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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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January 21, 2006


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Posted by Dana Blankenhorn

NOTE: The following entry is being mirrored at the new Infrastructure Held Hostage blog.

old-roundhouse.jpgWe live in an uneasy relationship with the past.Photograph courtesy RPI.)

The whole past is available to us, there to teach us lessons, to give us Clues that can help us avoid yesterday’s mistakes.

We can find multiple analogies within it. While our politics may seem, to some, analogous to those of the early years of the Cold War, in terms of technology they’re far more like those of the early Progressive Era, the early 1900s.

So imagine if the railroads of that time controlled all the roads.

That’s precisely what AT&T and Verizon, aka Bell East and Bell West (making Qwest and BellSouth into Bell North and, what do you know?) are doing to the Internet right now.

Jay Gould should have been so clever.

They’ve gotten away with it (so far) because the Internet uses the old phone network (cars using the old railroad tracks) for transport. As with railroad tracks and cars, the phone network brings irrelevant, even obnoxious, artifacts with it.

Take out the frequencies used for phone calls (which you can easily do with VOIP) and your DSL line could handle up to 7 Mbps down, no problem, without changing out the underlying technology.

Still don’t believe me? If you have a home LAN (and millions do) you’re assigning IP addresses to each PC on the network, creating your own private Internet.

Your transport to the Internet backbone could be delivered just as easily with a cable modem as with the phone.

  • When the cable company offers you phone service they’re not rebuilding the old infrastructure, just modeling it on data.
  • Internet transport could be delivered over power lines, and where my inlaws live, in Flatonia, Texas, it is.
  • Internet transport could even be delivered using radios, through a Wireless ISP (WISP) using the shared unlicensed WiFi frequencies your home network (and garage door opener, and cordless phone) use.

Whether that WiFi cloud is owned by your city or a private company is irrelevant – it would work.

Many large companies create their own networks, linking to the Internet only at competitive peering locations where they can get the best prices on fiber transport. Long distance fiber remains a competitive market (for now). Their fear is that, with so much of the U.S. transport market now held by the Bells, their prices could be squeezed just as yours are.

Given that the cable operators have powerful lobbies, and cable does not cover everyone, the phone companies are, in their own lobbying for privilege, allowing them to exist. It’s also convenient. Their current efforts at “improvement” are aimed solely at delivering TV to homes, as cable does, not at improving Internet service.

By allowing this dual-monopoly on consumer Internet transport, or duopoly, the cable and phone monopolies mask reality. Having a choice between only cable and a Bell for ISP service is like having a choice between only Coke and Pepsi for the liquid you need to live. It’s a false choice.

In his book $200 Billion Broadband Scandal, Bruce Kushnick details how we got from the open, competitive market of 10 years ago to today’s duopoly. But I’m more interested in how we get out of this, and what a truly competitive Internet market might look like.

The first Clue is for you to understand that the Bells don’t need to exist. If the Bells went under, and their networks sold to the highest bidders, people would operate it. They would get together and interconnect their networks. They would provide service, with the current capital written down to its real value.

The second Clue for you to understand is that the alternative to monopoly isn’t communism, but competition. If the Bells had to wholesale their networks, as they did under the 1996 Telecommunications Act, that would be fine. If a federal law allowed cities to build their own Internets, that would be enough. If the Bells were only required to share their poles with Wireless ISPs and other competitors, even at a small profit over cost, that would work, too.

The third Clue for you to understand is that the present system is not tenable. Despite their success in creating an Internet duopoly, Verizon and AT&T are each worth about 40% less than they were just five years ago. The old phone network, based on wires, poles, and switches that must be written off over 20 years or more, cannot survive in a world of Moore’s Law where cheap radios and shared fiber can do the same thing. The only way they can survive is through laws that mandate you pay them whatever they demand, for whatever they choose to give you. It’s almost like the government forcing you to buy cigarettes.

Imagine if cars could have been forced to run on rails 100 years ago, and pay monopoly rail rates for the privilege. Any nation which had merely built roads would have buried us long ago. All the economic progress of the last century would have been impossible.

That is just what is happening. The Internet is the new road network. Your PC, your laptop, your PDA, your cell phone, that’s a car.

Don’t let it be crippled. Let the Bells die a natural death. Make them, by refusing to allow continued government life support, by pulling that plug of coercion that keeps them alive.

Free the Internet for competition.

Comments (5) + TrackBacks (0) | Category: Business Strategy | Digital Divide | Economics | Futurism | History | Internet | Investment | Politics | Telecommunications | e-commerce


1. REY on January 21, 2006 03:22 PM writes...

Broadband Power Line Demo
January 29-February 1, 2006
Hilton San Diego Resort

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2. bill on January 21, 2006 08:06 PM writes...

Yep free internet for me too, why have any congress that would work. Free food too! Oh and I want someone to pay my morgage, and free internet softwere without spyware. It not going to happen you dope...Verizon is doing a great job with there fios rollout. But the internet is changing from 10 years ago, its a good thing, there will be more choices, wireless networks, some payed for by cities and towns, by way of taxes.... not free to me. My town can't even take care to the school system and fire department. Just a thought I have seen the town next to me roll out data and video, guess what it a mess. All I want to say is that there are not to may things free. What a dumb article.

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3. Dana Spiegel on January 22, 2006 07:23 PM writes...

Great Article! We've (NYCwireless and others) have been trying to get people to understand that our current telecom and cable marketplaces are anything but. I like your comment about "the alternative to monopoly isn’t communism, but competition". This statement is so true that its sad that we (Americans) need to remind ourselves that its competition that creates a healthy marketplace.

And thanks for the comparison to railroads circa 1900. I've made this argument too, but we need more people to talk about it.

Also, I talk about these things a bit on my Wireless Community blog.

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4. Jesse Kopelman on January 23, 2006 05:40 PM writes...

I'll throw the same idea that I always do for these discussions. There is an easy fix to the current situation. All that is needed is a law that says no network owner can be a retail service provider and no retail service provider can own a network. A politician able to make this a reality would earn a place along-side Teddy Roosevelt.

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5. Robert Neely on February 10, 2006 07:16 PM writes...

Remember Rwanda? Backward place in dark continent with history of extensive massacre?

"Terracom is in process of providing over 400 secondary schools in Rwanda with high speed (300k+) internet access and phone service. 30 secondary schools and the Kigali Institute of Science and Technology are already on the Terracom network. This represents a user base of over 15,000 students.

Within two years 90% of the secondary school students in Rwanda will have an email address and access to the high speed internet via a combination of wireless broadband and the Terracom Fiber Network.

Internet access does not stop there. Terracom is providing hosting and collocation services for the entire educational email system and web sites. Each school will be able to build their own websites from a template system which allows them to post their own information and interact with the world.

True, high speed interconnectivity will allow the schools around Rwanda to interact with each other, and with the Ministry of Education to electronically record all the data related to school operations. This data, which will be centrally available, will include such things as students, grades, teachers name, etc. Through this high speed connectivity the Ministry will be able to communicate directly with all the teachers at one time like never before, also helping to educate the teachers. Online learning, webcasting, video and audio conferencing are all possible on the Terracom network.

All of this is happening at a cost lower than anyone can believe. For instance the entire phone system operating through VOIP incurs one small flat rate to ensure all teachers can contact each other, central help desks and the Ministry itself. Terracom, a private Rwandese company, operated and managed by Rwandese, feels a strong obligation to help make Rwanda the IT center of Africa. Through this educational initiative Terracom is helping to build an incredible Rwanda of 2020."

Must be some kind of lesson there.

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