Dana Blankenhorn

A New and Better Future

Think of this as Volume 17, Number 26 of the newsletter I have written weekly since March, 1997. Enjoy.

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Living as we do in the now, we often fail to appreciate how the future is changing before us.

I know the future isn't what it seemed to be when I was young. Technology moves through the path of least resistance, and in my lifetime that has meant Moore's Law. Extending the exponential gains in computing power made possible by silicon into other areas of technology – wired and wireless networks, aluminum and optical drives – has transformed us in many ways without seeming to change society all that much.

I currently drive a little four-door hatchback that, in many ways, isn't much different than the Jeep wagon my dad took to California in 1970. (I inherited it durng my college years, and thank god fashion has made so much progress since the mid-1970s.) I live in a house that has stood since 1923, the year my mom was born, and looks from the outside just as it did then.

Facebook Knows It Can't Beat Google

The silly scandal of Facebook running off to Hillary Clinton's old campaign manager, trying to launch a privacy investigation over Google Social Circle, actually has a serious point behind it.

Facebook can't beat Google. And they know it.

The issue that has reporters Twittering is privacy and even the fact we're all talking about that means that Facebook has succeeded in its campaign, because we're talking about something Facebook has long had to deal with, and in that it can be seen as existing on a level playing field with Google.

But in evaluating the two companies that's not the real issue. Raw traffic is not the real issue. Ads are not the real issue.

The real issue is infrastructure.

Scott Cleland's Game: Turn Google Into AT&T

Scott Cleland is a Bell troll.

He is what he has always been, an apologist and paid advocate for the Bell companies and their causes. He hides his source of funds, and reporters new to every beat keep buying the act. It's crazy. Crazy like a Fox.

This week he's a concern troll, having issued a "book" (the same way Regnery publishes "books") that is nothing but a long hit piece against Google. USA Today gave him an admiring interview without once asking him where his money comes from, which is like treating Glenn Beck as an unbiased journalist.

Cleland's theme is that you can't trust Google, that Google always lies, that Google is not out to serve anyone but its own shareholders, and that it deserves the strict government scrutiny given his clients, the Bells.

The aim is simple. To hobble Google with lawyers and layers of bureaucracy, hordes of people who spend their days focused inward, taking big salaries to prevent innovators from innovating.

Free the WiFi

There are two reasons to share things via open source. So they won't become worthless, and so they can become more valuable.

The Sega game machine is an example of the former principle.  Had Sega been able to donate the code when they killed the product, it could have had an after-life. As it was, owners now have bricks.

WiFi is an example of the latter principle.  The Electronic Frontier Foundation now says it wants the WiFi protocol “opened,”  allowing free sharing of unused bandwidth.

Peter Eckersley calls fears of privacy and security that have made people lock their WiFi routers a “tragedy of the commons” and suggests the launch of an Open Wireless Movement to fight back.

I wrote something very similar two years ago, from Chengdu, where I was able to post stories only because of open wireless connections in a Chinese condo project. My hosts let us use a great apartment, but it had no computer, no Internet. Without the open connections of nearby units, which admittedly were on intermittently and didn't provide a ton of bandwidth, I would have been gone from the Web all that week. As it was, I delivered some of the most popular things I ever did write at ZDNet.

The Myth of the Telco Cloud

The acquisition by CenturyLink (actually Qwest), an old-line telco, of Savvis, a new-line Web host and core networker, for $2.5 billion, is being sold as a way to boost “cloud computing services.” 

Well, I'm sure that's what they want you to think. But where's the cloud here?

Does Savvis have a cloud? No, they have hosting centers and fiber lines. Does CenturyLink have a cloud? No, it's a phone company.

So this is, in a way, just financial manipulation. But, as a small piece in AmLawyer notes, this is all part of a larger trend.

I call it the myth of the telco cloud.

After the Carrier Death Spiral, Google

A “carrier death spiral” is what some are calling AT&T's acquisition of T-Mobile. (Others disagree.)

The merger raises the spectre of a renewed monopoly (as though the former SBC hadn't moved decisively in that direction years ago). The deal will take a year to clear although AT&T officials insist they have the stroke with the bureaucracy to get it done.

And they do. That's the problem.

I can't tell you how many trillions of dollars American consumers have paid over the last decades, over and above their real value, for wired and wireless bits, thanks to monopolistic practices we foresaw in the mid-1990s, tried to deal with, and then saw politics unravel.

The whole idea of the government, from the beginning, was to separate the infrastructure from the service. Thanks to a compliant Bush Administration, and Clinton appointees who were outmaneuvered, the Bell operating companies overthrew that deal. This led to the merger mania which now sees us with only three “choices” – AT&T, Verizon and Comcast – for most people just two of the three, and for others just one.

One Word for Broadband Stimulus

Congress is looking at putting anywhere from $6-9 billion into broadband as part of the stimulus bill.

Not what advocates like Free Press want. (They were looking at more like $44 billion.) But a lot more than I was thinking of, namely, zero.

This is not to say I hate broadband. I love me some broadband, the broader the better. I just happen to think that competition is a better tool for getting it than any subsidy.

