Content vs. Connectivity
Will we allow innovation and growth?
Thursday, February 10, 2000
There is a shorter version of some of
the thoughts in an essay I
recently did for Boston Software News. As I get comments, I am adding an
Questions and Answers and
Clarifications Appendix. This will be rolled into an updated edition at some
point. This includes my definition of content.
A Simple Conclusion
The consumers' connections to the Internet are controlled by companies who
are in the business of delivering content and services
funded by advertising. Consumers who wander the Internet represent lost revenue.
Customers who use IP telephony no longer make phone calls. Customers who
experiment with creating new services are called abusers.
As long as these companies control connectivity, we do not have a marketplace
for the connectivity services vital to the growth of the Internet and necessary
for innovation and the benefits we have come to expect.
We must allow for a marketplace by preventing players with interests opposed
to connectivity from controlling connectivity. It is a dramatic case of conflict
of interest and antitrust violation. We cannot afford to tolerate such behavior.
It is allowed and abetted by accepting the self-serving fallacies of the
existing players. We must challenge their claims and create the opportunities so
necessary for our continued prosperity.
The Internet Protocol is a very disruptive idea. Still in its infancy, it has
transformed the global economy and the society. This massive disruption was
tolerated because the idea grew slowly. It took nearly twenty years from the
first implementations to the birth of the World Wide Web. The Web brought the
Internet out of its protected academic setting into the larger world.
In 1993 attention was focused not on the Internet, but on Interactive
Television (ITV) and the promise of 500 channels of entertainment. Billions of
dollars were being invested in this new medium. At the same time the
International Telecommunications Union (ITU) was progressing on worldwide
standards for message, X.400, with the backing of all the governmental and large
telecommunications companies. The Internet community itself was creating
"simple" protocols while awaiting the official standards from the ITU.
The Internet was the domain of kids playing with running web servers and a
few foolish companies trying to sell stuff. The Cable TV companies eventually
saw an opportunity for badly needed revenue since their basic business was
marginal. They began to offer cable modem service. The telephone companies had
invested a large amount of money in a technology to compete with the cable
companies by sending video over telephone wires. It was called
ADSL. Faced with the complete failure of ITV
they began to consider using the technology to provide connections to the
By 1999, the Internet had become very very important and e-commerce was big
One unfortunate result is that the "reasoning" behind the failed ITV effort
is now being applied to the Internet. The problem with ITV is that it came out
of the tradition of the television networks whose primary business focus was on
keeping people from switching away, or, to use more colorful language, the
business is about owning eyeballs.
The new businesses of AOL and Excite, for example, are about keeping their
users within their world. AOL markets additional products and services to their
users while making navigation to the rest of the net awkward. Excite is proud
that their searches don't provide links to other sites. Instead they just give
their users answers without losing them to the rest of the Internet. Even though
Excite only exists because of those who experimented with creating services such
as the web, Excite now calls them abusers. Clearly something is very wrong.
There is a fundamental conflict between those who want to experiment with new
ideas and those who need to retain their audiences. But the Internet
connections are now controlled by companies who are trying to provide content
and thus, are in competition with their users.
The Internet has been a major contributor to the economy by allowing the
creation of new services. This is the very activity that is a threat to existing
services whether they are old brick and mortar enterprises or new Internet
The rapidly falling prices of communications did not come from the
benevolence of the telecommunications companies. It came because the Internet
made competition possible and allowed new players to recklessly create new
services. As Clayton Christensen points out in The Innovator's Dilemma,
the existing companies could not create the new services. Even when they wanted
to be benevolent the new services were not justified by the needs of the market
they were servicing. They required advocates who were willing to explore new,
seemingly unimportant, marketplaces. And they required advocates who had no
stake in existing alternatives such as high-speed "T1" lines at commercial
prices. It is still hard for a "bell head" to understand why one can use an
unreliable service like the Internet to create services that are more reliable
than their high quality lines.
Conventional wisdom favors the content strategy. To quote
The Industry Standard:
The fact is
while companies like Qwest, Global Crossing,
Level 3, IXC and Williams are battling to build the biggest, longest, most
comprehensive worldwide networks, there is only so much you can do with fat
pipes. The real money comes from selling service to consumers. Wholesale
bandwidth is a commodity. By buying US West, Qwest gets a direct relationship
with millions of customers.
