A Practical Navigator for the Internet Economy

An Introduction to the World View of Carlota Perez

A Roadmap for Rational Policy Making in the Midst of Technology and Economic Chaos

After years of complaining about a technology and investment tide that seems lost in a dark and hopeless fog, I have discovered an analysis that both sheds light on our frustrating condition and charts a positive future course rather than the one of frustration and anger laid down by Naomi Klein in Shock Doctrine. How to purchase this issue. $$350 or $1400  group.

March 16, Ewing, NJ -- The May issue looks at the economic analysis of Carlota Perez that ties together technology economics and policy in a whole new way.

Executive Summary

Carlotta Perez, pp. 1

We examine the thought of the influential long wave theorist Carlotta Perez through detailed notes of two talks and readings of available material from her book and a paper written for the EU.

Carlota shows how what we are experiencing now has happened before as a part of similar patterns in no less than four earlier technology revolutions since the industrial revolution of the 1770s. At the very big picture level each revolution comes in two stages: first there is a period of installation and disruption of the old way of doing things. The fact that a substantial amount of the new infrastructure has to be built out before income can be derived from its use leads to over investment, a speculative bubble, and market crashes. Every time. Comforting to know since we usually only experience one such event in our lifetimes.


With the crash Carlota finds that we enter a period of transition where social and economic players reorient themselves on the playing field. With installation the state is pushed into playing a role that is subservient to dominant finance capital which primarily redistributes existing wealth. Finance capital plays little role in the creation of new wealth necessary for the second period of the technology namely its deployment stage. In deployment the technology spreads its benefits from early adopters to the rest of society and, rather than concentrating wealth, redistributes it and leads to a golden age of prosperity lasting two or three decades until the next new technology wave builds enough steam to overturn the old order.

Carlota finds that we are now in the eighth year of a transition that in past has lasted anywhere from two to thirteen years. Most significant she finds that the only way to break out of the turning point into healthy deployment is for the state to return in alliance with business and the people to impose sufficient control on the captains of finance capital to be enable a shift of each nation’s economic output from finance and the redistribution of wealth to deployment the creation of new wealth.

Symposium Discussion

KPN Roles Out FTTH for Zero Dollars p. 22

Vincent Dekker explains how Dutch incumbent KPN hopes that by selling obsolete property, some 1200 of their 1500 local exchanges, will earn KPN more than its new All-IP will cost the company.Social FTTH Service in Paris
Olivier Jerphagnon: reports that the organization (OPAC) that manages the low-income housing in Paris (100k apartments, about 250,000 people) announced the result of the tender to provide a social FTTH service. Neuf Cegetel was selected vs. Free and Numericable to provide a basic triple-play service (512k Internet, 18 HD-TV channels, 2 phone lines with free incoming calls) for 1 euro/month.

Internet Stability p. 24

February 26 COOK Report: Everyone here has surely heard about Sunday's YouTube so called hijacking via routing announcements from Pakistan Telecom (as 17557). I have been keeping half an eye on the Nanog discussion. Now that we know what happened, the larger significance begins to come into focus.

NANOG Network Engineer: (And then, of course, the really scary questions: What would such a certification process look like, and how many of us would be able to pass?)

My best question for the colleagues on this list is can or should any of the regulatory certification like steps below be pursued? Can it be argued that any serious benefits should flow from doing so?Tim Cowen: I don't know how feasible it is in the circumstances but the way I see the following is mainly based on negative incentives in the event of failure. Many laws assume penalties enforce the 'right' behavior. Any parent will see that as only half the answer, and often the less successful approach. Rewarding good behavior is often regarded as better by psychologists, and it worked for Pavlov!

Comcast Packs Hearing, p. 26

Comcast deservedly called to task by the FCC for its Network management publicly embarrasses itself at hearing at Harvard Law school.

John Curran: Apparently, the Cambridge hearing on Internet traffic blocking was very well attended, and there's now a concern that it might have been *too well* attended: http://savetheinternet.com/=boston Note that Comcast acknowledges that it paid for line holders to arrive 90 minutes early (and thereby allow local employees who wished to attend to get a seat without losing time in line), but hasn't acknowledged that some of the 'line holders' apparently occupied seats for the duration of the hearing.

Tim Wu: I was at the Boston hearings. There were plenty of seat-warmers sleeping through the hearings; occupying many of the front row sears. The other funny thing was enough Comcast supporters were brought along so that every time Comcast (as opposed to, say, Verizon) spoke there was thunderous applause.

Rural Broadband, p. 28

Estrada: I’ve been pondering some data that we’ve recently collected in the Northern California mapping project I’m working on and it’s puzzling me a smidge. I’m wondering if any of you have run across this in other areas of the US.

As it turns out, the small rural phone companies all have broadband available to 100% of their subscribers. Most of them have great take rates (50% or better.) When we asked them why they put it in, they said, ‘because people want it.’ Now, the two 800 pound gorilla companies cover a lot of the other geography in the area we are mapping and the coverage is not nearly as good. When we asked them why the small companies could do it and they couldn’t they said, ‘that's because rural is their primary customer base so that's where they invest.’ snip

Vint Cerf: The misguided belief that economics would support facilities-based competitive entrance into the market and the elimination of the computer-inquiry results that distinguished enhanced and basic services destroyed any possibility of competition through new facilities-based competitors or through line sharing and wholesale access to transport. The telecom act of 1996 was not enforced (some say was not enforceable) leading to the demise of the clecs. All in all I would conclude that the last decade has not been the FCC's finest.

