Imagining the Maximum Net

Why the best model for building out infrastructure may be the Interstate Highway System.


Here's a question: should the decision to build the Net to maximum
capacity--the broadest we can make broadband--be based on whether or not
today's carriers can think of a way to pay back the cost of building it?

While we're answering that, let's ask if the Net should be private at
all. Are the rivers and seas private? How about the Interstate Highway
System?

I pondered these questions this past Wednesday while on the plane home from a series of
industry events. At each of these events, nearly everybody had a laptop,
and nearly every laptop was connected to the Net. And everybody experienced
frustration with connection speed. Slow Net connections are to industry
tradeshows what traffic tie-ups are to Los Angeles.

On my own laptop, at 38,000 feet over the southwest desert, I read and
re-read
"Analysts
Question Bell Investments"
, written by Ted Hearn and
published in Multichannel News. It's a report on what financial market
analysts told the Senate Commerce Committee, which is expected to vote
soon on a bill that would, in the story's words, "ease phone-company
entry into cable markets and perhaps include network-neutrality
safeguards".

At issue in the story is whether and how carriers can make profits by
investing in additional broadband infrastructure. It begins:

Wall Street analysts told a Senate committee Tuesday that the
billions of dollars being spent by AT&T Inc. and Verizon
Communications Inc. to compete with cable might not produce a profit.

"There is a high degree of skepticism that the substantial
investment underway at the [phone companies] to deliver broadband
networks to the home will deliver a satisfactory return on the
incremental investment," said Luke Szymczak, vice president of
JPMorgan Asset Management.

AT&T and Verizon are installing high-capacity fiber lines to rapidly
deliver voice, video and data in a high-stakes battle with cable.

Note how the story is framed. It suggests that the only way phone
companies can make money is by competing with cable. One level up from
vendor sports, this is Industry War over turf defined by each industry's
incumbent categories: cable TV delivery on one side and telephony on the
other. "The battle between cable and the phone giants has put sharp
pressure on the stocks of both industries", Hearn writes.

Of course it has; neither industry can imagine anything
beyond expanding at the expense of the other. Phone companies want to
get into the new cable business called "content delivery". Cable
companies want to get into the new phone business called VoIP. Both want
regulatory relief from restrictions on their abilities to take business
away from each other in a zero-sum turf war whose perimeter is defined
by "content delivery" and VoIP.

Both agree about two things, however. One is revenue can be found in
premiums charged to the likes of Google and Yahoo for higher guaranteed
bandwidth. The other thing they agree is Net Neutrality, preventing bandwidth advantages
or restrictions based on the sources or contents of Net communications,
is a Bad Thing. To them, it limits the ability of carriers to obtain
returns on investment by, well, selling premium services to Google and
Yahoo.

Thus, Net Neutrality (see
"Net Neutrality
vs. Net Neutering"
) is cast as something opposed to
business--"government interference", essentially.

Hearn goes on:

"The costs of these networks are far beyond what the returns of the
new services can provide," said Craig Moffett, VP and senior analyst
of U.S. cable and satellite broadcasting at Sanford C. Bernstein
&
Co....

Aryeh Bourkoff, managing director at UBS Warburg LLC, expressed
concern about the regulatory climate facing cable after the industry
invested more than $90 billion on network upgrades to roll out
digital TV and high-speed-Internet access.

He referred to possible network-neutrality and a la carte
programming mandates, as well as less burdensome franchising
requirements on phone companies, as negatives for cable.

"As media consumption over the Internet develops at a rapid pace, I
believe it is too early to introduce regulation on key issues such
as a la carte pricing and packaging and on net neutrality, as the
market is still in its early stages," Bourkoff said.

Moffett, an opponent of network-neutrality mandates by government,
warned that if network owners were barred from creating a "fast
lane" on the Internet to generate more revenue to cover capital
expenditures, they would have to recover much, if not all, of their
cost from subscribers, whose monthly bills would likely rise
substantially.

"Mandated net neutrality would further sour Wall Street's taste for
broadband-infrastructure investments, making it increasingly
difficult to sustain necessary capital returns, and it would likely
mean that consumers alone would be required to foot the entire bill
for whatever network investments do get made," Moffett said.
Investors dislike policy upheavals in Washington that distract them
from focusing on market fundamentals, said Kevin Moore, wireline
telecom analyst at Wachovia Securities.

"We have enough to worry about in considering the rapidly changing
competitive and technological environment. In other words, we want
regulatory stability and certainty," Moore said.

Summary: 1) the only returns on investment will come from known sources
of revenue; 2) the only additional revenue will come from shaking down
large content sources for higher carriage payments; 3) Net Neutrality is
a Bad Thing.