This doesn't make any sense. Intel has thrived selling commodity processors
and Cisco is one of the most successful new companies. US West is failing and
seems a strange place to look for salvation.
The fact is that there is a limited market for content. Companies
selling yesterday's news must resort to advertising. Instead of customers paying
for services, the viewers (their eyeballs) are being sold to others. This
raises serious privacy and social policy concerns, which are getting much
The Internet has been a primary factor in creating the current economy. Even
as we see increasing opportunities we are already in the longest economic boom
in our history.
The biggest threat to this growth would be to stymie the continued innovation
in the sadly naive assumption that we have a mature marketplace. It's like
looking at the Golden Goose and seeing only foie gras.
History and Again
We can no longer depend on the benign neglect that has permitted the Internet
to grow up and challenge the current communications infrastructure.
To be explicit the Web is not the Internet. The web is just one result of the
innovation wrought by the Internet's fundamental architecture. By
confusing the Web with the older broadcast media, we run a very real risk of
starving the engine of innovation and prosperity. It's like killing the
goose who lays golden eggs because we are so worried about the new wealth that
we cannot risk letting the goose annoy us with the potential of laying more
valuable platinum eggs.
The Internet is not only disruptive, but it challenges our common sense.
This shows up even in something as simple as assigning phone numbers. When
area codes were first created as part of the North American Numbering plan they
certainly seemed plentiful. But as usage grew, abetted by computers, we ran out
of numbers in some places. It seemed simple enough to split an area code in two.
People could then update their address books by crossing out the old numbers and
replacing them with the new. But the phone numbers are now identifiers and
stored in a myriad of databases. It is no longer feasible to split area codes
but we continue to do so because we are just used to 7 digit phone numbers.
The effect is more obvious in changing postal (ZIP) codes. Some Boston area
postal codes were changed from 021xx to 024xx to ease postal routing. This seems
reasonable to the postal service and their major mailers. But postal codes have
become database identifiers. Since they don't change often, few systems
designers have had experience with such changes and are thus unprepared for
them. For the post office, the code is still viewed as physical routing code for
mail rather than an identifier whose interpretation can easily be changed.
If we have difficulty in understanding the simple changes to the meaning of
area codes and zip codes, think of how difficult it is to come to
The Interstate Highway System
1919, a young Captain, Dwight D. Eisenhower attempted to drive across the
country and found himself bogged down in the mud*. This
experience, as well as observing the strategic value of Germany's Autobahn,
contributed to his sponsorship of Interstate Defense Highway System.
The Interstate Highway system threatened the viability of the many businesses
that depended upon local traffic. It simply bypassed them. In doing so, it
created huge new opportunities for commerce and has returned trillions of
dollars to the economy. Unlike the railroads, which provided full transportation
services at the highest price they could get away with, these highways simply
The Interstate Highways were created with strict rules on their design and
use. For example, they could not double as state routes. In fact, Massachusetts
decided to convert their State Route 128 into I-95. Since 128 was known as the
heart of the state's computer industry the designation was retained as an
historic name but not as a route name.
These restrictions prevented the highway system from becoming beholden to
local interests that would be in conflict with the national interest.
As we try to understand the phenomena of the Internet we need to learn from
the experience of the Interstate Highway system:
- It generated tremendous economic benefit.
- It had a focus that was beyond the local transportation needs.
While I am a strong believer in the marketplace as the mechanism for creating
goods and services, we need to understand how it works and what the limitations
are. Trying to second-guess the marketplace runs the risk of imposing an
arbitrary definition of the public good upon others.
The Interstate Highway System was built after half a century of trying to
improve the transportation system and after observing systems that other
countries had built. But it could also be justified for the needs of the
military. While the economic value is now evident, it was not necessarily
obvious that such a system was the best course.
The Internet was built with a simple goal of enabling disparate networks to
be interconnected. In addressing this need the designers took a minimalist
approach. Rather than imposing their solutions on others, they simply provided a
means to transport packets from one end to the other.
The Internet vs Telecommunications
The history of the Internet is available from any number of sources but they
tend to miss what really makes the Internet the engine of innovation and
economic benefit that it is. My IP Infrastructure
essay makes an attempt at explaining the fundamental issues.
