Mike Bookey, a friend of mine who recently published a book called “America at the Internet Crossroads: Choosing the road to innovation, wealth, and a supercharged economy,” likes to say that, before we start debating the details of Internet policy, we need to step back and ask ourselves (as individual citizens, as participants in a debate, and as a society) what kind of an Internet we want in the future. Without some shared sense of that, parties in an Internet policy debate have no common frame of reference and will tend to talk past each other, especially if they come to the debate with different ideologies, biases or political agendas. It may not always be easy to agree on one or more key goals, but I think Mike’s right that this is an important first step in any debate related to Internet policy.
Mike also contends that, rather than think of how the Internet best fits into our economic system, it’s becoming more appropriate to think in terms of how our economic system fits within the Internet. My interpretation of Mike’s point is that the Internet is emerging as the “nervous system” that supports 21st century economic, political and social systems. It is not simply another sector of the economy to be regulated (or deregulated) in the usual manner, where vested interests in related sectors engage in an invitation-only dance of lobbying and horse-trading artfully choreographed by well-paid legal minds to balance each other’s mix of pain and gain. It’s too fundamental and important for that.
I think an appreciation of this latter point is fueling what seems to be growing and often passionate grassroots support for the principles of network neutrality (if not always agreement on whether we need net neutrality rules or what they should be), as well as the accelerating rise of local Community Internet (a.k.a. muni-broadband) initiatives in cities large and small around the country.
I’d argue that these two trends reflect an increasingly widespread appreciation for both of Mike’s points, which together speak to the critical importance of Internet policy and favor creation of a next-generation broadband Internet that offers virtually unlimited, ubiquitous, symmetrical bandwidth, with access to the content and services this bandwidth can deliver controlled by end users, not by pipe-owners.
The latter, of course, should be paid enough by users to finance the network’s costs, but that’s a separate issue from having pipe-owners provide different levels of speed or quality to different service providers based on their business relationship (or lack thereof) with them.
In an “Internet-based” economy, users willing to pay for enough bandwidth to receive a stream of HD video should be able to freely choose which provider of HD streams deliver content to them using the bandwidth they’ve paid for. Of course, a provider of HD content would be wise to make sure they can deliver HD-quality to the local access point-of-presence, at least if they want to have satisfied customers. But the choice of how that local access bandwidth gets used is made by the end-user who pays for that level of bandwidth, not by the company that provides the bandwidth.
Of course, the role of “high-capacity, low-cost, ‘stupid-network’ bit-delivery” is a pretty radical and unwelcome departure from the traditional cable TV model, and also from the two-tiered Internet vision apparently embraced by both telephone and cable companies (though the latter prefer to let telcos do the talking and take the heat).
But, it seems to me that this really is the vision of the Internet that the vast majority of American citizens, companies and public institutions share, including web-based service providers, the financial industry and both new and established content providers, virtually all of whom are experimenting with direct-to-consumer distribution via the Internet. In a column discussing the growing number of “over-the-top” (personally, I dislike that label) content initiatives, CED magazine editor Jeff Baumgartner quotes Les Moonves:
“With this broadband channel, we’ve essentially bypassed cable and created a general entertainment outlet utilizing existing creative and content resources,” said CBS President & CEO Leslie Moonves.
I don’t claim to be a very good reader of Congress, but I’m beginning to believe that more and more of its members are sensing the reality that the vast majority of their constituents—cable and telephone companies being the notable exception—share key elements of a common vision of the Internet’s future, a vision built around fully retaining the principle of network neutrality, while also encouraging investment in networks that can put the U.S. back in the lead in terms of availability, bandwidth and service innovation.
Appreciation of this reality within the halls of Congress seemed evident in: comments and questions from both sides of the aisle at recent hearings held by members of the House Judiciary committee; the shift in vote balance on Markey’s net neutrality amendment as it went from subcommittee to committee and; the fact that, in some House races, net neutrality appears to be emerging as a campaign issue in a season when control of the House is potentially up for grabs.