Is this how we want the Net framed?

How about framing the Net as rivers and oceans, which nobody owns and
which float everybody's boat? Or how about framing the Net as public
land? That's how Susan Crawford puts it in
"The
self-owned internet"
:

There are a couple of reasons why we have national parks and access
to the seashore. Some things are so much the gifts of nature that
they should be reserved for everyone. And some things (like the sea,
and like the Internet) are so important to each of us that keeping
them freely available makes us a group of citizens rather than
slaves....

Now--the internet wasn't created by nature; it's an agreement
between machines made possible by the designers of that agreement
(or protocol). But it is a great gift, and it is very important to
being a citizen, and for these reasons it is owned by all for common
use. It's a commons, like the Boston Common. And no sovereign ever
showed up to which the people who "own" the internet (that is,
everyone) surrendered their ownership.

How about framing the Net as the "Information Highway" that became a
cliche (without ever quite happening) a decade ago? To get what I mean
by that, consider what the US would be like today if we hadn't created
the Interstate Highway System fifty years ago. What would the lack of
Interstate Highway infrastructure have cost us by now? Where would
Germany be without the Autobahn? How about Switzerland without its rail
system? How about any great city without its international airports?

According
to Wikipedia, the Interstate Highway System cost $114 billion
to build. Can we even begin to calculate what it would cost us today
not to have it? Or to estimate the cost of building it now? We need people
with imagination talking to Congress, not just carriers and Wall
Street analysts. We need to tell Congress what kinds of activity and
what kinds of business are made possible by a public Internet with
maximized capacity. What boats get floated by symmetrical 100Mb or 1Gb
bandwidth to homes and businesses?

At BarCamp in
Austin
last Saturday, Wayne Caswell of
CaziTech gave a
detailed presentation that argued for public broadband
infrastructure and for imagining its benefits. He went beyond the
obvious and listed its benefits to education, healthcare, lifestyle,
governance, national security, photo and video sharing, live
teleconferencing, remotely served real-world simulations,
hyper-realistic multiplayer gaming, organic LEDs bringing HD pictures to
handheld devices, Ultra HDTV, distributed immersive theater, signing and
lip reading for the deaf, telepresence, collaborative synchronized music
performance across any distance. And he mentioned one that stood out for
me as a guy who follows Linux: worldwide grid computing "with massive
computational power that far surpasses that of a handful of
supercomputers", resulting in science breakthroughs out the wazoo.

These benefits alone dwarf advances made possible by oceanic transport
or the Interstate Highway System.

We need to add our ideas to Wayne's and bring them not only to Congress,
but to the carriers and to one another. If we don't, we risk relegating
the Net to backroads maintained in perpetuity by the lamest and least
imaginative industries of our time.

Doc Searls is Senior Editor of Linux Journal, for
which he writes the Linux for Suits column. He also presides over
Doc Searls' IT Garage,
which is published by SSC, the publisher of Linux
Journal
. He recently was named CITS Fellow
of the University of California, Santa Barbara. He can be reached at
doc@ssc.com.

______________________

Doc Searls is Senior Editor of Linux Journal

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Interstate Highway Systtem was a bad move

Anonymous's picture

The idea of a government controlled (public owned) internet is lunacy. Sorry Doc, I like your writings but this is crazy. Wholly apart from the real violations of privacy and freedom that WILL occur with a government controlled internet are the unintended consequences and opportunity costs of the government absorbing avaiable investment capital and pouring it into single solution.

What would have happened if we had not built the interstate highway system? For one, mass transportation would be more varied and avaialble today. Our dependence upon oil would be greatly diminished. Our cultural stew would have retained more of its distinctness. WHat would have happened if we never granted public utility monopolies our subsidized the construction of huge hydroelectic dams? We would have much cheaper solar and other forms of energy.

Keep the government out of it.

Like the interstate system, kind of...

Adina Levin's picture

I agree that there is enough common good in network access to incent public investment.

A previous commentor made an important point that was buried in a post that argued against public infrastructure.

In the road system, the interstate system was built out with federal money and local roads are provided at the local level. By contrast, with the telecom system, the shortage is in the "first mile" for the end user, not the backbone at the center of the network.

Therefore the need is for municipal fiber systems such as the ones being built in the major cities of Europe.

P.S.

Kevin Carson's picture

BTW: I should add I'm not an anarcho-capitalist.

It seems to me that the proper model for "privatizing" the net is to the consumers' co-op, not the giant capitalist corporation. We need to treat the net as a common, rather than either corporate or state property, and manage it cooperatively. But it should be funded voluntarily, on a cost basis.