The Internet Protocol is very simple. It just delivers packets from one
end-point to another. It doesn't do any interpretation nor even guarantee
delivery. The services at the end-points are free to make their own policies
including weighing the tradeoffs between timely delivery and delays.
The Ethernet architecture had already demonstrated how well this approach
worked. Despite many people's concerns, the ability to just drop packets on a
wire without any central coordination or reservation worked very well. The
Internet extends this idea to the entire world (and beyond).
Traditional telecommunications delivers a service such as voice
communications or video. The provider builds a physical infrastructure suited
for the particular type of service being provided. Historically the
communications providers have lived in a protected regulatory environment
because their means of delivery required the use of limited public resources
such as the right-of-way in a city or a portion of the spectrum space for
This offered a double protection from competition. Each service required its
own physical plant and the regulators would allot exclusive territories under
the theory of natural monopoly. While the reasoning might be questionable, the
ability to create a national communications systems was such an amazing feat one
can understand the motivation for special treatment.
The Internet Protocol changes the rules by breaking down the barriers between
each medium. The packets are the same whether they are on phone wire, or coax
(cable) or even over the air. We can think of traditional communications as
being built out of solid blocks. Each block had its purpose and its place. IP
turns all of this into a liquid that can flow anywhere. The pressure builds up
and pushes past each obstacle.
This liquid is a commodity and providers are forced to compete at the cost of
the service rather than the value of the service. This has driven the prices
down but has increased the demand to more than offset these lower prices. This
is a well-understood phenomena. Intel has increased its performance a
thousand-fold. The result is to sell more processors not less as the newly-found
needs grow even faster!
The traditional communications companies find themselves in a bind since
their services can now be created by anyone at an end point. But for companies
with a corporate culture and organization built upon providing high value
service this is very threatening. At the same time as these threats are growing
they still have an installed base, which, in the near term, is much more
valuable. This is the Innovator's Dilemma.
If they provider effective connectivity, their users don't need their
high valued services.
To the extent that they can seek regulatory
protection to maintain the status quo they can hold off change and have little
incentive to be proactive in exploring how to increase the connectivity
The Internet vs The Broadcasters
ITV: Interactive Television
I had an epiphany when a broadcaster explained to me that his business had
only one purpose -- delivering viewers to advertisers, or, simply put, keeping
their eyeballs from wandering. During one panel discussion (broadcast on C-Span)
a broadcaster commented on one of the unsolved problems of web links in
advertisements, the viewer they lose to the click.
To the broadcasters the value of Interactive TV (ITV) is to make TV more
valuable and, perhaps, sell new services. To the computer companies, ITV was an
opportunity to make computers part of the television experience. In those days
the television was more popular than computers though the rate of computer sales
was already beginning to outpace televisions. ITV even had something to offer
the telephone companies since it allowed the programming to be available on a
central server and then sent out over the existing phone wire. Cable companies
had the opportunity to sell movies on demand instead of being limited to the
small number of channels available.
There were many exciting new technologies. Compression allowed more channels
on a single cable and over the phone line using DSL.
By having a computer in the Set Top Box, viewers could click on buttons on the
screen to play games or send messages back to the broadcasters. They can even
buy things immediately. In fact, are proposals to make every product shown in a
movie a "placement" can be purchased by clicking on the screen.
This was the grand convergence of all the technologies. The press picked up
on the 10x compression and multiplied 50 channels times 10 to get the "500
There were many technical challenges but these were viewed with enthusiasm by
the research community. How do you make sure the timing of all the digital
signals is just right so that they are just as good as the present analog
signals. How do you allow many different software objects to run on the set to
box with complete security and, most important, with full protection of the
intellectual property (AKA movies).
But the basic assumptions provide false and the marketplace model was naive.
The underlying problem was the lack of marketplace dynamics to challenge the
design and the assumptions. Unrealistic complexity and unnecessary requirements
could proceed unabated. Except, perhaps, from the complete lack of a
marketplace. It didn't help that in testing the users (to use the computer term)
just didn't care about any of it.
In the absence of an alternative, however, this wouldn't be enough to check
the enthusiasm. We still see this thinking in the digital television
legislation, the fantasies about high definition TV and efforts to tightly
control intellectual property on DVDs and with set top boxes.
