Dana Blankenhorn

St. Google and the Dragons

I wrote the following this evening and cross-posted at my Mooreslore blog.

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Change is the one business constant. Those who embrace it succeed, those who resist it fail.

But change also dislocates.

Workers threatened by change organize unions and seek protection from government. The Luddite movement was a call by workers to smash the new textile mills that threatened their jobs.

Business calls against change are heeded more often, because they may speak the language of change and back it up with cash. In autocratic societies the cash is called a bribe. In a democracy it’s called a campaign contribution.

History proves that in every case, the public interest governments must follow is to embrace change. This is tough when the threatened industries have enormous political power.

Yet America has done this for 200 years.

• 19th Century Whigs embraced change as “public works,” ports, canals, and (later) railroads and telegraph companies that needed scarce capital.
• Turn of the Century Progressives embraced change as antitrust, worker protection and (perhaps most important) the income tax, which replaced the tariff as the funder of government and made America the world’s business leader.
• Mid-century Europeans forged free trade agreements, starting with Iron and Steel, evolving into the European Community. America embraced this movement through the WTO and such treaties as NAFTA.

Cars replaced railroads, oil replaced coal, suburbs replaced cities, and as the American blackboard was erased, rewritten and erased again, incumbents were allowed to wither away.

Today Google is the face of corporate change. Google has become a corporate stand-in for the changes the Internet makes necessary. Thus the incumbents have their knives out for it:

 

• Telephone companies threatened by the Internet’s end-to-end principle, in which services are defined at the edge, want government to give them power to define services within their networks that everyone – including Google – will be forced to pay for.
  
• TV and movie studios threatened by the fact that video can be passed as bits have demanded, and gotten, the power to halt distribution of bits they own.
  
• Newspapers threatened by the Internet’s power to organize everything and make it available through links want government to make Google (and then the rest of us) pay for “linking rights.”

These forces are made more powerful by the fact that networks, studios, and reporters have no new business models to replace what’s lost as Google and its followers (Level 3, Craigslist, eBay, Amazon) march forward.

From the Firehose

Gordon Cook extracted the following from today's traffic on the mailing list created on behalf of the $200 Billion Broadband Scandal.

The picture is not from the list. Instead it's from Steve Borgerding, who took it on a field trip with Melrose, Minnesota Troop 68 of the Boy Scouts.

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A failure of imagination to see that It is 'just' capacity, from Erik Cecil of Level3:

The deeper irony is, of course, that as intelligence moves to the 
edge, pipe suppliers appear to be nothing more than utilities.   
Which, in all fairness, brings up an issue that I struggle with on 
behalf of my employer - how in God's name does one attract money for 
a build when all you are building is connectivity?  The backbone 
industry got crushed by excess capacity and the Bells are doing 
everything they can without regard to their own credibility to make 
sure that the same thing doesn't happen at the edge. [Cook Report,   
"Turning the edge into scarcity."]

This points to an even deeper irony - it is because of their fear 
that they have nothing of true value to sell that the fact of the 
matter - it is just capacity - will eventually become glaringly 
obvious to all.  But again, investors are driven by the same fear.   
So it is in many ways a self-fulfilling prophecy.  Typically those 
situations really have to crater big before those invested in such 
delusion wake up - viz. the Abramoff  scandal in DC.  We are probably 
years away from the full public perception of that, but maybe not.   
Like a bamboo tree - which grows for 4 years showing barely a shoot 
and then upon the 5th year rockets up 80 feet in less than 6 weeks, 
perhaps this has been growing for a very long time and may rocket up 
very quickly for reasons anticipated and unanticipated.

So coming full circle if I may, perhaps the greatest failure of 
politicians, regulators, businesspersons, lawyers, technologists and 
the public at large is a failure of imagination.   Perhaps we've 
failed to imagine a world where incentives (and disincentives) are 
aligned and drive people to do the right thing. Having spent 
the past 10 years of my career  focused solely on enabling the 1996 
Act, one thing is certain - it is not easy to force business or 
people or business to spend money.

The Bell (former / present and substantially similar) companies - as 
evil as they may appear and act at times - are extraordinarily adept 
at aligning their actions perfectly with the incentives and 
opportunities afforded by the current regulatory environment.  And 
regardless of where the next generation of regulations end up, I've 
seen little yet that convinces me they aren't already well ahead of 
that curve and likely control substantial portions of the outcome.   
The rest of the industry survives by exploiting the gaps in their 
business plans and strategies, until, as you point out, they are 
consumed by their larger rivals.

How We Got Here

How did all this intellectual firepower (and typing skills) get together on one blog?

Gordon Cook explains:

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In the first few days of January Bruce Kushnick asked me if i would  consider placing my private 'symposium' mail list behind his efforts  to get the story behind his $200 Billion Broadband Scandal drummed  into the public conscience.  I agreed and reached out to a bunch of  new people as well expanding the list from 65 to 108 members.  It is  a private list where contributors give me the right to publish what  they write.  But they also own their own  words and are free to blog  anything that they contribute.  I am happy therefore to be known as  the instigator of the effort to publicize Bruce's cause which is  really our cause as well. 

DSL Reports Nots $200 Billion Scandal

Broadband Reports flagship DSL Reports has spawned an item about the $200 Billion Broadband Scandal. It's located at.

It's reprinted below in full:

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Do American Telcos Owe You $2,000? - Kushnick attacks bells for fiber-optic trickery & deceit

According to the baby bells' least favorite critic Bruce Kushnick, the telcos have received more than $200 billion in tax cuts and other incentives to provide promised symmetrical fiber-optic connectivity to millions of Americans - connectivity that never arrived (though the incentives were never repaid).  According to Kushnick, he believes each American consumer is owed roughly $2,000 for services never rendered. 

