See our commentary at Forbes.com, responding to Revision3 CEO Jim Louderback’s calls for Internet regulation.
What we have here is “mission creep.” First, Net Neutrality was about an “open Internet” where no websites were blocked or degraded. But as soon as the whole industry agreed to these perfectly reasonable Open Web principles, Net Neutrality became an exercise in micromanagement of network technologies and broadband business plans. Now, Louderback wants to go even further and regulate prices. But there’s still more! He also wants to regulate the products that broadband providers can offer.
Here were my comments in the FCC’s Notice of Proposed Rule Making on “Preserving the Open Internet” — better known as “Net Neutrality”:
A Net Neutrality regime will not make the Internet more “open.” The Internet is already very open. More people create and access more content and applications than ever before. And with the existing Four Principles in place, the Internet will remain open. In fact, a Net Neutrality regime could close off large portions of the Internet for many consumers. By intruding in technical infrastructure decisions and discouraging investment, Net Neutrality could decrease network capacity, connectivity, and robustness; it could increase prices; it could slow the cycle of innovation; and thus shut the window to the Web on millions of consumers. Net Neutrality is not about openness. It is far more accurate to say it is about closing off experimentation, innovation, and opportunity.
After yesterday’s federal court ruling against the FCC’s overreaching net neutrality regulations, which we have dedicated considerable time and effort combatting for the last seven years, Holman Jenkins says it well:
Hooray. We live in a nation of laws and elected leaders, not a nation of unelected leaders making up rules for the rest of us as they go along, whether in response to besieging lobbyists or the latest bandwagon circling the block hauled by Washington’s permanent “public interest” community.
This was the reassuring message yesterday from the D.C. Circuit Court of Appeals aimed at the Federal Communications Commission. Bottom line: The FCC can abandon its ideological pursuit of the “net neutrality” bogeyman, and get on with making the world safe for the iPad.
The court ruled in considerable detail that there’s no statutory basis for the FCC’s ambition to annex the Internet, which has grown and thrived under nobody’s control.
. . .
So rather than focusing on new excuses to mess with network providers, the FCC should tackle two duties unambiguously before it: Figure out how to liberate the nation’s wireless spectrum (over which it has clear statutory authority) to flow to more market-oriented uses, whether broadband or broadcast, while also making sure taxpayers get adequately paid as the current system of licensed TV and radio spectrum inevitably evolves into something else.
Second: Under its media ownership hat, admit that such regulation, which inhibits the merger of TV stations with each other and with newspapers, is disastrously hindering our nation’s news-reporting resources and brands from reshaping themselves to meet the opportunities and challenges of the digital age. (Willy nilly, this would also help solve the spectrum problem as broadcasters voluntarily redeployed theirs to more profitable uses.)
With the release of the FCC’s National Broadband Plan, we continue to hear all sorts of depressing stories about the sorry state of American broadband Internet access. But is it true?
International comparisons in such a fast-moving arena as tech and communications are tough. I don’t pretend it is easy to boil down a hugely complex topic to one right answer, but I did have some critical things to say about a major recent report that got way too many things wrong. A new article by that report’s author singled out France as especially more advanced than the U.S. To cut through all the clutter of conflicting data and competing interpretations on broadband deployment, access, adoption, prices, and speeds, however, maybe a simple chart will help.
Here we compare network usage. Not advertised speeds, which are suspect. Not prices which can be distorted by the use of purchasing power parity (PPP). Not “penetration,” which is largely a function of income, urbanization, and geography. No, just simply, how much data traffic do various regions create and consume.
If U.S. networks were so backward — too sparse, too slow, too expensive — would Americans be generating 65% more network traffic per capita than their Western European counterparts?
As Washington and the states pile up mountainous liabilities — $3 trillion for unfunded state pensions, $10 trillion in new federal deficits through 2019, and $38 trillion (or is it $50 trillion?) in unfunded Medicare promises — the U.S. needs once again to call on its chief strategic asset: radical innovation.
One laboratory of growth will continue to be the Internet. The U.S. began the 2000’s with fewer than five million residential broadband lines and zero mobile broadband. We begin the new decade with 71 million residential lines and 300 million portable and mobile broadband devices. In all, consumer bandwidth grew almost 15,000%.
Even a thriving Internet, however, cannot escape Washington’s eager eye. As the Federal Communications Commission contemplates new “network neutrality” regulation and even a return to “Title II” telephone regulation, we have to wonder where growth will come from in the 2010’s . . . .
“No moment in technology history has ever been more exciting or dangerous than now. The Internet is like a new computer running a flashy, exciting demo. We have been entranced by this demo for fifteen years. But now it is time to get to work, and make the Internet do what we want it to . . . .
“Practical business: who will win the tug of war between private machines and the Cloud? Will you store your personal information on your own personal machines, or on nameless servers far away in the Cloud, or both? Answer: in the Cloud. The Cloud (or the Internet Operating System, IOS — ‘Cloud 1.0′) will take charge of your personal machines. It will move the information you need at any given moment onto your own cellphone, laptop, pad, pod — but will always keep charge of the master copy. When you make changes to any document, the changes will be reflected immediately in the Cloud. Many parts of this service are available already.”
Amazon’s Paul Misener gets all reasonable in his comments on the FCC’s proposed net neutrality rules:
With this win-win-win goal in mind, and consistent with the principle of maintaining an open Internet, Amazon respectfully suggests that the FCC’s proposed rules be extended to allow broadband Internet access service providers to favor some content so long as no harm is done to other content.
Importantly, we note that the Internet has long been interconnected with private networks and edge caches that enhance the performance of some Internet content in comparison with other Internet content, and that these performance improvements are paid for by some but not all providers of content. The reason why these arrangements are acceptable from a public policy perspective is simple: the performance of other content is not disfavored, i.e., other content is not harmed.
Here are a few good perspectives on Google’s big announcement that it will no longer censor search results for google.cn in China, a move it says could lead to a pull-out from the Middle Kingdom.
Later this week the FCC will accept the first round of comments in its “Open Internet” rule making, commonly known as Net Neutrality. Never mind that the Internet is already open and it was never strictly neutral. Openness and neutrality are two appealing buzzwords that serve as the basis for potentially far reaching new regulation of our most dynamic economic and cultural sector — the Internet.
