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Exploring Role of Networks in the Future of Global Economy

Free the Internet or Just Another Scandal? Change to Come from the Top or From the Grass Roots?

March 3, 2006 Ewing, NJ -- only two months after I decided to take on the cause of Bruce Kushnick’s $200 Billion Broadband Scandal life goes on as before. There is a ripple or two of discontent in the blogosphere. The New York Times on Sunday February 12 ran a very short note about an online “rant” all 406 pages of it. The Newark Star Ledger, given a chance to ask embarrassing questions to the NJ Board of Public Utilities, decided it wasn’t worth the trouble.

Meanwhile the LEC lobbyists and astro-turfers continue to obfuscate public discourse where it must seem obvious that life is far too complicated to pay attention to new corporate rip-offs of ratepayers who themselves have their own economic struggles to worry about. Given the news from the Middle East and the Bush Administration’s rule-of-fear what is another Enron or two? The conclusion? Ivan and Ed continue to bluster and will survive by raising rates since they are now largely freed from regulation.

The IHH mail list now boasts 120 members and has developed a life of its own. It is a heard of frustrated Cassandras who see clearly what their fellow citizens cannot quite grasp. Namely that the two most plodding dinosaur like companies in the land, Verizon and SBC/ATT, declare war on Google the current darling of the Stock market. The press dithers and suggests that the new monopolists not favor their own content but the public seems to care little. It’s all opaque and apparently well beyond their keen.

Verizon acts as though FiOS is the fulfillment of earlier promises when it is not. When it is also so burdened down with catch 22s and other restrictions as to be not worth using. Moreover FiOS’ economics are untenable as our experts point out in dozens of earlier pages of text in this very issue. Verizon ran FiOS up and down the streets of Ewing Township NJ in the last months of last year. Yet why would I want it, given the ludicrous terms of use outlined by Bob Frankston earlier in this issue? Why should I switch from my current cable service? Verizon claims better bandwidth, but they will rip out my copper, insist on a package deal of phone services while whining at the state legislature to grant them a blanket franchise for a “me-too” offering of TV that will be a huge drain on Verizon’s resources.

But let’s shift our field of vision from the LECs to the rest of the world. Tom Friedman in his January 2005 book The Earth is Flat explains how broadband Internet is the global flattener. Friedman’s work offers an eloquent portrayal of the new values that fly over the heads of the duopoly. I found it absolutely stunning that the LEC CEOs could be ignorant not only of John Seely Brown and John Hagel’s work but also Friedman’s. Yet there is no sign in the proclamations that issue from the Executive Suites of either global telco that the man-in-charge has a clue of where the economic drivers of the new century are located.

The problem, however, also shows up in the very good and diverse population of my list which in a so far fruitless search for an analysis that everyone can agree on I have renamed twice. The first was a change from Infrastructure to information and the second a few days later from information to innovation held hostage. Many list members are adamant that the beef is with the infrastructure; that is it is with the physical network. While others point out that what makes the difference is not the physical infrastructure but rather what you can or cannot do with the information that rides over it.

The list is a herd of cats. Cats with divergent interests and cats that are farther out - indeed way farther out - than that of the general population. Some think that Congress can be persuaded to act on behalf of the citizens who elect them rather than that of the corporations who buy their services. Others like Mike Bookey tend to think that we must build for ourselves in our own backyards, from the bottom up, educating our local communities as we move along.

Bookey wrote in early February: “I know it looks bleak sometimes at the top of the pile, but change is occurring at the bottom.  I subscribe to the theory that if we move the bottom, the top either moves or it topples. :-) Here is an example of something positive that happened [locally] yesterday.  I met with the mayor -- very smart guy -- from a city near where I live.  The city's population is about 38,000.  I'd read in the local paper that the city was thinking about building a WIFI network. So, I sent an email to the mayor asking if he would meet with me.  I wanted to know why the city thought building a WIFI network was necessary. I also wanted to know how they planned to pay for it.”  

 
“The mayor said that it was important for economic development reasons that the City be perceived as digitally hip.  Providing WIFI to the common area of the downtown core would help change people's perceptions of the City.  The city had not thought through how to fund the WIFI systems construction and operation.” 
 
