Frontline Wireless, a start-up company that was expected to be a major player in next-generation wireless networks but unexpectedly shut down last week, was never exactly an underdog. Led by former FCC chairman Reed Hundt and backed by the bluest of blue-chip venture capitalists – including John Doerr of Kleiner Perkins, early Google backer Ram Shriram, and former Netscape CEO Jim Barksdale – Frontline appeared to have both the political connections and the mountains of cash needed to compete in the telecom business.

Indeed, it seemed a little quaint that Frontline qualified for a "small business" discount in the upcoming bidding for a highly desirable swathe of radio spectrum: the company was formed to go after those spectrum licences, and it was always clear that winning the auction and building a network would cost many billions of dollars.

But in the telecom business, there is big and powerful, and then there is big and powerful. At the end of the day, even the leading moguls in Silicon Valley apparently had second thoughts about going toe-to-toe with AT&T and Verizon.

The forthcoming spectrum auction involves some highly desirable frequencies, and the computer and internet industries see it as an opportunity to develop a new kind of wireless network that would be open to many different types of devices and software. Wireless carriers in the US currently keep a very firm grip over how their networks are used – that's why Apple had to cut a special deal with AT&T even to launch the iPhone – and that's clearly a barrier to innovation.

There was a lot of wrangling over the auction rules, with Silicon Valley players led by Google and Frontline pushing hard to require that networks using the new spectrum be "open." They won a partial victory, and Google says it plans to participate in the bidding, which will start at more than $4 billion

But in the meantime, the incumbent carriers, namely AT&T and Verizon, have begun to make a lot of noise about their commitment to "openness." There were also some complications relating to the Frontline plans to provide new types of services for public safety organisations. And the risks of bidding against huge telecom players whose livelihood could be at stake apparently gave Frontline's backer pause.

Auction participants were required to put up a $128 million deposit last week, and Frontline walked.

Personally I've always been a little doubtful about Reed Hundt, an Al Gore protégé who made a lot of enemies during his tenure as FCC chief. And John Doerr and Jim Barksdale are hardly babes in the woods when it comes to the ways of Washington: in the 1990s they were central players in prodding the Justice Department to go after Microsoft. But it's always a mistake to underestimate the political savvy of the phone companies, whose empires depend on their ability to manipulate the regulatory process to their advantage.

Now Google stands alone in the effort to spur innovation in wireless communications, and I for one hope the company can succeed. Google, certainly, has a scary amount of market power already, but it has succeeded by building a better mousetrap, not by leveraging a massive legacy customer base and working the political system.

Innovation in wireless, and more open networks, are clearly desirable from a consumer perspective, and it will take entities from outside the industry to force things in that direction. The fact that Frontline won't be among them shows just how difficult a proposition it is.

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Jonathan Weber is the founder and editor in chief of NewWest.Net, a regional news service focused on the Rocky Mountain West in the United States. He was previously the co-founder and editor in chief of the Industry Standard

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