
So what does this mean? Google is spreading its bets, and sees global potential in WiMAX. The standard may not be fully baked, but if it worked you could have a clear alternative to the existing locked-up wireless world in the U.S. So Google may be throwing its weight behind cable companies and Sprint rather than dealing directly with AT&T and Verizon.
It's obvious that Google isn't conditioning its collaboration with Sprint on complete openness. The Sprint network won't be sold wholesale - something that Google is clamoring for in the 700 MHz auction. The Sprint network may not (we can't tell yet) allow any device to use it. Sprint is saying that it will provide open standard APIs
(application programming interfaces) to people who want to create customized products for browsable
devices, so that may open up the application world - right now application developers have to pay 40-50% of their revenue to a carrier in order to have their application be usable on phones that are locked to that carrier's network. Can't really tell, though - it's too early - whether Sprint will ease up on taking a cut.
But there's no guarantee that Sprint will be giving access on a non-prioritized basis to the entire internet.
Is Google being hypocritical? Perhaps, on one level. Openness may go out the window when you have to keep your shareholders in mind. On another level, Google could say that it's impossible to get at the wireless world using the 700 MHz spectrum because that has been locked up by the existing carriers. So they're simply trying another route, and the benefits to consumers will far outweigh any niggling concerns about openness.
Or maybe they just wanted to make sure that the Google phone had a distributor.
Thursday litigation thought
Verizon has joined AT&T in favoring the Martin plan.
The summer brawl over the 700 MHz auction does seem to be steaming to a close. For now, at least.
It's very likely that the “open device, open application” rules won't be sufficiently clear or enforceable to make a difference. Remember the 1996 Act? All those good intentions about making the incumbent telephone companies open up their equipment for use by competitive (non-incumbent) local companies? Because there was so much litigation over what
rates an incumbent could charge for use of its equipment, the
interconnection/unbundling regime prescribed by the 1996 Act failed.
Meanwhile, competitive local telephone companies went out of business, as did ISPs.
You can just imagine how much the winner of the national blocks in this 700 MHz auction (who will be Verizon or AT&T) will want to fight over certification standards for devices and differential treatment of applications. At the same time, they'll be creating enormous path-dependencies for an entire generation of technology. They'll buy time with lawsuits.
Or, on another front, maybe Frontline will sue (although it's tough to see the business model for doing so). Frontline had an audacious, solves-all-problems plan. Maybe they'll join with public safety officials in saying that the Commission's auction rules won't result in the right kind of dedicated network (the kind that Congress wanted), and that therefore the auction is unlawful.
It's frustrating. Someone said to me today, “Why don't we just have a few days of riots?” I can't imagine Americans rioting over communications policy, and neither can you. The Commission wouldn't be moved by riots - neither would the Congress. Google is right that the “foreclosure value” to the incumbents of these
licenses isn't the same as their market value, and so the incumbents
will spend whatever it takes to block new entrants. The people who want things to change don't have any levers to pull at the moment.
But there can always be lawsuits.