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 on the plane home today from a series of industry events. At each of these events, nearly everybody had a laptop, and nearly every laptop connected to the Net. And everybody experienced frustration with connection speed. Slow Net connections are to industry trade shows what traffic tie-ups are to Los Angeles.

On my own laptop, at 38,000 feet over the desert Southwest, I read and re-read "Analysts Question Bell Investments", by Ted Hearn in Multichannel news. It was a report on what financial market analysts told the Senate Commerce Committee, which is expected to vote soon about 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 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 does. That's because 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 ability to take business from each other in a zero-sum turf war defined by the perimeters of "content delivery" and VoIP.

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

Thus Net Neutrality (the subject of our last SuitWatch) 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 quite happening) a decade ago? To get what I mean by that, consider what the U.S. would be like today if we hadn't created 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 not to have it today? Or to estimate the cost of building it now?

We need people with imagination talking to Congress. Not just carriers and dull 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 both for public broadband infrastructure and for imagining its benefits. He went beyond the obvious to list 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 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 each other. 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. He was recently also named CITS Fellow at the University of California, Santa Barbara

Ted Hearn's Analysts Question Bell Investments:
http://www.multichannel.com/article/CA6316081.html?display=Breaking+News

Susan Crawford's The self-owned Internet:
http://scrawford.blogware.com/blog/_archives/2006/1/5/1619868.html

Interstate Highway System, in Wikipedia:
http://en.wikipedia.org/wiki/Interstate_highway_system

Wayne Caswell's Cazitech:
http://cazitech.com