Southwest Virginia Blogs

We know exactly what will happen if the big telecom companies succeed in convincing Congress to let them partition the Internet. We have a perfectly good example of the mess we will be in, and it is called the cellphone industry. Read this article to see how innovation is choked off, small businesses are forced out of the market place, and how consumers end up paying more, much more, for mediocre services.

Right now, anyone with a good idea can start an Internet-based business and know that the service will be available to anyone with an Internet connection. What the telecom companies want is a "two tier" system, but in reality there will be many tiers, and companies that want to sell a service over a Verizon network, as an example, will likely have to pay high up front fees and high monthly fees, before any revenue comes back to the new enterprise. This means most new business ideas will never launch, because the start up costs will be too high, and the next Google or eBay will never have a chance. Let's hope Congress comes to its senses before it is too late.

We know exactly what will happen if the big telecom companies succeed in convincing Congress to let them partition the Internet. We have a perfectly good example of the mess we will be in, and it is called the cellphone industry. Read this article to see how innovation is choked off, small businesses are forced out of the market place, and how consumers end up paying more, much more, for mediocre services.

Right now, anyone with a good idea can start an Internet-based business and know that the service will be available to anyone with an Internet connection. What the telecom companies want is a "two tier" system, but in reality there will be many tiers, and companies that want to sell a service over a Verizon network, as an example, will likely have to pay high up front fees and high monthly fees, before any revenue comes back to the new enterprise. This means most new business ideas will never launch, because the start up costs will be too high, and the next Google or eBay will never have a chance. Let's hope Congress comes to its senses before it is too late.

We know exactly what will happen if the big telecom companies succeed in convincing Congress to let them partition the Internet. We have a perfectly good example of the mess we will be in, and it is called the cellphone industry. Read this article to see how innovation is choked off, small businesses are forced out of the market place, and how consumers end up paying more, much more, for mediocre services.

Right now, anyone with a good idea can start an Internet-based business and know that the service will be available to anyone with an Internet connection. What the telecom companies want is a "two tier" system, but in reality there will be many tiers, and companies that want to sell a service over a Verizon network, as an example, will likely have to pay high up front fees and high monthly fees, before any revenue comes back to the new enterprise. This means most new business ideas will never launch, because the start up costs will be too high, and the next Google or eBay will never have a chance. Let's hope Congress comes to its senses before it is too late.

USA Today has a useful summary of net neutrality, with a two column, side by side comparison of the issues and the players. Congress continues to squabble over this issue, with what appears to be a notable lack of understanding of what is involved. The current legislation is now opposed by nearly every single municipal and county professional organization that represents either local government officials or local government generally, which should be a signal to legislators that something is not quite right. But Congress has never minded stripping communities of decisionmaking and control in the past, so we can only hope the sausage factory we call Congress, in the end, makes something palatable to communities.

If it wasn't enough to be known as the Senator who wanted the bridge to nowhere, Senator Ted Stevens of Alaska has probably secured a permanent place in history, right along with Al "I invented the Internet" Gore, as the Senator who said this:

"They want to deliver vast amounts of information over the internet. And again, the internet is not something you just dump something on. It's not a truck. It's a series of tubes. And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material."

Senator "The Internet is a series of tubes" Stevens is fast becoming the laughingstock of the Internet with this remark, which sounds suspiciously like how a lobbyist might try to explain it to a lawmaker. There is a place for analogy (I like to use the roads analogy), but when you are making laws that will effect the work and livelihood of hundreds of millions of Americans, you have an obligation to take the time to truly understand the issues.

It is frightening to think this guy is a key lawmaker. Here is a Wired article with more on Stevens and his tubes, but there are already many thousands of comments and commentary on this. Oddly, Stevens may have done all of us a big favor by revealing his deep ignorance of the topic. It may now be much harder to get a pro-telecom bill passed.

And just to be clear, while multimedia does tend to slow things down under certain conditions, that problem does not require massive Federal legislative meddling to fix--Stevens wants to basically hand the keys to the Internet over to the cable and telephone companies. If he thinks the "tube" problem is bad now, wait until the "tubes" are managed by the telephone and cable companies.

If it wasn't enough to be known as the Senator who wanted the bridge to nowhere, Senator Ted Stevens of Alaska has probably secured a permanent place in history, right along with Al "I invented the Internet" Gore, as the Senator who said this:

"They want to deliver vast amounts of information over the internet. And again, the internet is not something you just dump something on. It's not a truck. It's a series of tubes. And if you don't understand those tubes can be filled and if they are filled, when you put your message in, it gets in line and its going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material."

Senator "The Internet is a series of tubes" Stevens is fast becoming the laughingstock of the Internet with this remark, which sounds suspiciously like how a lobbyist might try to explain it to a lawmaker. There is a place for analogy (I like to use the roads analogy), but when you are making laws that will effect the work and livelihood of hundreds of millions of Americans, you have an obligation to take the time to truly understand the issues.

