Monday, January 16, 2006

"Hey, Baby Bells: Information Still Wants to Be Free"

Mike sends on a link to a nifty article in the New York Times: Hey, Baby Bells: Information Still Wants to Be Free. It's a good introduction to what's gone wrong with our telecommunications network from the standpoint of an informed Joe Consumer. Most folks who are up in arms (and up in arms we should be, let there be no doubt) about the current telecom betrayals in Washington or either tech geeks, or law geeks, or policy wonks. These guys are intense, driven, and cannot, for the life of them, see how anyone could not care as deeply about these matters as they do. (Yes, yes, I do count myself in that number. Apologies.) Of course, that's nuts. Telecom outrage is not a reasonable day-to-day angst for most folks. Like black coffee or bock beer; it's mostly an acquired taste.

What's nice about this article is how undriven it is, yet is still emphatic about what it is we should want and could have--if we'd all just wake up.

AT the top of my wish list for next year's Consumer Electronics Show is this: the introduction of broadband service across the country that is as up to date as that 103-inch flat-screen monitor just introduced by Panasonic. The digital lifestyle I see portrayed so alluringly in ads is not possible when the Internet plumbing in our homes is as pitiful as it is. The broadband carriers that we have today provide service that attains negative perfection: low speeds at high prices.

It gets worse. Now these same carriers - led by Verizon Communications and BellSouth - want to create entirely new categories of fees that risk destroying the anyone-can-publish culture of the Internet. And they are lobbying for legislative protection of their meddling with the Internet content that runs through their pipes. These are not good ideas.

That's about the shape of it. The guys that have put us in a pretty pickle are lobbying to make it worse--much worse. The internet is like the goose that laid the golden egg; it's a mysterious gift that's produced unanticipated wealth. That wealth seems to have sprung up mostly because anybody could trade anything with anybody --information and ideas not only want to be free; they only flourish when they are. The telecoms look at all this wealth (which they did nothing to create) flowing through pipes they own by a bit of peculiarly American history and seem to think that smothering the goose that laid the golden eggs is a good idea. It wasn't in the fairy tale and it won't be in our real world either.

The story goes on to document just how poorly we are doing vis-a-vis countries with an actual broadband policy. (100 megs for 25$? Japan. A Gig for 120? Sweden.) How much freedom to choose we've lost (Recall dialup ISPs, hundreds? Now our effective choices for the new broadband are 0, 1, and 2. Lafayette will join a vanishingly rare elite to have a paltry 3 choices.)

For the geekier among us this story reveals a new thing to worry about. Previously, we'd only had to worry that the providers (AOL, Google, Vonage, Netflix, etc.) would have to pay a surcharge they'd pass on to us to get decent service, and leave the public part of the net with only what's left over. We not have a bit more to worry about: exclusive provision. Where one company in each category is allowed to bid for not just decent service but the right to exclude its competitors. (This idea could only come from a monopoly like the Bells who gravitate to such things easily. Imagine: If you've got BellSouth you can only buy from NetFlix and get fast downloads. Or only search Google quickly, and Vonage? My guess is that they couldn't pay enough to make their service half so good as BellSouth's branded product. None of this is a joke, folks. It's happening now. And our good friend BellSouth is in the forefront:
In an interview, William L. Smith, the chief technology officer at BellSouth, described to me his company's trial offering in West Palm Beach, Fla., last year of a speedy download service for Movielink content. When asked whether BellSouth would offer its special service on an exclusive basis to a particular content site and agree to exclude the sponsor's rivals, he did not hesitate in treating the question as a matter of simply settling on the right price. The N.F.L. and Nascar strike exclusive distribution deals, he said. Why not network carriers?
Companies like Google and Yahoo and everyone from Adobe to Microsoft to Lawrence Lessing and Vince Cerf object. The battle is far from lost but winning will take an aroused public. And this article is a good one to think on and to share with friends.

8 comments:

Anonymous said...

The article makes sense.

"Networks and Perhaps more important, the superabundance of content in the Internet's ecosystem is best explained by its organizing principle of "network neutrality." The phrase refers to the way the Internet welcomes everyone who wishes to post content. Consumers, in turn, enjoy limitless choices. Rather than having network operators select content providers on our behalf - the philosophy of the local cable company - the Internet allows all of us to act as our own network programmers, serving a demographic of just one person.

Today, the network carrier has a minor, entirely neutral role in this system - providing the pipe for the bits that move the last miles to the home. It has no say about where those bits happened to have originated. Any proposed change in its role should be examined carefully, especially if the change entails expanding the carrier's power to pick and choose where bits come from - a power that has the potential to abrogate network neutrality.

The pipe should be netural.

When LUS begins to provide "content" like Bell and the others, will not that make the fiber "non neutral"? Seems to me that their the desire to make money will pull them to the same position as the others providers? Then what will be the difference?
How can we keep Lafayette fiber "netural"?

