What Exactly Is Intermodal Competition?

Intermodal competition is defined as: “provision of the same service by different technologies (i.e., a cable television company competing with a telephone company in the provision of video services).”

Intramodal competition is defined as: “competition among identical technologies in the provision of the same service (e.g., a cable television company competing with another cable television company in the offering of video services).”

Focus on 4 words: same, different, identical, same.  Same is repeated twice.

The Free State Foundation (FSF) is out with a paper regarding the existence of intermodal competition between wireless and wired.  The reason is that they take exception with the FCC’s recent reports on Wireless and Video competition.

Saying wireless represents intermodal competition to wired (fiber/coax) is like saying that books compete with magazines or radio competes with TV.  Sure, the former both deliver the printed word.  And the latter both pass for entertainment broadcast to us.  Right?

Yet these are fundamentally different applications and business models even if they may share common network layers and components, or in English, similarities exist between production and distribution and consumption.  But their business models are all different.

Wireless Is Just Access to Wireline

So are wireless and wired really the SAME?  For voice they certainly aren’t.  Wireless is still best efforts.  It has the advantage of being mobile and with us all the time, which is a value-added, while wired offers much, much better quality.  For data the differences are more subtle.  With wireless I can only consume stuff in bite sizes (email, twitter, peruse content, etc..) because of throughput and device limitations (screen, processor, memory).  I certainly can’t multi-task and produce content the way I can on a PC linked to a high-speed broadband connection.

That said, increasingly people are using their smartphones as hotspots or repeaters to which they connect their notebooks and tablets and can then multi-task.  I do this a fair bit and it is good while I'm on the road and mobile, but certainly no substitute for a fixed wired connection/hotspot in terms of speed and latency.  Furthermore, wireless carriers by virtue of their inefficient vertically integrated, siloed business models and the fact that wireless is both shared and reused, have implemented onerous price caps that limit total (stock) consumption even as the increase speed (flow).  The latter creates a crowding out effect and throughput is degraded as more people access the same radio, which I run into a lot.  I know this because my speed decreases or the 4G bars mysteriously disappear on my handset and indicate 3G instead.  

Lastly, one thing I can do with the phone that I can’t do with the PC is take pictures and video.  So they really ARE different.  And when it comes to video, there is as much comparison between the two as a tractor trailer and a motorcycle.  Both will get us there, but really everything else is different.  

At the end of the day, where the two are similar or related is when I say wireless is just a preferred access modality and extension of wired (both fixed and mobile) leading to the law of wireless gravity: a wireless bit will seek out fiber as quickly and cheaply as possible.  And this will happen once we move to horizontal business models and service providers are incented to figure out the cheapest way to get a bit anywhere and everywhere.

Lack of Understanding Drives Bad Policy

By saying that intermodal competition exists between wireless and wired, FSF is selectively taking aspects of the production, distribution and consumption of content, information and communications and conjuring up similarities that exist.  But they are really separate pieces of the of the bigger picture puzzle.  I can almost cobble together a solution that is similar vis a vis the other, but it is still NOT the SAME for final demand!

This claiming to be one thing while being another has led to product bundling and on-net pricing--huge issues that policymakers and academics have ignored--that have promoted monopolies and limited competition.  In the process of both, consumers have been left with overpriced, over-stuffed, unwieldy and poorly performing solutions.

In the words of Blevins, FSF is once again providing a “vague, conflicting, and even incoherent definition of intermodal competition.”  10 years ago the US seriously jumped off the competitive bandwagon after believing in the nonsense that FSF continues to espouse.  As a result, bandwidth pricing in the middle and last mile disconnected from moore’s and metcalfe’s laws and is now overpriced 20-150x impeding generative ecosystems and overall economic growth.
 

Related Reading:
DrPeering Really Thinks Cellphones Are, Well, Awful!

Apparently the only way to convince regulators is to lie or distort the "wireless only" stats