Broadband: Don’t Get Fooled Again

On the eve of the passing of the massive “economic stimulus package” (I was really hoping it was going to be more than 1 trillion so Dr. Evil could start saying “1 trillion dollars”) we are hearing “broadband broadband broadband.” 

I’m going to be spending the day tomorrow at the Silicon Flatirons Conference titled The Digital Broadband Migration: Imagining the Internet’s Future and I’m speaking at 9:45 on the panel titled Overview Panel: The Internet’s Challenge to Policymakers.  It’s clear that I’ve been set up as my co-panelists are:

  • Kathryn C. Brown, SVP of Policy, Verizon, Former Chief of Staff FCC
  • Kathleen O’Brien Ham, Vice President of Federal Regulatory Affairs, T-Mobile
  • Dale Hatfield, Adjunct Professor, University of Colorado, Former Chief Engineer Federal Communications Commission
  • William Kovacic, Chairman, Federal Trade Commission
  • Bryan Tramont, Silicon Flatirons Senior Adjunct Fellow, University of Colorado, Partner, Wilkinson Barker Knauer, LLP

I guess I’m the dude that gets to say “telcos – please get out of the way.”  Coincidentally, as I was catching up on my email this morning, I ran into a note from Bob Frankston (of Visicalc fame) pointing in response to this conference pointing me to his post titled The Broadband Internet?  It’s a brilliant post that is right on the money.  The punch line:

“Today people know that they want more “Internet” so they ask for more of the same by saying “broadband”. Our future lies in universal connectivity and simplicity. We can do better than living in the past glory of telecommunication.”

I really hope “Broadband” and “Internet” don’t get conflated.  Our friendly neighborhood policy makers need to make sure they know the difference.

  • ensemble

    Brad,

    For your readers review and consideration, (as well as those that might be attending the seminar), below are some links to some "historical" background information on the past "efforts" (sic) made by the telcos to deliver "broadband" services to America:

    (1) A Rant. All 406 Pages of It.
    By DAN MITCHELL – New York Times – Published: February 11, 2006
    A NEW e-book tells a "sordid story" of business fraud, according to one reviewer. The book's author says it is "the largest fraud case in American history."

    http://www.nytimes.com/2006/02/11/technology/11on

    (2) Did the Bells Rip Off America? and Is There An Alternative?
    An overview at the Wetmachine blog about Bruce Kushnick's book that meticulously documents how the incumbent telcos have used the promise of broadband to win subsidies and regulatory goodies.

    http://www.wetmachine.com/totsf/item/424

    (3) And Bruce Kushnick's Web-Site TeleTruth:
    Alliance for Customers’ Telecommunications & Broadband Rights

    http://www.teletruth.org/

    Suggestion:

    In my opinion, what is needed is the creation of more OSPN, (Open Service Provider Networks) where "shared" physical broadband infrastructures are created and funded in a collaborative fashion, while the differentiation or value-added services that define the difference between the providers (like Internet access, VOIP, or Enterprise Storage services) are divided-up logically through "virtual broadband beltways". These IP-based "channels" leverage MAN to WAN and LAN to PAN fixed and wireless broadband architectures, VLAN's, and Secure Tunneling Technology to "Virtualize" the available packet processing power across different providers to deliver broadband services or "connections" to the "cloud" for users instead of broadband "circuits" that are isolated islands of connectivity that just extend the failed teleco billing models of the past.

  • http://intensedebate.com/people/Chip_Schooler Chip_Schooler

    This reminds me of when the web took off in the mid 90’s. People would say to me “I am on the Internet.” They meant that they used a single application (at that time the world wide web). They had no comprehension of the underlying infrastructure, nor, more importantly did they care. I mentioned this because I think it is still true today – most Internet users do not understand the infrastructure, they just want their applications ( for example browser-based applications: such as YouTube, or Facebook or client based applications such as Yahoo Messenger or Skype) to run faster (and be free).

