Watering the Net Roots

by Doc Searls

On the one hand, you can look at Verizon's dumping of rural New England business as a kind of red-lining. On the other hand, listen to what the company picking up the dumped business says it wants to do. According to the Boston Globe,

...the merger will likely benefit rural customers by putting them in the hands of a company that specializes and focuses on rural markets, according to John Byrne, analyst at Technology Business Research in New Hampshire.

Verizon serves 1.5 million access lines, 180,000 DSL customers, and 600,000 long-distance customers in the three states. The company offers DSL Internet access to about 60 percent of households there. In contrast, FairPoint offers DSL access to about 80 percent of households it serves.

But in southern New Hampshire, where FairPoint will take over the high-speed FiOS fiber-optic network available to 80,000 households, customers who may have expected to see FiOS TV offerings won't likely see "triple-play" bundles of voice, television, and Internet in the near future.

"Clearly, video will be a consideration, but we don't want to get distracted by that," as FairPoint takes over, Leach said. "We are going to increase high-speed data right out of the box."

Kurt Adams, chairman of the Public Utilities Commission in Maine, said he cannot comment on details, but that merger hearings would likely focus on broadband investment, service quality, and rates.

Something big is getting missed in the fight between carriers and local governments, and many side-takers on both the right and the left are equally blind to it. What's missed is serious and widespread market demand for high-speed data connections — specifically connections that are not subordinated to television.

No doubt about it: consumer demand for TV is still huge, and will stay huge for a long time. But producer demand is for high-speed Internet. That goes for approximately all of the connected business population, plus the growing number of consumers that now also produce — and will increasingly produce video they'll want to share, and perhaps even sell. Significantly, this demand includes the production side of the incumbent entertainment industry as well. Here in Santa Barbara, the demand for higher-speed Internet is driven to a large degree by filmmakers and production professionals who would rather work from home than drive down to Hollywood.

Municipal, county and state governments (and regulatory bodies like the PUC in Maine), are responding to their consituents demands when they do their best — in many different ways, across the country — to represent and support that demand.

One can argue that some of this support is misguided. In fact, I'm one of those who argues that local governments make a mistake when they offer "triple play" services identical to those of the incumbent carriers — even when the incumbents (as in the case of Verizon in New England) have effectively red-lined their districts.

But the fact remains that the demand is there. And most of it is coming from the private sector. That is, business.

Fat-pipe high-speed Internet is good for all business. Not just for incumbent TV and telephone companies.

Many on the left don't see what's happening because they're too busy wanting to protect consumers from big bad heartless companies. Their pro-Net sympathies are on the side of social benefits and personal freedoms — mostly of self-expression. They tend to turn blind eyes toward business in general. To many on the extreme left business is evil and we need government to protect us from exploitation by business.

Many on the right don't see what's happening because they're too busy protecting business from government in general. They recognize and value the importance of business, and credit it with social as well as economic benefits. When fights break out between business and government, they'll naturally side with business. That's what they're doing in the carriers' fight against lawmakers favoring Net Neutrality (which would impose restrictions on what carriers can and cannot do) — and in the separate but not distinct fight between the carriers and the "munis": local and regional government-led efforts to bypass the carriers in providing high-speed Internet connections and services. By seeing the two fights as one, folks on the right miss seeing the real market demand, by business, for high-speed Internet connectivity.

Several things need to happen here.

First, the Net Neutrality debate needs to be quarantined at the federal level. It may be a national debate with local implications, but the battle itself is a federal regulatory one, and should be confined as much as possible to Washington. It is especially important here for the right-vs.-left side-taking not to continue bleeding down to the state, regional and local levels.

Second, folks on the right and the left should both recognize high-speed Internet market demand as something that primarily arises from local businesses (including small and home offices) — and that this demand will only increase as more consumers become producers and look for high-speed connections that serve production as well as consumption. Everybody needs to see that serving this demand is good for the economy, for society, and for individuals.

Third, state, local and regional governments need to create regulatory environments that are friendly to high-speed Net build-out by everybody, including individuals and businesses of all sizes.

Fourth, we should support and encourage infrastructure development companies that prioritize around demand for high-speed Internet rather than television. Fairpoint is one of them, and they should be saluted for their good efforts.

Fifth, the growth of independent "netcos" should be supported. In the January issue of Linux Journal, I wrote about Indienet.dk, a local Linux-based Danish company that's in the business of providing pure Internet transport:

Although they support VoIP phones, they don't sell VoIP as a service. Nor do they sell TV. (Those last two combine with Net service to form the familiar "triple play" of offerings that telcos, cablecos and many of their new muni competitors are pushing in the US.) "We're bottom level", says Jakob Frederiksen, our host and the company's sales and service chief. "We just provide the base-level connectivity."

Indienet is able to thrive in a business environment that is far less regulated than ours in the U.S. Last September I was led to explore this environment by my friend Thomas Madsen-Mygdal, who introduced me to players at the backbone as well as the local level. Here's what I discovered:

Among wholesale transit providers are TDC, which for many decades was Denmark's national PTT (which stood for Postal Telegraph and Telephone, and generically still stands for the old state-owned communications companies). Later, Thomas and I spoke at length with TDC's Per Rasmussen, who made it clear just how complex and competitive the market for Internet deployment and service has become.

For example, in suburban and rural areas, the old cable television head ends are being put to new use by the communities themselves. It's easy to forget today that what we now just call “cable” began as CATV, or Community Antenna TV. In Denmark as well as in the US and elsewhere, cable got its start when communities — on their own or with the help of specialized contractors -- put up towers and antennas at some central point (usually where the antennas could see the originating transmitters of TV signals), and amplified those signals down coaxial cabling to the houses of customers. Today, Per explains, these old cables (and newer ones too) are being repurposed for Internet service, with telephony and television riding on top of the Net as services. Meanwhile, a large number of private electric power companies, leveraging war chests of cash gained from selling their power plants, are getting into the phone/Internet/TV triple-play business, driving fiber down many last miles to many homes. With their smaller cash reserves, companies like TDC have to be more careful about how and what they deploy, along with whom and what they connect to.

What gets Thomas most excited is users owning their own infrastructure, and the opportunities for small grass-roots companies like Indienet to grow the Net “from the outside in” -- from customers at the edges toward the backbones. All the market fragmentation and competition, he says, serves to force vertical integrators to unbundle their offerings.

Not surprisingly, Denmark is #1 in household broadband penetration, and also leads in broadband take-up. Here's how one report summarizes it.:

South Korea at 26 % penetration has lost its lead to three Western European countries: Denmark with 26.5%, Iceland at 26.4%, and the Netherlands at 26.35%. South Korea grew by a negligible amount of 3.1% while Denmark led the top five countries growing by 31.5% over the past year. The US is 19th overall with 16.61 broadband lines per 100 inhabitants behind Luxembourg, and just ahead of Macau.

You can find more stats here.

This isn't to say that Big Ideas aren't worth fighting over, or that we shouldn't fight for the Net at the federal level. Those fights are hugely important. I think the market-hostile PERFORM act, which is led by Sen. Feinstein (D-CA) and requires building DRM in to satellite and Internet radio (on behalf of the RIAA and little else), is one of the most dangerous bills working its way through Congress right now. The unintended consequences of this for grass-roots action on the Internet are profound. As Don Marti puts it, The weird angle on this is that she's selling out the netroots scene that helped get her party a majority in Congress. If she gets it passed, the database marketing crowd gets to control politics in the USA again, and she's back in the minority.

It's the grass roots that matter. That's where growth starts, that's where society lives, and that's where there are plenty of pro-Net causes we can all get behind, regardless of how our politics lines up.