John said...

Anon,

i think you miss some background that misleads your post.

First you seem to think that the current situation is that the "network carriers" are not currently providing content and are practicing net neutrality. You're wrong. The US' broadband, uniquely in the world, is dominated by the cable companies and they have run closed systems, specially sanctioned by the federal government to not be "common carriers" since before the internet began.

Consequently you've never had the phenomena on cable that you had during the dialup era of many competing ISPs. Cable absolutely dominates the delivery of digital media in the United States in a way that has no parallels in the rest of the world. Cablecos already devote most of their network to making sure that their product runs separately and best over their last mile networks. We're not used to thinking about it that way but we really should rethink. If the cablecos were forced to common carriage over IP we'd all have more bandwidth than we could immediately use.

The cable pipe is not neutral, never has been, and probaly never will be.They favor their own product and assure the delivery of their content at all costs. You get "best effort" on a part of what they have left over.

The current argument over net neutrality involves only the hunger of the telecos for the same deal the cablecos are already getting. They want to abandon the common carriage and interconnect rules they agreed to when they wanted to be a rate-guaranteed monopoly (google up Theodore Vail). Now, without giving up the resources which that monopoly gave them, they want to change the terms of the deal.

LUS has to operate in a competitive environment which includes these two entities and inside a regulatory regime which considers all this "natural." LUS would be abandoning a tried and true, remarkably successful business plan pioneered by the incumbents and designed for the peculiar American situation were it to choose to do less than compete head to head.

I try and be pragmatic. And here's what I think is the best possible outcome in an imperfect world: LUS builds a publicly-owned networks and funds it purely off the subscriptions of those who desire the service. That will involve, at least initially, competing with the incumbent providers directly--matching their services one for one. People like you anon (I wish you'd use your name) and like many of the supporters of the LUS referendum have pushed LUS to guarantee that IP services will be open. That's the same sort of net neutrality that we are hoping for from the incumbents (and aren't likely to get). And LUS has given us that promise. With LUS we actually have a practical way to enforce such promises. We know these guys and can argue with them at lunch or at a council meeting and actually expect to be heard. If we care enough we can start a citizens group and make sure that net neutrality is enforced in our little town. I'd be all for it. I'd help. (What I am not willing to do is to hand over all the advantages to the private competition and impose special disabilities on our public utility.)

Anonymous said...

I think I understand what you are saying. But I am not concerned about TV programing. Here is my problem with the hope you express for the future of LUS fiber. It's not open now. I recently price internet for my office, 1.2 megs was over $550 per month and I must use their designated retailer. With Cox I am paying $170 per month for 3 megs down and .5 megs up. That is not what I thought we were voting for. Now understand, I support LUS running fiber to bring competition. What am I missing?

John said...

Anono,

What happend to the topic at hand? We were talking about net neutrality and pipes and suddenly there is some other unrelated issue?

As far as wholesale one-off pricing via bandwidth resellers it has nothing at all to do with "what we were voting for." This wholesale model has real problems, as LUS discovered. LUS has to rely on third parties to resell their bandwidth...something these third parties are only interested in if they involve other, retail, high-profit services sold on top of the commodified bandwidth. You are experiencing some of the problems with the wholesale model.

The current model actually is a totally open wholesale model. Any wholesaler can apply to qualify and they can resell bandwidth and run whatever services seem profitable. As you can see it's not a cure-all. The retail model, with LUS selling services directly will echo the business model of the incumbents and will be less open in the non-IP areas.

What you seem to be missing, and I have to say the mistake seems disingenous to me, is that the retail model is not the wholesale model and even if it were business rates are not retail rates. (Cox sells my residence higher nominal bandwidth than your business is getting from them for much less.)

Anonymous said...

Didn't realize I was getting of the point. I really thought cost and access to internet was the subject. I assumed retail means direct sales to any consumer, business and residental. I didn't realize you define it differently for residence and business. But, be that as it may. Lets try to get on the same page. LUS has the right to sell internet connectivity directly to the consumer, business or residence. The law says it and we approved it. So there is nothing stopping LUS from selling directly to a business. Is that right? So why doesn't LUS sell their bandwith directly to my business. They quoted $85 a month for the triple play and I would pay that for just internet. Actually, I would gladly pay LUS the same price cox charges, even a little more, just to support it. Then you write "The retail model, with LUS selling services directly will echo the business model of the incumbents...". Now I really don't understand. If LUS is going to the have the same "business model as the incumbants", and their prices are higher now, what is the point. And if their prices to business are 3 times higher then cox now, please explain to me, and try to make it simiple, why should we be ok with that model? I'm not trying to out tpye you, you will always beat me. UNCLE. It's this simple, internet through LUS was over $550 per month for 1.2 megs up and down, Cox was $180 per month for 3 megs down, .5 megs up. Please explain why this is a good plan? And I don't care about TV.

John said...

