Some quick thoughts on Broadband

People pay for intelligence.  Thing is, it grows all the time.  Used to be intelligence was very close to pipe and device.  It made sense to build regulatory models and business models around the two.  Intelligence these days, however is in 2 places: (a) software - how well does software get you what you want when you want it where you want it and for how much; and (b) a niche, but cool devices that make good use of (a), are very desirable from a consumer perspective (I for one, love my new iMac; 21" screen, terabyte hard drive and smokin' fast apple RAM), not to mention it is a work of art, sitting on my desktop.  I love it and was happy to pay top dollar for it.

So it is simple.  You can have customers lining up around the block to pay for intelligence or you can go to war with them by trying to keep it out of their hands.  One feels like surfing and the other feels like battling a tsunami with swords.  

The outcome it seems to me is certain.  The transition, however, remains in doubt.

Let us hope for superhuman perspicacity for those charged with making decisions critical to how the transition plays out.

Google: Build fiber optic infrastructure, but do it right.

Google has announced they are building out fiber optic infrastructure.  This is a tremendous opportunity, but there are dangers.  Having spent careers helping competitive landline, wireless, cable, Internet backbones, and even satellite-based communications companies enable the best of what the Internet brings to us, I can tell you this is one of the single biggest opportunities to transform a moribund American telecommunications market & infrastructure into a vibrant engine of economic change. 


This is a detailed proposal.  It is a "how to" manual.  

Remember, the true purpose of communications networks, of the Internet, is to serve.  There are communities in this nation who are suffering badly.  If Google is motivated by compassion and guided by wisdom, the success of their venture is assured.

First, do not build triple play.  Build something new.  Start at the very base of the model.  When you do, the doubling rate will be incredible.  Ensure that you work closely with the city, understanding their infrastructure, ensuring that you don't go out and build triple play.  That would be an idiotic waste of time and money.  Be smart, build the new recipe.  Do it from the ground up.  Think creatively.  Use fiber optic for street light control (this gets you to both sides of every major intersection.  Slap cabinets up on schools and city buildings.   Build out to the emergency locations, to the PSAPs (and there are some legal issues that need to be though through there, but again, doable), run a wireless network, connect health care, libraries, but do the same for auto shops and bakeries.   Think of fiber optic not as telecom, but as a new sort of societal building block.  Think of it as an input.   Think of it as fertile soil.  Spread it around.  Do NOT hoard it.  Give it away as much as you possibly can.

Secondly, build smart.  Loma Linda, as Chris mentioned somewhere, but as many of us - Doc, JP, John, etc. saw with our own eyes was incredible.  It was among the smartest community builds I've seen anywhere.  I think one of the reasons is that when they built they really deeply understood communications networks; they really weren't interested in triple play as the primary achievement of the build.  

Third, and one of the harder jobs, is putting the legal infrastructures in place in ways that benefit everyone.  This requires deep thinking at a network, operational, billing, business and legal level.  This is where the cake is unbaked and rebaked.  If there is any one place where expenses explode and impasse met, it is here.  So long as no one gets too religious - and it will be incumbent upon Google to be the least religious and the most humble if what they want is success AND harmony - there are ways of creating peace.  What people forget is that every carrier - landline incumbent, mobile wireless, CLEC (what's left of them), rural, independent (think Windstream / CenturyLink), cable (Comcast, Cox, etc. - I've done their interconnection work too) - all are interconnected today. They find ways to get along.  I can say from experience that it is harder when you have to connect ALL of them, but it is doable.  Just drop the religion and think creatively.   

Fourth, provided the foregoing are done, Google could light that network and have it ad supported.  If they are smart, if they avoid all of the traps of copper/coax thinking, they can avoid giant cost items that are sinking most of these business models day over day.  If they deploy as infrastructure where they have community support, the actual cost will be suprisingly lower than most pundits say is possible (too many people stay stuck in the wrong framing; they are victims of their assumption sets and end up repeating assumption and proof again and again without ever freeing themselves from assumption).  This is the core economic value.   