It is frightening to think this guy is a key lawmaker. Here is a Wired article with more on Stevens and his tubes, but there are already many thousands of comments and commentary on this. Oddly, Stevens may have done all of us a big favor by revealing his deep ignorance of the topic. It may now be much harder to get a pro-telecom bill passed.

And just to be clear, while multimedia does tend to slow things down under certain conditions, that problem does not require massive Federal legislative meddling to fix--Stevens wants to basically hand the keys to the Internet over to the cable and telephone companies. If he thinks the "tube" problem is bad now, wait until the "tubes" are managed by the telephone and cable companies.

Vonage may be the first big casualty of the "Web 2.0" craze. While Voice over IP is technically not a Web 2.0 application, we can use Web 2.0 as shorthand for the same kind of hysteria we saw in 1999 and 2000, when a lot of really bad ideas (from a business perspective) got way too much venture capital funding.

Proving that there is still a sucker born every minute, investors poured nearly half a billion dollars into the VoIP firm's IPO--even though the company has never had a single profitable quarter in its five year life, and in fact has lost nearly half a billion dollars in that time.

The problem for Vonage is that they set the stock price too high (well, the company has lots of problems, but I'm talking about the IPO). The $17 initial price has dropped below $15 in just a few days, and some are predicting it will fall below $10. High flying tech stocks are supposed to shoot upwards in value and make early buyers of the stock big profits.

But wait! There's more!

Vonage offered users of their telephone service an opportunity to buy stock at the initial opening price. That's an attractive offer if the stock value shoots up quickly; you can buy the stock and immediately know you are going to make a profit if you sell right away. But what if the stock price drops? Now you have to buy shares at $17 that the market says are only worth $14.50. What some subscribers are saying is that they are going to renege on their agreement to buy. And Vonage is now suggesting it will force subscribers to honor their purchase commitments.

It can't get much uglier than that.

Stepping back, Vonage has two structural problems. First, the business model for Vonage, in which you can make free calls to other Vonage users and pay to make calls to people not on the Vonage network, is not working--the company is losing money every day.

Second, the big access providers have started playing games with VoIP data traversing their networks so that the quality of the phone calls is much reduced. This is part of the "two tier Internet" issue, where the big providers first "prove" extra fees are needed by monkeying with the way their competitor's data traffic is handled, then claim special fees are needed to make the network work better. Vonage is an early victim of this because they have so many people using their service.

And in fact, heavy VoIP traffic can and does affect networks. But the solution is not to start charging companies like eBay, Vonage, and Google special fees to carry their traffic. The real problem is that the bandwidth model of selling Internet access that we have used for the last decade is badly broken. The two tier Internet "solution" is like putting a band aid on someone having a heart attack.

We need open access digital road systems where bandwidth is free and you pay for services. This allows everyone in the service chain, from customer to service provider, to price or pay for services based on the value of the service, and not on some completely artificial cost of some increment of bandwidth that has no relationship to what people and businesses actually do.

Some communities are already planning open access systems. As they become operational in the U.S., we'll see more and more movement toward them, because they are the only ladder out of the hole we are in. In the meantime, we have to hope our state and Federal legislators don't cave in to the two-tier Internet crowd and really screw things up.

This article talks about Verizon's new claim that net neutrality "limits" the company, and the nothing but a scare tactic of claiming they won't be able to roll out any new services unless they get to erect toll gates.

One thing net neutrality does limit is the ability of one or two big companies from setting up walled gardens that keep consumers locked into a few choices (from, say, Verizon or Comcast). Net neutrality gives consumers and innovative startups a chance to play on a level playing field.

The telcos are way behind the cable companies in broadband customers, and they are desperately trying to get legislators to give them a break. They have cleverly adopted language that makes them sound like they are all for innovation and rolling out new services quickly, but you have to look beyond that to see what the end game is likely to be.

Right now, the picture could get very grim very quickly if legislators fall for all this "We just want to offer great new stuff at great prices." In the short term, we do get some modest competition. But in the long term, communities, their economic future, and local jobs are at stake if all we have is a duopoly with cartel-like pricing and a very limited set of choices for services. A duopoly is not marketplace competition. Vasteras, Sweden has marketplace competition, with 64 service providers selling all kinds of services to local residents and businesses. That's what every community in America ought to have--dozens of providers, not just two.

A distinguished group of technology leaders has begun a Save the Internet campaign, which is intended to provide information to legislators on the network neutrality issue.

Many of the incumbent broadband providers want to start charging differential fees for access to their broadband networks. The effect will be to squeeze much of the innovation and opportunity out of the Internet, leaving only deep pocket companies that can afford to pay the tolls--and that is all they really are.

It's as if our entire Interstate Highway System, formerly free, suddenly had tollbooths at every exit. It would not be good for the economy. And a two tier Internet won't be good for the economy or for communities.

Communities need a stake in the ownership of the Internet; nothing less than their economic future is at stake. If the toll access to the Internet is too high in your community (think rural), companies won't relocate to rural areas. And that means no jobs.