But the world didn't stand by. The Internet was starting to make its presence
The Web Emerges
The Web was able to explode upon the world because the stage had been set.
The basic IP Infrastructure was developed in the mid 1970's and replaced the
earlier ARPANet by the early 1980's. Because of its nature it was relatively
easy to span the world and cheap enough to be used for mundane tasks, such as
exchanging email and transferring files. High profile glitzy claims and military
needs kept it alive as a research vehicle while it grew.
The Internet was one of many connected networks. Eventually it grew beyond
its initial role of interconnecting and subsumed the other networks. At the same
time there were starting to be applications that took advantage of connectivity
such as Lotus Notes and the Gopher protocol for sharing documents. Communities
such as Unix UUCP connected with other systems.
The protocols were generally simple because they were done to serve the
users' own needs. Users crafting programs to their own needs using simple tools
could afford to experiment and rapidly evolve their software.
At CERN in Geneva Tim Berners-Lee was able to experiment with his web for
sharing technical information. It took advantage of the tools on his NeXT
machine to build a system that allowed him to blur the distinction between
writing and publishing. The key idea was to use links that allowed for including
existing documents as well as ones created for this web. He also used a
simplified form of the standard graphics markup language (SGML), which he called
HTML (Hyper Text Markup Language). The stage was set for Mosaic, which
implemented a subset of the web on the PC so that others could participate.
Because HTML was so simple, the PC user could live without editing tools and
just use a standard text editor.
The Web became available on the PC as a way for people to publish as
much as, if not more, than as a way to surf!
Those who look under the surface of the protocols are amazed at their
simplicity. Many web tools now allow the creation of very complicated services
and documents, but one can still go underneath this complexity to innovate. This is the point must be emphasized and re-emphasized.
The effect of the web has been to greatly accelerate the growth of the
Internet both in span and capacity while continuing to drive the costs down even
as services more than make up for the increased capacity with new applications
and services! Though the web brought the Internet to the fore, it is the
underlying IP Infrastructure that is the key to innovation.
The Internet sneaks in.
In the United States modems had become required items for new PC's even
though only a small percentage of the buyers actually used dialup services. The
US also had a tradition of unmeasured local phone services. This meant that you
could connect to an online services and stay connected for hours without any
The web gave the rest of the users a reason for dialing up. The ability to
publish gave rise to a plethora of sites to explore. The costs were low enough
that it was OK to just explore the web without a deep purpose. But thanks to the
ease of publishing the web rapidly become a treasure trove of interesting pages
even if those were only a small portion of what existed. Search engines came to
be and some people started experimenting with the commercial possibilities.
The Cable TV companies found a much-needed source of revenue. To the ITV, DSL
was an understood technology that could be repurposed for the Internet. But DSL
rollout has been slower than cable modem role out. This is consistent with the
basic theme that connectivity doesn't improve without advocacy. Otherwise it
easily gets lost in conflicting agendas.
The flexibility of the web has allowed people to view it in their own terms.
Print people see it as an online magazine and often try to exert very strong
control over typography so that I can't take advantage of my large screen.
Broadcasters try to stream video to me. And others try to sell me things.
The sellers have the advantage of a strong measure of success. Rather than
impose their model on the medium, they need to discover what works. And they
have found great success. They also provide an answer to the question of whether
advertising can work on the web. The answer is a yes, but not a simple yes. More
on that below.
In a sense all of the models are correct to some extent but each needs to be
updated by learning what works and what doesn't. Timing is also important.
Streaming audio over the web used to be problematic and iffy. Now, to a great
extent, it "just works" and it is not only possible to listen to radio on the
web, it has many advantages over traditional broadcast. There are still rough
edges but it is clear that it can work. The protocol for encoding music, MP3, is
even more interesting. It is much more flexible and adaptable than radio. It
will be exciting to see how these ideas play out. What happens when we aren't
limited in music distribution? What happens to radio when we don't have the
limitations of the spectrum, when we don't have bandwidth limits or geographic
limits? When we don't need to pay a high price to reach a limited audience? What
happens when the kids jamming in the basement can broadcast to the world?
As the capacity of the net increases, we can view television as just another
stream. It generally needs more bandwidth than radio but compressed video can be
very efficient. In-home networks can readily handle high definition signals.