“We talked in general about the Internet.  I shared my view that it was best to think about the Internet as a digital road network and that WIFI was a piece of a larger puzzle.  He got it.  When I left the mayor saw the need to add a new component to the city's urban development master plan.  That component is urban plans for developing the city's digital landscape. The mayor suddenly saw himself as responsible for the social and economic health of his city in the digital economy.  One community down and lot's more to go.”
 
Bookey continued: “I live about as far from Washington DC as you can live and not live in Japan. By the dictates of geography, I can't be of much help in DC.  What I can do is help communities in my area set an example of what is possible.  I selfishly need for those of you fighting in DC to buy me some time.  I need you to hold off attempts by the telephone and cable companies to ban municipalities from building and running local Internet infrastructures.  I want you to know I appreciate what you are doing.”

So we don’t all yet know quite where we are going but we are learning from our globally internetworked environment.

Vint Cerf Tutors the Senate

Meanwhile in the US we are falling way behind. Vint Cerf had to lecture the US Senate on network neutrality on February 7, 2006. He spoke about lessons that the Senate should have been learned long ago.

“Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the Internet such a success. For the foreseeable future most Americans will face little choice among broadband carriers. Enshrining a rule that permits carriers to discriminate in favor of certain kinds or sources of services would place those carriers in control of online activity. Allowing broadband carriers to reserve huge amounts of bandwidth for their own services will not give consumers the broadband Internet our country and economy need. Promoting an open and accessible Internet is critical for consumers. It is also critical to our nation's competitiveness – in places like Japan, Korea, Singapore, and the United Kingdom, higher-bandwidth and neutral broadband platforms are unleashing waves of innovation that threaten to leave the U.S. further and further behind. [snip].

[If one observes how the Internet was structured,] one can see the overarching rationale -- the "why" -- that no central gatekeeper should exert control over the Internet. This governing principle allows for vibrant user activity and creativity to occur at the network edges. In such an environment, entrepreneurs need not worry about getting permission [so that ] their inventions will reach the end users. In essence, the Internet has become a platform for innovation. One could think of it like the electric grid, where the ready availability of an open, standardized, and stable source of electricity allows anyone to build and use a myriad of different electric devices. This is a direct contrast to closed networks like the cable video system, where network owners control what the consumer can see and do. [snip].

As we move to a broadband consumer network, the Internet's openness is being threatened. Most consumers face few choices among broadband carriers, giving carriers tremendous market power. At the same time, the FCC has shown little willingness to extend the long-standing non-discrimination rules governing our telecommunications system to the incumbent broadband providers. As a result, carriers increasingly will have an economic incentive to use their power to block competitors, seek extra payments to ensure that Internet content can be seen, and generally control consumer activity online. Were there sufficient competition among and between various broadband networks, Google's concerns about the future of the Internet would largely be allayed. [snip]

The Internet has become an immense catalyst for economic growth and prosperity, in this country and around the world. However, our nation is risking the loss of that catalyst, just when the broadband era should be creating the most benefits for the most people. Allowing the interests of network owners to shackle the Internet could severely undercut our nation's ability to compete effectively in the global market. We must do all we can to preserve the fundamental enabling principles of the Internet: user choice, innovation, and global competitiveness. Google looks forward to working with this Committee to fashion carefully-tailored legislative language that protects the legitimate interests of America's Internet users. And that includes the future interests of the next Google, just waiting to be born in someone's dorm room or garage. “ So ended Vint’s February 7th testimony. As of nearly three weeks later there is no sign that anyone on Capitol Hill is willing to stand up to the local telephone monopolists. Until the current Congress and White House administration is swept from power I see no hope of responsible change at the national level.

The necessary change will come, like it or not, at the grass roots – either here in the US or from China and India.

Connecting a Flat Globalized World with Opportunities for Economic Innovation

http://www.edgeperspectives.com/davosedge2006.pdf

This is the latest iteration of the thought of these global explorers. Note well what they say. “China is rapidly emerging as the global center of management innovation.” China and not the US!

