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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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Moore’s Law defines the history of technology. It held that the number of circuits etched on a given piece of silicon could double every 18 months as far as its author, Intel co-founder Gordon Moore, could see. Moore’s Law has spawned constant revolutions since then, not just in computing but in communications, in science, in a host of areas. Moore’s Law applies to radios, and to optical fiber, but there are some areas where it doesn’t apply. In this blog we’ll take a daily look at new implications of Moore’s Law in real time, as it rolls forward to create our future.
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December 28, 2005

Om mane padme WRONG

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Posted by Dana Blankenhorn

om-malik.jpgI always wanted to write that headline, and finally got the chance today.

Om in this case is Om Malik, whose broadband blog has become one of my regular stops in daily newsgathering.

Om's view? Speed doesn't matter. Who cares if it's 1 Mbps or 2 or 10 or 20? The applications are all the same. What are you going to do with it?

Well in one sense he's right. The faster speeds being sold and claimed by cable and Bell companies right now are bogus. I switched to cable a few months ago and I'm switching back. The cable claims it's running at 5 Mbps, but not really. It's like a hose that sputters and drips. Sometimes it works at that speed, but usually it doesn't. When it comes to such things as latency and real throughput, an ADSL line, like the one I had before, is faster. (I'm sorry Earthlink. I'll hurry home as fast as I can.)

But in the broader sense, he's full of, well, the remains of holiday food. Because just as faster chips meant new applications (and interfaces) in the 1980s and 1990s, so faster broadband can mean that today.

What we're stuck with is Pentium speeds, while the rest of the world is getting Pentium IVs. As a result, we can't develop, or deploy, the new applications that will really define the future. Other countries, like Korea, will do that. And we'll be left behind.

It's just that simple. Broadband is the new chip. The speed of your connection defines your experience. So long as that speed is artificially throttled by monopoly and government protection of monopolists, we can't progress.

And it's not just the people thinking of imaginative new Web and Always-On applications who suffer from that. The reason there's limited demand for faster PCs (and PC prices are falling) is because broadband isn't advancing, and not placing demands on those chips. Thus the last four years have seen a host of "gadgets" developed which are just advanced clients, excuses for hoarding. Who'd need a 30 GB iPod, really, if the content were available over the air? Who would be spending billions on lawyers to attack grandmas for their grandkids' hoarding if you really could get all you wanted, any time, from anywhere, for a reasonable monthly fee?

How are we going to have new content models, models that deliver a working business model to content providers, if the delivery of that content remains problematic?

America is failing in a welter of monopolism and people who should know better are making excuses for it.

Break up the tele-monopolies and I'll show you the future.

UIntil we do that we'll all languish in the past.

Comments (13) + TrackBacks (1) | Category: 802.11 | Business Strategy | Digital Divide | Futurism | Internet | Politics | computer interfaces


COMMENTS

1. Jesse Kopelman on December 28, 2005 05:02 PM writes...

In Om's defense, I think he was more railing against the useless speed numbers for the purpose of marketing and the lack of available applications for higher speed connections than saying that speed doesn't matter. Whatever his intention, it sparked some interesting conversation on the blogosphere and what more can one ask?

Permalink to Comment

2. Brad Hutchings on December 28, 2005 08:58 PM writes...

Hilarious Dana. So why are Yahoo and Napster getting their butts kicked by iTMS? Both offer flat-rate, unlimited downloads, some streaming on demand, etc. Reasonable monthly fee -- less than the price of a hot CD, an application where aDSL and cable yield more than adequate bandwidth. There's more to what Steve Jobs says about people wanting to own their music than just hoarding it on their hard disks. For example, if I play a song 20 times in a row on my iPod, nobody anywhere is going to think I'm a dork. Under models where the data sits on the server, someone is gonna know.

Malik's point is that downstream speed improvement is marginally important for the kinds of client-server apps we have today. The real issue is upstream speeds, which would enable very rich legitimate P2P applications. GoToMyPC is one of your sponsors. I've written a very popular cross-platform screen sharing application. Think that kind of thing. Or maybe having your own private music library available for streaming to your own private devices. Think those kinds of services. It might surprise you to learn that network bandwidth isn't the bottleneck with screen sharing -- CPU and memory speed is.