I’ll comment on Net Neutrality from several angles over the coming days. But a terrific essay by Berkeley’s Jaron Lanier impelled me to begin by summarizing some of the big meta-arguments that have been swirling the last few years and which now broadly define the opposing sides in the Net Neutrality debate. After surveying these broad categories, I’ll get into the weeds on technology, business, and policy.
The thrust behind Net Neutrality is a view that the Internet should conform to a narrow set of technology and business “ideals” — “open,” “neutral,” “non-discriminatory.” Wonderful words. Often virtuous. But these aren’t the only traits important to economic and cultural systems. In fact, Net Neutrality sets up a false dichotomy — a manufactured war — between open and closed, collaborative versus commercial, free versus paid, content versus conduit. I’ve made a long list of the supposed opposing forces. Net Neutrality favors only one side of the table below. It seeks to cement in place one model of business and technology. It is intensely focused on the left-hand column and is either oblivious or hostile to the right-hand column. It thinks the right-hand items are either bad (prices) or assumes they appear magically (bandwidth).
We skeptics of Net Neutrality, on the other hand, do not favor one side or the other. We understand that there are virtues all around. Here’s how I put it on my blog last autumn:
Suggesting we can enjoy Google’s software innovations without the network innovations of AT&T, Verizon, and hundreds of service providers and technology suppliers is like saying that once Microsoft came along we no longer needed Intel.
No, Microsoft and Intel built upon each other in a virtuous interplay. Intel’s microprocessor and memory inventions set the stage for software innovation. Bill Gates exploited Intel’s newly abundant transistors by creating radically new software that empowered average businesspeople and consumers to engage with computers. The vast new PC market, in turn, dramatically expanded Intel’s markets and volumes and thus allowed it to invest in new designs and multi-billion dollar chip factories across the globe, driving Moore’s law and with it the digital revolution in all its manifestations.
Software and hardware. Bits and bandwidth. Content and conduit. These things are complementary. And yes, like yin and yang, often in tension and flux, but ultimately interdependent.
Likewise, we need the ability to charge for products and set prices so that capital can be rationally allocated and the hundreds of billions of dollars in network investment can occur. It is thus these hard prices that yield so many of the “free” consumer surplus advantages we all enjoy on the Web. No company or industry can capture all the value of the Web. Most of it comes to us as consumers. But companies and content creators need at least the ability to pursue business models that capture some portion of this value so they can not only survive but continually reinvest in the future. With a market moving so fast, with so many network and content models so uncertain during this epochal shift in media and communications, these content and conduit companies must be allowed to define their own products and set their own prices. We need to know what works, and what doesn’t.
When the “network layers” regulatory model, as it was then known, was first proposed back in 2003-04, my colleague George Gilder and I prepared testimony for the U.S. Senate. Although the layers model was little more than an academic notion, we thought then this would become the next big battle in Internet policy. We were right. Even though the “layers” proposal was (and is!) an ill-defined concept, the model we used to analyze what Net Neutrality would mean for networks and Web business models still applies. As we wrote in April of 2004:
Layering proponents . . . make a fundamental error. They ignore ever changing trade-offs between integration and modularization that are among the most profound and strategic decisions any company in any industry makes. They disavow Harvard Business professor Clayton Christensen’s theorems that dictate when modularization, or “layering,” is advisable, and when integration is far more likely to yield success. For example, the separation of content and conduit—the notion that bandwidth providers should focus on delivering robust, high-speed connections while allowing hundreds of millions of professionals and amateurs to supply the content—is often a sound strategy. We have supported it from the beginning. But leading edge undershoot products (ones that are not yet good enough for the demands of the marketplace) like video-conferencing often require integration.
Over time, the digital and photonic technologies at the heart of the Internet lead to massive integration — of transistors, features, applications, even wavelengths of light onto fiber optic strands. This integration of computing and communications power flings creative power to the edges of the network. It shifts bottlenecks. Crystalline silicon and flawless fiber form the low-entropy substrate that carry the world’s high-entropy messages — news, opinions, new products, new services. But these feats are not automatic. They cannot be legislated or mandated. And just as innovation in the core of the network unleashes innovation at the edges, so too more content and creativity at the edge create the need for ever more capacity and capability in the core. The bottlenecks shift again. More data centers, better optical transmission and switching, new content delivery optimization, the move from cell towers to femtocell wireless architectures. There is no final state of equilibrium where one side can assume that the other is a stagnant utility, at least not in the foreseeable future.
I’ll be back with more analysis of the Net Neutrality debate, but for now I’ll let Jaron Lanier (whose book You Are Not a Gadget was published today) sum up the argument:
Here’s one problem with digital collectivism: We shouldn’t want the whole world to take on the quality of having been designed by a committee. When you have everyone collaborate on everything, you generate a dull, average outcome in all things. You don’t get innovation.
If you want to foster creativity and excellence, you have to introduce some boundaries. Teams need some privacy from one another to develop unique approaches to any kind of competition. Scientists need some time in private before publication to get their results in order. Making everything open all the time creates what I call a global mush.
There’s a dominant dogma in the online culture of the moment that collectives make the best stuff, but it hasn’t proven to be true. The most sophisticated, influential and lucrative examples of computer code—like the page-rank algorithms in the top search engines or Adobe’s Flash—always turn out to be the results of proprietary development. Indeed, the adored iPhone came out of what many regard as the most closed, tyrannically managed software-development shop on Earth.
Actually, Silicon Valley is remarkably good at not making collectivization mistakes when our own fortunes are at stake. If you suggested that, say, Google, Apple and Microsoft should be merged so that all their engineers would be aggregated into a giant wiki-like project—well you’d be laughed out of Silicon Valley so fast you wouldn’t have time to tweet about it. Same would happen if you suggested to one of the big venture-capital firms that all the start-ups they are funding should be merged into a single collective operation.
But this is exactly the kind of mistake that’s happening with some of the most influential projects in our culture, and ultimately in our economy.
Professors at a leading research unit put suspect data into a bad model, fail to include crucial variables, and even manufacture the most central variable to deliver the hoped-for outcome.
Climate-gate? No, call it Berkman’s broadband bungle.
In October, Harvard’s Berkman Center for the Internet and Society delivered a report, commissioned by the Federal Communications Commission, comparing international broadband markets and policies. The report was to be a central component of the Administration’s new national broadband Internet policy, arriving in February 2010.