The authors pick apart in detail the leading edge trends of what globalization and the Internet are doing to alleged 20th century concepts of economy of scale in large organizations. Globally competitive large organizations will have to be nimble organizations. They will be likely outsource their manufacturing and customer to care operations where global economy of scale is possible. But economies of scale do not apply to their product development and strategy. Consequently these critical activities will be executed by small groups of key workers. But, without the edge-based, edge-controlled internet extolled by Vint Cerf in his February 7th testimony, this will not be possible. Ironically it is precisely this Internet that the SBC/ATT and Verizon are trying to kill. To keep their perks Ivan and Ed will put the US behind the economic eight ball.

Brown and Hegel (B&H) write: “Who we know is more important than what we own. Traditional business strategies are delivering diminishing returns.“ Certainly, this is very reflective of the experience of the 35 attendees at the Oaxaca meeting. B&H continue: “As change accelerates, our stocks of physical assets and knowledge depreciate at a more rapid rate. Flows of new knowledge become critical to competitive success and these flows occur only in the context of relationships. Successful strategies will depend on privileged positions in rich networks of relationships. In this world, the primary value of assets is their ability to help us build and sustain relationships.”

“Whatever our existing capabilities, we will only succeed in the future by finding ways to get better faster than others. No matter how good we are internally, we will be able to get better even faster by working with others at the edge because people with complementary capabilities can help us to find creative ways to deepen and extend those capabilities."

“Unbundling the firm enables even more rapid growth.” [Page 8] The people there, in Oaxaca whom I described on page one of this issue were a part of this new paradigm of relationships – of discovering what works and who has the most innovative ideas. The broadband edge based Internet with increasingly powerful real time collaborative tools has enabled the formation of many new and agile and web based eco-systems. Business opportunities globally are to be found in these environments and not in the Central Planning Ministries of the telco cable co walled gardens.

So where to? I have now interviewed Tom Vest whose remarkable framework portraying the Wealth of Networks will be the focus of the COOK Report during the months of March and April. What Tom has put together is, I believe exceptionally important. It is a macro economic analytic analysis by means of which policy makers to evaluate the economic impact of IP packet switched networks. Something long overdue.

Note on Sunday March 5. I finished the interview last night. All two hours and thirty five minutes of it. I am more convinced thjan ever before of the critical importance of Tom's findings. Here for the first time is a coherent look at the entire global economy of TCP/IP networks.

Therefore, let the duopoly fool the public for as long as it is able to do so. Meanwhile it is time for the rest of us to examine the world, find the good practices, and build on them Candide-like in our own backyards.

As part of that world examination on February 13 JP Rangaswamy and John Seely Brown and I exchanged some email on JSB's book The Social Life of Information. Referring to the book JP wrote: "it (the book) is more relevant now than ever before. And I remain optimistic. It was the book that taught me the difference between being an IT Director and being a CIO, as Information became the defining thing, not technology. Unfortunately for people like us, most people are still hung up about the tech and not the info, so it gets tiring swimming against the tide."

COOK Report speaking: "Information became the defining thing, not technology" - what a simple - seemingly obvious - and POWERFUL conclusion. I still have only finished the preface of the actual book. It is clear however that this is the general premise of the book as well as JP's guiding principal.

But so many questions follow! The book has had many many readers. (It has been translated into 10 foreign languages - if I recall correctly) Yet the number of known adaptors of the philosophy - the number of CIO's or even it directors who are able to live these principals in their own companies do not even fill the fingers of one hand! This according to JSB and JP! Extraordinary,

I want to ask what this means? The book has sold a huge number of copies - yet the evidence of induced change is small. Why? Is it because the culture inside 99% of the organizations is so rigid that anyone, who is converted by the message of the book, will have a hopeless battle? Are the actions required so threatening to other entrenched power centers that the information technology executive does not dare try to walk the walk??

