Wednesday, August 19, 2009

ATT and GOOG Voice

Andy Kessler wrote a nice piece in today's Wall Street Journal, where he opined that ATT/Apple's disincentive to 'open' the airwaves is as much an 'alpha' (company) problem, as it's a 'beta' (industry) issue.

Beginning with the concept that airwaves can be owned by private entities, the government has not only sold, but set a mechanism to maximize the price companies pay for exclusive airwave access. Of course, the derivative of large upfront payments is an expectation of a long and fruitful annuity of high customer payments.

We have a situation here where there is a non-alignment of government objectives (per the President "the US should lead the world in broadband penetration and Internet access.") and its policy of selling access.

Given the airwave ground rules, plus the granting of municipal cable monopolies (more upfront government fees) ATT/Apple, and others, are behaving exactly the way one would expect. Unfortunately, it's not in their long-term interests, nor those of the US, to have regulations that unnaturally create high margins in a world where marginal costs are plummeting and innovators, such as Google, are at the doorstep.

As we have seen, entrepreneurs who are stifled by locked doors, find windows of opportunity.

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