Planet Gore

Forcing ethanol: The wireless lesson

Ethanol, insist its advocates, can be competitive, but — paradoxically — only if government intervenes in the market (“There is a chicken-and-the-egg dilemma to overcome,” colleague Cliff May writes in calling for a Brazilian-style, federal flex-fuel car mandate. “For once, we have a problem government can solve.”)

But the recent explosion of “alternative” telecom — in the form of wireless technology — suggests they are not only wrong, but that government intervention would do damage to the nascent alternative fuel market.
Twenty years – just two decades ago! – national cell phone networks did not exist. The telecom market was dominated by huge, powerful, landline corporations – not unlike the oil companies demonized by ethanol advocates like Coskata and GM today.
Yet since 1985, despite enormous obstacles, wireless infrastructure has blossomed to the point that there are more wireless subscribers — 250 million — than landline connections — 185 million.
Why? Not because government mandated “flex-com” businesses or households. In fact, government had nothing to do with the alternative communications revolution (except auctioning spectrum licenses). Wireless infrastructure happened because the product was cost-effective — competitive enough to warrant a market return on massive, private capital investment.
Why did wireless succeed? Because, says wireless industry spokesmen Joe Ferran of CTAI, “we’ve always been a competitive industry that has driven innovation.” Says John Stanton, one of the wireless pioneers along with Craig McCaw, Wayne Schelle and others: “These were genuine entrepreneurs.”
In fact, government intervention is probably the worst thing that could happen to the alternative fuel market (if it indeed has a future) because it will sacrifice risk for political subsidy and entrepreneurs for Washington lobbyists.
Finally, a note on “Big Oil.” As with “Big Telecom” before them, oil companies are not impediments to alternatives because they are, in fact, energy companies. Just as the biggest wireless company today is AT&T (which swallowed McCaw Cellular), oil companies, too, will embrace alternative fuel when it is viable (in fact, they are today’s leaders in alternative fuel research).
If ethanol advocates’ argument is national security, then government should nationalize the fuel sector – otherwise, only markets can efficiently determine alternatives.

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