If they get the recipe right, the value will be unlimited.  The only real question is first of courage, and then intelligence.  It takes courage to bake a new cake.  It takes deep intelligence (and humility) to perceive the only way to truly serve American communities in need is to start from scratch.  People are hurting.  The economy still sucks.  Google, with real courage, could transform communities and transform people's lives. Can anyone imagine a higher calling or more worthy pursuit?  

I'll pray for their courage.  Head bowed, I will pray.  Real people are suffering.  They need help.  Do it right, not for the money, not for the policy, not for the politics, not for the economic or intellectual ideals of it.  Do it right because some kid's mother needs a job, because some kid's father has nowhere to look, nowhere to go, is not employed by the government, doesn't have a tenured academic job, doesn't work for a think tank, is not a partner in a law firm, but is just a dad trying to make ends meet for his kids.  Do it right because it is our duty to serve each other.  

Do it right because what you really want is to go to bed at night with a full heart, not a full wallet.

Surse corde,

Erik

Wireless Cowboys

I love what Vistabeam is doing and flattered to be mentioned in their blog.   Here's the link to the article - it's a post I put up on cybertelecom today on Why Broadband is Important.  These guys are the real deal; they are doing a hard job & I'm honored to be mentioned by them.

Meanwhile super busy, thus the dearth of posting here.  Will catch up on that as soon as I can.

Meanwhile, be well.

Erik

Escape from Net Neutrality

To really grok how important it is to get regulation right, you'll have to actually look at Lee Selwyn's economic analysis of the present state of telecommunications markets.  [I had trouble with the deep link, so just in case, click here scroll down to "Telecom Deregulation: All a Matter of Degree" Lee Selwyn" or try the second link first.] 

What the slides demonstrate is incredible concentration of market control and power in the hands of AT&T and Verizon. They also provide economic proof that the deregulatory policies of the past eight years have all but handed the Internet to Ma Bell.

In several recent proceedings  ("Net Neutrality NPRM" ), the FCC has begun to ask the question of whether there is a problem with how the Internet works and what it should do. These are good questions to ask. Unfortunately, in the vast majority of proceedings the FCC is starting from the wrong premise. They are assuming that they can remedy a market where the two largest players combined are nearly twice as big than the rest of the entire market using only minimal regulation. In other words, they seek to remedy what is clearly monopoly control with deregulatory tools.

The good news is that may be changing. (Doc Searls picks up on that here: Liberating the Net From Telephony), but before we get to the end of the story, let's pick up on how we got here:

A. How We Got Here:

• The Shrinking Natural Monopoly (slides 11-15): Lee Selwyn, whom I personally regard as one of the smartest telecommunications economists around traces, in un-economist-like concrete network detail shows precisely where money is and why.  

• Full Monopoly:  At slides 18-20, Dr. Selwyn shows how rapidly wealth concentrates when a retail provider is deregulated while every other competitor is forced to subsidize the dominant provider's retail services in the absence of meaningful wholesale regulation and antitrust control.

• Telecommunications Enterprise Markets are Monopolized as Well: as Dr. Selwyn points out and as GAO has told us for years,there is zero competition for network access plant.  Access is a business term that refers to dedicated capacity between points.  It is used primarily in the context of large businesses, Internet Service Providers, data centers, and other heavy duty users purchasing large amounts of capacity.  (Compare slide 17 AT&T before SBC acquired them and AT&T after the merger: slides 18 and 19).

• Everyone pays the loop owner even if the loop owner is supposedly deregulated in a "competitive" market.  Slide 20 shows the loop facilities (i.e. this refers to the actual physical line from your home or business to the first major point of network aggregation), for all intents and purposes are totally deregulated, even where they are supposedly "regulated". (From a financial perspective, there's no duopoly; there's pure monopoly.)