Is the only hope for further progress another 2001 economic crunch that causes enterprises to slash their IT budgets and then, lo and behold, for this book to offer the recipe and rationale for what to do in the face of difficulty? I recall that JP said he had to do fierce budget cutting and that he viewed it back then as an opportunity. Friedman's The Earth is Flat said the crisis of 2001 also drove the forces of globalization into higher gear - for I think similar reasons. Can this book also be a guide to responsible people in the next crisis as JSB’s Social Life was a guide to JP Rangaswamy?

Art Kliener’s recent book Who Really Matters had another hint of the problem - namely that the culture in most organizations is less than rational and often hidden. So perhaps it is no wonder that the ideas of JSB are popular but not easily implemented?

However change is there. I think and hope. In the very wonderful Oaxaca meeting just ended, 95 to 100 % of the 35 of us I believe would agree with these principals. What’s more, in case after case after case, entrepreneurs there who headed small organizations of 5 to 40 or 50 employees, as far as I could tell, lived by these principals in their companies.
So what ideas does that conclusion lead to? Is the future of capitalism to be found in the types of folk represented there? Are JSB and JH wasting their time trying to reach many of the top executives of BIG American Info-tech companies? Lulled by their sense of self-importance and wealth are many of them so numbed that they cannot wake up? Does the point, game, and match now go to Asia where the culture favors cooperation and collaboration more than here?

I am glad Bruce is going to sue the telcos - I will help. But I must also think about the extraordinary difficulty of forcing change as outlined in my previous comment on the ideas of JSB and JP. So I am feeling a little schizoid - on the one hand I want to ride out, samurai-like, and finish off the telcos.  But on the other I think what if I don't succeed?  Would it not be better to follow a different path.  Educate, yes. But do so at the grassroots level.

One of the Oaxaca attendees talked with me about ideas similar to those of Mike Bookey. We discussed Bruce's findings.  We agreed that the whole thing was a stinking mess and he surprised me somewhat when he said do not fight them - you won't win.  Aim to educate and change at the grassroots.

He then mentioned the magnificent 2 hour seminar we had from  Gustavo Esteva. “His (Esteva's) point of view resonates deeply for me: Instead of trying to change the world, create a new one. Imagine yourself in that perfect world, what activity would you being doing? Do that when you get up tomorrow morning and if something gets in your way find a way around it.”

Consider the similar point of view of Level 3 regulatory attorney, Erik Cecil who commented on February 7. "Be like the valley of the universe - accept all - and all that you require will flow to you. Be like water & do not complain of the rocks that impede your path; flow around them and sing a sweet song while you do. This is not pollyanna - this is how I sometimes crush ILEC witnesses on cross exam. Come see me in hearing on cross sometime. Zen lawyer? Don't know; don't care; it just works."

“Rocks in the way or pools of opportunity? Incumbents are converting an abundant resource into a scarce one. OK. Let's see, deregulate the services, drive prices way up. So, less regulation equals less market insulation and, well, let's see, you've driven the price of an abundant, cheap resource (bandwidth), uh, up? Deregulated market failure - sometimes this equals a big huge opportunity.”

How ironic that the companies that are the most determined not to listen to these insights now own the Internet and will do their damnedest to prevent the rest of us from moving forward.

Nevertheless I repeat what I said earlier: doesn't the future lie with the Oaxaca type folk who were from NGOs, Visual arts, heath care outreach and reform, education reform, IBM, game designers, Sun, open source, email and web strategy for political campaigns, and Web 2.0 communities? There were several themes there: the over arching ones were boundary crossing, collaboration and cooperation. A strong common thread was a desire to use one's life to change the world. The activities of everyone there would not be possible without the internet and web. The grand unifying unspoken theme was the innovation unleashed when in an end- to end network people just do what needs to be done without having to get the permission of the centralized controllers of society.

For the rest of the issue you will have to subscribe.

