[1st-mile-nm] Sen. Durbin's Broadband Online Forum: Exerpts

[Richard Lowenberg]

A while back, at the end of July, I posted a note to this list, that
Illinois Senator Dick Durbin was conducting a three day online forum, to
discuss this nation's broadband issues.   Most of the many postings on the
forum were surprisingly intelligent and substantive.   At the time, I
culled a few postings that in my biased opinion, were relevant to the
1st-Mile agenda.   Though a bit late and lengthy, they are worth taking
note of, and follow below.
rl
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Time to build 21st century Internet roads  (0.00 / 0)

A strong argument can be made that universal broadband connectivity is the
21st century "Information Age" equivalent of the public road network that
was built in the Industrial Age of the 20th century.  The latter provided
and was funded as a "public good," and contributed enormously to the
unprecedented mobility and economic growth characterized by the industrial
age (though, ultimately, also to global warming).

A single fiber-optic network can deliver virtually unlimited bandwidth
with relatively low-cost periodic upgrades of electronics.  As dannynyc
notes, the high fixed costs of access networks--especially wired
networks--suggests that the most efficient mode of competition is to
deploy one state-of-the-art future-proof network, operate it on a
cost-recovery basis (including revenue to support periodic upgrades) and
allow service providers to compete freely on a fiber- and standards-based
open-access IP network.

Trying to achieve competition via facilities-based competition cannot
really lead to market efficiency nor the potentially vast social
"externalities" that profit-focused network operators cannot readily
monetize.  This is evident in today's markets, which are dominated by two
networks in the wireline sector and four in the wireless sector.
Economics 101 tells us that duopolies are inherently
inefficient--especially so if they are allowed to vertically integrate
(which is where incumbents want to take the broadband market). This is
evident today in the wireline sector.  And because our current wireless
industry structure (as Tim Wu and others explain) has been allowed to
vertically integrate to a high degree, it is also inefficient relative to
its counterparts in other parts of the world, where there is not this
level of vertical integration.

The Internet model is so much more efficient and innovative (and also
hyper-competitive, for those who worship market competition) than either
of these "control-based" models.  Laying it on top of a single
publicly-financed fiber-wireless hybrid network is the ideal solution.

Given this, the public policy question becomes: do we want to accept the
cable/telco/wireless status quo as it is;  try to regulate its market
distortions and inefficiencies (e.g., via net neutrality rules);  try to
incrementally open it up (e.g., via open-access auction rules for part or
all of the 700 MHz spectrum);  or mobilize as a nation to build 21st
century "IP packet" roads open to all comers at cost and upgraded
regularly to support maximum capacity and connectivity at the lowest
per-bit and per-user cost?

We could potentially do more than one of these but, if we step back and
consider the power and social, political and economic benefits of
broadband connectivity, the last option sure looks best and ultimately
most cost-effective to me.

The question then becomes how do we get there?   That question is
addressed in another work I'd recommend to communication policymakers: a
book called "America at the Internet Crossroads: Choosing the Road to
Innovation, Wealth and a Supercharged Economy" by Mike Bookey
(http://www.amazon.co...).  Mike lays out a clear and compelling rationale
for fiber and wireless "Internet roads," along with some very practical
steps for getting them built and to mobilizing the necessary political
will and resources.

Thanks again Senator Durbin for inviting our input and engaging in an
expanded dialog.

by: mitchipd @ Sun Jul 22, 2007 at 22:22:52 PM CDT

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Separate the Pipe from the Applications  (4.00 / 1)

The single most useful way to make the vision you are talking about really
work is to separate the pipe from the applications that run on it.  Treat
the pipe as a regulated utility, just like a gas pipe.  Regulate the pipe.
Allow a the pipe provider to get a guaranteed rate of return on
investment.

Prohibit the pipe provider from providing applications on the pipe.
Require that any applications provider be able to provide his application
on an equal basis with all other applications providers.  All providers
can use whatever facilities the pipe provides.  App providers can be
largely unregulated (they will be subject to things like legal intercept
for example). This is like the gas that goes to the pipe, but it's
fundamentally different.  The actual gas that goes to your house may not
be provided by your supplier; all that happens if you use 1mcf, the gas
supplier puts 1mcf in the pipeline network.  Here, the application
provider actually provides the services you order over the pipe.