The 231-page report was an ode to foreign broadband success and especially to the regulatory model of “open access,” a euphemism for mandated sharing of network assets at government-set prices. Although U.S. Internet innovation is flourishing, the Berkman Center found the U.S. tragically lagging other nations in consumer broadband penetration, prices, and network speeds. In a perfect set-up for a dramatic re-regulation of U.S. communications networks, Berkman concluded that open access mandates have “a positive and significant effect” on broadband penetration and that the effect is “somewhat larger . . . and more robust than previously thought.”
Just one problem. Actually many problems. The report botched its chief statistical model in half a dozen ways. It used loads of questionable data. It didn’t account for the unique market structure of U.S. broadband. It reversed the arrow of time in its country case studies. It ignored the high-profile history of open access regulation in the U.S. It didn’t conduct the literature review the FCC asked for. It excommunicated Switzerland . . . .
See my critique of this big report on international broadband at RealClearMarkets.
This morning, the Technology Committee of the New York City Council convened a large hearing on a resolution urging Congress to pass a robust Net Neutrality law. I was supposed to testify, but our narrowband transportation system prevented me from getting to New York. Here, however, is the testimony I prepared. It focuses on investment, innovation, and the impact Net Neutrality would have on both.
If you’re interested in Net Neutrality regulation and have some time on your hands, watch this good debate at the Web 2.0 conference. The resolution was “A Network Neutrality law is necessary,” and the two opposing sides were:
Against
James Assey – Executive Vice President, National Cable and Telecommunications Association
Robert Quinn - Senior Vice President-Federal Regulatory, AT&T
Christopher Yoo – Professor of Law and Communication; Director, Center for Technology, Innovation, and Competition, UPenn Law
For
Tim Wu – Coined the term “Network Neutrality”; Professor of Law, Columbia Law
Brad Burnham – VC, Union Square Ventures
Nicholas Economides – Professor of Economics, Stern School of Business, New York University.
I think the side opposing the resolution wins, hands down — no contest really — but see for yourself.
“I hope that they (government regulators) leave it alone . . . The Internet is working beautifully as it is.”
— Tim Draper, Silicon Valley venture capitalist, who along with many other SV investors and executives signed a letter advocating new Internet regulations apparently unaware of its true content.
See this comprehensive new Web traffic study from Arbor Networks — “the largest study of global Internet traffic since the start of the commercial Internet.”
Conclusion
Internet is at an inflection point
Transition from focus on connectivity to content –Old global Internet economic models are evolving –New entrants are reshaping definition / value of connectivity
New technologies are reshaping definition of network –“Web” / Desktop Applications, Cloud computing, CDN
Changes mean significant new commercial, security and engineering challenges
This is just the beginning…
These conclusions and the data Arbor tracked and reported largely followed our findings, projections, and predictions from two years ago:
Also see our analysis from last winter highlighting the evolution of content delivery networks — what my colleague George Gilder dubbed “storewidth” back in 1999 — and which Arbor now says is the fastest growing source/transmitter of Net traffic.
Calling them “Masters of Light,” the Royal Swedish Academy awarded the 2009 Nobel Prize in Physics to Charles Kao, for discoveries central to the development of optical fiber, and to Willard Boyle and George Smith of Bell Labs, for the invention of the charge-coupled device (CCD) digital imager.
Perhaps more than any two discoveries, these technologies are responsible for our current era of dramatically expanding cultural content and commercial opportunities across the Internet. I call this torrent of largely visual data gushing around the Web the “exaflood.” Exa means 1018, and today monthly Internet traffic in the U.S. tops two exabytes. For all of 2009, global Internet traffic should reach 100 exabytes, equal to the contents of around 5,000,000 Libraries of Congress. By 2015, the U.S. might transmit 1,000 exabytes, the equivalent of two Libraries of Congress every second for the entire year.
Almost all this content is transmitted via fiber optics, where laser light pulsing billions of times a second carries information thousands of miles through astoundingly pure glass (silica). And much of this content is created using CCD imagers, the silicon microchips that turn photons into electrons in your digital cameras, camcorders, mobile phones, and medical devices. The basic science of the breakthroughs involves mastering the delicate but powerful reflective, refractive, and quantum photoelectric properties of both light and one of the world’s simplest and most abundant materials — sand. Also known in different forms as silica and silicon.
The innovations derived from Kao, Boyle, and Smith’s discoveries will continue cascading through global society for decades to come.
In Monday’s Wall Street Journal, I address the once-again raging topic of “net neutrality” regulation of the Web. On September 21, new FCC chair Julius Genachowski proposed more formal neutrality regulations. Then on September 25, AT&T accused Google of violating the very neutrality rules the search company has sought for others. The gist of the complaint was that the new Google Voice service does not connect all phone calls the way other phone companies are required to do. Not an earthshaking matter in itself, but a good example of the perils of neutrality regulation.
Our own view is that the rules requiring traditional phone companies to connect these calls should be scrapped for everyone rather than extended to Google. In today’s telecom marketplace, where the overwhelming majority of phone customers have multiple carriers to choose from, these regulations are obsolete. But Google has set itself up for this political blowback.
Last week FCC Chairman Julius Genachowski proposed new rules for regulating Internet operators and gave assurances that “this is not about government regulation of the Internet.” But this dispute highlights the regulatory creep that net neutrality mandates make inevitable. Content providers like Google want to dabble in the phone business, while the phone companies want to sell services and applications.
The coming convergence will make it increasingly difficult to distinguish among providers of broadband pipes, network services and applications. Once net neutrality is unleashed, it’s hard to see how anything connected with the Internet will be safe from regulation.
Several years ago, all sides agreed to broad principles that prohibit blocking Web sites or applications. But I have argued that more detailed and formal regulations governing such a dynamic arena of technology and changing business models would stifle innovation.
Broadband to the home, office, and to a growing array of diverse mobile devices has been a rare bright spot in this dismal economy. Since net neutrality regulation was first proposed in early 2004, consumer bandwidth per capita in the U.S. grew to 3 megabits per second from just 262 kilobits per second, and monthly U.S. Internet traffic increased to two billion gigabytes from 170 million gigabytes — both 10-fold leaps. New wired and wireless innovations and services are booming.
All without net neutrality regulation.
The proposed FCC regulations could go well beyond the existing (and uncontroversial) non-blocking principles. A new “Fifth Principle,” if codified, could prohibit “discrimination” not just among applications and services but even at the level of data packets traversing the Net. But traffic management of packets is used across the Web to ensure robust service and security.