With the Internet capacity growing by a factor of 10 to 100 each year, we will
soon be able to casually transmit it over the Internet.
If "they" let us.
An aside about advertising. Advertising is a very powerful idea since it
allows for independence between the service and the funding. Instead of having
to sell each document or program or service, advertising allows for the
flexibility necessary to get out of the "micro-justification" bind. Make the
overall service attractive to viewers. Aggregate the viewers and sell them to
This can be a very positive idea. If one had to justify each newspaper story
based on its appeal, the overall product would suffer from blandness.
Conversely, if advertisers have too much control over content, risk aversion
would rapidly devalue the content.
The problem is that this makes advertising a very imprecise tool that is
subject to whims and superstitions. Accepting the ratings from "sweeps" week on
TV, despite its artificiality is a way to pretend precision while accepting its
The web offers the hope of greater precision. Why not just show ads to the
most likely buyers. If you think the web viewer speaks Spanish, then show the ad
in Spanish. The owner of an old Cadillac may be ready to buy a new one. These
are actual proposals.
Putting aside the question of whether too much precision actually narrows the
market, the concerns about privacy and other uses of the information are
But for the advertisers to buy, one must be able deliver the viewers (their
eyeballs). With the rise of advertising the stage is set.
Advertising? Wonderful. We must be back in Kansas (to those who notice
Wizard of Oz references).
Broadband! Convergence! What is old is new again.
Cable companies are now broadband companies trying to provide new content and
services to delight us. Thanks to the new technologies they can be our telephone
And the telephone companies, still want to be our TV companies. US West's
VDSL is Very high speed DSL but most of that speed is kept back from the user
and doled out by US West into ITV streams. Sprint does the same slivering with
ION. Voice over DSL is now a hot topic since, unlike IP, DSL a service that the
Telco owns and controls.
And, "it is a fact' (to use the quote from above)
that "content is King". That the way to make money in the business is to have
content. But since content doesn't really sell, you have to sell your viewers
eyeballs to advertisers (enhanced by their personal histories and tidbits and
habits). And, you can also hawk your own goods. If you're really creative you
can find all sorts of new marketing plays.
If content is king then commodity connectivity is anathema. Providing
connectivity is seen as a completely losing proposition. This is a
self-fulfilling prophecy because without investment we know that it loses value
(the stakeholder argument). The process is abetted because the "content people"
promulgate a message that vindicates their profession. And the investors who
understand little buy into it (literarily).
But why should ITV or, content, be any better this time around that it was
the last time? And how could connectivity be such a bad business when, as Intel
demonstrates, there is a very large demand as long as we allow and even
encourage people to find new users. Imagine in the 1970's trying to explain that
video games were going to be much more important to advancing technology than
the multibillion dollar military marketplace!
To be fair, this time things are very different. ITV can be deployed using
"Internet" technologies and web-based tools. For example, Digital TV (DTV)
protocols are based on Web protocols. The television can be decomposed with HDTV
decoders already becoming common on PCs. Yet the standards and legislative
processes presume a wisdom that allows them to predict technologies ten years
ahead, predictions, which are already stale.
But the face of the new ITV is AOL or Excite rather than NBC. Actually,
there's also MSNBC, which is more like old ITV and seems to have trouble making
people care. But AOL has captured people's imagination and the people
themselves. It provides a complete and comfortable solution. And makes money buy
selling and selling to their users. As long as their users think of AOL instead
of the Internet they have a business proposition.
As AOL demonstrates, some of ITV is indeed relevant. But it has a big
vulnerability. Unlike the world of the early 1990's, the ITV providers do not
have complete control over distribution. If they user discover and revel in the
web, they are lost. These providers have a very strong interest in preventing
this from happening.
The Connectivity Providers
The connectivity providers have the goal of creating a marketplace for their
services. Unlike the content providers who need to increase the value of their
limited content, the connectivity providers have the goal of increasing the
traffic. The best way to do this is to encourage the new players to provide
traffic (not necessarily "content"). Even better would be to encourage the
creation of new applications, especially those that are symmetric such as shared
The tension between the contents providers and the connectivity providers
acts as a powerful force to increase traffic and grow the market. And the market
itself is driven not by content created by a small number of authors, but by
uses discovered by millions of people experimenting and thousands
commercializing their own idea.
