False Dawn of Wireless Competition

Business Week is all-excited over the June spectrum auctions.

It sees companies like News Corp., Clearwire, Microsoft and Time Warner as possible bidders. It sees "real competition" in the market.

Bunk.

At best this auction will increase the number of oligopolists from its present 4 to (maybe)  5-6. It will take years to build-out systems so service can be offered on them.

Real competition, in the Internet Age, means anyone can get involved. And we know this by the enormous growth of WiFi.

The story here is one of the edge vs. the center.

WiFi competition is defined at the network edge. It's defined, first, in hardware, which is sold to anyone. Then the services are defined by the people buying that hardware. The 2.4 GHz WiFi frequencies are incredibly crowded, just about anywhere you go, in stark contrast to the licensed frequencies.

This so-called "competition" will be defined at the center, by the network providers. The winners in this aucton will define what services to offer, what speeds to offer. They will define what you can do with the resource. Not you.

Can't anyone see the difference?

If you want real growth in wireless, the correct approach is to increase the supply of unlicensed spectrum. Cisco will make money, Microsoft will make money, and a host of new services will be created. New value will be created, and prices will be kept low.

All I see here is a slightly-larger oligopoly. Unless, of course, the current incumbents manage to game the system and hoard more spectrum for themselves.