Contents

Let’s Explore the Role of Networks in the Future of the Global Economy - Do the Telcos Have a Role to Play? Under Current Circumstances, Answer in US Is “Not Likely"

So What is the Big Picture? p. 1
The Telco Wars Led to Phantom Networks p. 2
The RBOCs Lived in an Alternate Universe p. 3

Interview

Simon Lin Describes Another Fox’s Journey The Shaping of the New Open Source Collaborative World in the Pacific in Grid Computing and Digital Archives

Academia Sinica
as a 20th Century Refuge for Chinese Science and Scholarship p. 5
The Rise of the Internet Motivates
Development of a Research Network and Pooling of Resources p. 7
Making Taiwan
a Center of Internet Connectivity and Network Exchange p. 8
Early Connection
to the Core Makes Taiwan a Major Internet Player in Asia p. 9
Physical Network Connections Less
Important than Human Relationships Between Network Operators p. 9
Finding
Unprecedented and Compelling Applications in Digital Archives p. 10
Turning from Archives to Grids to Build Collaborative Infrastructure p. 11
Why the High Energy Physics Community Was the Foundation for
Global Cross Disciplinary Problem Solving p. 12

Symposium Discussion

The Morphing of the Internet from Web
Centric and Hierarchical to Collaborative
And Peer-to-Peer p. 15

Report From Korea p. 25

Might the Cable Cos Ever “Internetwork” Among
Themselves? and
Anti -Trust Suit Alleging Discrimination Among
Bells Enters Discovery Stage p. 28

“Telecoms want their products to
travel on a faster Internet - Major site owners oppose 2-tier system” p. 31
Anti-trust Lawsuit Alleging Collusion Between Bells Enters Discovery Stage p. 33
The Coming Revolution is Not in Higher Download Speeds p. 34

Always on Flat Rate Pricing or Incentives to
Discriminate? p. 36

Bandwidth Glut In Last Mile? p. 42

Too Many Fragmented Agendas? p. 48

Broken Bell Promises p. 54

Sanity Check 2005- IPTV Still Doesn't Work p. 58

The Golden Age of One Internet Architecture May Be Over

Does Fear of Commoditization Lead Intel to Sell Life Style and Not Chips? - Doc Searles on Conversations, and Markets p. 67

200 Billion Broadband Scandal and
The Infrastructure Held Hostage Mail List p. 72

The ILECs Have Been Given a Natural Monopoly Without Any Responsibilities to their Customers p. 86

>Net Neutrality: How the LEC Uses Zero Marginal Cost to its Advantage p. 92

Business Communications Review Laments the End of Competition for the Enterprise p. 94

FiOS - Avery Skeptical Litany of the Issues
and Problems p. 96

Pushing Bottom Up Change to Digital
Environments at the Community Level p. 106

Problems of the Ownership Society – Closed Capitalism or Mercantilism? p. 113

Strategy: In Search of a Consensus Goal for a Political Fight p. 115

To Make Matters Worse Ubiquitous Bell Funded
Astroturf Confuses Public Policy While Lobotomized Regulation Holds Sway at the State PUC Level p. 120

Verizon Wants Cable Franchise for All of NJ p. 128

Legal Problems with a Broadband Bill of Rights or
Don’t Argue Just Build Alternative Infrastructure p. 134

Regulatory Issues Behind Use of Telecommunications Service p. 139

JP's First Principals Reprise: Banish "Consumer"
- Replace by "Actor" and Avoid Arbitrary
Distinctions in Network Use p. 144

The Economic Differences Between the Optical Research Nets and the Rest of the US p. 146

Why the Uptake Rates Will Kill FiOS p. 151

Wanted - Carrier Neutral Networks Developed
by Public Private Partnerships p. 156

Changing the Public Perception of the Internet p. 160

Long Term Mission of the Infrastructure Held Hostage List Recombinant Thought Leads to Understanding and New Action p. 163

Where the Rest of the World is Headed - Arctic Monkeys Outstrips the Beatles and Liberal US Late 90s Regulatory Policies Come to the UK p. 171

Wanted: – a Recognition That Internet-style Connectivity Is Our Right as a Fundamental Infrastructure just as Are Highways p. 173

How to Educate the Public to Make Sound
Policy? Is the Issue Economics or Free Speech? p. 180

But What is the Funding Model for Infrastructure That Belongs to the People? p. 187
The End of the Internet? p. 193

Highlights from John Seely Brown and John Hagel’s “Connecting Globalization & Innovation: Some Contrarian Perspectives” p. 197