Public support for an “open” Internet is also apparent in the growing number of Community Internet initiatives being considered around the country. The message to cable and telephone companies from the country at large is beginning to sound like “work with us to create the Internet we want and know is possible, or get out of the way and we’ll do it without you”—either on our own as a local community, or with the help of Internet-based service providers like Earthlink and Google and/or vendors that see muni-broadband projects as an emerging business opportunity.
There have recently been signs that incumbent access providers are starting to bid on Community Internet projects, though its not clear yet to what extent they will end up being involved in such projects. They certainly could bring assets to the table. But it remains to be seen whether local communities and incumbents can develop win-win strategies that balance the latter’s business priorities with the former’s goals for a next-generation broadband Internet. And, in many communities, there may a fair amount of distrust between the parties, as well as a preference among community leaders to avoid becoming dependent on incumbents, whose participation they may perceive as having ulterior motives and potentially conflicting priorities.
It’s my sense that Wall Street analysts largely ignore the significance of Community Internet initiatives when they model cable and telco valuations. Should that change, it could increase the pressure incumbents feel to address this potential threat to their existing business models and valuations, either through a ramping up of efforts to block these initiatives at the local, state and/or national levels, or by developing strategies for adapting their business strategies to what may be an emerging reality—that they stand pretty much alone when it comes to their vision of tomorrow’s Internet.
Mitch Shapiro at 4:55 PM|Comments(3)
Doc,
Thanks for the comment.
I wasn't proposing or expecting that this "virtually unlimited, ubiquitous, symmetrical bandwidth" would be deployed tomorrow. I meant to present it as a goal that can be pursued over time, and in the context of retaining the "openness" of the Internet.
A chapter in Mike's book (cited with a link in my post) outlines a "staged roll-out" strategy for what he refers to as "Internet Roads." Here are some excerpts from that chapter that provide a general sense of how this might work:
For communities wanting to build Internet roads now or possibly in the future, a well-planned and well-structured fiber infrastructure plan is critically important...Unfortunately, the typical practice is for public and private organizations to install fiber infrastructure without fully considering the long-term needs of the community...
The IRU [Internet Road Utility] should use a phased approach for the build-out of the community's Internet road network. A phased approach carries the least risk of catastrophic failure and minimizes the amount of taxpayer dollars at jeopardy. It also ensures the community is solidly behind building the Internet road network.
The IRU's initial development phase is small and focuses on providing Internet service to government and public agency sites within the community...Municipal government and public agencies are the primary providers of services in communities. We often overlook this fact. We are conditioned to think about services delivered locally over networks just in terms of telephone, cable television, and Internet backbone access. In reality, nearly all services that municipal governments and public agencies now provide can be greatly enhanced by Internet road service.
Because the IRU initially connects government sites and public agencies, when business and residential consumers connect to the Internet road service, they can immediately access these same government sites and public agencies. This is where the advantage of a staged development plan kicks in. New public services can be created in the time between connecting the first group of government sites and public agencies to the Internet road service and connecting business and residential consumers. These new local services take advantage of the ultra high speeds of the Internet road service. They are not available from the telephone and cable television companies. This availability of unique local services from government and public agencies motivates business and residential consumers to demand access to the Internet road network.
If the IRU wants to expand faster than the installation of fiber allows, it can use wireless technology to enlarge its service footprint. Though wireless cannot deliver the capacity of fiber, and some services available on the fiber portion of the Internet road network cannot be delivered over wireless, it is quick and relatively inexpensive to deploy. It enables the IRU to introduce more business and residential consumers to its service before the installation of fiber infrastructure. When the fiber infrastructure is eventually expanded to serve these consumers, the wireless service can be repurposed to serve just the mobile service needs of the community. In this way, the IRU uses wireless to extend road service to sites not yet served by fiber and provides for the future delivery of mobile services.
