Monday, August 6, 2007

700 MHz Rules: More Impact than Carterfone

Though some might really have preferred mandatory wholesale rules for a portion of the 700 MHz spectrum, the "Carterfone" style "any compliant device can be attached to the network" provision will have much more impact than did Carterfone. Carterfone lead to widespread use of modems on the public network, initially by business customers who did not have to "ask permission" to do so. Consumers initially could "buy and own" their own phones instead of renting them from the phone company.

We also might credit the rise of much of the Interconnect and business phone system business to Carterfone.

Then, because modems could be used, we can further say that Carterfone helped pave the way for creation of the Internet itself. First dial-up access, then broadband access, became possible because of Carterfone. Because of broadband the visual and now semantic Web developed. These are significant effects, indeed.

But the 700 MHz spectrum should ultimately have more impact. We assume the C block will be assembled into a national network. We assume a high-quality, low-latency core, with short access "tails," and full mobility across the whole network.

The near-term impact will be significant. Device manufacturers will benefit, since they simply have to build equipment that complies with the technical specs. Users will benefit since they can use any handsets they choose. But there will be more impact, fairly shortly.

Because the new network will be based on IP (as well as Ethernet), there will be ways to provide VoIP, even if network operators try to wall off all voice services in the traditional walled garden. Technological cleverness will take care of that problem.

That is going to create a potential new "offer leader" in wireless. And recall that AT&T's "Digital One Rate" completely reshaped industry-wide packaging and pricing, not simply some of AT&T's offerings. The C block network potentially lays the framework for a service provider with some scale to reshape consumer expectations of what things should cost and how they should be packaged.

More significantly, the C block network potentially allows a provider some latitude to redefine the customer experience as well, creating new expectations of what media "should" be available, how they should work together and what the "right" price is for such capabilities.

We can't really predict what other developments might occur. I don't think one would have extrapolated the creation of the World Wide Web or VoIP from Carterfone. I don't think it is yet possible to extrapolate from the wireless equivalent of Carterfone, either.

But this is a bigger deal than most people assume. It just will take a while before the wider ramifications are seen. And by the time it happens, nobody will remember a relatively "small" regulatory decision.

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