FCC: Moving Beyond Neutrality.

Tuesday, February 26, 2008
Updated: Apr 15, 2008

The FCC is treating the challenge of Network Neutrality as an issue of network management. Today's debate echoes the 1990's debate of what to do about the dialup modems that were clogging up the phone network. The crisis was real in the sense that modems did tie up network resources. Yet there wasn't a crisis at all because there was no real scarcity. The scarcity arose entirely from policy decisions and it disappeared when the carriers started to use their native packet transport for Internet packets.

The modem crisis wasn't a problem of network management. There was simply a mismatch between the Internet and the end-to-end constraint which means that services are defined outside the network. The traditional telecommunications industry is about providing services in the same manner that railroads sell transport as a service.

If users can create their own solutions you cannot charge them an arbitrarily high price for services and you cannot charge them a high price for transport when there are many other choices available. Thanks to the end-to-end constraint we've learned how to create solutions without depending on a "high quality" network. We just need abundant capacity. If the carriers cannot charge for services or better network facilities they have a problem paying for the transport.

This cannot be solved by better network management any more than we can fund highways by selling rides. The solution is to fund roads as infrastructure. This is true for the facilities we use to do our networking – they are infrastructure though they don’t share the physical problems of roads and cost very little. In fact, by working around the limitations of the carriers' network we've become adept at making very effective use of the existing facilities and thus the effective cost is zero while we reduce other expenses by taking advantage of a common infrastructure.

Today I can watch a high definition TV program as a 2Mbps stream – a small portion of the broadband capacity available in many cities. And we don't even need that much capacity. Once you are forced to be creative you realize that very little of what we watch on television is live. We can transfer the video bits in the background so they are available when we choose to watch. Or we can choose to watch at lower resolution. This flexibility is entirely outside the network!

Yet we mustn't let our excitement about high speed network connections make us forget the importance of being able to make connections at all. We may view the E911 emergency phone service as important but you can only be connected if you have a landline phone or have a billing relationship with a cellular carrier. You have few options to create your own solutions and can't take advantage of the copious connectivity we already have available. We already have essentially 100% Wi-Fi coverage in our cities and it's easy to extend the coverage. Yet we are denied use of this abundance because we are forced into the confines century old business models that assume we must buy services and cannot create our own solutions!

In a crisis like 9/11 and Katrina we had to wait for phone companies to solve problems rather than being able take advantage of what we've learned from the Internet. The stock market was closed for a week while we waited for phone wires to be spliced.

These are not network management issues – they are business model issues embedded deeply within the regulatory framework that defines the FCC. Were it not for these regulations the marketplace would have long taken advantage of the abundance we already have in our copper, fiber and radios

We avail ourselves of the abundant capacity we already have by operating our infrastructure to maximize capacity. Today the carriers create value through scarcity. It's the same dilemma we'd face if we tried to operate roads as profit centers. In fact, that was once the norm when men with pikes would charge for using their private roads. This is akin to a business trying to maximize the profit of the office copiers even if made it too expensive to conduct business.

The modem crisis faded away because the carriers couldn't ban modems (thanks to the legacy of railroads – common carriage laws). We used modems because of an accident of history – in the US local calls over analog phone lines didn't incur a per-minute charge. The lack of unmeasured usage in Europe may have given the US a decisive advantage in embracing the Internet. It was about pricing – Europe was ahead in adopting digital technology and, in France everyone already had a computer terminal for Minitel – a national online service deployed in the 1980's. In the US the technically more advanced digital services failed to gain acceptance because they were tied to usage-based pricing.

Fortunately we didn't need to argue about economic models –we had a visceral response. We weren't going to give up what we had. With cable modems, DSL and other technologies the carriers made a small portion of their capacity available.

By side-stepping the "modem crisis' we failed to learn. We didn't address the root cause of the problem – the conflict between funding the network by selling services and our ability to create our own solutions. The fact that DSL has remained essentially stagnant since 1987 is a good example of what happens when a dynamic marketplace meets a Regulatorium. Compare that with networking in our homes that can now go at a gigabit per second without any ongoing costs.

As much as the carriers can keep offering solutions the one thing that they can't do is cede control to people and communities to create their own solutions. It would be like asking railroads to extend their business model to people driving their own cars. It doesn't work. This is why we fund roads as infrastructure. We do need to be careful about metaphors – we're not talking about expensive roads. In fact we're talking about enabling technology that will reduce costs – even to the point of reducing taxes. This is not about a free lunch – it's about taking advantage of what we already have.

We avoided confronting our naïve assumptions. We don't expect to pay for an email message yet we accept the idea of paying for phone calls – as if phone bits were special.

Paradigm shifts are hard. We think of the Internet as another network technology. But that's just something we do – it's really about our ability to create our own solutions including making connections without depending on any particular network. We fail to see that a phone call is just one thing we do with connectivity and not a service we have to pay for. We keep building special infrastructure for each purpose and redundant broadband facilities without recognizing that bits are bits and we'd have abundance if we didn't work so hard to keep them in billable paths.

Accountants use the term "fungible" for commodities like kernels of corn – you just care about how many not which is which. Bits are the ultimate fungible commodity – why do we put so much costly effort into pretending that video bits, and email bits and wireless bits are so special?

It's not at all about the money – it's about being empowered to create our own solutions. At a time when we are worried about the economy and our safety what could be more foolish than to leave ourselves dependent upon third parties whose only interest is keeping us dependent upon them and in creating value through scarcity.