As the business and residential consumer market served by the IRU grows larger, more service providers are attracted to the environment of the community's Internet road network. These can include broadcast television entertainment and news service providers. The addition of more providers increases the number of services available to consumers on the Internet road network.
As a result, more business and residential consumers are attracted by the usefulness of the IRU's Internet road service. A virtuous cycle begins. More service providers attract more business and residential consumers, and more business and residential consumers attract more service providers. On it goes until equilibrium is struck between the size of the government, business, and residential consumer market in a community and the number and type of service providers it can support.
As consumer demand increases, a tipping point is reached when demand exceeds the IRU's ability to expand service fast enough. When this happens, the municipal government can decide to place a bond issue before its voters to fund a rapid community-wide build-out of the Internet road network.
Posted by: Mitch Shapiro at May 17, 2006 2:38 PM
Doc, we disagree. I too worked for a FTTH start-up in the boom years. We began delivering 100Mbps service in 1997, almost ten years ago.
Moore's law says the electronics capabilities roughly double every 18 months. Once fiber is installed we can ride Moore's law to extract more and more bandwidth.
We installed 144 strand fiber cable in our backbone. The amount of bandwidth reserve in this cable is measured in the trillions of bits. This reserve is just waiting for Moore's law to create ever more efficient and inexpensive electronics to mine it.
Today, if I were building an FTTH network I would look seriously at delivering symmetrical gigabit to each home and business. Certainly in a few years gigabit will replace 100 megabit Ethernet, like 100 megabit Ethernet replaced 10 megabit.
Bandwidth is not a limited commodity, except to the extent that the telcos and cablecos find it to their economic advantage to create artifical scarcity to support high prices.
I'm sure you would agree that the production of abundant bandwidth at the lowest possible price would be a good thing for society. What we now have is a situation where the telcos and cablecos are making what otherwise is an infinite resource scarce so they can charge high prices. If the production of abundant bandwidth at the lowest possible price is good for society, then it follows that companies that artifically limit its production to charge high prices is bad for society.
As to your comment that it is impossible to build a business model that produces abundant bandwidth at the lowest price, I can point you to where this is happening. Of course, we will have to leave this country to get beyond the ILEC, MSO, FCC cabal that limits bandwidth in the interest of corporate welfare to see this model in action.
Posted by: Mike Bookey at May 17, 2006 11:40 AM
"...and favor creation of a next-generation broadband Internet that offers virtually unlimited, ubiquitous, symmetrical bandwidth, with access to the content and services this bandwidth can deliver controlled by end users, not by pipe-owners..."
Do you realize what a pipedream this is? From both a technical and financial perpective? Why should someone who just wants to read email subsidize the person using massive ammounts of bandwidth to deliver video to his friends? Unless you just want to use tax dollars to steal from the poor and feed the upper class techies? How do you charge for bandwidth? Peak (like now)? Usage?
I worked for a startup FTTH company back in the boom. We were delivering 100 mb/s bandwidth to homes for a triple plays service.
Sounds great... with a 4 Gb/s metro network and 10 Gb/s core.
Until you count up exactly how HD streams that 4 Gb/s metro pipe can deliver in your model - 200 at MPEG-2 data rates, maybe double that with modern MPEG-4 encoding. That leaves nothing for any other services. Nada. Zilch.
I don't know how big the cable and telco video networks are, but I doubt that their economics have allowed a bigger network than this to be built.
This just isn't enough bandwidth for your "any HD source I want to view" scenario. The community WiFi networks are only interesting from a connectivity viewpoint and don't have enough bandwidth to enable any of your scenarios.
The only reason that the telcos have enough bandwidth in the core to deliver video is that they use IP multicast. In your many-to-many content delivery model, no one could afford to build a network that would offer anywhere near the bandwidth required to deliver reliable service. This would lead to a non-neutral network to provide better service to either more "important" applications or reward applications that either can work in crappy network conditions or game the network to get their content through. Either way, not a network nirvana.
Doc
Posted by: Doc McClenny at May 16, 2006 10:51 PM
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