…a licensing program that gave hardware manufacturers the ability to build Kindle clones, along with an incentive to sell them at near-zero margins. Amazon would give those manufacturers access to the core Kindle hardware specs (there’s no real magic there anyway) and the right to call it a Kindle device so long as they also put the core Kindle software on the device. That software links the device to Amazon’s store, meaning downloads revenue flows through Amazon.

Amazon would then share a percentage of net margin generated from downloads with the hardware manufacturers.

Techcrunch has put into words what I’ve felt since the day the Kindle was announced. After all, Amazon isn’t in the hardware business at all; it’s in the product and content retail business. I can imagine that in the initial days of the Kindle launch, Amazon needed its own device to build a strong association between Amazon’s brand and the mobile ebook model. Now that that purpose is served, manufacturing and selling the Kindle hardware is an overhead that Amazon could avoid.

Just like Associates?

This isn’t very different from the masterstroke that Amazon played years ago with its Associates affiliate program. Before Affiliate Marketing became the wild jungle that it is today, Amazon launched a series of innovative tools – aStore, Omakase Links, Product Previews – to let publishers (people who owned websites/blogs/suchlike) add links to Amazon’s content onto their web pages. These publishers then earned a cut of the sale generated by clicks from the links on their web pages.

Kindle is Associates all over again, except instead of web-based tools, we’re talking hardware specs.

For instance, Amazon’s aStore let developers build their own focused online “stores” (which displayed Amazon’s books). (A religion-focused website would be able to draw viewers and sell that category of books better than Amazon.com itself.) In the same vein, a student version of Kindle with access to e-textbooks and additional bookmarking features would be better marketed and sold by a third party which is focused on only that market.

With such an Affiliate/Franchise/Licensing model, manufacturers would fall over themselves for a chance to access Amazon’s massive ebook and newspapers database – and a cut of the subsequent revenues.

The Mobile Opportunity

Once third party manufacturers have licensed the Kindle specs, they are no longer restricted to building anything that looks like the Kindle today. I can readily think of well-designed iPhone/iPod Touch ebook applications like the New York Times app. This fits in with American universities doling out iPods Touch and iPhones to their incoming freshmen.  A market for Nokia’s S60 devices would be many times larger.

What do you think? Would you purchase a Kindle application for your mobile device?

Aside: Of course, manufacturers would then be free to choose the carrier of their choice for wireless content delivery. That sure isn’t going to make Sprint-Nextel happy.

Dvorak starts off well enough, alleging that vested corporate interests, especially those of commercial ISPs AT&T and Comcast, are successfully sabotaging attempts by local governments to implement free community wifi.

The argument falls apart when Dvorak lists common arguments made against municipal wifi,and how they ought to be countered.

Argument 1: It’s not good enough. It’s not fast enough.You’ll have to pay more for higher speeds and the lower speeds are unusable except for e-mail and Web surfing.
Dvorak’s suggested counter-argument: “Since 99% of the usage would be for email and web surfing, I wonder how is this not fast enough? Not fast enough for what? All of the systems I’ve seen are plenty fast.”

Argument 2: It stifles competition. Nobody else will be able to compete in a market where something is free.
Dvorak’s suggested counter-argument: “These are the same people that say governments can’t do anything right. But apparently they do this right.”

The last one takes the cake, though.

Argument 3: Government shouldn’t be in the connectivity business.
Dvorak’s suggested counter-argument: “Another standalone bromide. Why shouldn’t it be in this business? Nobody knows.”

It’s fashionable in India in these neosocialist times to spew invective at private service providers and advocate a larger role for Government, but coming from an American, it’s surprising (although I’m not sure if Dvorak is known to have Leftist leanings).

Dvorak observes the symptom corectly, but misreads the problem, and therefore advocates a horrendously wrong solution.

Symptom: Municipal (community) wifi is dying
Dvorak’s reading of the problem: powerful commercial ISPs are derailing government’s efforts
Dvorak’s solution: greater role for Government in providing community wifi (possibly through public money)

The actual problem: there are powerful commercial interests in the first place
A possible solution: lower entry barriers to local wifi providers. Since, as Dvorak mentions, there are only two dominant ISPs, they have enough bargaining power at both the national and local level to block other entrants. The U.S. has had a history of being plagued by vested corporate interests (the alternative energy sector in the U.S. has been chronically starved of funding, not least because of subtle but powerful opposition from Big Oil).

Finally, mandating government to play ISP is an invitation to inefficient use of public money, regulation skewed in favor of the government-owned ISP (think MTNL/BSNL in India), and a sick, wheezing, slow network that people will eventually tire of. It will probably lead them to paying for reliable connectivity from AT&T and Comcast anyway.

A striking parallel to this is the Maharashtra government’s insistence on providing farmers with free electrcity and water – another example of government getting into the business of providing public services. Farmers are by-and-large so fed up with how ridiculously unreliable these utilities are, they’d much rather pay for guranteed supply.

Back in 2005, I wrote about why the government should not be in the business of running business. The Indian pseudo-socialist government, of course, finds it extremely uncomfortable acknowledging that this school of thought even exists. But it looks like two years later, the American Government needs to read that article – more than ever.