Less Corporate Welfare, Not More

Kevin Carson's picture

The main cost of not having the Interstate, it seems to me, comes from the very fact of having it. Access to subsidized highway transportation, at a cost that has little if anything to do with the costs one imposes on the system, has encouraged a business model that relies heavily on the Interstate. The Interstate has generated distance between things, and thus increased our dependence on the Interstate. It's an example of what Ivan Illich called a "radical monopoly."

To the extent that it is only cost-effective when part of the costs are externalized, that means the creation of the Interstate resulted in a net loss in efficiency. Overall, we'd be be better off if it had never been built.

The Interstate is a state capitalist nightmare. It subsidizes the concentration of capital and the growth of corporations far beyond the size associated with maximimum efficiency, by artificially shifting competitive advantage toward those most reliant on long-distance shipping. It makes it artificially feasible to buy stuff from a big factory a thousand miles away, when (if costs were fully internalized in price in a free market) it would be cheaper to buy stuff from a small factory twenty miles away. Same for buying lettuce and broccoli from giant agribusiness plantations in California or Argentina, instead of from community-supported agriculture near where they live in (say) western Massachusetts.

Let the market work

Terry's picture

Just because we can imagine a better 'net doesn't mean that the government knows how to build it. The Interstate Highway System works very well in the middle of nowhere, when nobody is using it. In the cities, where there are lots of people contending for access, it is badly congested. Have you ever driven in Los Angeles during rush hour? Government has little incentive to build capacity for new customers; there is no profit in it.

Now contrast this with goods and services provided by free markets. When people queue up for access, entrepreneurs see an opportunity. Give them a bit of time, they'll work out the details. Look back on the history of internet access, and think about how rapdily it has progressed from 100 baud modems to 58K modems to DSL and cable access. This is not a restricted market available only to a few - it's a great success story, bringing internet access to practically everyone. Instead of whining about how we don't all have access to unlimited bandwidth in every nook and cranny, let's acknowledge how impressive the increase of bandwidth is, and let entrepeneurs do what they do best - proved more benefit for less.

Before we consider letting the government step in to "fix the problem", it would be well to think of the congested freeways in every city, or one of the longest-running monopolies known: the Postal Service. Do we really want an internet as slow and expensive as the USPS? In many countries, the Postal Service runs the telephone service as well -- surely those countries now provide great ease of access, low prices ... oh, gosh, not.

Competitive markets, for all they occasionally suffer glitches at time, do a better job of allocating resources than any non-responsive bureacracy could ever hope to.

How do we make the noncompetitive market competitive

Doc Searls's picture

I agree.

So now, how do we open this thing up?

Do we completely de-regulate cable and the telcos? I actually favor that.

But is it politically realistic?

If not, what's the compromise?

Doc Searls is Senior Editor of Linux Journal

Government.

Chris Moller's picture

I can't add a lot to what's already been said in this forum, but I can second it. Giving the Federal government /more/ power over our lives is the /last/ thing we need. I'll be happy to tolerate my 500kB link as long as it makes it more difficult for the religious nuts to control the content of that link, or the NSA/FBI/whoever to snoop on me.

Like the guy in the first comment said: government is the /problem/, not the solution.

The Interstate Hwy System cost a lot more than $114B

Anonymous's picture

Lots of costs to interstate system: urban sprawl, pollution, the death of small town merchants, the elimination of small manufacturers and small farms, walmart and soaring trade imbalances, endless maintenance and peripheral pork (see this year's hwy bill), etc. Government is the problem Doc, not the answer.

What about the rural areas?

Germ's picture

I think something should be done about the areas outside the metros. I live in a rural area where the phone lines have not been upgraded in over 20 years...they won't even support 56k. I connect at a blazing 31.2kps. And it's not just me. There are hundreds of thousands of people across America being left out of all the broadband fun.

I can't afford satellite internet and I don't even know if it would work with Linux in the first place. Dialup is my only option.

Sorry Doc, I just can't muster up any sympathy for your "slow" connection at the conference.

Broad(band)ly mistaken...

Monsyne Dragon's picture

This is a bad idea on SO many levels...
First: He who pays the piper calls the tune. To put it bluntly, I don't trust the government. I am NOT interested in having a NSA-compliant internet. Or having my website banned because some moralistic twit in congress got his longjohns in a twist over something and went on a crusade against "those people" using "Our Public Resources" in a way he dosen't like (c'mon, can't you just hear the speeches already?)
No Thanks.