As network traffic, content, and outlets proliferate and diversify, Washington wants to apply rigid, top-down rules. But the network requirements of email and high-definition video are very different. Real time video conferencing requires more network rigor than stored content like YouTube videos. Wireless traffic patterns are more unpredictable than residential networks because cellphone users are, well, mobile. And the next generation of video cloud computing — what I call the exacloud — will impose the most severe constraints yet on network capacity and packet delay.
Or if you think entertainment unimportant, consider the implications for cybersecurity. The very network technologies that ensure a rich video experience are used to kill dangerous “botnets” and combat cybercrime.
And what about low-income consumers? If network service providers can’t partner with content companies, offer value-added services, or charge high-end users more money for consuming more bandwidth, low-end consumers will be forced to pay higher prices. Net neutrality would thus frustrate the Administration’s goal of 100% broadband.
Health care, energy, jobs, debt, and economic growth are rightly earning most of the policy attention these days. But regulation of the Net would undermine the key global platform that underlay better performance on each of these crucial economic matters. Washington may be bailing out every industry that doesn’t work, but that’s no reason to add new constraints to one that manifestly does.
Yesterday, the Joint Project Agreement between the U.S. Department of Commerce and ICANN expired. Today, a new “Affirmation of Commitments” goes into effect.
Key points from the new Affirmation:
ICANN will remain an independent, private-sector led organization.
Nations from around the world will have new input through the Government Advisory Committee (GAC).
Overall transparency and global involvement should improve.
But this Affirmation should extinguish any notions that the UN, EU, or other international players might gain new power over ICANN.
ICANN must focus its efforts to ensure three core objectives. That the Internet is:
always on
free and open
secure and stable
More big issues coming down the pike. But for now, I think, a fortuitous development.
Whatever you think about this messy dispute between AT&T and Google about how to classify web-based telephony apps for regulatory purposes — in this case, Google Voice — the key issue not to lose site of here is that we are inching ever closer to FCC regulation of web-based apps! Again, this is the point we have stressed here again and again and again and again when opposing Net neutrality mandates: If you open the door to regulation on one layer of the Net, you open up the door to the eventual regulation of all layers of the Net.
George Gilder and I made this point in Senate testimony five and a half years ago. Advocates of big new regulations on the Internet should be careful for what they wish.
In what is sure to be a substantial contribution to both the technical and policy debates over Net Neutrality, Richard Bennett of the Information Technology and Innovation Foundation has written a terrific piece of technology history and forward-looking analysis. In “Designed for Change: End-to-End Arguments, Internet Innovation, and the Net Neutrality Debate,” Bennett concludes:
Arguments for freezing the Internet into a simplistic regulatory straightjacket often have a distinctly emotional character that frequently borders on manipulation.
The Internet is a wonderful system. It represents a new standard of global cooperation and enables forms of interaction never before possible. Thanks to the Internet, societies around the world reap the benefits of access to information, opportunities for collaboration, and modes of communication that weren’t conceivable to the public a few years ago. It’s such a wonderful system that we have to strive very hard not to make it into a fetish object, imbued with magical powers and beyond the realm of dispassionate analysis, criticism, and improvement.
At the end of the day, the Internet is simply a machine. It was built the way it was largely by a series of accidents, and it could easily have evolved along completely different lines with no loss of value to the public. Instead of separating TCP from IP in the way that they did, the academics in Palo Alto who adapted the CYCLADES architecture to the ARPANET infrastructure could have taken a different tack: They could have left them combined as a single architectural unit providing different retransmission policies (a reliable TCP-like policy and an unreliable UDP-like policy) or they could have chosen a different protocol such as Watson’s Delta-t or Pouzin’s CYCLADES TS. Had the academics gone in either of these directions, we could still have a World Wide Web and all the social networks it enables, perhaps with greater resiliency.
The glue that holds the Internet together is not any particular protocol or software implementation: first and foremost, it’s the agreements between operators of Autonomous Systems to meet and share packets at Internet Exchange Centers and their willingness to work together. These agreements are slowly evolving from a blanket pact to cross boundaries with no particular regard for QoS into a richer system that may someday preserve delivery requirements on a large scale. Such agreements are entirely consistent with the structure of the IP packet, the needs of new applications, user empowerment, and “tussle.”
The Internet’s fundamental vibrancy is the sandbox created by the designers of the first datagram networks that permitted network service enhancements to be built and tested without destabilizing the network or exposing it to unnecessary hazards. We don’t fully utilize the potential of the network to rise to new challenges if we confine innovations to the sandbox instead of moving them to the parts of the network infrastructure where they can do the most good once they’re proven. The real meaning of end-to-end lies in the dynamism it bestows on the Internet by supporting innovation not just in applications but in fundamental network services. The Internet was designed for continual improvement: There is no reason not to continue down that path.
In case my verses attempting an analysis of Quality-of-Service and “net neutrality” regulation need supplementary explanation, here’s a terrifically lucid seven-minute Internet packet primer — in prose and pictures — from George Ou. Also, a longer white paper on the same topic:
Today, FCC chairman Julius Genachowski proposed new regulations on communications networks. We were among the very first opponents of these so-called “net neutrality” rules when they were first proposed in concept back in 2004. Here are a number of our relevant articles over the past few years:
With an agreement between the U.S. Department of Commerce and ICANN (the nonprofit Internet Corp. for Assigned Names and Numbers, headquartered in California) expiring on September 30, global bureaucrats salivate. As I write today in Forbes, they like to criticize ICANN leadership — hoping to gain political control — but too often ignore the huge success of the private-sector-led system.
How has the world fared under the existing model?
In the 10 years of the Commerce-ICANN relationship, Web users around the globe have grown from 300 million to almost 2 billion. World Internet traffic blossomed from around 10 million gigabytes per month to almost 10billion, a near 1,000-fold leap. As the world economy grew by approximately 50%, Internet traffic grew by 100,000%. Under this decade of private sector leadership, moreover, the number of Internet users in North America grew around 150% while the number of users in the rest of the world grew almost 600%. World growth outpaced U.S. growth.
Can we really digest this historic shift? In this brief period, the portion of the globe’s population that communicates electronically will go from negligible to almost total. From a time when even the elite accessed relative spoonfuls of content, to a time in the near future when the masses will access all recorded information.
