No one likes disruptive technology, except the disruptor. Microsoft (MSFT), Google (GOOG), Dell (DELL), and Intel (INTC) are backing a new wireless technology that could be extremely troublesome for the country’s largest cable and telecom companies. As MarketWatch describes it the "breakthrough, tapping into an unused part of the nation’s airwaves, is politically charged because it threatens to shift the Internet-access business away from telecom and cable companies that are historically well-connected in Washington, throwing open the field to a brand new batch of competitors."
So, the Microsoft group has begun to lobby the federal government to take a close look at the new tech as an alternative to the broadband delivered by the likes of Comcast (CMCSA), Verizon (VZ), AT&T (T) and Time Warner Cable (TWC).
The battle for the airwaves could get ugly. "The telephone companies are terrified they’ll lose 40% of their wireless minutes, because you’ll be able to connect from work or home and bypass their wireless networks," said J.H. Snider, research director of the wireless future program at the New America Foundation, a Washington-based policy institute that has long advocated to allow use of white spaces.
The potential option to get broadband internet via a new alternate means comes as Sprint (S) is building out its wireless WiMax network and Verizon (VZ) is spending $23 billion to create a fiber-to-the-home network. Interestingly enough, Intel is one of the largest WiMax backers and its chips allow many PCs to work with WiFi, so it would appear to have a horse in at least three races.
Another company that could be hurt is new IPO Clearwire (CLWR) which saw its stock drop immediate after the shares opened for trading. The company is a publci pure play in WiMax.
Life could get very, very nasty for phone and cable companies. The new Microsoft assault would represent an entirely new way for consumers to get broadband access, and WiMax may as well. The tradition broadband providers can ill afford any real competition. They spent too much to get to the pole position in the race.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies the he writes about.
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