Anono Person,

Re: the same page:

I think the problem here is more of the same problem with mistaken assumptions, to wit, you say: "there is nothing stopping LUS from selling directly to a business."

LUS does not have the right to sell directly to anyone yet. Until all the legalities are cleared it'd be irresponsible to open yourself to lawsuit. (We've talked about BellSouth's lawsuit happiness elsewhere. I'd think you'd realize that taking you up on your suggestion would only invite more legal foolishness.)

Poor Assumption #2: "They (LUS) quoted $85 a month for the triple play and I would pay that for just internet."

As you have already discovered with Cox, business and residential rates are entirely different creatures. LUS has said that, like Cox or BellSouth, its business rates will be different from its residential rates for the same speed connection. This is easy to understand; you may not like it, I may not like it. But it is the common practice of all the carriers.

Poor Assumption #3: "If LUS is going to the have the same "business model as the incumbants", and their prices are higher now, what is the point."

You are continuing to pretend that the current wholesale model of LUS, which is radically different from the current retail model of the incumbents, has anything to do with the prices LUS will charge when it moves to the retail model. Currently LUS DOES NOT SET the rate you pay their wholesale resellers. Their wholesale retailers do. They buy access from LUS and resell to businesses. What they really want to sell is advanced, highly managed, recurring, cash-generating services, (e.g. highly sophisticated VOIP systems for multiple locations) not the simple internet connect that is all that you apparently want. In their mind going to all the trouble of setting up a one-off, specialty connection for your paltry business desires is not worth it unless they can really charge you. Understand that, in their defense, they are "boutique" businesses selling speciality services to those that "appreciate" what they are offering. You hope that they will pretend to be the equivalent of Sam's Club just for you. That's not practical for them. -- The Sam's Club model of selling to many at a low price in order to make the necessary profit off quantity is not the business they're in. It is the business that Cox and BellSouth are in and the business that LUS intends to enter.

Until you untangle your confusion between the current, wholesale "boutique" model of current LUS retailers (NOT LUS) and the Sam's Club model of a mass market retailer you will continue to lead yourself into confusion on this issue.

Isn't this anono business just absurd at this point?

Anonymous said...

1) I called someone I know at LUS and they said their is no legal reason they can't sell directly. But you say they are don't want lawsuits. Got it.

2) OK, so LUS will price business different from residence. Same as the incumbants. Only for small busines cox is 1/3 the cost of LUS. Got it.

3) So the LUS fiber thing will not be of use to "paltry business" like mine who want a internet connection. Got it.

4) Wholesale/retail. Either way, LUS is not interested in delivery of internet services to small business, because " not worth it unless they can really charge you". But the other are. Got it.

As to the anono business. You really have 2 choices. 1) remove it from the choice you provide for comments, or 2) don't answer.

John said...

You say:
1) I called someone I know at LUS and they said their is no legal reason they can't sell directly. But you say they are don't want lawsuits. Got it.

I say: Not what I've heard, I thought that to sell retail munis had to go through all sortsa hoops. You know, that pesky "local government (un)fair competition" law. That was the point.

You Say: 2) OK, so LUS will price business different from residence. Same as the incumbants. Only for small busines cox is 1/3 the cost of LUS. Got it.

I say: Now you are being deliberately obtuse. LUS IS NOT selling you broadband at all right now. I've explained that patiently. And the resellers that are selling LUS bandwidth are not really in the market that you want to buy in. BellSouth and Cox are currently. LUS will be when its plan goes through. This is not all that hard to understand.

You say: 3) So the LUS fiber thing will not be of use to "paltry business" like mine who want a internet connection. Got it.

I say: You don't read very deeply. Neither I nor LUS called your business paltry. I was attributing that attitude to LUS resellers...and then patiently explained why that was an understandable position for them to take. LUS will be your best choice as it will be mine when it comes out. I think you know that. But since you only post anonymously you'll never have to eat your words. Pretty convenient.

You Say: 4) Wholesale/retail. Either way, LUS is not interested in delivery of internet services to small business, because " not worth it unless they can really charge you". But the other are. Got it.

I say: You're not listening. To repeat once again: LUS is not selling you anything right now. Get that fixed in your head. LUS will be happy to sell to you as a commercial concern at the same 20% discount that they have promised residential customers when they do start offering services directly. They've said so with their name attached. You can hold them to it or accuse them of deceiving you. They're likely to stand behind their word since their reputation depends on it. --Unlike one party to this conversation who can say anything, and refuse to even acknowledge the true situation when it is patiently outlined without having any risk to his reputation.

You say: As to the anono business. You really have 2 choices. 1) remove it from the choice you provide for comments, or 2) don't answer.

I say: I have at least one more choice: I can point out, insistently, that people who express unsubstantiated opinions and make wild claims with little visible foundation in fact without risking their own "good" names are revealing how weak they believe their arguments are. I can point that out whenever it's appropriate. As I have. As I will.