• No one can deploy any form of competitive network that exchanges voice traffic with any incumbent landline network without paying subsidies to the deregulated telephone company, which itself uses very low cost advanced gear, based upon cost assumptions that date back to the 1940s.  

Subsidies, therefore, continue to flow from the Internet to the since-deregulated Bell landline services and facilities.  These same deregulated Bell landline facilities, however, support Bell Long Distance, Bell mobile wireless services, Bell "Internet" services, and so on.  


We're paying regulated subsidies to deregulated massive monopoly machines and allowing them to compete in deregulated markets.  We created The Perfect Storm.

B. Net Neutrality: Gives Ma Bell Her Cake While She Eats Competition Too:

First, it cannot even begin to fix the problems it pretends to be able to solve. The reason is simple. Anything that's transmitted in Internet Protocol is deregulated. The irony is that rather than encourage the deployment of new, better, faster, cheaper, more technologically advanced loop facilities, deregulation resulted in everyone funding only one form of loop plant (copper) providing only one form of functionality (time division multiplex analog voice over 64kbps circuits).

• Worse yet, Bells now want more funding for services that have been subject to minimal or no regulation.
  
  
  
  "The infrastructure necessary to provide and optimize the delivery of such services, however, is extraordinarily costly, reflecting hundreds of billions of dollars of private carrier investment. It is these carrier investments that create the stable platforms that support new features and higher speeds, that successfully balance competing bandwidth demands, and that enable the astonishing array of innovative devices and applications that develop at the network “edges.” It is impossible to predict all of the benefits that next generation networks may provide. But one thing is certain: the Commission must maximize the incentives for carriers to make these foundational investments, because without them, none of the other, more visible innovations would be possible. (AT&T Comments in GN Dockets 09-157, 09-51 available here: http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=7020039959)
  
  
  

As you peruse FCC comments filed by AT&T Mobility, Verizon Wireless, AT&T, Verizon, Inc. consider their market data.  There is none.  Rather they come up with numbers on things like:

A. Handset "competition", which is nothing more than the tiny tail of vendors wagging off of the backside of the two largest landline, IXC, Internet peers, and mobile wireless carriers in the world. 

B. Size and health matter, so don't be fooled by "number of competitors" per market; that's an old landline trick as well, but counting up the players on the field is not the same thing as determining whether they are breathing or have a pulse. Wireless competition is not "vibrant" in a world where the third largest wireless competitor posted a net loss of $2.8 billion for 2008 and another $978 million for the first six months of 2009, while its credit was downgraded to junk status, and millions of its wireless subscribers are switching to "rival carriers."

Second, it is legal vaporware. Net neutrality is not law, it is not even rule. Over the long term, the FCC cannot sustain the fiction that a vast majority of the economic and technical activity associated with any wire or radio communication in the United States continues to exist in a statutory no-man's land called "ancillary jurisdiction". That was created to allow for a little regulatory flexibility, not to exclude from the ambit of the 1934 Communications Act the most ubiquitous, revolutionary, and pervasive network technology ever known to humankind.

It leaves completely in the dark and out of reach the very instruments of massive and near complete market control:

• enormously high special access costs (as noted above, these costs are critical input to every other carriers' costs because carriers use them to connect major network facilities as well as wireless towers or to reach fiber optic backbones from data centers or large enterprise locations);
• extremely high per minute subsidies paid by all carriers who exchange voice calls with incumbent landline network.

Third, the appearance of a rule may be worse than no rule at all. Net Neutrality, however, has deeper, more subtle potential harms, including but not limited to the possibility that courts, once again, refuse to apply antitrust because "it's regulated".  This was effectively the holding in Verizon Communications, Inc. v. Law Offices of Curtis Trinko, LLP.   


While facially the idea that a regulated entity should not be subject to antitrust regulation makes sense, the holding in Trinko overlooks legal, market, and network realities in ways that accelerated the monopolization of telecommunications markets.   This is primarily due to the fact that the market opening regulations embodied in the federal Telecommunications Act of 1996 were extremely difficult to enforce.  They were highly technical and split enforcement between the FCC and 52 separate public utility commission jurisdictions (50 states + Washington, D.C. + Puerto Rico).  


