Clearwire's Bad Decision
By Mike Masnick, Fri Mar 25 20:15:00 GMT 2005

Clearwire has backed itself into a corner, and no matter how it responds, it won't look good. Either the company is admitting that its (pre-WiMAX) wireless technology is no good, or the company is violating network neutrality in front of an FCC that's doling out fines for the practice.

Clearwire came onto the wireless scene last year with plenty of fanfare, thanks mainly to being founded by "wireless pioneer" Craig McCaw. However, in the intervening months, the fixed wireless broadband company has made some questionable decisions. The company simultaneously announced that it had taken an investment from Intel at the same time that it agreed to use Intel-backed WiMAX technology as the core of its network. In some ways, that sounds like Intel paid Clearwire to choose its own technology.

Today, however, the situation became even stranger. People are noticing that Clearwire's terms of service appear to ban high-bandwidth applications, which could include VoIP and any sort of streaming media. In fact, it appears that Clearwire is going beyond just telling people they can't do those sorts of things, to the point where the company is actively blocking them. VoIP upstart Vonage has noticed that Clearwire customers are apparently unable to use its VoIP offering. This comes just a few weeks after a small telco was fined by the FCC for blocking Vonage calls. While the FCC still hasn't officially come out with rules on "network neutrality," it's made it pretty clear that it doesn't look kindly on those who flaunt the rules and block certain kinds of traffic -- especially if it's for anti-competitive reasons.

Clearwire's initial defense is problematic and paints the company into quite a corner. It claims that the blocking isn't for competitive reasons, but "necessary to ensure network performance reliability." This might make people sit up and wonder -- especially coming so close to stories suggesting that voice over wireless was such a threat to other technologies. If Clearwire really believes that its pre-WiMAX implementation can't handle VoIP or streaming audio, then it certainly speaks poorly of WiMAX technology -- and might make you question what kind of demand there would really be for the technology.

However, tossing a big wrench into this discussion was Clearwire's own decision this month to have Bell Canada offer VoIP service to its US customers (giving Bell Canada a nice back door way to enter the US market). With this news, it's pretty clear that Clearwire doesn't really think that its WiMAX technology can't handle VoIP. In fact, the company is certain that it can. Unfortunately, this puts the company right back into the network neutrality spotlight, which may force the FCC to take action.

Either way, this adds one more point to the discussion about wireless VoIP, and why it might not be as big a threat as some analysts like to predict. In the case of independent broadband wireless providers -- who were the most likely to present a challenge -- it's entirely possible that they, too, will act like traditional telcos and muck every thing up.