Sunday, June 11, 2006

Our Korean Future?

Here's three tools for kicking back and thinking about the future.
  • The Future Boy Column in Business 2.0 this week focuses on the South Korea's status as the place to go to look at the consequences of providing a whole population with cheap, fast broadband. The South Koreans are integrating connectivity into their culture in fascinating and suggestive ways--ways that the author suggests make Korea's future dominance in the area probable.
  • In an complementary essay Susan Crawford uses the Korean (and Japanese experience) as an excuse for focusing on getting more competition in the US market. There are only a few basic choices and each has its problems.
(Here's a caveat on the first two stories: both authors as Americans find it easy to take a look at a desirable situation that has any element of competition in it and identify competition as the cause of the desirable situation--and that's enough to "be" the answer. I suspect Koreans wouldn't make that mistake. The most striking difference between the American and Korean experiences is that the Koreans government funded a huge modern backbone, heavily subsidized companies building last mile solutions, and pushed most of its competition by regulatory means. Korean competition is based on something like the US CLEC model (which the FCC has abandoned)--the network owners are forced to sell their access at favorable wholesale rates to third-party providers. The Koreans had a clear goal: get high speed bandwidth to everyone--and they ruthlessly, without our regard for ideology, did what was necessary to make that happen.)
  • The third story, an older one from Wired, takes a less economic tack. It focuses on cultural issues and cultural assumptions. In it the story is that the South Koreans have figured out that big broadband is most readily driven by social interaction; not by the solitary, couch-potato vision of consumption that drives the dreams of American providers. From the article:
    "South Korea's broadband commons challenges North American assumptions about what bandwidth is for and why it's relevant. In the US, cable, telephone, and media companies spin visions of set-top boxes and online jukeboxes, trying to "leverage content" and turn old archives into new media streams. There is a profound fear of empowering consumers to share media in a self-organizing way on a mass scale. Yet this is precisely what makes South Korea the broadband capital of the world. It's not a futuristic fantasy that caters to alienated couch potatoes; it's a present-day reality that meets the needs of a culture of joiners a place where physical and virtual are not mutually exclusive categories ..."
All worth thinking about. What will shape Lafayette's broadband future? How will economics and the unusual economic structure we will have hear interact with our unique cultures?

2 comments:

Anonymous said...

I will point out again that the 1st step in South Korea's advancement in telecommunications was to end government role as a "provider" of content and retail service provicer in telecommunications. They adopted the "open" system.

Tim

John said...

:-) which gives me the opportunity to repeat my earlier response to your position that South Korea's experience in building out a huge infrastructure at govt. expense was a good idea:

While I like--and actually think ideal--the idea that the national government would do the same for the internet that it did for the interstate highway system infrastructure I do think there are problems with the way you phrase things here.

The models in Asia are not, by our standards, "privatization" models. The profit-taking companies are huge, closely integrated with the government and very much "directed" by government policy and massive, targeted investment to foster those policies. Think the old AT&T on steroids with an actual national broadband policy to fulfill.

Again, I think your suggestion makes sense as far as it goes. It would be easy and relatively cheap for Govt to provide a huge cheap, fast publicly-owned backbone with utterly open access (and this would in a stroke solve the net neutrality debate). Its not being discussed because only dreamers like you and I think the phone and cable lobbies would allow it.

But even with huge changes in the admin and congress that allowed the feds to displace the under-performing incumbents the cost-prohibitive part would be the local last mile. If public policy encouraged it and laws permitted I think most communities would shoulder this burden themselves and leave it open as you describe.

But the overall solution would still include muni investment.

For my money local muni investment can have only two logical outcomes:

1) in the standard model of competition it will spur price breaks and more/better services

2) if in fact your fears that it will in our special case stifle instead of stimulate competition are true that can only mean that wired telecom is a special case. I think that might be true. I'd not be surprised if fiber turned out to be what economists call a "natural monopoly" -- the classic sign of that is that only one provider survives. (This has basically been true in both phone and cable (and electricity) for most of their wireline history.) In that case--monopoly!--the public would be better off owning it. This is the classic rationale for public utilities of all kinds.

In both cases, taken as a whole, the entry of muni competition is a good thing. --especially if the muni is the first to field FTTH.