Says Kushnick of his new report: "It is a tale of deceit, fraudulent data and gaming the regulatory system using fake consumer groups, biased research firms and campaign-financed politicians to control everything from the FCC, to Congress, to the state legislatures and commissions to vote for phone-company-financed laws that are not in the public interest."

A long discussion thread follows. Well worth reading.

Sascha Meinrath's Review

Sascha Meinrath, an award-winning scholar now at the University of Illinois' Institute of Communications Research, offers a review of, and endorsement, of the $200 Billion Broadband Scandal today. It is cross-posted at his blog and re-posted here with permission.

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I was lucky enough to be able to look over an advance copy of Bruce Kushnick's new book, "The $200 Billion Broadband Scandal" -- it's a powerful critique documenting the trail of broken promises and misinformation perpetrated by many broadband service providers in order to get favorable treatment, special dispensation, and competition-free access to residents across the United States.  One of the most damning indictments, that United States residents have already paid for upgrades to our existing broadband infrastructure -- being charged for services never delivered -- and not a small amount either, but actually to the tune of $200,000,000,000.  When you break it down, that's roughly a $2,000 refund for every household that's due for contractual obligations never fulfilled.

Achieving Connectivity

Bob Frankston has posted an essay relating to Bruce Kushnick's book at SATN.Org, a site he shares with Dan Bricklin, David Reed, and others. It is cross-posted there, along with other material.

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Amatrya Sen: no famine has ever occurred in a democratic country with a free press and regular elections.

The Internet can deliver on the promise of a free press and more -- it gives everyone a voice. It gives them a chance to contribute and prosper in a world economy. Why are we continuing to accept policies not only mired in the past, but policies designed to keep us there simply to support a pretend-industry created by a now falsified regulatory traditional.

Getting Connected is about policy. There is ongoing debate about "Net Neutrality" in an effort to assure that the carriers do not abuse their control of the rights of way. It's reminiscent of the old notion of a "common carrier". I argue that setting such rules is likely to provide protection for the carrier by allowing them to comply with the letter of the law but not the spirit. The Internet is something very different than the phone network. The Internet is a proven success -- we should be framing policy in terms of connectivity rather than treating it as just another service as if it were just another television channel.

Dana Blankenhorn has posted his own comments. Dana is far more practiced at writing to a general audience and many readers may find his presentation more accessible.

You should also read Bruce Kushnick's "$200 Billion Broadband Scandal". Connectivity threatens the carriers' ability to charge for the value of their services. There problems are structural so we shouldn't be surprised that they are doing "whatever necessary" to try to forestall the inevitable but it doesn't mean we can condone it.

Assuring Scarcity is an examination of cellular carriers' policies. Today's digital cellular system is borne of the very same technologies that gave us the Internet but turned 180°and used to maintain total control. I'm excited by the document because it makes my case for me. They come right out and say the Internet will give us abundant connectivity at a low price. But to them it is not a chance to fulfill Amatrya Sen's vision -- to them it's a danger. It threatens their revenue and they must redouble their efforts to assert control in the best tradition of the railroad robber barons in the United States a century ago.

My January column in Von Magazine was a titled And Now with Billability. It was a satire about the carriers' plan to extend this cellular strategy to land line service. It's called IMS and, it's not a fantasy -- it's part of this same GSMA strategy.

I use the term "connectivity" rather than speaking about the Internet as such because the Internet is a specific implementation of a particular set of protocols. The word "Internet" itself has a lot of semantic overloading with many people confusing the Internet with particular modes of use such as the web.

The Internet is about the idea that anyone can create solutions without having to depend on others. Unlike traditional networks the Internet doesn't promise reliable delivery yet we can create reliable services at the edge anyway. It's a very powerful concept I consider on a par with Copernicus message that the Earth was not at the center of the universe or even the solar system. There are a number of ways to describe this dynamic.

The Internet is based on the "End-to-End Principle". Unfortunately this is easily misinterpreted as just the opposite -- womb-to-tomb in which the intermediary takes responsibility for all aspects of the service. This also means they get to define the services and set the rules. This confusion frustrates the creation of effective policy. The Internet provides opportunity but doesn't guarantee any particular service will work -- those who focus on the risks will want assurances and the intermediaries are very happy to oblige. In fact, they offer "quality" and how can anyone object. Yet that term is a trap -- they define quality according to their metrics, not the users.

If we interpret quality for a voice conversation as "sounds better" then it turns out that Internet is rapidly evolving. Whereas it was once difficult to use the Internet to carry on a conversation, simply by increasing capacity the net is beginning to sound better than traditional phone calls, especially for international calls. The audio quality of calls is not limited by the PSTN's predetermined "QoS" (Quality of Service). Not only can you get more capacity from the transport you can also take full advantage of the audio capabilities of the PC. You aren't even limited to audio and can add video and maybe even a smell-o-vision protocol (but, please don't).

As an aside, this is a good lesson in how evolution works. When you presume a designer you get a single optimum or measure of quality. The Internet allows multiple and unpredictable measures of quality to be achieved.

Cellular telephony as at the center of the debate. It's easy to get faster connections but we can't take advantage of connectivity is it not available. Cellular phones have given us a taste of availability but those who provide cellular connectivity have a stake in preventing competition. They must oppose untethered Internet connectivity because it is a threat to their profits. They are right but their profits cannot take priority over the fundamental needs of society. In the US it is a direct assault on free speech.