There's only one minor problem. There are no
connectivity providers!!!!At least, not providing connectivity
services to the consumer as their primary business.
The reason is very simple. The telecommunications service companies
got there first. They own the right of way and they have a symbiotic
relationship with their regulators. And their claims are very plausible. They
are providing a vital service and if they are financially threatened the vital
services will suffer. For those of us who believe in the marketplace the best
way would be to provide them with incentives to invest.
But this is no different from shooting ones parents and then pleading for
mercy as an orphan!
Even if we ascribe the best intentions to their efforts, they have an
intrinsic conflict of interest, which disqualifies them as advocates for new
services. Given their premises the arguments are very strong. But the premises
Fortunately we've had enough experience with the Internet to have a taste of
its potential and we've seen the rapid improvements in capacity and a
corresponding reduction in price in areas that are not protected by regulation.
The architecture of the Internet, the IP boundary layer is the key. It gives
us a way to separate the connectivity services from the content services!
This section is "commented out" for now.
The problems of change are exacerbated because the government itself has a
stake in the status quo:
- Revenues from telecommunications services are threatened if such
services disappear. The controversy of taxing Internet-based commerce is
already an issue (though, calling it an Internet Tax is confuses the
- Seeking to protect those who cannot afford full phone services and
seeking to fund the connections of schools to the Internet, the government
has a stake in maintaining class telephone lines. In assuring that one has
to pay only a few dollars a month for each copper pair, it becomes difficult
to argue for eliminating them. Accidental properties, such as the presence
of huge lead-acid batteries at telephone central offices become requirements
in the name of public safety.
- The government raises money by auctioning off wireless spectrum.
Consequences and Policy
We are faced with the opportunity to continue to support the economic growth
and new opportunities afforded by the Internet. Or we can return to a past in,
which services and creativity are stymied by those who control access to new
services and distribution.
It is that simple.
In theory, the marketplace will find a solution. But we have given total
control over key resources to providers with a fundamental conflict of interest.
They see their business as delivery content and fund it by selling access to the
eyeballs (viewers) they control. Increasing connectivity gives viewers
alternatives -- their "eyeballs" to escape. Encouraging innovation gives them
very strong reasons to escape. Increasing Internet capacity is seen as coming at
the price of the portion of the capacity that can be used for dedicated, high
This is not a real marketplace. The marketplace incentives are towards
- The Internet grew by having advocates for connectivity. The history of the
Internet has been a constant standoff between the telecommunications service
providers and those who provide commodity connectivity. The telecommunications
companies are correct in identifying the threats posted by the Internet. If
the Internet is not a threat then it is not doing anything innovative.
- Without advocacy, myths and fallacies are not challenged.
Telecommunications companies are still mired in the myth that their brittle
infrastructure is necessary to provide reliable services. We continue to
demonstrate the advantages of the resilient design of Internet-based
protocols. They are tolerant of failures and take advantage of opportunities
and gain the benefits of commodity pricing. Streaming services do not need
complex QOS (quality of service) schemes, they "just start to work" as
capacity increases. In fact, if QOS is useful, it indicates a serious resource
starvation that deserves the attention wasted on QOS.
- The regulators and legislators grew up during a period of severe resource
constraints. Rigid standards like NTSC were vital to making television service
possible in the 1930's. At this point such rigid standards are already
impediments. HDTV is a classic study in the failure of the standards-setting
process as each standard has become obsolete before it is deployed and
- The common wisdom claims that content is king and connectivity is a loss
leader. This is wrong and dangerous and self-serving. As Intel, Cisco and
Microsoft have demonstrated, providing enabling technologies is a very
profitable business. Even in the absence of protected markets companies like
Dell and Compaq have done well even as they've had to stay on their toes. The
arguments against the connectivity business are disingenuous pleas for
protection from a competitive marketplace. Better to have control over a niche
than have to work for a living.
- The current telecommunications providers are beneficiaries of old notions
of natural monopolies and they continue to reap the full benefits of their
franchises. By separating the business out we can take advantage of existing
infrastructure and share it among those who want to create services. At the
same time, new players can lay down fibers and wires or reinvent wireless
- The claim that the Internet represents a mature marketplace are absurd.
Anyone making such a claim is admitting to being utterly clueless and
blatantly disingenuous. How could a marketplace that is only a few years old
and growing by a 1000% a year be considered mature? We cannot lock-in policy
that limit the options for the future.
