The dispute over municipal broadband bears a striking similarity to the development of the electric power industry a century ago. As James Ballerâ€”an attorney who represents local governments and public utilitiesâ€”first warned in a 1994 paper written for the American Public Power Association: â€œThe history of the electric power industry casts substantial doubt on the notion that our nation can depend on competition among cable and telephone companies alone… to ensure not only prompt and affordable, but also universal, access to the benefits of the information superhighway.â€
One common source of frustration for me is seeing municipal wireless projects shot down because cellular carriers claim it’s “unfair competition”. This just doesn’t hold water, the reasoning is completely backward. The carriers bid on spectrum because supposedly they have a business model which will make them money with that spectrum. Once they win the spectrum they’re supposed to execute on that business plan. If something operating on completely unlicensed spectrum is able to undercut whatever they’re operating on that licensed and private spectrum guess what the problem is….. Wait for it….. the business plan.
So what if the carrier paid insanely huge amounts of money for the spectrum they own? They’re the ones who decided to purchase it, and they’re the ones responsible for making money off of it. Let’s change the players a little bit to draw a parallel to what the carriers are trying to do through legislation.
Let’s say I purchase a software package from a company to use in my business. That software comes with license terms from my provider and restrictions on what I can do with it, and I sign a contract with the software provider governing the usage of the software and our relationship. So I build the costs for that software into my own pricing models and build my business around that. Now lets say that someone else comes along, a competitor of mine, and they find a way to do the same thing that I do but without using the software that I licensed. So they cost less and I start losing customers to them.
Now does the government step in and prevent my competitor from competing with me? Do I expect them to legislate that the business that I’m in can only be provided by using the same software that I was a sucker enough to license? No, of course not. I made a mistaken decision to build my business on top of a base that cost too much and I got undercut. Welcome to the market based economy. So my question once again is: Who’s problem is it that carriers who paid millions in license fees for spectrum are getting customers stolen by Wi-Fi networks?