Permalink to Comment

3. Primis on December 29, 2005 09:25 AM writes...

Dana,

You're not really looking at this logically at all.

It's a bit silly to sit there and state "OMG! It's so slow!! And other countries have faster access!!! Why can't I get it yet?! What's wrong with this country?!".

For one thing, deployment in these other countries is nowhere near the nightmare deployment is in the U.S. We're talking HUGE size and scale differences. Whereas everyone in Korea or Japan mostly lives in several very dense area (in very small counties), everyoen in the U.S. is spread out much more across a very, very large landmass. you can't even compare Canada because there are big scale and population density issues there as well.

Secondly, the reason for your "monopolies" is because the only ones up for the task of deployment are the large companies (that need to get even larger to deploy to more areas, and end up buying our other companies to do so). Or did you just expect every Joe's Local DSL to always expand nationwide?

Does that net the best result? Companies like Comcast make it a rather obvious "No". A company like Comcast is proof that such a large company is going to have serious issues and be fairly corrupt.

Yet how on earth are you suggesting breaking up companies is going to make deployment of any faster speeds and new tech any *quicker*? What exactly are you basing this on, other than an obvious bandwagonney dislike of the large teleco's and cableco's.

It's the inverse in truth, it'd only *slow down* deployment, because there'll be even less organization or more gaping holes in the landscape that are way behind. For all their flaws, at least the large telecos and cablecos have a tiny bit of motivation to keep up with things across the board -- something smaller, more-local providers don't have once they're set, nor do they have the resources to.

Brad is right -- memory and CPU architecture has lagged due to companies losing their focus. Even 3d videocard tech has begun to lag in the midst of what should be a slugfest of a war between ATI and nVidia. Part of it is because hardware makers pushed too far too quickly for a while there, and got well ahead of what anyone wanted or needed.

Another part of it is that everyone has become so enamored with the web, Skype, mobile access, and 20 billion other things that are irrelevant in the longrun, that a lot of true innovation and progress has been pushed aside. Everyone's chasing whatever the new dumb buzzword of the day is (Google, Skype, mobile, WiMax, VoIP, etc) and nobody's just making really fast, really good basic hardware to push the envelope for everyday generic use anymore. And you're starting to see the effects of it now. Everything is specially tuned to do this or that, or meant for this or that.

BTW, in terms of content models... I have yet to see any of these supposedly "more-enlightened" countries that are supposedly so far ahead of the U.S. in broadband actually come up with anything new or useful to use it all for. In other words, I have yet to see a killer app in place justifying any of those speeds they already have.

Permalink to Comment

4. Justin on December 29, 2005 09:34 AM writes...

Primis,

What I want to know is why huge urban areas still don't have anywhere near the same level of broadband speed as Korea and Japan do. Surely there's no population density issues in areas such as New York and San Francisco!

I think this argument is just a cop out for telco and cable operators to avoid spending capital on improving their networks when they can just continue to fleece their customers for the same (or marginally improved) speeds year after year.

Permalink to Comment

5. Primis on December 29, 2005 11:24 AM writes...

Dana,

You're not really looking at this logically at all.

It's a bit silly to sit there and state "OMG! It's so slow!! And other countries have faster access!!! Why can't I get it yet?! What's wrong with this country?!".

For one thing, deployment in these other countries is nowhere near the nightmare deployment is in the U.S. We're talking HUGE size and scale differences. Whereas everyone in Korea or Japan mostly lives in several very dense area (in very small counties), everyoen in the U.S. is spread out much more across a very, very large landmass. you can't even compare Canada because there are big scale and population density issues there as well.

Secondly, the reason for your "monopolies" is because the only ones up for the task of deployment are the large companies (that need to get even larger to deploy to more areas, and end up buying our other companies to do so). Or did you just expect every Joe's Local DSL to always expand nationwide?

Does that net the best result? Companies like Comcast make it a rather obvious "No". A company like Comcast is proof that such a large company is going to have serious issues and be fairly corrupt.