These advances do not manifest a crisis of Internet governance.
As for a real crisis? See what happens when politicians take the Internet away from the engineers who, in a necessarily cooperative fashion, make the whole thing work. Criticism of mild U.S. government oversight of ICANN is hardly reason to invite micromanagement by an additional 190 governments.
See this new paper from economists Rob Shapiro and Kevin Hassett showing how artificial limits on varied pricing of broadband could severely forestall broadband adoption.
To the extent that lower-income and middle-income consumers are required to pay a greater share of network costs, we should expect a substantial delay in achieving universal broadband access. Our simulations suggest that spreading the costs equally among all consumers — the minority who use large amounts of bandwidth and the majority who use very little — will significantly slow the rate of adoption at the lower end of the income scale and extend the life of the digital divide.
If costs are shifted more heavily to those who use the most bandwidth and, therefore, are most responsible for driving up the cost of expanding network capabilities, the digital divergence among the races and among income groups can be eliminated much sooner.
See my new Forbes.com commentary on the Microsoft-Yahoo search partnership:
Ballmer appears now to get it. “The more searches, the more you learn,” he says. “Scale drives knowledge, which can turn around and drive innovation and relevance.”
Microsoft decided in 2008 to build 20 new data centers at a cost of $1 billion each. This was a dramatic commitment to the cloud. Conceived by Bill Gates’s successor, Ray Ozzie, the global platform would serve up a new generation of Web-based Office applications dubbed Azure. It would connect video gamers on its Xbox Live network. And it would host Microsoft’s Hotmail and search applications.
The new Bing search engine earned quick acclaim for relevant searches and better-than-Google pre-packaged details about popular health, transportation, location and news items. But with just 8.4% of the market, Microsoft’s $20 billion infrastructure commitment would be massively underutilized. Meanwhile, Yahoo, which still leads in news, sports and finance content, could not remotely afford to build a similar new search infrastructure to compete with Google and Microsoft. Thus, the combination. Yahoo and Microsoft can share Ballmer’s new global infrastructure.
We recently estimated the dramatic gains in “consumer bandwidth” — our ability to communicate and take advantage of the Internet. So we note this new study from the Internet Innovation Alliance, written by economists Mark Dutz, Jonathan Orszag, and Robert Willig, that estimates a consumer surplus from U.S. residential broadband Internet access of $32 billion. “Consumer surplus” is the net benefit consumers enjoy, basically the additional value they receive from a product compared to what they pay.
Om Malik surveys the Net traffic spike after Michael Jackson’s death:
Around 6:30 p.m. EST, Akamai’s Net Usage Index for News spiked all the way to 4,247,971 global visitors per minute vs. normal traffic of 2,000,000, a 112 percent gain.
See our new paper estimating the growth of consumer bandwidth – or our capacity to communicate – from 2000 to 2008. We found:
a huge 5,400% increase in residential bandwidth;
an astounding 54,200% boom in wireless bandwidth; and
an almost 100-fold increase in total consumer bandwidth
U.S. consumer bandwidth at the end of 2008 totaled more than 717 terabits per second, yielding, on a per capita basis, almost 2.4 megabits per second of communications power.
Check out Cato Unbound’s symposium on Lawrence Lessig’s 1999 book Code and Other Laws of Cyberspace. Declan McCullagh leads off, with Harvard’s Jonathan Zittrain and my former colleague Adam Thierer next, and then a response from Lessig himself.
Luckily for us, Lessig’s lugubrious predictions proved largely unwarranted. Code has not become the great regulator of markets or enslaver of man; it has been a liberator of both. Indeed, the story of the past digital decade has been the exact opposite of the one Lessig envisioned in Code. Cyberspace has proven far more difficult to “control” or regulate than any of us ever imagined. More importantly, the volume and pace of technological innovation we have witnessed over the past decade has been nothing short of stunning.
Had there been anything to the Lessig’s “code-is-law” theory, AOL’s walled-garden model would still be the dominant web paradigm instead of search, social networking, blogs, and wikis. Instead, AOL — a company Lessig spent a great deal of time fretting over in Code — was forced to tear down those walls years ago in an effort to retain customers, and now Time Warner isspinning it off entirely. Not only are walled gardens dead, but just about every proprietary digital system is quickly cracked open and modified or challenged by open source and free-to-the-world Web 2.0 alternatives. How can this be the case if, as Lessig predicted, unregulated code creates a world of “perfect control”?
Lots of commentators continue to misinterpret the research I and others have done on Internet traffic and its interplay with network infrastructure investment and communications policy.
I think that new video applications require lots more bandwidth — and, equally or even more important, that more bandwidth drives creative new applications. Two sides of the innovation coin. And I think investment friendly policies are necessary both to encourage deployment of new wireline and wireless broadband and also boost innovative new applications and services for consumers and businesses.
But this article, as one of many examples, mis-summarizes my view. It uses scary words like “apocalypse,” “catastrophe,” and, well, “scare mongering,” to describe my optimistic anticipation of an exaflood of Internet innovations coming our way. I don’t think that
the world will simply run out of bandwidth and we’ll all be weeping over our clogged tubes.
Not unless we block the expansion of new network capacity and capability. (more…)
Check out Stephen Wolfram’s new project called Alpha, which moves beyond searching for information on the Web and toward the integration of knowledge into more useful, higher level patterns. I find the prospect of offloading onto Stephen Wolfram lots of data mining and other drudgery immediately appealing for my own research and analysis work. Quicker research would yield more — and one might hope, better — analysis. One can imagine lots of hiccups in getting to a real product, but this video demo offers a fun and enticing beginning.
When Cablevision of New York announced this week it would begin offering broadband Internet service of 101 megabits per second for $99 per month, lots of people took notice. Which was the point.
Maybe the 101-megabit product is a good experiment. Maybe it will be successful. Maybe not. One hundred megabits per second is a lot, given today’s applications (and especially given cable’s broadcast tree-and-branch shared network topology). A hundred megabits, for example, could accommodate more than five fully uncompressed high-definition TV channels, or 10+ compressed HD streams. It’s difficult to imagine too many households finding a way today to consume that much bandwidth. Tomorrow is another question. The bottom line is that in addition to making a statement, Cablevision is probably mostly targeting the small business market with this product.
