Lobbying

The Underdog Internet Providers Head to Washington


“Kind of like a union?” I ask Craig Foster. “Eh, yeah,” he says, “except without the union part.” Foster, the CFO of Ubiquiti Networks, was in New York this week, in part to talk about the Ubiquiti World Network, a trade group that will bring together smaller wireless Internet service providers and give them what they really need: a lobbyist.

Ubiquiti (UBNT), whose chief executive officer, Robert Pera, was profiled in Bloomberg Businessweek earlier this year, makes hardware that sends Internet signals over long distances without wires. Your phone carrier does this, but Ubiquiti’s customers, unlike your phone carrier, use unlicensed spectrum. That is, they don’t have an exclusive license from the Federal Communications Commission to transmit. Instead, they send their signals over certain, limited frequencies that have been set aside for anyone to use.

Ubiquiti has focused its engineering talent on strengthening signals, sending them through cluttered airwaves, and filtering signal from noise at the other end. This has created for them a large customer base in emerging markets, where there’s less capital to spare for expensive fiber-optic networks. It’s a market large enough that Pera has been able to buy the Memphis Grizzlies. But there are also places in America, mostly rural, where wired infrastructure is too expensive to build. And there are places in America, mostly urban, where wired Internet access is too expensive to pay for.

Foster estimates that between 3,500 and 5,000 wireless Internet service providers serve these markets. I went to a meeting of them last year; WISPs, as they call themselves, tend to be small, run by engineers who get a kick out of solving problems while hanging by a clip from the top of a tower. It’s an industry still small enough that it calls its annual national conference “WISPapalooza.”

The companies that use licensed spectrum—like your cell phone carrier—have pull in Washington, both directly and through trade groups like the CTIA. They need to, because they can’t operate without the licenses that come from the FCC. The WISPs, thus far, have no pull, because all they’ve needed from Washington is unlicensed spectrum, a public good that Washington already provides.

It’s unfortunate but true that members of Congress, if they don’t have anyone calling them about an issue, assume that it’s unimportant and move on to the stuff that everyone’s yelling about. Which means that public goods don’t do well in Washington unless they happen to line up with some large company’s commercial interests. Net neutrality, like unlicensed spectrum, lowers the barrier to entry for new companies, and has found (somewhat) committed proponents as Google (GOOG) and Facebook (FB) increase the amounts of money they send back East. Earlier this year, Google cracked the top 10 in Washington in terms of dollars spent on lobbying. Facebook more than tripled its lobbying spend last year as well. (Although, these companies are only as benevolent as their own interests will allow them to be. On net neutrality, they line up on the same side as consumer groups. On privacy, they square off against them.)

This is the challenge that Ubiquiti, with its new network of WISPs, has to overcome. There are a lot of people in Washington who are paid to demand that the FCC free up more spectrum and license it to mobile phone carriers. They’ve been yelling about it for a while.

So there’s little understanding in Congress that unlicensed spectrum can generate economic activity, too, even though no one owns exclusive access to it. In February, Yochai Benkler, a fellow at Harvard’s Berkman Center for Internet and Society, made a case for the potential of this market, pointing out that 87 percent of health-care wireless applications, for example, use unlicensed spectrum. Regulation hasn’t caught up with technology, Benkler argued. The FCC shouldn’t just be protecting unlicensed bands, but expanding them.

Benkler’s academic ideas line up nicely with Ubiquiti’s financial interests, which gives the company a chance to champion what to Washington is still a new idea. I ask Foster what bands, in particular, he’s interested in lobbying the FCC to free up for unlicensed use. “We’re going to push for anything we can get our hands on” is his answer. The Ubiquiti World Network is going to hire a lobbyist, he says. “We’re a little bit green, but we have committed some money.” It will take a lot more than some.

Greeley-brendan-190
Greeley is a staff writer for Bloomberg Businessweek in New York.

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    (Ubiquiti Networks Inc)
    • $40.89 USD
    • 0.85
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