Yet how on earth are you suggesting breaking up companies is going to make deployment of any faster speeds and new tech any *quicker*? What exactly are you basing this on, other than an obvious bandwagonney dislike of the large teleco's and cableco's.

It's the inverse in truth, it'd only *slow down* deployment, because there'll be even less organization or more gaping holes in the landscape that are way behind. For all their flaws, at least the large telecos and cablecos have a tiny bit of motivation to keep up with things across the board -- something smaller, more-local providers don't have once they're set, nor do they have the resources to.

Brad is right -- memory and CPU architecture has lagged due to companies losing their focus. Even 3d videocard tech has begun to lag in the midst of what should be a slugfest of a war between ATI and nVidia. Part of it is because hardware makers pushed too far too quickly for a while there, and got well ahead of what anyone wanted or needed.

Another part of it is that everyone has become so enamored with the web, Skype, mobile access, and 20 billion other things that are irrelevant in the longrun, that a lot of true innovation and progress has been pushed aside. Everyone's chasing whatever the new dumb buzzword of the day is (Google, Skype, mobile, WiMax, VoIP, etc) and nobody's just making really fast, really good basic hardware to push the envelope for everyday generic use anymore. And you're starting to see the effects of it now. Everything is specially tuned to do this or that, or meant for this or that.

BTW, in terms of content models... I have yet to see any of these supposedly "more-enlightened" countries that are supposedly so far ahead of the U.S. in broadband actually come up with anything new or useful to use it all for. In other words, I have yet to see a killer app in place justifying any of those speeds they already have.

Permalink to Comment

6. Dana Blankenhorn on December 29, 2005 12:44 PM writes...

Why do cso-called free market conservatives fight the very idea of market competition when it is proposed?

The Bell and cable companies are TRUSTS, people. Monopolies. They have been allowed to establish a duopoly on local access to the Internet by this government.

The idea that anti-trust is anti-business was supposedly settled a century ago.

But maybe not.

Permalink to Comment

7. Brad Hutchings on December 29, 2005 02:08 PM writes...

Why do cso-called free market conservatives fight the very idea of market competition when it is proposed?

Because "free market" does not mean "maximize number of competitors". It doesn't even mean "optimize competition", because unless you're God (and then your existence would be open to debate), you don't have and can't gather enough of the right information to find the optimum, let alone establish the right goals a priori.

Free market proponents look at the current regulatory regime in the telecom industry and are thankful that it has a strong trend downward, and will continue to work for further deregulation. We'd like to see an eventual end to the Gore Tax, to USF, to the Spanish American War tax, to the FCC, to state PUCs, etc. This might be similar to how practical people against the war in Iraq would want us to draw down our troop levels. No practical person who opposes the war would say, "ok, we have 150,000 troops left in the country, so we need to the bomb the hell out of it and leave". Similarly, no practical free-market proponents want to bust up the telecom industry because the players are probably within an order of magnitude of the scale optimal for current conditions, and they'll adjust themselves to the right size much faster than any intelligent designer might try. Speaking of which Dana, maybe you could enlist the Discovery Institute to lay the intellectual groundwork for your crusade. Your arguments are pretty similar, and they are savvy enough to avoid calling minority women "self-hating" and suggesting that President be (I won't repeat it, you deal with the Secret Service).

Permalink to Comment

8. Jesse Kopelman on December 29, 2005 03:58 PM writes...

Brad you have made an excellent "free market" argument, but I don't think you've thought things through to their logical conclusion. Large corporations want services from the government -- mainly protection from theft (both of intellectual and real property). The price for that protection is regulation, however capricious it might be. It is the same as we individuals who must put up with arbitrary speed limits on the highway as the price for police to protect us from brigands and drunk drivers and who knows what else. I fully support any corporation's wish to go unregulated if that corporation is also willing to give up all the protections afforded by our legal system. Anything else is just trying to have it both ways.