Far more perplexing than Cablevision’s strategy, however, was the reaction from groups like the reflexively critical Free Press:
We are encouraged by Cablevision’s plan to set a new high-speed bar of service for the cable industry. . . . this is a long overdue step in the right direction.
Free Press usually blasts any decision whatever by any network or media company. But by praising the 101-megabit experiment, Free Press is acknowledging the perfect legitimacy of charging variable prices for variable products. Pay more, get more. Pay less, get more affordably the type of service that will meet your needs the vast majority of the time. (more…)
The supposed top finding of a new report commissioned by the British telecom regulator Ofcom is that we won’t need any QoS (quality of service) or traffic management to accommodate next generation video services, which are driving Internet traffic at consistently high annual growth rates of between 50% and 60%. TelecomTV One headlined, “Much ado about nothing: Internet CAN take video strain says UK study.”
But the content of the Analysys Mason (AM) study, entitled “Delivering High Quality Video Services Online,” does not support either (1) the media headline — “Much ado about nothing,” which implies next generation services and brisk traffic growth don’t require much in the way of new technology or new investment to accommodate them — or (2) its own “finding” that QoS and traffic management aren’t needed to deliver these next generation content and services.
For example, AM acknowledges in one of its five key findings in the Executive Summary:
innovative business models might be limited by regulation: if the ability to develop and deploy novel approaches was limited by new regulation, this might limit the potential for growth in online video services.
In fact, the very first key finding says:
A delay in the migration to 21CN-based bitstream products may have a negative impact on service providers that use current bitstream products, as growth in consumption of video services could be held back due to the prohibitive costs of backhaul capacity to support them on the legacy core network. We believe that the timely migration to 21CN will be important in enabling significant take-up of online video services at prices that are reasonable for consumers.
So very large investments in new technologies and platforms are needed, and new regulations that discourage this investment could delay crucial innovations on the edge. Sounds like much ado about something, something very big. (more…)
Saul Hansell has done some good analysis of the broadband market (as I noted here), and I’m generally a big fan of the NYT’s Bits blog. But this item mixes cable TV apples with switched Internet oranges. And beyond that just misses the whole concept of products and prices.
Questioning whether Time Warner will be successful in its attempt to cap bandwidth usage on its broadband cable modem service — effectively raising the bandwidth pricing issue — Hansell writes:
I tried to explore the marginal costs with [Time Warner's] Mr. Hobbs. When someone decides to spend a day doing nothing but downloading every Jerry Lewis movie from BitTorrent, Time Warner doesn’t have to write a bigger check to anyone. Rather, as best as I can figure it, the costs are all about building the network equipment and buying long-haul bandwidth for peak capacity.
If that is true, the question of what is “fair” is somewhat more abstract than just saying someone who uses more should pay more. After all, people who watch more hours of cable television don’t pay more than those who don’t.
It’s also true that a restaurant patron who finishes his meal doesn’t pay more than someone who leaves half the same menu item on his plate. If he orders two bowls of soup, he gets more soup. He can’t order one bowl of soup and demand each of his five dining partners also be served for free. Pricing decisions depend upon the product and the granularity that is being offered. (more…)
Sun Microsystems was the first to know — and to boldly say — that “the network is the computer.” And yet they couldn’t capitalize on this deep and early insight. Here are six reason why.
Some good history on the evolution of the Internet. I especially liked Steve Crocker’s story about how he and his fellow early Internet developers would share ideas — not by email but by mail. Here’s Crocker’s first “Request for Comments” detailing networking protocols. Today there are some 5,000 RFCs.
See my new commentary on the new $7.2 billion broadband program in the Federal stimulus bill. I conclude that if we’re going to spend taxpayer money at all, we should take advantage of local knowledge:
Many states have already pinpointed the areas most in need of broadband infrastructure. Local companies and entrepreneurs are likely to best know where broadband needs to be deployed – and to aggressively deliver it with the most appropriate, cost-effective technology that meets the needs of the particular market. Using the states as smart conduits is also likely to get the money to network builders more quickly.
And that
After falling seriously behind foreign nations in broadband and in our favored measure of “bandwidth-per-capita” in the early 2000s, the U.S. got its act together and is now on the right path. In the last decade, total U.S. broadband lines grew from around 5 million to over 120 million, while residential broadband grew from under 5 million to 75 million. By far the most important broadband policy point is not to discourage or distort the annual $60+ billion that private companies already invest.
As the Internet’s power grows — dominating our public discourse and driving deeper into every industry and commercial realm — it becomes a bigger target. As the key platform of our knowledge economy, it invites mischief, or worse.
Most digital citizens know the hassles and even dangers of viruses, phishing, and all manner of mal-ware. But cybersecurity is a much broader and deeper topic, and will grow ever more so. The Center for Strategic and International Studies published a good report on December 8 detailing the threats and offering recommendations to “the 44th Presidency.” CSIS suggested a number of specific actions, among them:
(1) a comprehensive national strategy; (2) that the White House lead the effort; (3) that we “regulate cyberspace”; (4) that we authenticate identities; (5) modernizing old laws not suited to the digital networked world; (6) building secure government systems; and (7) not starting over, given what they saw as the previous administration’s productive start.
Yesterday the Senate Commerce Committee moved the ball forward with a hearing on the topic, including the head of the CSIS study James Lewis, nuclear engineer Joseph Weiss, cyber-guru Ed Amoroso of AT&T, and Eugene Spafford of Purdue University’s Center for Education and Research in Information Assurance and Security — better known by its brilliant acronym, CERIAS. (more…)
As the wireless world continues to churn out terrific new hardware and software innovations and network speeds, Engadget talks about the industry in depth with AT&T’s wireless chief Ralph de la Vega.
Calm and reasoned discussion in debates over broadband and Internet policy are rare. But Saul Hansell, in a series of posts at the NYTimesBits blog, does an admirable job surveying international broadband comparisons. Here are parts I and II, with part III on the way. [Update: Here's part III. And here's a good previous post on "broadband stimulus."]
So far Hansell has asked two basic questions: Why is theirs faster? And why is theirs cheaper? “Theirs” being non-American broadband.
His answers: “Their” broadband is not too much faster than American broadband, at least not anymore. And their broadband is cheaper for a complicated set of reasons, but mostly because of government price controls that could hurt future investment and innovation in those nations that practice it.
Ask America. We already tried it. But more on that later.