Secondly: The "Interstate" metaphor is flawed, because the internet's "Interstates" are just fine. Those would be the backbone networks, which are quite competative (and mostly run by companies that you've never heard of.) Those who connect to the backbone networks, like ISP's, hosting providers, large businesses, etc, almost always have multiple connections from multiple providers, making it very easy to flip over to another provider if one violates their service agreement, or otherwise does something obnoxious. There is also a lot of extra capacity at that level. There's still loads of dark backbone fiber in the ground, as there isn't yet enought demand to light it.
What Searls is complaining about is the broadband providers covering the 'last mile', in his metaphor, more like the local sidestreets than the interstate. As far as the phone and CATV companies go, all of this noise about "premium rates", etc is just that, noise. As much as the phone and cable companies would like to believe they are kings of the hill, there is alot of competition waiting in the wings for them to do something stupid, especially as wireless technologies improve. Remember per-byte charges on early connections? Hourly charges? Yeh. This "premium" stuff will quickly go the way of those, *IF* anyone is stupid enough to try it. Google, etc, ain't gonna pay the danegeld, and all the users are gonna know is "my internet is slow" and "Hey, this wireless stuff (or whatever) is faster!".

Thirdly: None of that is going to fix Searls' problem with his net connection at his conference being slow. The reason THAT is slow is because the network is undoubtedly provided by the hotel/convention center hosting the event, who has (sensibly) sized their *equipment* for the load of *average* users, and of course, a whole bunch of bandwith-loving techno-geeks is going to overload their network in a heartbeat. Or does he plan on buying cisco mega-routers for every business in the country too?

So, in short, we have a plan that A) Gives every sleazeball who manages to get himself elected the power to micromanage my life, B) soaks up a bunch of my money in taxes, and C) dosen't solve the problem anyway. LOVE-ly. Where do I sign up? :P

If you REALLY want to help folks get conected to the 'net, I'd suggest that you donate some of your time, expertise, and/or equipment to the local community wi-fi effort. You'll be directly involved, and won't have to wait for some political windbag to swipe someone else's dough before doing something usefull.

I've been thinking about exactly the same thing...

W.B. McNamara's picture

International broadband speed envy has been eating away at me for a while (U.S. avg. 1.5Mbit, Japan avg. 26Mbit), but a couple of recent articles finally inspired me to fire up the spreadsheet and figure out exactly what it is that we in the US are getting for our broadband dollars. The result of that -- a post on my blog entitled Broadband Wall Math -- is, I think, both informative and depressing. It ends up asking the very same question that you do: does the United States believe that our national data infrastructure will have an increasingly critial role in our developent in coming years, or not?

Interesting thought

FARfetched's picture

I hope I'll remember to thrash this out on my own blog some time, but probably won't. Had blogs been around in the 50s while the Interstate system was being proposed, I imagine people would have been talking about "the zero-sum turf war" between the railroad industry and the auto industry as well. Perhaps some of the newspapers brought it up.

While I agree that the Interstate system brought many benefits, there are also some drawbacks like congestion, pollution, death & injury by accidents, and no thought given to tightening oil supplies. A public internet would have some of the same problems -- congestion and pollution by spammers, black-hats, and other criminals comes to mind, and it would be even harder to throw them off than it is now -- although death & injury would have to wait for immersive technology, I guess. :-) One could sell this as a way to slow down resource depletion, though -- with GigE bandwidth available to all, things like telepresence become much more feasible. Driving would become the realm of shoppers and the retail workers who support them.

Yet I would be wary, in the current political climate, of a federal online infrastructure initiative (it would probably be called something like that), though. The FBI keeps trying to mandate installation of their Carnivore data-sifters in ISP server rooms. The administration just ignores the law and has the NSA spying on us anyway. Were the feds in control of the net, they would have not only the ability to install whatever spy-eyes they wanted, they would also have a Big Red Switch. If the people started to organize and attempt to take control of their own infrastructure, they could simply shut the whole thing down. (See China, this bunch isn't much different.)

Private vs Public

Angela Kahealani's picture

"While we're answering that, let's ask if the Net should be private at all. Are the rivers and seas private? How about the Interstate Highway System?"

EVERYthing is "private", because there is no nation The USA, there remains only a corporation: "The United States, Inc.". All of what used to be the USA is held "privately" by people and their shell corporations.

Sorry, you chose the wrong analogy, or the wrong "nation".
You probably have been brainwashed by the State Indoctrination Centers (Public Schools) and by NWO Broadcasts (what passes as "news"). Maybe you should reconsider you choice of the blue pill and switch to the red pill... (ref: The Matrix)

...but remember, I'm only offering you the truth, nothing more.

http://www.goldismoney.info/forums/showthread.php?t=2835&goto=nextoldest

...time to see the latest Wachowskiism: V for Vendetta

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