What if we choose to let the marketplace continue to work out
the problems? It's hard to evaluate the cost of the lost opportunities. But we
can try to imagine if the phone companies succeeded in their campaign to prevent
the attachment of "foreign" equipment such as modems to the phone network. Or in
their more recent attempts to declare modem users as a threat to the integrity
of the phone network.
What if the local merchants had control over the Interstate
Highway system and were able to assure that each of their businesses would be
well served by routing the high to their advantage and were able to assure that
the speed was low enough to encourage stopping to shop. Imagine a highway
system, which charged according to the value of your car and of the goods you
We do know the value of the first hints of the potential of the
Internet. And that's all we have, just the first hints. We cannot afford to
stymie its growth and the attendant innovation by handing control to parties who
are threatened by the innovations.
But won't the marketplace triumph over all of this?
We've had Set Top Boxes for over thirty years and we are still
unable to integrate TV tuning with Set Top Box tuning. The marketplace has been
completely stymied by the consumer electronics industry. As long as these
companies being perpetuate a "marketplace" whose primary purpose is to control
content provided to a controlled audience, they can maintain the same kind of
lock on the connectivity marketplace.
The Set Top Box is a dramatic example of the ability of the
current industry to thwart marketplace forces. Pleas for allowing the
marketplace to operate are simply self-serving and disingenuous.
The fallacies of wired connectivity come back with a vengeance
in the world of wireless connectivity. The excitement is around WAP, the
Wireless Access Protocol. It is the dream of every ITV fantasist. It is touted
as the new way to resell old content in new containers. It is rife with
fallacies such as the protestations of how expensive wireless connections are
(even as cellular prices continue to plummet). It is special and needs its own
protocols since the web protocols can't be used for cellular phones because they
don't have wires and because they don't have wires they can't use the same
protocols that one uses on wires.
Unlike the TV marketplace there is rapid churn in the cellular
market and WAP-capable phones are available and there will be enthusiasm. But we
can look back at CB Radio for an example of wild enthusiasm followed by a
complete crash of a marketplace in the face of a better alternative.
The key to the Internet's triumph over ITV was the symmetry that
made every user a potential contributor. WAP devices are like the Set Top Box,
closed systems that attempt to create a marketplace for existing providers and
do not provide a marketplace for innovation.
The allocation of the wireless space into discrete frequencies,
which are then auctioned to content providers, reflects the same kind of closure
of the marketplace that we have in wired connectivity but the consequences are
even worse. It squanders an abundant resource that can be an effective way to
avoid the chokepoints of right-of-way control that give the content providers
If we can open up the wired space to a robust marketplace the
restrictions of the wired path become moot.
And we can. The idea of allocating the wireless space by
frequency dates back to the 1800's. A similar technique was used to multiplex
telegraph signals on a wire by using tuning forks to separate the signals.
We now have a much better understanding of signal processing and
have techniques such as spread spectrum signaling and ultra wide band radio. We
have the Ethernet and Internet to demonstrate the effectiveness of a chaotic,
free-for-all, communications environment. In fact, the Ethernet itself was a
wired form of the wireless Aloha-net experiment at the University of Hawaii.
The current approach is like allocating exclusive foraging space
for each cow instead of sharing range space. And it makes no more sense.
In the PC industry we have learned how to make transitions while
keeping compatibility with the past. For example, current FCC regulations
tolerate a limited degree of unintentional radiation, yet when the same
radiation is intentional, it is banned.
The FAA tolerates airplanes whose avionics date back to World
War II and are so fragile that the slightest radio signal will cause it to
crash, or so go the claims. How these planes survive flying past the megawatt
transmitters on New York's World Trade Center is a mystery. Steve Cushing's
Fatal Words provides ample documentation of the cost of accepting
communications systems that belong in a museum. Little of what we've learned
about digital communications have been applied to flying. Instead we accept the
lie that it is more important to certify safety than take a risk of providing
real safety. A plane may crash due to someone using a cellular phone (though
that's a myth since they are really banned because they interfere with cells on
the ground) but we know that planes have crashed due to simple communications
errors that are only tolerated because of the negligence required by
The consequences of accepting these myths are similar to that of
accepting the claims of the wired provider, but more tragic given the huge
opportunity we have to create very powerful new services. A simple example is
the persistence of broadcast radio. The lack of effective connectivity from cars
prevents the creation of new, two-way, communications services that go far
beyond the possibilities of radio.