    At the infrastructure level, the struggle has always been in defining a viable business model and allocating the costs. Dial-up Internet access had a major negative impact on the telco’s because it vastly exceeded the telco’s CO connect time assumptions but did not provide the telco’s with any additional revenue. This is where the telco’s learned their lesson about controlling the Internet delivery infrastructure.

    In order to clearly define Internet policy, lets focus the discussion on delivery infrastructure which, simply stated, consist of an IP address, TLD service, and a physical connection. (All other capabilities, from email to web to Skype, are services made up of bits that come and go via this infrastructure. Further, there is no technical requirement for an infrastructure provider to offer a data service or for a service provider to maintain an infrastructure.) Also, to help simplify, let’s separate the last mile component of the infrastructure from the backbone.

    The goals of the last mile infrastructure are:
    •Deliver bits faster and cheaper than was delivered in a preceding time period.
    •To be reliable
    •To be ubiquitous
    •To have a fixed price to the consumer

    Ironically, this capability is what the original Internet Service Provider delivered. They took existing telco voice infrastructure and added value by getting bits to the customer. They provided speed by deploying the latest modem technology and by faster and better connections to the backbone. (The telco’s, along with everyone else from Bechtel to Southern Pacific, were in the backbone business laying fiber.) Only when equipment was needed in the CO such as DSLAMs did the telco’s (along with the cable companies) really get into the end user business. Of course, the CLECs help drive this transition.

    Given the requirements stated above, what are some possible viable business models?
    •Government provided:
    oSince the focus is on the last mile, this would have to be local governments
    oPayment is via taxes or user fees
    •Last mile infrastructure-only companies
    oWhat is the competition they keeps the services viable and up-to-date?
    oWould need a guaranteed return to encourage investment
    •Regulation
    oA revised version of the 1986 Telecommunications Act?
    oCould require the divestiture of the infrastructure or a creation of regulated and non-regulated services by a telco.

    The intensity of the debate is driven by the fact that while large vested interests want a deregulated market, it not possible. A market model is not viable because the market is fettered by the simple fact that there is a huge barrier to entry, physical access. And, vertical integration (which is the telco’s model) is not effective either. Does anyone want five infrastructure companies running wires to their house. Do we want the telco’s completely controlling access to content that may compete with their content?

    Due to the size and scale of the U.S. consumer market, a mixture of the three approaches will be needed to reach the goals in a reasonable time frame. Trying to select single policy would take far too long to put into place. To be clear, the position of this blog is regulated last mile infrastructure. The backbone and content services markets are both unfettered and should be determined by a market model. With a level infrastructure playing field, the backbone and content competitive intensity would deliver benefit to consumers even faster than those received in recent history.

  • http://intensedebate.com/people/Chip_Schooler Chip_Schooler

    This reminds me of when the web took off in the mid 90’s. People would say to me “I am on the Internet.” They meant that they used a single application (at that time the world wide web). They had no comprehension of the underlying infrastructure, nor, more importantly did they care. I mentioned this because I think it is still true today – most Internet users do not understand the infrastructure, they just want their applications ( for example browser-based applications: such as YouTube, or Facebook or client based applications such as Yahoo Messenger or Skype) to run faster (and be free).

    At the infrastructure level, the struggle has always been in defining a viable business model and allocating the costs. Dial-up Internet access had a major negative impact on the telco’s because it vastly exceeded the telco’s CO connect time assumptions but did not provide the telco’s with any additional revenue. This is where the telco’s learned their lesson about controlling the Internet delivery infrastructure.

    In order to clearly define Internet policy, lets focus the discussion on delivery infrastructure which, simply stated, consist of an IP address, TLD service, and a physical connection. (All other capabilities, from email to web to Skype, are services made up of bits that come and go via this infrastructure. Further, there is no technical requirement for an infrastructure provider to offer a data service or for a service provider to maintain an infrastructure.) Also, to help simplify, let’s separate the last mile component of the infrastructure from the backbone.