The FCC was created during the depression when we feared the marketplace and had to deal with the technical problems of analog signaling. Simple techniques like dedicated wires and assigning frequencies for wireless communications allowed us to exchange messages between two points and it was hard to imagine anything better. We accepted the need to compromise the First Amendment in order to give the FRC (the Federal Radio Commission) the ability to dole out portions of a fixed pie.

Today we know that scarcity was not intrinsic. We have many examples of creating capacity. Digital technology allows us to treat any transport as just another way to exchange bits. Even if spectrum allocation made sense why do we need to reach beyond the nearest access point? A milliwatts radio can reach the world via the Internet whereas a traditional megawatt radio antenna can cover a small area and only if no one else is trying to talk (transmit) in the same frequency at the same time. If the scarcity is not real then why do we continue to require a license to speak?

With the service delivery model inherent in today's broadband we face the same problem – we cannot communicate unless it is profitable to a service provider. No wonder a city like Newton Ma has three broadband providers that provide no more capability than one but at three times the cost. Yet our ability to communicate locally is limited by the carriers' arbitrary policies.

If my neighbor and I have different providers we can't communicate directly but instead must pass through a carriers peering point and thus create a transfer cost. Why aren't these broadband networks connected locally? This is not a network management problem – this is a business model problem. It is a problem created by the FCC continuing to think in terms of services and not in terms of infrastructure.

You can't manage a profit center into being infrastructure. You have to step back and recognize that the FCC itself is the problem in forcing us to stick with policy defined in 1934. We need to take a fresh look at the promises – we need a sunshine law to revisit the premises now that we understand they are false: that communications is a service, that scarcity is intrinsic and that we need a national monopoly to assure that we can interconnect. The Internet is a compelling counter-example

The industry itself understands that there is a problem. For the short term it can prevent abundance but users are becoming too good at creating their own solutions. Yet we continue to worry about who will pay for infrastructure and we try to incent the carriers to work against their own self interest by providing more capacity. Yet we already have abundant capacity but don't take advantage of it. A small portion of a single broadband delivery pipe gives us enough to do TV 2 megabits out of a gigabit pipe is enough for HD.

More important, our communities haven't begun to take advantage of our infrastructure because they are still thinking in terms of services and they pay for redundant infrastructure. Why do they pay for phone calls? Why do we have separate systems for each emergency service – thus failing to learn the importance of being able to communicate among service providers and the importance of giving all of us the ability to help? Why do we have a community access TV channel rather than being able to take advantage of the Internet for more than a web site? It should be the fabric that connects the community and communities.

When people ask for more broadband they are not asking for more services – they are asking for more ability to create their own solutions. They are betrayed by an FCC that hears their requests but translates it into "more services" and thus deprives them of the ability to create their own solutions.

I would go on but more important is that the telecommunications industry knows it is in crisis and has known this for decades.

In 1982 ATT understood that its business model was under threat and accepted divestiture. But it couldn't get away from being in the business of selling services so only postponed the inevitable. What divestiture did prove is that the carriers can make major changes when they see it as in their interest.

Today we understand how to take advantage of local infrastructure. Divestiture II will be based on what we've learned – we will own our local infrastructure and thus will have every incentive to maximize the capability and create abundance. Anyone and everyone will have the opportunity to create services – we won't be limited by the carriers' imagination nor their need to prevent us from competing with them.

The value of the telecommunications industry is small compared with the value that we will get. The network itself has no intrinsic value – the value comes from what we do with it. Once we are not limited by the carriers the economy will get a much-needed boost. And we will also be safer – able to look at our own needs whether though medical monitoring or responding to unanticipated events. It's bad enough that we can't respond to disasters. We are also unable to respond to opportunities because we must limit ourselves to what profits carriers.

What makes this tragic is that the carriers no longer serve a necessary purpose. Local connectivity is infrastructure. What is the purpose of telephone company now that a telephone call is just something we do ourselves over IP?

We have a choice of managing the network just as we have for the last century or we can recognize that this is not a problem of network management.

The FCC can play a very positive role in working to remove the impediments to local ownership. For example, cable franchising rules make it difficult to get popular content without a cable operator having its own infrastructure.

This means that the community-owned infrastructure must compete with the private infrastructure that controls access to specific content. Such control is an extreme violation of neutrality and puts communities in a difficult position because a community-owned infrastructure is now an additional expense. Paying for "cable" is part of what gave rise to the misguided notion that connectivity is expensive – broadband is expensive because it includes the price of the services. Basic connectivity is very inexpensive.

We also need to assure that we don’t simply create local phone companies, even if community owned, which provide services rather than infrastructure. I call this the muni-bell model – and it is a failed idea. The local bells rejoined to form larger companies and the attempts to start afresh with municipal wireless service providers have not succeeded.

We shouldn't lose site of the purpose of networks and networking. The networks have no value in themselves – the value comes from our use of networks. The current service-provider model limits our ability to take advantage of what we have and frustrates our ability to do networking.

We must not forget, with apologies to Shakespeare, that ultimately the problem lies not in our networks but in ourselves and our ability to communicate and connect.

References

http://www.frankston.com/?Name=VonRailroads. Telecommunications policy closely matches railroad policies. In fact, the FCC is a descendent of the ICC.

http://www.frankston.com/?Name=AssuringScarcity. The cellular industry warns us about the threat of abundance and their solution is to prevent us from creating our own solutions.

http://www.frankston.com/?Name=OurInternet and http://www.frankston.com/?name=SATNFSM. More about how to implement connectivity from the edge and connectivity among communities.

Bob Frankston Site