Which leads to  one word, the one word by which I will measure whether this is money down a rathole or something significant.

Internet.

Phone FUD Targets Google

It may be the first challenge to the new President's tech policy.

For the last several months advocates for the nation's phone monopolists have been ginning up a public relations campaign against Google. They claim it's a monopolist. They claim it's a threat to freedom, a violator of privacy, evil.

It's being done in clever ways, through academics and think tanks you don't usually think of as Bell shills. Privacy advocates are being taken in, even the Electronic Frontier Foundation.

But it doesn't take a genius to see where all this is coming for, or where it's leading. All it takes is a little knowledge of the industry's history, a quick look at who stands to benefit, and a short Google of who's cheering from the sidelines.

Just read Scott Cleland's blog. Cleland, a notorious phone monopoly booster of long standing, has been hammering Google this year at every opportunity.

Google itself seems unable to understand the situation, or properly respond to it. CEO Eric Schmidt has tried to be personally charming. The company's other officials have sought to be transparent, and answer questions honestly.

Meanwhile, the stock market crash has hit Google hard. The company is now worth only about what Verizon is worth -- AT&T is now worth nearly twice that. And Google's stock valuation has begun tracking the phone giants. Suddenly it's no longer a growth stock.

How should Google respond? Aggressively. And it needs to understand who its opposition really is, the ruthlessness of that opposition, and the nature of the struggle.

It is a political struggle.

Ending the Duopoly

One interesting fact, told on CNBC this morning, is that while most people are very pessimistic about the current economy most think things will get better in the next year or so.

They will. That's because the present trends are pretty easy to reverse, and once reversed should stay that way. Simply placing a priority on the War Against Oil should enable U.S. demand to fall fairly dramatically. Insulation, grid improvements, and smaller cars driven somewhat less will force oil prices down in the fairly near term, if we are serious about it.

The same is true for the other big economic problem we have, the one no one really talks about. The telecom duopoly. Throughout this decade, just as the Bush Junta has given oil producers a stranglehold over our economy, so he has allowed telecom monopolists to be given the same stranglehold. This was done deliberately, to gain more control over the American people. With "one throat to choke" it's easy to get your demands for data satisfied, assuming you pay the bills. So a policy of fewer Internet providers was in the authoritarians' best interest.

It has been good for the telecoms'. As I've noted here many times, the price of "broadband" has remained stable for a decade, and its definition has not stretched one bit. This despite the improvements in equipment and technology of Moore's Law -- we now have efficient fiber switches, and fibers which can handle hundreds of streams of data at once.

The new way the monopolists seek to screw us is with bandwidth "caps," which have come into effect on all the major networks -- Comcast, Cox, and AT&T, in amazingly short order. This is indeed designed, as Om Malik notes, to force you into keeping your cable TV. While the nominal cost of cable broadband is $50/month it's only available with a viewing package in most areas, and that can come to $80/month or more, even if you're not using pay per view or a service like HBO. The phone company does the same thing. Their broadband also costs $50/month, but they nick you for another $50 (or more) for the phone line, and then add a long distance plan.

The result is that Americans are now paying about $120-150/month for 1.5 Mbps downloads which can only get video clips, while Europeans and Asians pay a fraction of that for lines which can do far more. Innovation is being throttled. It's hard to telecommute on such slow lines, especially if you're in a business where the movement of large files is commonplace. So winning the war against the telecom duopoly is a component in winning the War Against Oil.

Now, here's how we win it.

A Reason to Produce

Think of this as Volume 11, Number 21 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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All the economic problems of our time have a single root cause. (Cartoon by Thomas Nast, for Harper's Weekly.)

Whether we're talking about the Internet, about wireless technology, or about energy, the cause is a lack of reason to produce more.

Consider oil, only because it's top of mind. Why should OPEC produce more? Why should any other major producer? Why should these suppliers lift a finger to halt the thefts and corruption which keep oil from the market?

Will they make more money by doing this? No, they won't. Oil is at $130 per barrel and going higher. Add more supply and the price will go down.

The same is true for Internet service and wireless service. Why should the companies which control Internet broadband allow the creation of a "new pipe" in wireless? It would compete with their shared monopoly. Having kept prices for basic broadband at $50/month and higher, these monopolists are now moving to actually raise prices by limiting the number of bits they deliver under those contracts, and preventing the spread of competing technologies.

Why shouldn't they? What is their incentive for investing in their networks to increase the number of bits they deliver? Will they earn more money as a result? No, they won't.

The problem in all these cases is the same. Shared monopolies, or oligopolies. The free competition of capitalism naturally moves markets toward this climax state. Think Coke and Pepsi, or Bud and Miller, or WalMart and Target. A very small number of companies in each market control the bulk of supply, and are thus in a position to set prices. Why do you think it costs over $1 for a can of fizzy water?

While proclaiming the benefits of capitalism and competition, the United States government has been endorsing this principle of oligopoly for most of the last century, and that trend has accelerated during this decade. All that has really happened is that the oil producing nations of the world have figured this out and taken advantage.

So the answer to our economic doldrums is simple. We need to switch from giving people reasons to withhold product from the market and give them reasons to supply it.