Dana Blankenhorn

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.

The Unstoppable Power of Communication

The most powerful force in the world is communication.

This medium brings more of it within reach of more people than any medium has before. (Pictured, the capital of Rwanda.)

When George W. Bush was in Africa this week reporters were astounded by the number of people there who supported Barack Obama, who seemed to know all about him.

And why not? Africa is filled with Internet cafes. Africans don't have to listen hopefully for a word from the BBC anymore. They can pick up The New York Times.

Recently I mentioned the idea that Obama should go to Kenya and try to sort out the growing crisis there. Turns out he's been there, via radio. He made a statement and took questions at the end of last month. This has not yet had an impact, as the struggle has morphed into a tribe-on-tribe war over land. But he was there, and could be again, at any time.

It's not just politics where this medium is making enormous change. It's in every facet of life. The turnaround in Rwanda is being driven as much by information as anything else. The use of sympathy to reach markets, and the opening of an online stock exchange,  is enabling capital to reach all of East Africa. Trouble in Kenya can now quickly move capital to Rwanda and vice versa. Rapid capital flows can create a gigantic incentive to make peace.

The Difference Among Democrats

Think of this as Volume 11, Number 2 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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The difference among Democrats is subtle -- perhaps too subtle for TV to catch.

But it's there.

I've compared Hillary Clinton to Richard Nixon before, the key to that comparison being her role in the AntiThesis to Nixon's Thesis, which still governs America in 2008, and the ruthlessness which many Democrats, as a result, see as her strength. I've also talked about Barack Obama's comparison to Reagan and my love for John Edwards.

Edwards' star is fading fast, unfortunately. His populism is drawing people like me, those accused of wealth and guilty of education, but failing among its target audience, those with lower-middle incomes. Democrats in that group are going to Clinton, while Huckabee does well if they're Republican. Edwards is left with the "limousine liberals," those who know history. I have compared him here to FDR and to those of lower income that's all FDR is -- history.

What the media does -- and it wants to do this at an accelerating pace regardless of who it hurts -- is winnow down the field quickly. It does this with the early primaries. Single digits in Iowa and you're out. And after New Hampshire they want a two-man game in each party. Thus Fred Thompson and Giuliani have been dismissed, with Romney given the task of "Michigan-or-bust." And on the Democratic side, Edwards is considered gone.

We're left with Obama and Clinton, and the real issue, which is similar to what Republicans faced early in the last generation when the battle was between Reagan and Gerald Ford.

That is a choice between the new values and the old interest groups.

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.

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?

Monopolies Are Worthless

History will show one of the salutary impacts of this decade has been an economic experiment, testing the economic viability of monopolies in a changing world.

The Bush Administration has pushed American business toward monopolies and shared monopolies, partly for ideological reasons and partly to make business easier to control. We now know for certain the economic impacts of such a policy.

It does not work.

Proof can be found in news that Vodafone has at least considered making a bid for Verizon, which holds a monopoly on telephone landlines in the eastern U.S. and a stranglehold on the wireless market as well. Its growth as a monopoly was profiled by the $200 Billion Broadband Scandal, the book which occasioned the creation of this blog.

Vodafone, by contrast, holds only mobile phone licenses in the more competitive European and Asian markets.

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.

Bell Fight Must be in Open Source Agenda

The fight against AT&T, both its horizontal and vertical break-up to guarantee market competition, must be an integral part of any progressive open source agenda.

Right now AT&T is an unregulated monopoly, which takes enormous subsidies from the taxpayer. It has now begun, with the cooperation of the FCC, to increase those subsidies.

That's what companies do. Poor man want to be rich, rich man want to be king, and a king ain't satisfied until he rules everything, as the song goes. AT&T is now King of the U.S. Internet, and it won't be satisfied until it can do there what it does in cellular, namely sell bits through an eyedropper, control what the bits do, and take monopoly profit from each side of every transaction. This is no different from what an African PTT used to do back in the 1980s, and that's where our economy will go if we allow this.

This is a perfect set of issues in which open source politics can work. It involves the identification of Astroturf groups, bought-off research and other fronts. It involves  focusing the government on simple goals -- nothing less than a break-up will do -- and it involves keeping politicians' feet to the fire on this.

It's ironic that humor seems to be the best weapon against what we face (as above), but that's the way it is when democracy has been destroyed and utterly corrupted. Humor was the only weapon against Stalin, and when you have powerful corporations controlling state action calling the result democracy is just brain-dead.

BellSouth Plays Hardball to Spite its Face

BellSouth, soon to become part of AT&T, is starting to play a peculiar kind of hardball with Georgia home developers.

The Atlanta Journal-Constitution reports the company is telling them that if they dare sign a deal with another communications company (like cable) to provide services in their development, then BellSouth will never, ever, ever "provision" that neighborhood with phone lines.

According to the paper, developers are taking this nonsense seriously.

When we opened our sales center, the carrier we chose had not yet installed lines," said Rick Mildner, chief operating officer for the developer (a project called Tributary at New Manchester)

"Even though the BellSouth line went right by, they declined to provide service. When I called, they basically said, 'Well, sue us.' "

Does this matter? Very much. You've heard of taxation without representation? How about taxation without service?