500,000 sold in one weekend.
The potential to sell 50 million in two years.
And the service costs three times as much (over two years) as the phone itself.
See the jump. Self-interest warning is: ON.

Jobs is Great; the Network Isn’t: Government Needs to Act

The iPhone is almost the long-sought convergence of computing and communications in a handheld device – almost a complete triumph. But between its promise and the reality of use falls a shadow: the AT&T network that puts the iPhone on the Internet is “pokey” (Mossberg of Wall Street Journal) and “ancient…excruciatingly slow” (Pogue of New
York Times).

Lacking a great, low-cost, high-speed network as its communications platform, Jobs’ fine job is a Ferrari on a horse path.

The brilliance of Steve Jobs is eternal. We are right to depend on entrepreneurship as the way to maintain the American Dream. And of course Jobs knew what he was yoking his invention to. Why did he do it?

The CEO of AT&T explained: “I’m not concerned [about slow speed]…and by the way, there’s not a 3G network available in Ottumwa, Iowa. If you want to sell these devices in a variety of places, Edge is the only opportunity you have.”

Let’s decode his words. Only Verizon and AT&T networks reach Ottumwa, Iowa, and Verizon rejected the iPhone. So Jobs had to go to AT&T. Its network – called EDGE – is generally called a second generation of wireless technology, as opposed to the third generation widespread in Europe. It operates at a connection speed similar to the dial-up service for logging on to the Internet through a telephone line.

It’s a bridge back to the 90’s, instead of a door to the future of ubiquitous computing. Yet given a lack of competition, it’s all AT&T needed to build, and it’s the only network choice Apple had.

And by the way, to connect the iPhone to the Internet the consumer has to pay AT&T more than three times the price of Jobs’ invention for an inescapable two-year service contract.

But blaming AT&T for the low speed and high cost of connection to the iPhone is like blaming the sun for global warming. AT&T is just following the laws of economics like the sun does the laws of physics. The problem is that the Bell monopolies have reassembled themselves to thwart competition. So the once robustly competitive and madly investing wireless industry of the 90s turned into the consolidated, pokey, ancient, disinvesting and disappointing wireless broadband industry of the 00s.

What America needs is a new, independent national, high-speed, fourth generation, wireless broadband network available to Jobs and all other entrepreneurs at very low cost. The way to get that new network is for the FCC to make the right decision in the upcoming spectrum auction, the last of its kind.

If the Bells buy all the spectrum in this auction they can warehouse the spectrum, not bothering to use it, and foreclosing competition for the rest of the lives of every reader of this woeful story. (After all, the first AT&T monopoly lasted for 70 years.) By contrast, the FCC can order that anyone who buys the spectrum must build America a new, national, wholesaling, fourth generation wireless broadband network that sells low price, high quality service to anyone.

This is a last chance for Congress to correct the over-consolidation of the last half-decade. And it is a great chance for the new FCC, whose full ranks have been filled for less than a year, to accomplish something insanely great.

Enter Frontline Wireless – a company I started along with prominent venture capitalists John Doerr and Ram Shriram, well-known entrepreneurs Jim Barksdale and Haynes Griffin, and Reagan’s FCC chair Mark Fowler. We say the FCC should auction some spectrum with the condition, like zoning on real estate, that the winner in the auction build a network that is (a) national in scale, (b) serves both firefighters and police on one hand and consumers on the other, so that consumers can pay for it and first responders will have it built for free; (c) delivers internet connection at five to ten times the speed of EDGE and (d) sells that Internet access to any and all who want it, without denying service to anyone.

Frontline has obtained endorsements from Senators John McCain and Daniel Inouye, Congresspersons John Dingell, Ed Markey, Jane Harman and Chip Pickering. But it is opposed by Verizon, which is taking the lead for the twin duopoly descendants of the old Ma Bell monopoly. Incredibly, no Verizon executive has appeared in public to explain, much less defend, the Verizon alternative.

If you think America deserves better, faster, cheaper wireless, then tell Congress and the FCC you’d like to see what Verizon proposes that beats the Frontline plan – so as a consumer and citizen you can get better deal than AT&T gave Apple.

Had the Frontline Plan been in effect, Steve Jobs would had an alternative beyond the two Bells, he would have had a choice of a far faster and less costly network and he’d have made the iPhone available to all Americans, and to all policemen and firefighters, even in Ottumwa, Iowa.
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