MCI’s Unplugs Lexington, Kentucky

MCI’s SkyTel has started offering wifi service in Lexington, Kentucky. $24.99 a month at home, and $69.99 for small business. Average speed, is around 3 mbps, but a higher speed option is available for $575 a month (including T-1 back-up!) SkyTel was the pager network operator Worldcom bought at top of the market.

Shrinking consumer broadband choices?

FCC’s decision to extend monopolistic control over the last mile has The Consumer Federation of America and Consumers Union all riled up. They are worried that lack of competition will only increase prices, limit choices, and result in slower innovation. “The FCC today took our country one giant step closer toward solidifying a two-company domination – the local cable and telephone providers — over the consumer Internet market,” said Gene Kimmelman, Senior Policy Director for Consumers Union. “As both industries tighten their hold on high-speed Internet (broadband) access, consumers will see their choices diminish and their bills skyrocket.” “This stranglehold will stifle innovation as these duopolies discriminate against unaffiliated applications and services that in the past have driven the growth of the Internet and the boom in information technology,” Mark Cooper, Director of Research at the Consumer Federation of America, said. “As a result, our country will fall even farther behind Asia and Europe in broadband penetration.”

I agree. FCC is beholden to special interest groups, and has lost all veneer of fairness. Michael Powell thinks that also-ran technologies like WiMAX and Broadband over Powerlines will result in competition, and once again shows that despite his self professed love for gizmos, he really doesn’t have a grasp on technological realities. I think it is time that consumers get to elect FCC commissioners, via the local ballet. No political appointments for this most important body, which is chartered with coming up with unbiased, fair and realistic regulations that affect consumer lives in the future. I think broadband and wireless networks are going to be a key to our future and global competitiveness, and FCC is selling it down the pike. Here is a recent FCC reality check:

  • In the three and a half years that Michael Powell has been Chairman of the Commission, the U.S. had fallen from third to eleventh in broadband adoption.
  • As a result, the digital migration that Chairman Powell has touted has become a migration to a massive digital divide. One out of every two American households with incomes above $75,000 have high-speed Internet connections at home. One-out of every two American households with incomes below $30,000 does not have any Internet connection at home at all.
  • The cause of the failure of high speed adoption is clear, Americans are being overcharged by the cozy duopoly of cable and telephone companies. Cross national comparisons of price show that Americans pay fifteen to ten times as much, on a megabit basis, as consumers in Japan pay. Three years ago the price in America was three or four times as high.

Barron’s Last word about WiMAX

Often I come across posts, and dim witted articles which just simply don’t make sense, or don’t look at the heart of the matter. But skimming through Barron’s today, I came upon the final, and perhaps the most prophetic summation of this creature called WiMAX.

“The buzz has definitely gotten out of hand,” says Craig Mathias, proprietor of the Ashland, Mass.-based Farpoint Group, an industry consulting firm. “The trade association got involved in marketing way too early. There’s a danger in building hype beyond what the technology can do.” In the fixed wireless market, Mathias sees a potential market “in the hundreds of millions, not billions.” For investors, Wi-Fi was a slam-dunk technology that proved a difficult investment proposition, as hardware and components quickly commoditized and prices fell. Good for consumers, not so much so for investors. With the exception of a few smaller companies that could become acquisition bait, the same thing could happen again with WiMax.

MCI up for sale?

MCI is prepping itself up for sale? That’s the word fromThe New York Times which reports that “MCI has hired three investment banks, Lazard, Greenhill & Company and J. P. Morgan Chase, as well as the law firm Davis Polk & Wardwell, to help advise it and canvass for buyers.” The daily report is based on information from unnamed sources. MCI of course does not want to comment. The sale could be whole or in bits and pieces. The news of the sale should not come as a surprise to anyone for local and consumer long-distance business are going the way of Texas Rangers mounting a successful run for the pennant. Times speculates that obvious buyers could be the Baby Bells, since this would allow them to get into the lucrative business communications business, an area where they have struggled.

What will most likely happen, the executives said, is that MCI will try to sell its business services unit separately – potentially to a Bell or possibly to a technology company like Electronic Data Systems or even I.B.M. – and its consumer unit to a private equity firm, which would be attracted to its cash flow despite its dwindling business.

My best guess is that someone would step-up to the plate and snap-up UUNet business, maybe it will be Sprint or someone like that. I think their consumer and local infrastructure should be of interest to many, especially emerging giants from far away lands like India. Reliance Infocomm has global ambitions and this could fit the bill. I had heard a rumor to this effect sometime ago but did not put any credence to it. After all $6 billion is a big number.