ClearWire, Kirkland & Backwoods Seattle

Clearwire Wireless, like Costco, is HQ'd in Kirkland, Washington

Clearwire Wireless, like Costco, is HQ'd in Kirkland, Washington

Original post:  16 May 2008

Those of us who regularly buy 48-roll packages of bathroom tissue (in some places known as “toilet paper”) at Costco recognize “Kirkland Signature”, the store-brand-name for many Costco products. “Kirkland Signature” takes its name from the location of Costco Headquarters, in Kirkland, suburb of Redmond (!) and Seattle, Washington State.
Another little company headquartered in Kirkland is Clearwire, founded by Craig McCaw, who made billions developing one of the world’s first cell phone networks, then selling it to AT&T. Craig’s trying to repeat that success today by rolling out Wi-Max – a wireless data network solution – with Clearwire.
There’s one minor problem: Clearwire’s losing money. Big time. $727 million last year.
Last week, however, a Smorgasboard of partners announced an initiative to deploy Clearwire’s Wi-Max nationwide. The Smorgasboard includes Clearwire, Sprint/Nextel and a whole set of others including cable providers (Comcast, Time Warner, Brighthouse) and Google (!).
But what a Smorgasboard! A wireless data provider – essentially an Internet Service provider (Clearwire), a cellular telephone company (Sprint), traditional cable providers, and an Internet content provider (Google). What’s up with this?

Clearwire et al - A Smorgasboard?

Clearwire et al - A Smorgasboard?

Perhaps this Smorgasboard sees the writing on the subway walls. And maybe that subway writing points to the demise of their business models: Verizon and AT&T are deploying a coordinated set of services nationwide – cellular phone, land-line phone, cable television service and (via all-fiber networks), really high speed internet service. Verizon, in particular, is pushing forward with its FIOS fiber-to-the-home network. I believe Verizon will eventually grab the market share from traditional cable providers who’ve enjoyed virtual monopolies in most of their markets for years.
Consumers will be faced with buying either a their services from bunch of different, uncoordinated, companies, or the same set services (and actually, because of the fiber, superior in speed and quality) from a single provider: AT&T or Verizon. And probably at a discount.
What does this mean for most consumers and most cities? If the Clearwire/Sprint-Nextel Smorgasboard works (and that may be problematical – read the Washington Post), most cities and consumers will at least have a choice of a duopoly: either Verizon or AT&T, and the Smorgasboard.

Cable is a Monopoly in Seattle

Cable is a Monopoly in Seattle

What does this mean for Seattle? We’re still stuck in monopolyland. Neither Verizon or AT&T operate here. Comcast has a virtual monopoly on cable service. Qwest is an outlier from all these equations. So Seattle’s consumers will continue to face high (and rising) prices for many of these services and will continue to be lost in the backwoods for innovation, because all these companies will make their investments and bring their new technology to other cities, where they actually have to compete for market share.

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Filed under broadband, wireless

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