Hansell makes several nuanced points: (1) broadband speeds depend heavily on population density. The performance and cost of communications technologies are distance-sensitive. It’s much cheaper to deliver fast speeds in Asia’s big cities and Europe’s crowded plains than across America’s expanse. (2) Hansell also points to studies showing some speed-inflation in Europe and Asia. In other words, advertised speeds are often overstated. But most importantly, (3) Hansell echoes my basic point over the last couple years:
. . . Internet speeds in the United States are getting faster. Verizon is wiring half its territory with its FiOS service, which strings fiber optic cable to people’s homes. FiOS now offers 50 Mbps service and has the capacity to offer much faster speeds. As of the end of 2008, 4.1 million homes in the United States had fiber service, which puts the United States right behind Japan, which has brought fiber directly to 8.2 million homes, according to the Fiber to the Home Council. Much of what is called fiber broadband in Korea, Sweden and until recently Japan, only brings the fiber to the basement of apartment buildings or street-corner switch boxes.
AT&T is building out that sort of network for its U-Verse service, running fiber to small switching stations in neighborhoods, so that it can offer much faster DSL with data speed of up to 25 Mbps and and Internet video as well. And cable systems, which cover more than 90 percent of the country, are starting to deploy the next generation of Internet technology called Docsis 3.0. It can offer speeds of 50 Mbps. . . .
See this fun interview with the energetic early Web innovator Marc Andreesen. Andreesen is on the Facebook board, has his own social networking company called Ning, and is just launching a new venture fund. He talks about Kindles, iPhones, social nets, the theory of cascading innovation, and says we should create new “virtual banks” to get past the financial crisis.
Take a look at this 40 minute interview with Jen-Hsun Huang, CEO of graphics chip maker Nvidia. It’s a non-technical discussion of a very important topic in the large world of computing and the Internet. Namely, the rise of the GPU — the graphics processing unit.
Almost 40 years ago the CPU — or central processing unit — burst onto the scene and enabled the PC revolution, which was mostly about word processing (text) and simple spreadsheets (number crunching). But today, as Nvidia and AMD’s ATI division add programmability to their graphics chips, the GPU becomes the next generation general purpose processor. (Huang briefly describes the CUDA programmability architecture, which he compares to the x86 architecture of the CPU age.) With its massive parallelism and ability to render the visual applications most important to today’s consumers — games, photos, movies, art, photoshop, YouTube, GoogleEarth, virtual worlds — the GPU rises to match the CPU’s “centrality” in the computing scheme.
Less obvious, the GPU’s attributes also make it useful for all sorts of non-consumer applications like seismic geographic imaging for energy exploration, high-end military systems, and even quantitative finance.
Perhaps the most exciting shift unleashed by the GPU, however, is in cloud computing. At the January 2009 Consumer Electronics Show in Las Vegas, AMD and a small but revolutionary start-up called LightStage/Otoy announced they are building the world’s fastest petaflops supercomputer at LightStage/Otoy’s Burbank, CA, offices. But this isn’t just any supercomputer. It’s based on GPUs, not CPUs. And it’s not just really, really fast. Designed for the Internet age, this “render cloud” will enable real-time photorealistic 3D gaming and virtual worlds across the Web. It will compress the power of the most advanced motion picture CGI (computer generated imaging) techniques, which can consume hours to render one movie frame and months to produce movie sequences, into real-time . . . and link this power to the wider world over the Net.
How has debt-laden Level 3 survived (at least so far) two crashes now? Dennis Berman tells the story.
Since 2001, it has been paying $500 million to $600 million a year in interest. Yet it has never been able to cut its long-term debt load below $5 billion. Even worse, Level 3 hasn’t made a penny of profit since 1999. Its stock has traded below $8 for the past eight years. It closed at 98 cents on Monday.
Level 3 seemed a prime target to get pulled into today’s great credit maw, where decent but otherwise cash-strapped companies go to die. By November, bond investors were seriously doubting the company’s ability to pay off $1.1 billion in debt coming due this year and next, valuing its bonds as low as 30 cents on the dollar.
But the company has convinced large equity holders to bail them out of the crushing debt load, at least for the next year. 2010 and beyond will still be rough. Berman’s article did not mention the angel who saved Level 3 during the tech/telecom crash of 2000-02: Warren Buffett.
For those who found the Google-net-neutrality-edge-caching story confusing, here’s a terrifically lucid primer by my PFF colleague Adam Marcus explaining “edge caching” and content delivery networks (CDNs) and, even more basically, the concepts of bandwidth and latency.
Yesterday’s Wall Street Journal story on the supposed softening of Google’s “net neutrality” policy stance, which I posted about here, predictably got all the nerds talking.
Here was my attempt, over at the Technology Liberation Front, to put this topic in perspective:
_______________________
Bandwidth, Storewidth, and Net Neutrality
Very happy to see the discussion over The Wall Street Journal’s Google/net neutrality story. Always good to see holes poked and the truth set free.
But let’s not allow the eruptions, backlashes, recriminations, and “debunkings” – This topic has been debunked. End of story. Over. Sit down! – obscure the still-fundamental issues. This is a terrific starting point for debate, not an end.
Content delivery networks (CDNs) and caching have always been a part of my analysis of the net neutrality debate. Here was testimony that George Gilder and I prepared for a Senate Commerce Committee hearing almost five years ago, in April 2004, where we predicted that a somewhat obscure new MCI “network layers” proposal, as it was then called, would be the next big communications policy issue. (At about the same time, my now-colleague Adam Thierer was also identifying this as an emerging issue/threat.)
Gilder and I tried to make the point that this “layers” — or network neutrality — proposal would, even if attractive in theory, be very difficult to define or implement. Networks are a dynamic realm of ever-shifting bottlenecks, where bandwidth, storage, caching, and peering, in the core, edge, and access, in the data center, on end-user devices, from the heavens and under the seas, constantly require new architectures, upgrades, and investments, thus triggering further cascades of hardware, software, and protocol changes elsewhere in this growing global web. It seemed to us at the time, ill-defined as it was, that this new policy proposal was probably a weapon for one group of Internet companies, with one type of business model, to bludgeon another set of Internet companies with a different business model.