And the public safety cost is profound. Imagine all emergency
vehicles with full high bandwidth connectivity.
We know that human immune systems function only if they are
stressed in childhood. We have seen the Internet grow to have billions of web
page; growth only possible because all systems take responsibility for
cooperating in a problematic and hostile world. Yet we tolerate a brittle
architecture for wireless connectivity, which wastes a bountiful resource by
generating artificial scarcity and then ceding control to those who have an
interest in preventing competition.
A Simple Conclusion
The consumers' connections to the Internet are controlled by companies who
are in the business of delivering content and services funded by advertising.
Consumers who wander the Internet represent lost revenue. Customers who use IP
telephony no longer make phone calls. Customers who experiment with creating new
services are called abusers.
We simply do not have a marketplace for the connectivity services vital to
the growth of the Internet and necessary for innovation and the benefits we have
come to expect.
We must allow for a marketplace by preventing players with interests opposed
to connectivity from controlling connectivity. It is a dramatic case of conflict
of interest and antitrust violation. We cannot afford to tolerate such behavior.
It is allowed and abetted by accepting the self-serving fallacies of the
existing players. We must put a lie to their claims and create the opportunities
so necessary for our continued prosperity.
Please send comments and suggestions.
The New York Times doesn't allow me to repost their content so I'll
highlight selected paragraphs. You can look at the
original article. MS IE users can also see it in the frame below
From the New York Times:
@Home Puts Speed Limits on Uploads by
By MARTY KATZ
are getting pulled
@Home, which provides Internet access over cable to one million
subscribers, and its cable system partners are in the final stages of
introducing a program that limits the speed at, which users can send data.
The company introduced the program, called optimized network advantage or
ONadvantage, more than a year ago to deal with what a company official called
"bandwidth hogs," customers who
send so much data that they slow down service for others. The company projects
that the program will cover all of @Home's customers across the country by the
@Home said some subscribers were using the $40-a-month service to run
devices like servers and Webcams from home
that would be better handled by more expensive
services geared to business use.
Although cable modem users were enticed to sign up with promises of blazing
speed, the "bandwidth hogs," as Milo Medin,
@Home's architect, calls them, are ruining things for everybody.
High-traffic uses like constantly updating news and stock quote programs and
the e-mailing of digital photos are all clogging the narrow upstream
arteries. Still-emerging applications like Internet telephone calls will
make that dwindling trickle even thinner.
Looking at the New York Times site.
This is confusing because I am using a very broad definition which includes
services such as telephony which used to seem just transports for content. One
of the crucial differences between the IP Infrastructure and traditional
telephony is that are no circuits (or sessions) at the IP layer. TCP
(Transmission Control Protocol) does implement a reliable circuit (or stream)
but this is at the application layer.
The United States
I try to view issues from a global perspective but this essay is primarily
focused on the telecommunications industry in the United States. But it is not
very different in other countries. Perhaps the primary difference is the
persistence or legacy of the PTT or the government as the telecommunications
providers. Such benevolence is problematic because it comes with an agenda of
services and content but, unlike private companies, is even less subject to
market pressures. If anything, the rationale is to spare the services the
indignity of pandering to advertisers or other whims.
If there are counter-examples in other countries I would like to list them.
Is DSL the right model?
DSL is problematic because it is designed to the accidental properties of a
particular physical infrastructure. The DSL marketplace abounds with serious
absurdities due to it being defined in terms of the physical properties of the
existing copper wires. In fact, if one has a fiber connection, one is told that
DSL is unavailable. DSL uses existing copper wires yet the charge for the
physical layer of DSL can be $30/month with no new physical infrastructure! The
only piece of equipment is a line card in a phone switch that, like any other
piece of digital equipment, can be arbitrarily inexpensive. It doesn't even
include the charge for the Internet connection and ISP services!
To put it simply, DSL is not really a marketplace because, rather than
allowing for full competition, it is constrained by the accidental properties of
the physical infrastructure and it is controlled by the owner of the wire which
is typically a company that has a stronger interest in selling its phone