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Does 'Free' Have a Second Act?

5:40 PM -- One would think, given how many new products are marketed with a free trial offer, that getting something free is just the prelude to paying for something of value -- but where the broadband Internet is concerned, that doesn’t seem to be the case.

The Internet has trained far too many people to expect so much for free -- free music, free video content, free access to news and information -- that the basic business models of many traditional industries have crumbled.

It took major innovation by Apple Inc. (Nasdaq: AAPL) to move the music industry back into a paid model, but even the iPod couldn’t save the album. Once consumers got used to cherry-picking their songs, they were no longer willing to pay $14.99 to get two songs they liked and eight others in which they weren’t that interested.

Newspaper publishers are still trying to figure out how to stuff the free news genie back into the bottle, and video content owners may soon find themselves in the same position, as more viewers abandon traditional TV to watch episodes online, where advertising revenue is much less lucrative. Thus, the continued pressure on Hulu LLC to move to a paid model -- and risk losing many of its most loyal customers.

There are, of course, many precedents for taking what was once free and making it valuable enough to attract consumer dollars. Bottled water comes to mind. Broadband-enabled Internet access climbed out of the price gutter into which it had crawled in the late 1990s, and wireless access is something for which most of us now pay, especially in airports and travel venues.

One of the biggest freebies of all time -- the U.S. broadcast spectrum -- is now being eyed as a new source of wireless capacity, much to the chagrin of companies that built multibillion-dollar businesses selling advertising on their “free” TV services. Can the Federal Communications Commission (FCC) find the right mix of “incentives” -- the polite word for bribes or payoffs -- to get broadcasters to surrender their most valuable asset? (See FCC Proposes 300MHz More Spectrum by 2015.)

Success in this realm could be the most telling factor for the entire National Broadband Plan, given the crucial role that mobility will play. In other less democratic and market-friendly economies, the government wouldn’t mess around or play nice. But here in the good old USA, we’ll get to the curtain rise on what’s bound to be an interesting dance between the FCC and broadcasters, to determine who makes it to the second act of the Free Spectrum Show.

— Carol Wilson, Chief Editor, Events, Light Reading

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