Wednesday, February 08, 2006

Copyright is Dead. Is the Network Stranglehold, too?

An opinion piece by Larry Downes in the January edition of CIO Insight makes the argument that copyright is dead. He bases his opinion not on legal decisions but on the way large segments of the American population have opted to ignore the law.

Downes is the Associate Dean of the University of California @ Berkeley School of Information Management and Systems and the author of Unleashing the Killer App and The Strategy Machine. He says copyright was killed, ironically, as a result of the attempts of the entertainment industry to strengthen it.

Here's the crux of his argument in three brief paragraphs:
A few statistics have been bothering me for a while. Here's one: 72 percent of Americans between 18 and 29 years old who use the Internet say "they do not care whether the music they download onto their computers is copyrighted or not."

That's from a survey performed by the Pew Internet and American Life Project in July of 2003. Here are two more: Just a few months ago, as the Supreme Court was getting ready to hear arguments in the Grokster file-sharing case, the Pew project found that over 7 million adults had already copied a file from someone else's iPod or other MP3 device, moving beyond the embattled peer-to-peer networks. And as of July of this year, another Pew survey found that nearly 90 percent of all teenagers were active Internet users.
Then this:
Fueling the backlash against the entertainment industry is an emerging ideology among young consumers of collaboration, free culture, open source and bartering value for value in an economy of information. Add to that the long-standing tolerance by the content industries of home taping and other limited, technical copyright violations, and we have a generation of new consumers who don't care what the law says, or even what the Supreme Court says. The law simply doesn't reflect reality anymore. Game over.
It is this emerging ideology and a backlash against the network operating giants (the Bells and the cable companies) that has the potential to undermine the efforts by these companies to erect toll gates at all levels of networks and their gateways.

There is, as has been amply commented upon here, a pretty intense battle being waged in Congress, at the FCC, and to a lesser extent in the media about the power grab of the network operators and the resistance that has sparked from content providers.

One relevant, but thus far unreported aspect of this issue is that the Bells, at least, are actually seeking to position themselves in position to tax their competitors. That is, the Bells all view themselves as becoming content providers. Yet, all their tiered network/walled garden talk focuses on charging other content providers for the kind of network performance that, you can bet your last dollar, they are going to provide their own services as a matter of course.

No doubt they'll have some video on demand service or partner with some companies on search or music, or whatever. A term of the agreement would be guaranteed access to the fastest, sweetest spots in the network. While the specific deals might be vague now, what is certain is that others, not part of those deals would be expected to pay the going freight on network access.

The Bells have been here before.

It was when they were required to open their networks to Competitive Local Exchange Carriers (CLECs), but particularly CLEC DSL providers. Many times the CLECs were attempting to drive new services over the network that the Bells had not yet developed. As a result, the Bells would routinely sabotage efforts by the CLECs to deliver those services over their networks. Once the Bells actually had services which matched the CLECs, things did not improve; in fact, they got worse. The Bells were able to undermine the service reliability of CLECs (and thus their very businesses) precisely because they owned the network they were charging the CLECs to use.

So, now the Bells are claiming that they want to charge their competitors again as a means of paying for the shiny new networks they are building in some parts of their respective service areas.

It's 'deja vu all over again.'

So, how could this ideology of "collaboration, free culture, open source and bartering value for value in an economy of information" undermine the great network power grab of the Bells? I think the answer is in two places: one, the power of the ideology itself; and, two, the great fiber network busts of the turn of the 21st Century.

First, the ideology isn't just confined to college students. There are a lot of young, wealthy, free-culture oriented entrepreneurs who have no allegiance to the phone companies, no respect for them, and who might well rebel at the limits that Bells are salivating to put on networks.

Second, those entrepreneurs could still buy up national fiber networks for pennies on the dollar as a result of the great fiber network busts of the first part of this decade. Enron, Global Crossing, 360 Networks, XO, Williams, and others sank 10s of thousands of miles of fiber into rights of ways across the country in the 1990s. Just about all of that fiber led to the largest markets in the country, but passed plenty of mid- and small-sized markets on the way.

A Google, Microsoft, or other company or even individuals could scarf up fully operational networks whole and circumvent the backbones of the Bells (now owned primarily by AT&T, Verizon and Qwest).

Last mile? Municipally owned networks! Co-0p networks. Utility-owned networks. Fiber and wireless. IP over power line. Suddenly, there are many viable paths to the consumer that by-pass the Bell's Maginot Line of tiered, tarriffed traffic.

Like the entertainment industry Downes depicts in his column, the Bells and their (thus far) more discreet brethren in the cable industry are making a serious blunder by making this grab. Their efforts of control run smack into the face of what people want and how content companies want to respond to those needs.

It's an untenable position. The hierarchy-flattening revolution of Internet Protocol networks is in full swing. The network companies behave like we live in a public switched network world. They might, but the world, increasingly, doesn't.

This will probably not end well for them.

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