Editor's Corner

On moral hazard, WiMAX, and the UK
In 1963, the economist Kenneth Arrow developed the theory of moral hazard. The theory was an effort to capture the observable phenomenon that the redistribution of risk changes people's behavior. For example, say private insurers refuse to insure buildings in flood zones, or price the premiums so high that people cannot afford to buy policies, so the government steps in as insurer of last resort, assuring dwellers in flood zones that it--the government--would, beyond a certain dollar amount, cover their losses in case of floods. Economists would argue that by lowering the cost and lessening the risk to people who insist on living in areas prone to floods, the government now finds itself encouraging morally hazardous behavior--people take undue risks in choosing where to live because much of the costs of the risk have been redistributed away from them.

It occurs to us that we are running the risk of moral hazard when writing about WiMAX in the UK: We know by now that if we misstate a fact or offer the wrong analysis, Euro Tech News communication maven Steve Kennedy will correct us. In evidence: Last Thursday, in the WiMAX Beat, we wrote: "We are taking a risk here in writing about WiMAX in the UK (the risk: Misstating something and having Steve Kennedy, who knows more than we do on anything relating to WiMAX in the UK, send in a correction)." We took the risk and wrote about BT trying to ride back into the mobile market on the back of an auction for a WiMAX-suitable spectrum. Steve dutifully wrote back to make the necessary corrections:

Check out Steve's comments here.

See also Steve Kennedy's Digital-Lifestyles.info article

ALSO: The OFCOM auction of six years ago raised £22.5 billion pounds (or, according to some sources, £21 billion)--an order of magnitude more than the "£22.5 million" to which we mistakenly referred.

Looking back, looking forward
We thought we would use this last issue of the year to highlight what we take to be the main WiFi-related trends of 2006, and offer some predictions about what will be the main stories of 2007 (mindful, of course, of Yogi Berra's adage: "Prediction is very difficult, especially about the future"). An unscientific poll told us that many of our readers are already away from their offices, with their minds rightly set on the coming holidays. Rather than in this issue, we will offer our thoughts on WiFi and WiMAX in the past year and the one to come in the first issues of FierceWiFi and the WiMAX Beat next year.

Until then, happy holidays and a happy, healthy and productive new year to all! - Ben

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