Unfortunately, therefore, if the FCC enacts some quasi-rulings about "Net Neutrality" imposing upon loop owners (wireline or radio or both) some common-carrier like "obligations" that aren't overturned by the DC Circuit, antitrust enforcement will suffer. Antitrust will suffer because the courts, once again, will be confronted with the question of whether antitrust remedies should apply to services that are regulated. As a result we may have stacks of Net Neutrality "rules", but no actual means of enforcing them.

Fourth, Net Neutrality pretends that the Internet can be compartmentalized. This is extraordinarily dangerous in several respects. At a high level, the FCC is going to parse out a bunch of deeply interrelated problems into several different regulatory silos, then examine the "issues" in terms dictated by the old silos pretending all the while these evaluations are actually relevant to anything that's going on in the market. For example:

• The FCC in one proceeding they might find competition in mobile wireless markets without fully addressing the fact that AT&T and Verizon own a vast majority of the wireline networks that every mobile wireless carrier relies upon to compete.

• In another proceeding on landline voice, they might find sufficient voice competition without considering consolidation in mobile wireless or cable television. In yet another they might choose to leave "broadband" unregulated despite the fact that any broadband provider will have to buy connectivity from AT&T and/or Verizon in order to supply the services they use to compete with both. Moreover, that "broadband" competitor might also be forced to pay additional fixed and recurring costs to AT&T and/or Verizon by state (or federal) regulators as a condition of using those services.

Practical application of yet another problem not remedied by Net Neutrality:

• Because the "Internet" and "IP-enabled services" are deregulated, landline incumbents, particularly Bell telephone companies (AT&T, Verizon, etc.) will refuse to permit competitive broadband networks to connect with their networks. Without such connections, however, no competitor can exist. They are refusing to interconnect networks with mobile wireless carriers unless the mobile wireless carrier agrees to pay 10x or more than they currently pay for wireless calls if those calls happen to use next generation WiFi to provide greater coverage in homes and other places. These requirements would kick in despite the fact that neither the regular wireless call nor it's WiFi equivalent touch the Bell landline network unless and until a wireless caller calls a landline number. The network architectures, call flows, and costs are the same. Yet, many of the old line telephone companies are preparing, again, to hold their networks hostage and extract more money from anyone who happens to call. Net Neutrality does not address this.

Net Neutrality may be a beginning, but it only addresses the very surface of entrenched market harms resulting from nearly a decade of bad deregulation. As such, it has the potential to create as much harm as it attempts to remedy. Without transparent, consistent and readily enforceable regulation, we're in for Groundhog Day version of the past 8 years of rampant mercantilism.

Or so it seems from where I sit.

Effandineffablernets

Urbi et Orbi:

In the places I go there are things that I see
That I never could spell if I stopped with the Z.
I'm telling you this 'cause you're one of my friends.
My alphabet starts where your alphabet ends!
Dr. Seuss

Open your soul, hearts and minds; leave your walls behind and come out here with me.  Come on. Just come outside.  The house of thought won't collapse if you leave it behind for a bit.  

21st Century Paradigm: Read anything that Doc Searls or John Hagel, JP Rangaswami, Bob Frankston or other "visionaries" (why some see that as a put-down is beyond me) others write.  For some it's visionary.  For others it's vibrant reality.  For some a blessing.  For others a warning.  

21st Century Paradigm: whole brain thinking  -> using both hemispheres of your brain rather than hopping around on one hemisphere cursing how horrible reality is while simultaneously cursing the right hemisphere.  

• Intuitively logical

• Logically intuitive

• Neither intuitive nor logical but still, it's here.

• Behavioral economics

• Commons; Open spaces; anima.

• Collaborative.  Cloud.  Infrastructure. 