Permalink to Comment

9. Brad Hutchings on December 29, 2005 04:54 PM writes...

Jesse, acceptance of the current or a future regulatory regime is not the price of existing for a corporation. Compliance, of course, is that price. As has been hashed and rehashed here many times before, telecom regulation is a topic with a very rich and tangled history. Although things are much, much better now than a quarter century ago when Judge Green broke up AT&T and deregulation of the industry began full-force, there is still a lingering regulation and willingness to regulate telecom that doesn't exist in other industries. High tech high growth examples include computer hardware and software. Companies in those industries have been left pretty much to their own devices to innovate as they wish, and the pace of change and improvement over the same quarter century has been staggering. Arnold Kling even suggests (today) that this sector of the economy might be responsible for unprecedented productivity growth over the past 5, 10, and 15 years.

The free market, left to its own free associations among buyers and sellers, will not always arrive at individual choices that we all agree with. Dana thinks freer telecom has denied us our God given right to GBit Ethernet broadband. But overall, it has done an amazing job of moving services ahead and prices down, making communication affordably available to far more people than its highly regulated ancestor. I'm confident that if the Bells were regulated to produce that one result Dana wants, that we would overall be much worse off. McNamara's prosecution of the Viet Nam War should have forever disabused us of the notion that anyone who gets into that kind of command and control role with all the fanfair of being a genius could possibly have the information and the judgement to get a result competitive with more distributed decision making. And that's being charitable to McNamara in that it doesn't say he was washed up as a genius dictator when he left the auto industry for government. I think that would be too charitable an assessment to make about people who get into careers as regulators. If they could actually run a company profitably and for the benefit of their customers, employees, and shareholders, they'd be doing it.

Permalink to Comment

10. Primis on December 30, 2005 11:09 AM writes...

First of all, sorry about the dupe comment before... I didn't submit twice but something hung while submitting, and then never updated to show more than 2 comments.

Justin -
What I want to know is why huge urban areas still don't have anywhere near the same level of broadband speed as Korea and Japan do.

Because while a Los Angeles or NYC area is indeed a dense, large metro area, it's still nowhere near as dense as those in Asia. Furthermore, a compnay here in the U.S. doesn't JUST service... say, NYC -- it's serves entire NY State, a region of states, or even the entire country. A metro area in the U.S. is nothing like a metro area in China, Japan, or Korea, and those Asian companies need really only concentrate on the metro areas and not so much the rural ones.

You can say you don't buy it... but if you deploy 10 miles and can get 500,000 homes, how is that comparable to deploying 20 miles and getting 100,000 subscribers? Totally different investment-to-profit ratio there. It changes everything in terms of your strategy and what you can offer.

Dana -
Why do cso-called free market conservatives fight the very idea of market competition when it is proposed?

Because you always so-conveniently forget that when you break companies like that up, it results in other headaches and nightmares organizationally. Would you rather have 3 or 4 companies everyone's under, or 100 little ones that can never get anything quite right and all have very different networks in their little locale, each with their own management ideas? In that instance there's lots of "competition", but what resources do they have? There is something to be said for consistency, resources, and a standard here. And if nothing else, large companies like an SBC/AT&T can do that. If they successfully deploy in State A... they'll know what to do when deploying to State B, where as each local company would have to figure it all out on their own...

It's like selective memory or something though, to forget how maddening it can be to deal with a bunch of smaller companies/providers. Just think back to the early dialup ISP days and I'm sure it will all come floding back...

I would also point to Canada as a perfect example of how the idealistic broadband view doesn't necessarily have much merit in the longrun. Here their gov't pushed and pushed for broadband deployment to all areas, they have less a sprawl to deal with than the U.S really. They were cheered and lauded in many corridors for it... and they still haven't really done that great a job of deploying or upgrading. To be honest, their systems are probably in worse shape than the U.S.'s now, at this point in the game.

Also of note -- if this deployment is so easy to perform just anywhere, how come you only see it in Asia? I don't see it in Canada. I don't see it in Europe. I only see it in Asia, in areas where the population density allows them to push the envelope more and the demand is enormous.

It's not like everyone else has this and onyl the U.S. is lagging behind. It's just a unique situation and not replicatable in any other part of the world.

Permalink to Comment

11. Kate Lynch on December 30, 2005 03:09 PM writes...

This piece is notable for both the brevity and insight, As the owner of an independent ISP providing primarily DSL I concur with all your conclusions--but instead of running back to Earthlink you may want to try Bway.net where we have an Anonymous DSL service as well as public IP if needed.