Applications include telephony services, video services, web sites, email,
instant messages, etc, etc.  The pipe provider can't provide ANY of them;
they are just in the bandwidth business.

This solves "net neutrality".  It's inherently neutral.  It fixes the
investment problem; we have a long history that regulated utilities work.
Don't let anyone tell you that it's impossible to make money on a dumb bit
pipe.  It's very possible to make money on it, and investments with a
guaranteed low rate of return will be funded.

Allow municipalities to be pipe providers if they want to.  Same rules: no
apps.

You can dance with unregulated subsidiaries of regulated pipe providers.
I'd prefer to not do that; make a clean differentiation between the pipe
provider and an app provider

by: brtech @ Mon Jul 23, 2007 at 18:00:19 PM CDT

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Horizontal Divestiture: Fully Separate Transport from Content  (0.00 / 0)

Allowing the Bells to reconstitute as an unregulated oligopoly has turned
back the clock of innovation and set the US from being the broadband
leader to being closer to a broadband Third World Nation run by crony
capitalists.

The 1983 Divestiture of AT&T was the right idea but it sliced AT&T the
wrong way. We need to slice them again, but this time horizontally.

Separate the Physical Plant (Rights of Way, trenches, conduit, utility
poles, copper, fiber and central offices) into a regulated entity or some
other entity with direct citizen control/oversight. The Physical Plant
entity would have to offer access to physical transport on an open access
simple cost basis.

Just like other physical transports necessary for the common good like
roads, sewers and water (power transport should be handled the same way as
well)

The upper parts of the divested Bells (and Cable Companies as well) should
then have to compete with all other commercial, and non-commercial
entities to deliver services on top of the open access physical plant.

This would guarantee that the service providers can't dictate what content
is available or leverage an artificial stranglehold on the last mile into
artificial scarcity of information flow.

Anything short of this allows the CableBellCos to manipulate the process
as we are seeing with "net neutrality" and the Spectrum Wars.

Note that Wireless can not count as a 3rd alternative. The amount of
spectrum (and thus bandwidth) available for a whole city is minute
compared to what can be carried in one optical fiber. Fiber is the way to
deliver broadband. Its the  real roadway of broadband and it needs to be
and open road, not a toll road.

by: Robert_J_Berger @ Tue Jul 24, 2007 at 01:29:01 AM CDT

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We need to understand "competition"  (4.00 / 1)

Competition only flourished in long distance and devices, and in some
areas of resale and applications to the extent there was some regulation
to limit local telco abuse of market power.  Regulation temporarily opened
up some competition in the local access market, but this was always
limited and, once the Bells won their regulatory battles in court and at
the FCC, the CLEC sector imploded.

Having more local access pipes is fine, but there are real economic limits
on the viability of too many competing pipes, due to their high fixed
costs.  More sensible is a strategy that leads to deployment of the
fattest and most universal wireline and wireless pipes, with an economic
and regulatory structure in place to insure these pipes support a healthy
and highly competitive market for applications and services.

That's the Internet "open network" model, but it's not the model preferred
by incumbent telco and cable pipe owners.  That doesn't make them bad
guys, but it means their business model is fundamentally inconsistent with
the Internet model, which is dramatically more conducive to innovation and
free market competition.

We need a migration path from a legacy-network duopoly on the verge of
squeezing the Internet into its business model (and therefore squeezing a
lot of life out of it) to a future in which we've got universal
high-capacity networks built around  the Internet model.  That needs to be
the priority.

by: mitchipd @ Tue Jul 24, 2007 at 19:23:36 PM CDT

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broadband policy  (0.00 / 0)
Let me suggest 3 general principles:

1. Define "broadband" as comparable to what is available in the office
environment - i.e. 100mbit/second to 1gbit/second.  Note that this is a
rapidly moving target.

2. Think of networking as fundamental infrastructure - which suggests that
municipalities are the most likely provider, and that cost-recovery
pricing is to be preferred (e.g., the way large organizations treat their
infrastructure - put it everywhere, make it last, build the costs into
overhead).  At the very least, eliminate all barriers to municipal
networks (clarify the "any entity" language in the 1996 telecom. act).

3. Establish hard barriers between "content" and "carriage."  Private
carriers should be treated as common carriers, and should not be in a
position where there are economic incentives to favor some
services/content (i.e., theirs) over other services/content.

by: mfidelman @ Tue Jul 24, 2007 at 06:55:54 AM CDT

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