• Ambient connectivity.  Open. Yin.  Fluid.

21st Century Paradigm: Effandineffablernets

The naming of networks is a difficult matter.  It isn't just one of your holiday games.  

...

But above and beyond there's still one name left over,
And that is the name that you never will guess;
The name that no human research can discover--
But THE NETWORK ITSELF KNOWS, and will never confess.
When you notice a net in profound meditation,
The reason, I tell you, is always the same:
His minds are engaged in a rapt contemplation
Of the thought, of the thought, of the thought of his name:
His ineffable effable
Effanineffable
Deep and inscrutable singular Name.

Humans call it the "Internet."  The things they miss.

20th Century Paradigm: Telecommunications.  Mine.  Not yours.  Bright lines.  Hard boundaries. Opposition is competition.  Zero sum legal contests render high truths. 

20th Century Paradigm:  We hire politicians to run our proprioceptors and pay lawyers to fight reality in cramped artificial contests obscured from stakeholders and judged by politicians beholden to those who hire the lawyers.  

20th Century Paradigm: "We murder to dissect" (quoting Tennyson b/c 20th century paradigm is simply 19th century paradigm gone nuclear and digital without producing sustainable energy or sustainable communications systems). 

20th Century Paradigm:  Thinking top-down command and control corporations, militaries, or governments are efficient, evolved, adaptive, or anything other than pathologically self-destructive. 

20th Century Paradigm: pills solve potency.  (Love is potency.)

20th Century Paradigm: Any assumption that order can be imposed or mandated.  Rather than see the futility of the systems of orders it invented, it simply re-organizes the same system in order to impose the same form of order that caused the catastrophe necessitating the reorder again.  

Corporations, of course, do this much better than government.  They're paid more, and therefore, smarter.  Observe the abundant manifestations of corporate wisdom during the 20th century.  Neither corporations nor governments create wisdom.  They are dangers to themselves and others.  Were that not true, we'd have a vibrant ecosystem at every layer both inside and outside the glass not to mention the planet that sustains it all.    

20th Century Paradigm: History controls the present and fears the future.  

Only the present affects the present.  The future is the fears of the past projected on a wall.  Future and past exist only in fleeting and transitory thoughts.  Thought is malleable.  It is illusion.  What you think is not what is.  What is is what is.  Thinking is the screen of illusion that separates awareness from reality.  

Flow the spaciousness brothers and sisters.

Oh the things you can find
If you don't stay behind!

Good luck.

Erik

Ode to Individual Achievement: Service of Others

The constitution exhorts us mortals to reach high. Without forgiveness of ourselves and others, only depths, not heights are reached.

Our job is transcendence of present challenges.of governance. America is not a fixed location. It is an aspiration.

We have, therefore, the power and the duty to re-create ourselves again. We can repurpose and realign regulation and agencies.

Bob Cannon's service to all of us in maintaining the Cybertelecom list, which is sacred space for off-the-record discussions for industry insiders, and the Cybertelecom site for all these years is an incredible democratizing
gift and shining example of the power of a single individual to change government.

This is how you do transparency and the Administration should thank and bless this man for all that he has done, not to mention follow his example.

Empowering the Internet one American at a Time pt 2 (Show Up)

So if you follow some of my writing you know I've blown up the illusion that Net Neutrality will do a thing for any innovative company or individual out there. It's a long story but boils down to the fact that Net Neutrality attempts to weave a regulatory silk purse from the sow's ear of decades of de-regulation.

That's the bad news.

Here's the good news. The FCC just might get this. They may have an inkling that their Net Neutrality rules will come undone on appeal. So they've done two things:

First, they launched an inquiry into whether or not they should consider transitioning from a "circuit switched" to an IP-enabled world. (Hint: we're there; this is about helping them transition).

Second, they've announced a technical workshop. Techies, show up, OK? People from small companies, innovators, broadband, wireless, whatever is your gig - pay attention and get involved.

http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-294965A1.pdf