    The goals of the last mile infrastructure are:
    •Deliver bits faster and cheaper than was delivered in a preceding time period.
    •To be reliable
    •To be ubiquitous
    •To have a fixed price to the consumer

    Ironically, this capability is what the original Internet Service Provider delivered. They took existing telco voice infrastructure and added value by getting bits to the customer. They provided speed by deploying the latest modem technology and by faster and better connections to the backbone. (The telco’s, along with everyone else from Bechtel to Southern Pacific, were in the backbone business laying fiber.) Only when equipment was needed in the CO such as DSLAMs did the telco’s (along with the cable companies) really get into the end user business. Of course, the CLECs help drive this transition.

    Given the requirements stated above, what are some possible viable business models?
    •Government provided:
    oSince the focus is on the last mile, this would have to be local governments
    oPayment is via taxes or user fees
    •Last mile infrastructure-only companies
    oWhat is the competition they keeps the services viable and up-to-date?
    oWould need a guaranteed return to encourage investment
    •Regulation
    oA revised version of the 1986 Telecommunications Act?
    oCould require the divestiture of the infrastructure or a creation of regulated and non-regulated services by a telco.

    The intensity of the debate is driven by the fact that while large vested interests want a deregulated market, it not possible. A market model is not viable because the market is fettered by the simple fact that there is a huge barrier to entry, physical access. And, vertical integration (which is the telco’s model) is not effective either. Does anyone want five infrastructure companies running wires to their house. Do we want the telco’s completely controlling access to content that may compete with their content?

    Due to the size and scale of the U.S. consumer market, a mixture of the three approaches will be needed to reach the goals in a reasonable time frame. Trying to select single policy would take far too long to put into place. To be clear, the position of this blog is regulated last mile infrastructure. The backbone and content services markets are both unfettered and should be determined by a market model. With a level infrastructure playing field, the backbone and content competitive intensity would deliver benefit to consumers even faster than those received in recent history.

  • Maricela Morales

    Very valuable post. Txs. for the info about Bob's post.

  • James Mitchell

    I live in Back Bay, one of the most exclusive areas in Boston, a supposed high tech center. We cannot get FIOS nor as far as I can tell does Verizon have any plans in the next few years to offer FIOS in Back Bay. I should move to some obscure country in Minnesota, which will probably have it first.

    James Mitchell
    jmitchell@kensingtonllc.com

  • NealMcB

    We decided to use sfdbm as a blog tag, and #sfdbm on twitter

  • John May

    I think that they really meant "We need more cowbell". Knock em dead!

  • http://www.brettglass.com/FCC/remarks.html Brett Glass

    Brad: We need to tell not only the telcos but also government to "get out of the way." One of the scariest things I heard at the Silicon Flatirons conference was the assertion that the Internet should be regulated like a utility! VCs justifiably avoid investing in heavily regulated industries, because regulation stifles innovation, deters market entry, and gives large, entrenched players great advantages over smaller and more innovative ones.

    You were sitting, that morning, in a room that was mostly full of lawyers with dollar signs in their eyes; they want to make money by representing companies (especially big ones, because they pay more) in an endless, complex, stifling regulatory process. This is why they are so gung-ho about "network neutrality." The term itself is so poorly defined, and it would lead to such utterly complex and stifling regulation, that they'll have thousands and thousands of billable hours. Lawyers like that. But those of us who want to innovate will probably have to quit the business and find some other area in which to be innovative…. There won't be any wiggle room at all to define an innovative service or business plan. I urge you to fight "network neutrality" and its regulatory agenda with all your might. Not only will it stifle innovation among Internet providers; it will also kill opportunities to provide innovative equipment and software for networking.

  • Phil Weiser

    There should be a live webcast at http://www.nextgenweb.org/ngw-events/the-digital-… In any event, we will post the video before too long at http://itp.colorado.edu/itp-content/sftp-conferen