We wrote extensively about storage, caching, and content delivery networks in the pages of the Gilder Technology Report, first laying out the big conceptual issues in a 1999 article, “The Antediluvian Paradigm.” [Correction: "The Post-Diluvian Paradigm"] Gilder coined a word for this nexus of storage and bandwidth: Storewidth. Gilder and I even hosted a conference, also dubbed “Storewidth,” dedicated to these storage, memory, and content delivery network technologies. See, for instance, this press release for the 2001 conference with all the big players in the field, including Akamai, EMC, Network Appliance, Mirror Image, and one Eric Schmidt, chief executive officer of . . . Novell. In 2002, Google’s Larry Page spoke, as did Jay Adelson, founder of the big data-center-network-peering company Equinix, Yahoo!, and many of the big network and content companies. (more…)
When you’ve written as muchas Ihave about the weird Web topic known as “network neutrality,” this is big news indeed.
The celebrated openness of the Internet — network providers are not supposed to give preferential treatment to any traffic — is quietly losing powerful defenders.
Google Inc. has approached major cable and phone companies that carry Internet traffic with a proposal to create a fast lane for its own content, according to documents reviewed by The Wall Street Journal. Google has traditionally been one of the loudest advocates of equal network access for all content providers.
What some innocuously call “equal network access,” others call meddlesome regulation. Net neutrality could potentially provide a platform for Congress and the FCC to micromanage everything on the Net, from wires and switches to applications and services to the bits and bytes themselves. It is a potentially monstrous threat to dynamic innovation on the fast-growing Net, where experimentation still reigns.
But now Google, a newly powerful force in Washington and Obamaland, may be reversing course 180-degrees. The regulatory threat level may have just dropped from orange to yellow.
An investigation confirms that FCC Chairman Kevin Martin’s crusade to force à la carte pricing and unbundling of cable TV channels was indeed a sham, as many of us have been saying for years.
The venerable Economist magazine has made a hash of my research on the growth of the Internet, which examines the rich media technologies now flooding onto the Web and projects Internet traffic over the coming decade. This “exaflood” of new applications and services represents a bounty of new entertainment, education, and business applications that can drive productivity and economic growth across all our industries and the world economy.
But somehow, The Economist was convinced that my research represents some “gloomy prophesy,” that I am “doom-mongering” about an Internet “overload” that could “crash” the Internet. Where does The Economist find any evidence for these silly charges?
In a series of reports, articles (here and here), and presentations around the globe — and in a long, detailed, nuanced, very pleasant interview with The Economist, in which I thought the reporter grasped the key points — I have consistently said the exaflood is an opportunity, an embarrassment of riches.
I’ve also said it will take a lot of investment in networks (both wired and wireless), data centers, and other cloud infrastructure to both drive and accommodate this exaflood. Some have questioned this rather mundane statement, but for the life of me I can’t figure out why they deny building this amazingly powerful global Internet might cost a good bit of money.
One critic of mine has said he thinks we might need to spend $5-10 billion on new Net infrastructure over the next five years. What? We already spend some $70 billion a year on all communications infrastructure in the U.S. with an ever greater portion of that going toward what we might consider the Net. Google invests more than $3 billion a year in its cloud infrastructure, Verizon is building a $25-billion fiber-to-the-home network, and AT&T is investing another $10 billion, just for starters. Over the last 10 years, the cable TV companies invested some $120 billion. And Microsoft just yesterday said its new cloud computing infrastructure will consist of 20 new “super data centers,” at $1 billion a piece.
I’m glad The Economist quoted my line that “today’s networks are not remotely prepared to handle this exaflood.” Which is absolutely, unambiguously, uncontroversially true. Can you get all the HD video you want over your broadband connection today? Do all your remote applications work as fast as you’d like? Is your mobile phone and Wi-Fi access as widespread and flawless as you’d like? Do videos or applications always work instantly, without ever a hint of buffer or delay? Are today’s metro switches prepared for a jump from voice-over-IP to widespread high-resolution video conferencing? No, not even close.
But as we add capacity and robustness to many of these access networks, usage and traffic will surge, and the bottlenecks will shift to other parts of the Net. Core, edge, metro, access, data center — the architecture of the Net is ever-changing, with technologies and upgrades and investment happening in different spots at varying pace. This is not a debate about whether the Internet will “crash.” It’s a discussion about how the Net will evolve and grow, about what its capabilities and architecture will be, and about how much it will cost and how we will govern it, but mostly about how much it will yield in new innovation and economic growth.
The Economist and the myriad bloggers, who everyday try to kill some phantom catastrophe theory I do not recognize, are engaging in the old and very tedious practice of setting up digital straw men, which they then heroically strike down with a bold punch of the delete button. Ignoring the real issues and the real debate doesn’t take much effort, nor much thought.
Microsoft, having a couple weeks ago finally capitulated to the Web with the announcement of Ray Ozzie’s new Net-based strategy, now says it will build 20 new data centers at $1 billion a piece. Google is already investing some $3 billion a year on its cloud infrastructure.
Lots of people have criticized my rough estimates of a couple hundred billion in new Net investment over the next five years, saying it’s closer to $5-10 billion, and I wonder what the heck they are thinking.
My colleague Adam Thierer with an excellent post warning of the coming war on Google:
So, here we have Wu raising the specter of search engine bias and Lessig raising the specter of Google-as-panopticon. And this comes on top of groups like EPIC and CDT calling for more regulation of the online advertising marketplace in the name of protecting privacy. Alarm bells must be going off at the Googleplex. But we all have reason to be concerned because greater regulation of Google would mean greater regulation of the entire code / application layer of the Net. It’s bad enough that we likely have greater regulation of the infrastructure layer on the way thanks to Net neutrality mandates. We need to work hard to contain the damage of increased calls for government to get it’s hands all over every other layer of the Net.
For someone like me who studies cloud computing and Internet traffic, which is measured in tera-, peta-, and exabytes, Google’s terabyte sorting record is interesting:
we were able to sort 1TB (stored on the Google File System as 10 billion 100-byte records in uncompressed text files) on 1,000 computers in 68 seconds. By comparison, the previous 1TB sorting record is 209 seconds on 910 computers.
But I suppose I can see how you might not feel the same way.
In the context of potential federal media regulation known as “à la carte,” my colleague Adam Thierer comments on new Internet video technologies and content here and here, and expertly reiterates an old theme of mine, namely that the Internet *is*à la carte.
Coincident with the news that Microsoft is embracing the Web even for its longtime PC-centric OS and apps, The Economist has a big special report on “cloud computing,” including articles on:
