Dana Blankenhorn

Google and Microsoft Need Each Other

Google and Microsoft are fierce competitors. Everyone knows that.

Google is out to eat Microsoft's lunch, steal its Office revenue by putting applications online. Microsoft is out to eat Google's lunch, putting Office online, and continuing to grow its own search business.

But these two companies need one another right now. Badly. They need to ally. Now.

The reason for that is power. Political power. Microsoft, Google, Apple and every other tech company is being locked-out of the wireless market by AT&T and Verizon. Those two companies are working hard to extend the same control they exert on wireless to the Internet.

If they win the "net neutrality" fight, the Bell monopolists, who also control most of the Internet backbone,  will do just that. Already, AT&T and Verizon are hoarding bandwidth which Google, Microsoft, Apple and the rest could use to make a ton of money -- far more money than AT&T or Verizon could ever make with it. They're defining huge swaths of their bandwidth as off-limits, defining it as "services" -- video services and phone services which could easily ride on the Internet instead, and would give people dirt-cheap voice service and infinite video choices.

AT&T and Verizon are standing there with a bandwidth hose and kinking it, just like you'd kink a garden hose, so only a trickle of bandwidth comes out to the market. Then they're charging all of us out the wazoo for that trickle, because we need it, because we don't have any choice. It's digital water -- AT&T and Verizon have a monopoly on digital water.

AT&T has already posted new "terms of service" which forbid business customers from even criticizing the company. It's reminiscent of the worst Microsoft abuses from back in the day, but everyone can choose another operating system, a Mac or Linux. Most businesses can't choose another phone company -- they're captives.

The Biggest Lie in Technology

It's a lie that makes my blood boil every time I read it. (This cartoon, by Thomas Nast, is over 110 years old.)

The lie is that the U.S. telecommunications market is competitive, even hyper-competitive.

That lie was told again this week, by the Walt Disney Internet Group, when it announced its MVNO, a re-sale agreement with Sprint, would be closing. (The idiot in charge was engaging in some serious ass-covering.)

This followed similar announcements by Amp'D Mobile and by ESPN, another Disney unit. The only successful MVNO in the U.S. is Virgin Mobile, which is trying to go public in order to pay down its bills.

The plain fact is that the U.S. communications market, wired and wireless, phone, cable and Internet, is an oligopoly with very few participants, and that U.S. consumers have either few or no choices.

The End of E-Mail (As We Know It)

It's time to admit that e-mail, defined strictly by a client like Outlook Express, is dead.

Over the last several months I have been losing increasing amounts of e-mail sent to my POP3 e-mail box, whose address is based on my old Web site domain.

When this e-mail comes from business associates, from companies I'm writing about, I can make a call and get it re-sent. Sometimes I have to watch it fly away from my Mailwasher screen because I neglected to whitelist it, and that's embarrassing. Sometimes I never see it at all.

Recently I had a personal e-mail, sent from someone I knew, fall through the cracks. The story involves other people so I can't detail it. But the result nearly cost our family dearly. It still threatens us. The person in question was not a friend, they did not re-send, the e-mail was not expected, and the failure of that e-mail to arrive caused enormous misunderstandings, a short time later, whose repercussions may be felt for years.

People assume when they send an e-mail that it will get through. When it doesn't, they may believe the loss was deliberate. That's the way we are. We hit send and expect results.

This Week's Clue: Winning The War Against Oil

Following is the essay you can designate as Volume 10, Number 33  of This Week's Clue, based on the e-mail newsletter I have produced since March, 1997. It would be the issue of August 20.

Enjoy.

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There is only one way to win the War Against Oil.

Unleash Moore's Law.

The benefits of Moore's Law have been imprisoned for five years now, due to deliberate government policies aimed at protecting monopolies.

You can argue about the why all day. The facts are crystal clear.

• Spectrum has been sold to Bell companies that hoard it, and charge for each action you take using it.
• The phone network is a set of local monopolies, most controlled by two companies. There is no competition.
• The Internet backbone has become the same way, as the duopolists have purchased MCI and the old AT&T.
• Cable is also a series of local monopolies, led by Comcast.

First Principles in Spectrum Regulation

As I expected, the FCC rejected open access for the TV spectrum being recalled in 2009, merely throwing a bone to some equipment makers and setting up an auction that will only profit the monopolies.

What was most startling to me was the naked corporatism with which this was defended. It reminded me that, before the next election, we need to find some First Principles, based on Internet values, to guide future regulatory activities.

1. The goal of spectrum regulation is to maximize use of the resource.
2. The goal of spectrum regulation is not to maximize any license holder's financial return.
3. The goal of spectrum regulation is not to maximize the government's financial return.

These principles were, as I expected, systematically ignored. They were willfully flouted. Government officials actually said that, if open access were allowed, it might cut the value of spectrum now held by Verizon and AT&T, that it might cut the price the government could expect at its future auctions.

Well, duh! And what is wrong with that? Whose government is it? Is it Verizon's government? Is it AT&T's government? Is the government just in business to make a profit for itself?

This Week's Clue: Is Cringely on Crack?

Following is the essay you can designate as Volume 10, Number 30  of This Week's Clue, based on the e-mail newsletter I have produced since March, 1997. It would be the issue of July 30.

Enjoy.

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Robert Cringely is, rightfully, a legend in tech reporting. But there are times when he just makes me cringe.

His latest PBS column may be the dumbest thing he has ever written.

In it he is describing the same situation I described here a few days ago, Google's effort to increase the spectrum commons in the coming re-allocation of TV spectrum.

But his conclusion? Stop. Don't tick off Verizon and AT&T. They will crush you.

Look who Google is up against -- all the largest Internet service providers in the U.S. Google will not win this even if they win the auction, because the telcos and cable companies are far more skilled and cunning when it comes to lobbying and controlling politicians than Google can ever hope to be. The telcos have spent more than a century at this game and Google hasn't even been in it for a decade. And Google's pockets are no deeper than those of the other potential bidders.

Cringely, STFU. There are two key reasons why you are absolutely, totally, 100% wrong on this one:

 

The Corruption of Technology

Of all the corruptions during this decade, it's the Bush Administration corruption of technology that hit me the hardest.

When I use the word corruption, I am describing a deliberate policy of politicizing the development of technology, tearing at the process of change in order to put control into as few hands as possible, so as to control those hands.

This has been the pattern everywhere. The Bush Administration much prefers monopoly, or oligopoly, to real competition. Once such a goal is achieved, the few at the top can easily be manipulated, bribed, cajoled, or threatened into absolute support of the leadership.

I take the subject of technology personally, and have real-world experience with it. For nearly two decades, prior to this Administration, I watched technology change play itself out in successive waves.  No lead was safe. Those who were Clueless, or became so, went under practically before I could proclaim the word upon them. It was Darwinian, it was brutally competitive. It was also wonderful, and highly profitable. The raw capitalism of the 80s and 90s brought the U.S. economy to the very pinnacle of success, producing nearly a third of the world's products and services by the end of the last decade.

Now those days are gone. What we have instead is nothing less than state-directed corporate welfare. Moore's Law has been overturned by the War On Terror.

Routing Around The Bells

The evils of the Bell monopoly continue to get worse-and-worse.

Yet I remain optimistic. But first, let me vent a little.

So-called "broadband" users are still paying the same price for the same speeds as a decade ago, while the costs of actually moving the bits have fallen by more than a thousand-fold. Koreans consider our "broadband" a joke. And our wireless situation is no better. Every new auction is dominated by the same frequency hoarders, so we still pay $100 or more a month for what's essentially narrow-band wireless service. And nothing has been added to the unlicensed 802.11 spectrum, nor is it likely to be.

With the Bells facing a Congress which has other, more pressing business, and little appetite for more subsidies, it's getting what it wants from the states, where officials are incredibly ignorant. No one seems to understand that the AT&T push into "cable" is just an excuse not to liberate any bandwidth for true broadband Internet service.  Everything gets defined as a "service," with  an added monthly fee whether you use it or not, and nothing gets better, as it should under Moore's Law.

I'm facing nothing but crap from my cellular provider, Sprint. They only sell, they never service. They hid a $10/month "data" charge on my camera phone, they sold me a phone their other stores knew was a piece of crap (Motorola, you can go Chapter 7 now) and I'm paying $160/month for services I was told would cost $90/month, when their junk fees are added in. Trying to change anything in a store is impossible -- you have to go on-hold for an hour to talk with anyone. And this is the only national carrier alternative to the AT&T-Verizon duopoly -- it makes me want to spit.

Yet I remain optimistic. Here's why.

Good Union, Bad Union

The difference between a "good" union and a "bad" union is, in a word growth. Just as this marks the difference between a "good" company to invest in and a "bad" one.

Before proceeding to get union fans mad, let's look at companies briefly. Toyota, good. Ford, bad. When a company stops growing it starts dieing, and dieing companies can do a lot of damage, for a lot of years, to people and the general economy.

The same is true with unions. Good unions, like the SEIU, are constantly seeking growth. They aim to organize new industries, new businesses. Business advocates may hate them, but these unions are doing their job. Anyone who thinks Wal-Mart isn't socially better-off for the work of unions against them probably thinks Wal-Mart's only obligation is to its shareholders. Which is false.

The Internet Can Handle the Plague

There is no technical reason why the Internet can't handle the boom in traffic that might be expected in case of a plague.

Thanks to DWDM the Internet backbone has immense amounts of unused capacity. There is also competition, thanks to Level 3. If AT&T wanted to create an artificial shortage of supply in the Internet Core, in other words, they could not do it -- competitors would just steal the customers.

Problems, if they exist, lie at the network edge. Cable Internet services are designed to share a designated hunk of bits within a neighborhood. When all the customers in an area go online at once, they get bits through an eyedropper. Telephone architecture is different. So long as there is ample local switching capacity, signals should flow easily between ADSL modems. (If you're over 5 miles from a switch, you will have troubles, but you already have troubles.)

But there remains a political threat.