Permalink to Comment

12. John St. Julien on December 30, 2005 03:20 PM writes...

Blankenhorn is right here. As I see it he makes two pretty simple and difficult to deny points:

1) That judging the need for bandwidth needs based on current capacity-limited uses of the internet is pretty foolish. As with memory and processor speed new less-constrained capacities can be counted on to allow new more intensive uses. I've called the reasoning he contests "the argument from lack of imagination."

2) That the slow pace of net speed improvement is due to the slow pace of the current providers. Those providers are effective economic monopolies in their core business for any one geographic area--it is their control of fast, reliable, capacious wireline last mile that makes them monopolies in their specialties of wireline phone and cable. It is this monopoly status that allows them to not implement economically viable, but expensive fast broadband (fiber). Until the price falls so low for fiber that it is more profitable in the short term to build fiber than hang onto paid out copper they will not move on. A truly competitive market would have forced deployment of the cheaper to build, cheaper to maintain, much more capable, fiber to the home network years ago.

That seems very straightforward. Blankenhorn is right about those crucial facts. And that has, I think, huge consequences.

Most of the country is under the thumb of a communications network duopoly --cable and phone. These parallel specialty network monopolies are in the process of collapsing into nearly identical systems based on fiber and standard internet protocols. Apologists for the current mess, misnaming themselves advocates of "free enterprise," should indeed should know better than to support the anti-competitive, monopolistic status quo. This indictment applies equally to the right (who don't want to admit the existence of monopolies and when they do make the same tired arguments for size and efficiency that our great grandparents heard justifying the railroads and other speculative monopolies of the gilded age) and to the left (who seem frantic to endorse imaginary solutions where individuals own the last mile or private companies form "partnerships" with public agencies that lock in new private monopolies). The idea that things were bad (maybe) but that the coming convergence of networks augers a new age of "vigorous" competition that justifies speculatively reducing regulation is part of this collective fantasy. It ignores the raw economic fact of natural monopoly. Two converged networks without supporting service monopolies in cable or phone service will, if they really compete, collapse into a single monopoly. That is the nature of the economic situation. The history of phone and cable prove that telecom is a natural monopoly. A converged situation will not change that raw fact. A real competitive battle will leave only one provider standing in each market. The other, more likely scenario is for them to not really compete and to tacitly agree to some form of market segmentation--that is the classic duopoly model. In either case regulation to ameliorate the ill effects of monopoly practices will be necessary.

it's all very unpleasant for Americans weaned (left, right, and, center) on the idea that competition is the cure-all for what ails one economically. Unhappily, it's not true, as our great-grandparents would have understood as a matter of basic, lived, economics. The problem with monopolies is that they reveal the divergent interests of owners and customers--a problem that real competition keeps in check by bring the interests of owners largely into align with the interests of customers.

The only stable, nonregulatory solution to a natural monopoly situation is the classic utility solution--make the customers the owners. In the US this means cooperative and municipal ownership of the local network. (Think water or electricity districts.) It works, and it has worked well in situations where crucial services are provided by single providers. It will work equally well in the last mile natural monopoly of converged, fiber-based networks.

The battle is already joined and is already horrific, witness the travails of Lafayette, Louisiana or the astonishing laws pending in congress that would destroy the ability of local communities to exercise ownership rights over their own property. But refusing to participate in that battle will have devastating consequences for the individual user and for communities across the country as the new enormously powerful private monopolies understandably decide to choose shareholder profit over individual freedoms and community development.

Permalink to Comment

13. Jesse Kopelman on December 30, 2005 05:48 PM writes...

Brad, I am not arguing against the free market. I am a true Libetarian and I would be happy with no government at all -- I just don't think such a thing is possible. Study the behavior of the telecom companies you defend and you will note they are not in favor of the free market. They behave like everyone, else -- they want regulations that favor them and hurt everyone else. The point I am trying to make is either you have no regulations (which would make everyone equally unhappy) or you try and have fair regulations (which those who benefit from unfair regulations will oppose). When large corporations give up their lobbyists, I will be more than happy to raise the deregulation battle cry.

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