One article talks about the burgeoning use of WiFi by the upper middle class, especially in Mumbai and Bangalore. It’s exciting to know that entire residential complexes (Hiranandani – the real big builders – are profiled in here) are being provided with ready-to-use wireless Internet access. Further, the major vendors of traditional Internet access are WiFi-aware, and WiFi-ready too. For instance, Hathway and AirTel are already offering WiFi installation services. And at least in the major cities – Mumbai, Bangalore, Delhi and Pune, malls, cafes and bookstores seem to have wireless access enabled. Judging by the prices they’ve quoted in the article, WiFi internet access doesn’t seem outrageously expensive too.

There are only two bottlenecks to wireless internet access exploding in India.

One is the abysmally low percentage of computer owners who possess a laptop. According to the article, one percent of computer owners in India own a notebook computer. I think that’s about to change, though. Notebooks are now available in India around the Rs. 50000 mark, which is quite affordable for most. (I must also add that you can now purchase an amazingly powerful Pentium 4-based desktop PC for around Rs. 18000!) When I was researching notebooks for my eventual purchase of this ThinkPad, I found that most mid-range laptops, by local vendors like Zenith, and others like Acer, were available for as little as Rs. 40000. Certain Compaq models were next in line, costing about 50000-65000 (although HP has really high-end models too). So for an average middle-class family, buying a notebook computer should seem a natural choice.

By throwing open the doors for widespread rollouts of outdoor WiFi networks, Notebook computer penetration and wireless access ubiquity could piggyback on each other in a psoitive feedback loop once we’ve reached a critical mass of consumers.

The other problem is far more serious. That problem is the Indian Government. This other article talks about the ridiculous restrictions that have been imposed on outdoor use of WiFi. Here’s a quote:

Before buying equipment, he says he waits for an ‘in-principle’ clearance from the Wireless Planning and Coordination Wing of the Department of Telecommunications and a visit by the local police.

“Next, the standing advisory committee on radio frequency allocation must agree,” he says. “Sometimes they meet once in two months and your application doesn’t come up that day. We provide 30-35 application copies for all members.”

Then he waits for an operating licence.

It’s clear that the laws governing wireless Internet access are out-of-date. Here’s the current procedure for a licence for outdoor wireless access:

1. “In-principle” approval from the Wireless Planning and Coordination Wing of the DoT,
2. Visit by the local police,
3. Approval from Standing Advisory Committee on radio frequency allocation,
4. Issue of operating licence.

It takes up to a year for this kind of licence to be issued. For most businesses, that is simply too long. If the Government decides, once and for all, a spectrum for general outdoor wireless access, all of these steps could be eliminated. The Government must realise that the above method is simply not scalable. That is, once the number of applications increase, no committee is going to be able to scrutinise applications the way it is possible now. The police will be unable to keep visiting every locality. Actually, why the police need to be involved even today is uncertain.

Licences for wireless access smack of the licence-quota raj that was the hallmark of Indian business till the New Industrial Policy was announced in 1991. All the Government ought to be doing is defining “policy”, not “mechanism”. Incidentally, this a design principle for a lot of successful systems software, and it applies to this situation too. What it means is that the Government should simply formulate a set of guidelines that any WiFi internet access provider must adhere to. This should include the spectrum he/she must use, among others. Once this framework is in place, though, how the provider implements the wireless rollout, the tariffs for Internet access, et al is none of the Government’s business.

In a mature environment for wireless internet access, anyone with the equipment should be able to start a wireless network. It would simply be like a number of private intranets. To utilise the bandwidth offered by a wireless network, you’d need to log into the network. There are simple methods to implement this. Today, wireless network points trap http requests from hosts. If it is an unregistered host, a login/registration page is sent to it (the host), which will show up in a browser window. Very simple and elegant.

There are so many companies, notably Reliance and Hughes Telecom, which have begun digging up roads in most cities to lay their fibre-optic cables. While no one can fault these companies for the end aim – to provide cheap broadband Internet access, crisscrossing cities with subterrannean wires is madness. Especially when WiFi is an infinitely cleaner way to achieve the same thing. I wrote to the editor of the Indian Express two years ago, when Reliance first started this ambitious project. The letter was never published. It’s amusing to see this article so long after my letter, making the same points I had!

Finally, WiFi (or its long distance variant WiMax) is the best way to address the problem of rural connectivity. We have too many Government committees exploring how to “bring the information revolution to the underpriviledges masses” – in simple terms, ubiquitious rural internet access. But they’re all thinking in terms of expensive wired links. The only reason for doing that is to ensure that BSNL gets to play a major role here. BSNL has the largest wired network by far, in this country (much of it due to monopolistic restrictions, but that is not the point here). So it makes sense for the Government to make use of the infrastructure already available. Whether broadband over copper is actually feasible will be judged by how BSNL’s broadband initiative in the metros fares. But is it a good long-term strategy? A few villages in India still have only one phone connection for the entire village, and most have only a handful. How ubiquitious can Internet access get, with this kind of rural penetration?

Now I’m not aware of the kind of bandwidth that broadband over copper can provide. I’m thinking of a dual copper/WiFi infrastructure. We could have multiple broadband connections over existing copper infrastructure leading up to a village. These could then serve as starting points for a lot of WiFi connections. We could have a wireless hub/switch connected to the machine where these copper wires end, and enable multiple wireless connections from there. The “last mile” of the telephone network would become the “last but one” mile, with the actual end point as the wireless link. This is the kind of public/private collaboration the present Congress/Left Government would drool at.

The technology exists right now. So do the ideas, as do business models. The consumer’s been ready a while too. The only person that’s asleep is at the wheel – the Babu at the Department of Telecommunications. We need to sound a wake-up call before the WiFi moment passes us by.