Choosing Legal Foundations p. 34

Cecil: Mark, After listening to you and the rest of the smart people at the last Silicon Flatirons, and reading this string of discussion, I'll see your assessment of the 1996 Act and raise you one. To do so, I'm going to open the aperture a bit:

First, agreed completely: the Act was a failure from the start. We should have known this the second the Bells appealed the First Report & Order on Local Competition nearly the moment it was issued. We should have known it the minute that we had to take simple concepts, like single POI per LATA, up and down the federal appellate chain and back to the states who pretty much went any way they wanted. But we knew the second the ink was dry on the page - it defined the future in terms of the past, and, per point number two immediately below, missed the present entirely.

Second, and check me on this because I'm quoting from memory, the word "Internet" shows up in the 50,000 words or so of public law 104-104 (aka the 1996 Act for those who haven't cited it 10,000 times in briefs) 14 times. Reflect on that for a moment. The U.S. telecommunications industry has spent the past 12 years locked in epic battle before state public utility commissions, state district courts, state appellate courts, state supreme courts, federal district courts, federal circuit courts of appeal, the US Supreme court, state legislatures, the U.S. Congress, and in some 5,000+ municipalities arguing over what? Ultimately? The fact that no one writing the rules saw that the rule ending revolution had already started or if they did see it for dome reason(s) - and one can readily imagine why - they really didn’t do anything about it.

Encryption p. 38

An attorney from a firm whose lawyers frequently travel overseas asked: I occasionally kibitz to my firm's IT group. In a recent kibitzing session, the topic of hard disk encryption for laptops came up. (Context: the recent cases where the USG asserts the right to examine the contents of any electronic device entering or leaving the country. Since most lawyer laptops contain at least some client-sensitive (if not absolutely privileged) information, what's a lawyer to do if work or vacation takes them overseas and they don't want to leave their laptop behind…?)

Carbon Footprint of FTTH p. 42

Wagter: I have been invited to be the introduction/keynote speaker at the OECD FTTH workshop in April for policymakers. One subject that would be nice to introduce is the (allegedly) reduced carbon footprint of fiber communications. This is obvious for any lang-haul/back-haul network, not for FttH however (unless you calculate/estimate carbon-per-bit and assume bandwidths over 100 Mbps.). It has made me curious.... Editor: Good discussion of the complexities follows._

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An Introduction to the World View of Carlota Perez

A Roadmap for Rational Policy Making in the Midst of Technology and Economic Chaos

Part One:

Looking at the Videos and Reading the Excerpts from the Book p. 2

Part Two:

Carlota’s November 2007 Amsterdam INEC and February 2008 San Francisco CUD Talks

History is not Predictable Yet We Can Learn from it p. 4

Setting a Context to Understand Where We Are p. 5

New Technologies Mean New Infrastructures p. 5

Recurring Historical Patterns p. 8

The Transition p. 8

Movement Away from Mass Production Paradigm Not the End of Civilization p.10

Why Change from the Mass Market Paradigm Has Been So Protracted p. 11

The Turning Point p. 12

Values Under Two Different Paradigms p. 13

Economic Pressures Will Force Change in Social Patterns p. 16

Why the State Must Come Back p. 18

Afterward by Gordon Cook p. 21

Symposium Discussion February 13 March 10th

KPN Rolls out FTTH for Zero Dollars?

Social FTTH Service in Paris p. 22

Thoughts on Internet Stability in a Perezian World - The YouTube IP Hijacking p.24

Comcast, Thinking Internet Is Just Another TV Channel, Packs Audience at FCC Hearing p.26

Choosing Legal Foundations for Investment, Regulation and the Rule of Law p.34

Encryption for Privileged Legal Information p.38

The Facts on Carbon Foot Print of FTTH p.42

Executive Summary p. 45

Symposium & Interview Contributors to this Issue

Affiliation given for purposes of identification - views expressed are those of the contributors alone

Jim Baller, Partner Baller Herbst law firm
Nico Baken, Strategist KPN and Professor University of Delft
Kevin Barron, Information Systems Director, KITP, UC Santa Barbara
Robert Berger, Principal & Strategist, Internet Bandwidth Development Robert Cannon is Senior Counsel for Internet Law, FCC
Erik Cecil, Telecom Regulatory Attorney
Vint Cerf, Internet Evangelist, Google
Vincent Dekker, teelcom report , Trouw, The Netherlands
Tim Cowen, General Counsel for BT Global Services
John Curran, Internet engineer and board member ARIN
Vincent Dekker, telecom reporter, Trouw, The Netherlands
Susan Estrada, President First Mile.US
Fred Goldstein, Principal of Ionary Consulting, author of The Great Telecom Meltdown
Tom Hertz, CTO Fiber Utilities
Erik Hunsinger, Engineer Level 3
Bruce Kushnick, Executive Director, New Networks Institute
Olivier Jerphagnon, Independent fiber and broadband expert
John Levine, Taughannock Networks, writer consultant
Jan Meijer, Senior Engineer Internet Technology, UNINETT
Carlota Perez, long wave economist , author Technological Revolutions and Financial capital: The Dynamics of Bubbles and Golden Ages.
Ed Pimentel, CTO AgileCo, Alpharetta Georgia
Wolfgang Reichel, director of OEFEG, which deals with consulting and engineering telecommunications, subsidiary of Telekom Austria
Chris Savage, Partner Davis Wright Tremaine, LLP Washington, DC
Bill St Arnaud, Director Ca*Net4, Canada's high speed research network
Jim Thompson, wireless expert
Joost van der Vleuten, analyst telecom and energy, Ministry of Economic Affairs, The Netherlands
Herman Wagter, Director Citynet, Amsterdam
David Weinberger author Everything Is Miscellaneous: The Power of the New Digital Disorder
Tim Wu, professor at Columbia Law School best known for popularizing the concept of network neutrality
David Young, Vice President of Federal Regulatory Affairs for Verizon