Competition vs. Regulation

Occasionally, technology, competition and regulation converge to bring about real change. The innovative character of wireless mesh technology is shaping not only the expansion of broadband access, the regulatory model relating to telecommunications services that seeks to promote competition and how services are delivered and paid for. Wireless mesh shows how technology and innovation, fueled by investment responding to market demand, disrupts the status quo for the benefit of the consumer.

Mesh technology has emerged as a important means to deliver high quality broadband at an affordable costs. That municipal and public safety services are at the forefront demonstrates how the market will move to embrace change if it means quality and affordability. Beset by lack of spectrum, costly proprietary equipment yet in desperate need of quality transmission and reception, the sector looked to the market to find a solution. And the embrace is not driven by some general concept of broadband's benefits, but the delivery higher transmission speeds, the ability to send and receive quality video, photograph, and a range of other information quickly and securely. Broadband delivers improved productivity at less cost than legacy equipment. The services municipal and public safety need are real and the improvements tangible. All this has taken place largely outside the historic regulatory and legislative battlefields of the Congress, the State legislatures, the FCC and state utility commissions.

It is when wireless mesh took its natural progression, as it allows one infrastructure to provide several networks, to respond to the wider demand for affordable broadband, that the historic regulatory reaction became fully engaged. A fundamental of the competitive model is the pursuit of self interest. Incumbent providers, who often speak but not embrace the virtues of a deregulatory environment where ideas and products flow freely to the market, pursue their self interest by embracing the status quo and advocating resistance.

At a time when incumbent broadband providers now seek to enter each others markets, they are also confronted by a new competitor in wireless mesh. Comparing the strategies and reactions to both circumstances is a curious contradiction. Invoking the need to reduce regulatory barriers to provide more competitive broadband opportunities, phone companies seek relief from franchise obligations that the cable industry has managed to comply with to deliver cable and broadband service. Cable interests, in turn, seeking to protect their market share, invoke the status quo. In contrast, phone company reaction to using municipal infrastructure to deliver broadband over mesh networks to businesses and residences has been to pursue legislative and regulatory barriers to such services.

Several factors undermine this preservation of the status quo. The first is the tangible delivery of broadband to those who were not served and the accruing benefits. Portraying the evils of what may happen is a standard advocacy tact. Reversing reality is a much more difficult challenge. Additionally, history reflects an emphatics role of local government in promoting the delivery and effectively managing modern services, such as electricity and gas at the beginning of the twentieth century. It shows the high cost of the status quo to those who must wait and is an undertone now pervading the debate. That an overwhelming amount of the investment at stake with regard to manufacturing, building and maintaining the networks is private and not government dilutes the advocacy even more.

While these efforts may continue, the force of the market and the expanded access that has resulted, driven by the innovation and investment behind mesh networks, is not lost on legislators and regulators. Wireless mesh brings more than a means to deliver broadband. It presents a competitive dynamic that does not rely on defending sunk investment and protecting market share. It seeks to expand the consumer base and quickly. Its innovation and affordability introduces a critical facilities based provider of broadband to an environment desperately needing competition. In contrast to the underlying premise of recent regulatory efforts to promote competition, it is not constrained by the shared facilities model, so resisted by the phone companies, in pursuit of their own interests.

The degree of change is more than delivering telecommunications, it extends to how the service is paid for. For years phone companies have charged consumers for delivering and transmitting information. In the broadband world, phone companies want to charge one fee to the consumer and another fee to those sending information if they want faster delivery. In contrast, the larger mesh projects, premised on the innovation of wireless technology, provide consumers a choice where the cost can be underwritten by advertisements. The result is more choice and access and presents a model for all telecommunications services.

It is the insightful legislator/regulator that perceives the positive emanating from change, even when unable to predict ramifications. The debate is moving from resistance to promotion. Wireless mesh is unique in presenting a separate competitor shown to bring down prices and expand choice. Its proliferation is a forceful example of the market's intolerance of the status quo. With the right spectrum location and infrastructure access, it portends the real deregulation of telecommunications markets. It is that meaningful and dramatic.