I hope to return to blogging more regularly now that the college-hunting process is over for my high-school senior son—our family’s first time through what is an amazingly-daunting (and time-consuming) process—and I still have a backlog of other work to clear out, but I can’t resist jumping in to discuss one aspect of the new WiMAX deal announced yesterday between Sprint and Clearwire. As you may know, for awhile, WiMAX has been the next great wireless broadband technology. I say for awhile as it isn’t clear that it is going to ever succeed, but yesterday’s deal is another attempt to take a serious run at it.
That technology isn’t my focus. As part of the deal, Google is reported to be investing $500 million. Google has emerged as serious player in broadband, playing an important role in the last spectrum auction. Google clearly wants to see more broadband capacity and in a post yesterday on the deal, Google emphasized its desire to see an open Internet.
But only so open it seems. As reported in the WSJ yesterday and as is clear from the 9-page press release on the deal, Google’s investment buys it a preferred status on the network. To quote the press release: “Google will partner with the new Clearwire in the development of Internet services, advertising services and applications for mobile WiMAX devices. In addition, Google will be the search provider and a preferred provider of other applications for the new Clearwire’s retail product.” Four bullet points later, we are told that: “Sprint and Google have also entered into an agreement related to Sprint’s mobile services, whereby Google will become the default provider of web and local search services, both of which will be enabled with location information, for Sprint. Sprint will also preload several Google services - including Google Maps for mobile, Gmail and YouTube - on select mobile phones and provide easier access to other Google services.”
I am not sure what all of that means exactly. “The” search provider sounds like their will only be one search provider and a “preferred” provider makes it sounds as if other providers will be relegated to inferior positions. We also know, see Thaler & Sunstein in Nudge, that default settings are very powerful in determining behavior even if the setting can be changed at low cost.
Google has a public position on net neutrality that contemplates prioritizing based on the general type of application but not based on the ownership of the application. I shouldn’t over-read two paragraphs in a press release, but it isn’t clear to me that the positions that Google have bought with Clearwire and Sprint are consistent with its prior position on openness and net neutrality.