Executive summary

Free the Internet or Just Another Scandal?
Change to Come from the Top or From the
Grass Roots? p. 199

Contributors to this Issue

Tom Allibone, New Jersey Director of Teletruth and Consultant to NJ Communities & Schools
Janet Asteroff, New York City based Industry Analyst and Consultant
Jim Baller, Partner in Baller Herbst law firm & Expert on Municipal Networks
Dana Blankenhorn, Atlanta based business writer and blogger
Michael Bookey, author America at the Internet Crossroads, Principal Pachen Light Consulting
Scott Bradner, Technology Security Officer at Harvard University & Network World Columnist
Robert Cannon, Senior Counsel for Internet Policy in the Federal Communication Commission
Erik Cecil, Regulatory Counsel for Level 3 Communications
Vint Cerf, Co-author TCP/IP and Chief Internet Evangelist Google
Kilnam Chon, Co-Chair of Asia-Pacific Coordinating Committee on Intercontinental Research Networking
KC Claffy, Director, Cooperative Association for Internet Data Analysis
Roland Cole, Director of Technology Policy for the Sagamore Institute for Policy
Research
Frank Coluccio, President DTI Consulting Inc., New York City
James Enck, telecom Analyst and Proprietor of Eurotelco Blog
Susan Estrada is President and Founder of Aldea Communications and of First Mile.US
Harold Feld, Senior Vice President Media Access Project
Jim Forster, Distinguished Engineer, Cisco
Bob Frankston, developed Visicalc and Lotus and later home networking at Microsoft
Martin Geddes, Consultant and Publisher of Telepocalypse blog
Vijay Gill, Director Peering, America on Line
Fred Goldstein, Principal of Ionary Consulting, author of The Great Telecom Meltdown
Tom Hertz, CTO Fiber Utilities
Dave Hughes, owner Old Colorado City Communications and wireless advocate
David Isenberg, author of the Stupid Network and proprietor of Isen.com
Bruce Kushnick, Founder Teletruth and author 200 Billion Broadband Scandal
Simon Lin, Director Computing Center, Academia Sinica, Taipei, Taiwan
Om Malik, Columnist Business 2.0 and proprietor of Om Malik on Broadband blog
Scott McCollough, Texas attorney and friend of ISPs, CLECs and the Internet
Sascha Meinrath, Co Founder Campaign Urbana Community Wireless Network
Franscois Menard, Canadian policy expert and municipal fiber network architect
Jerry Michalski, Founder and President of Sociate, a technology consulting firm
Frank Muto, Co-founder Washington Bureau for ISP Advocacy
Andrew Odlyzko, Director Digital Technology Center, University of Minnesota
Andy Oram, Editor at O’Reilly knowledgeable about telcom and specializing in Open Source
Bo Parker, Managing Director of the Global Technology Centre of PricewaterhouseCoopers
Larry Press, Professor of Information Systems at California State University
JP Rangaswamy, Global CIO Dresdner Kleinwort Wasserstein
David Reed, Internet pioneer, spectrum policy expert, currently with Media Lab & HP
Jere Retzer, Network Analyst Oregon Health Sciences University Portland, Or.
Ron Sege, CEO Tropos
Clay Shirky, recently featured in Time, writes about Internet Economics Culture, Media Open Source
Richard Stastny, Senior Analyst, OeFEG/Telekom Austria
Bill St. Arnaud, Director Ca*Net4 Canada’s high speed research network
Jeff Sterling, Founder Interconnected Associates
Steve Stroh, Editor of FOCUS On Broadband Wireless Internet Access
Brough Turner, Vice President and Co-founder of Natural Microsystems
Tom Vest, Senior Analyst, Internet Economics & Policy CAIDA: Cooperative Assn. for Internet Data Analysis
Kevin Werbach, Assist. Professor of Telecommunications Wharton Business School
John Wilson, UK activist and Founder Access to Broadband Campaign
Ron Yokubaitis, CEO Texas.net, Gigfanews, and Data Foundry
Mostafa Zommo Director General e-Services Canadian Heritage