I am prompted to write as a result of a vigorous discussion that has been going on for some days on the topic of "Economic Sustainability of Community Wireless" on the forum of the World Summit on Free Information Infrastructure (WSFII).  It started as far as I was concerned by a posting a week ago from my good friend Vickram Crishna.  He wrote the following,

"Pune city, one of India's largest cities, has announced that is going to be a total hotspot soon, using a mix of wifi and wimax to take broadband to every corner. We're talking millions of people, hundreds of thousands of housing units spread out over a gigantic plateau city of hills, encompassing both the mind-bogglingly rich and the very poor.  Now it is up to manufacturers of wifi handsets to check out the market there, enabling local citizens to explore practical pricing mechanisms. Assuming of course, that the actual model followed allows for creative exploration of such an innovative environment. So far, there is no indication of whether any of the service offerings will be 'free' to access or use. Or not.  In a recent series of articles on applied innovation in India and China (comparisons are the flavour of the day) published in India as well as in the US, authors point out that the approach in China is to invest a little money to try out a number of models on the ground, putting the massive weight of the totalitarian state behind the model that works, while Indians tend to analyse each model as applied elsewhere before setting local rules. The disadvantage of this reasoned approach is of course that many things take much longer to disseminate, even to the point of missing the bus.

Pune city is the first big example of the Chinese model being used in India, at least to the point of experimenting with wireless as a viable alternative medium to cable (fiber and copper).

I am curious, and perhaps Malcolm can assist with his wealth of experience, about the 'clash of cultures' implied here. It would be a pity if the potentiality of such change-bringing technologies is vitiated through perceptions of ideological opposition.  To wit, be sad if the benefits of accessible broadband be diluted out of the fear of alternative economic models."

I could write a book on this topic (and may be I should) but let me make a few comments from my own perspective on this issue which increasingly seems to me to be at the heart of the dilemma which Vickram so concisely articulates.

I am devoted to liberty and free markets - that is to say, the 'free' (in the sense of unconstrained) exchange between a willing seller and a willing buyer.  There is a near universal (but mistaken) belief that this is what we now have in the telecoms sector and that it is some intrinsic evil of the market system in the hands of 'big business' that creates Vickram's dilemma.   Not so!   There is NO free market in the telecoms sector in the true meaning of the word.  The telecoms sector worldwide is effectively a state-created and state-sustained cartel of vertically integrated operators which, through flawed public policy and regulation (which they have been invited to help craft) permits them to cling to a fundamentally obsolete business model of 'service provision'.  This has enabled them to invest in digital infrastructure with state protection and then to hold the rest of the world to ransom to use it on payment of fees, totally unrelated to the capital cost and ongoing maintenance of the physical infrastructure.

It is the perpetuation of this now obsolete 'service provider' model that the $1,600bn a year telecoms sector is fighting to preserve.   The world of citizens - disorganised and unaware of the magnitude of the opposition and the battle - is beginning to wake up and are beginning to say, "we are no longer willing to be slave to the service provider model ... we will buy, build and maintain our own network and once we have found a means of financing this - the use of it will be FREE".

This clash of business models is at the heart of what is going on.   The telecoms industry worldwide is well organised and able to plead with political powers that doing anything to disrupt or dislodge it will not only threaten $1,600bn a year of revenues, but cause all sorts of other social and security mayhem.  Hence public policy and regulation keeps getting tweaked in their favour and against the best, long term interests of the citizens of this world.

As far as Pune is concerned, it is unclear whether or not the basic value and benefit of this network will end up remaining with the good citizens of Pune OR, whether it will be captured by one of the vertically integrated 'service provider' dinosaurs.  I would not bet on it as I read that Pune Municipal Commissioner Nitin Kareer said, "Currently, the service will be provided free of cost, until it is extended to the 20 sq km when the project will be commercially launched at nominal user charges for which the modalities have to be worked out," Kareer said.

I am sure the 'modalities' are just waiting to be 'worked out'.   And in the middle of this titanic struggle, sits the likes of Intel and Cisco.  They know only too well deep in their heart, that the genie is out of the bottle on this one and that ultimately, the service provider model in a digital world of abundant cheap capacity is DEAD.   Trouble is, while they remain this side of the chasm in terms of relying on the old business model for current earnings, they cannot be seen to be threatening these by becoming out and out advocates and supporters of the 'new world.

So the bringing of these technologies to all the citizens of this world will be achieved (and only achieved) through free markets and from wise investment and profitable business models.  But they will be radically different models to those of yesteryear and there will be no room for some intermediary 'operator' whose business model is founded on standing between the abundant capacity of digital technologies and end users, and hoping to levy a small toll charge.

Last week I was interviewed at the Telco 2.0 event and gave my candid opinion of what a vertically integrated telecoms operator should do in this situation.   You might find it interesting ... it is certainly radical.