There is ample precedent for communities to take on partial ownership of telecom infrastructure; done correctly, private telecom providers can make even more money, but on a level playing field that is managed for the common good.

Having trouble understanding the issues around network neutrality? Here is a short video that explains it very clearly.

The Christian Science Monitor has an article about the emerging two tier Internet. It is a good overview of the political and technical issues that are driving this problem. The big broadband access companies (e.g. the phone and cable firms) are determined to wrestle control of their customers away from the open Internet.

From their perspective, it makes perfect sense. They built their networks, and companies like Google are making billions by carrying traffic over them--those roads are not free, by the way. Google has to pay huge amounts of money for the bandwidth needed to make all those searches happen quickly. But not enough of it trickles back to the phone and cable companies, in their opinion.

It is unfortunate that the issue has become so polarized. You end having to take the side of the access companies (not entirely admirable firms) or the side of companies like Google, which are also not entirely admirable.

But the real impact is on communities and economic development. What if every road in your community was privately owned? And there were tollboths on every road into town? Everyone and every business that wanted to come into the community had to pay a toll--would that be good for economic development? Of course not. But that's where most communities are right now.

There is another way--build public roads and let all businesses use them. It's a model that has worked for a hundred years.

Doc Searls, one of the tech community's best commentators on technology and its impact on us, has done an outstanding job of explaining network neutrality--what it is, why it has made the Internet successful, and why it needs to be preserved.

He also analyzes the broadband carriers and their dream to turn the Internet into a sophisticated form of cable TV. This is an article that deserves close attention. Here is just one of many key points:

"In fact, the asymmetrical build-outs of service to homes has done enormous harm to market growth by preventing countless small and home Net-based businesses from starting and growing.

Specifically, by provisioning big bandwidth downstream and narrow bandwidth upstream, while blocking ports 25 and 80--in crass violation of the Net's UNIX-derived network model, in addition to the end-to-end principle--the carriers prevent customers from running their own mail and Web servers and whatever server-based businesses might be possible. Again, all the carriers can imagine is Cable TV. That's been their fantasy from the beginning."

The end of network neutrality means the choking off of new engines of economic growth, especially in rural communities and underserved urban neighborhoods. Small businesses and entrepreneurs have been creating jobs at a furious rate over the past decade, fueled in large part by the Internet. If we lose the Internet as we know, to be replaced by glorified TV, communities and neighborhoods lose their future.

Read this article.

The broadband access providers (aka the telephone and cable companies) are shocked, just shocked, that their customers are actually using broadband.

Their response?

According to this article in The Register, the big companies are already installing software that slows down much of what people want to do, to the point of making them give up and/or buying the service from the access provider.

This article talks about Skype, the popular Voice over IP service, and how the cable companies are using software to slow down Skype calls, with the hope that their customers get fed up and buy VoIP from the broadband provider instead.

The two tier Internet is already well underway, and the only cure is to distribute ownership of the network among property owners (us), the community, and the broadband providers. By doing so, we get the ability to set some of the rules. If we simply give up and let the phone and cable companies recapture natural monopolies over broadband, they get to set the rules.

Communities that pursue distributed ownership of the network will become havens for business, because broadband services will be cheaper, better, and more plentiful.

AOL struggles mightily with spam email. It has millions of subscribers who receive hundreds of millions of spam emails per week. At enormous cost, AOL (and every other provider of email service) has to try to filter out this dreck.

A core problem is that the cost of sending email is very low. It's easy to buy a server that can pump out millions of emails per day, and the service providers have to receive that email and deliver it to their users. It uses a significant percentage of the available bandwidth on the Internet.

AOL has proposed charging a small fee to deliver email from bulk senders. This approach of charging for email has been around for a long time. If it cost, as an example, 1/100 of a cent to send an email, it would be a barely noticeable fee for most people, who send out just a few a day--if you sent 20 emails a day, it would cost you six cents a month for email. But if you were a spammer sending out a million emails, it would cost you $1000/million emails. All of sudden, sending spam costs real money. Spam would stop overnight.

But the problem is a bit more complex. Many nonprofit and civic organizations also send out lots of email, and AOL's current plan would not discriminate--senders of large amounts of email would have to pay. In return for payment, AOL would guarantee that an organization's email would get delivered to the recipient's mailbox (i.e. not get tossed in the spam bin).

But charging some for email delivery and not others would create a powerful incentive for AOL to put most resources into delivering the paid mail and correspondingly less into unpaid mail. So if you are sending a single (free) email to an AOL subscriber, it would get treated differently.

This is not a simple problem, and there are no obvious and simple solutions. But creating multiple classes of service on the Internet is likely to cause as many problems as it solves. It would be a difficult transition to go to fee-based email, but doing it across the board so that every email continues to get the same level of treatment would be better than AOL's proposal.

Garth Graham is the visionary leader behind Telecommunities Canada; Graham has been thinking about communities and technology longer and with more clarity than most of us, and when Garth talks, I try to shut up and listen. In the hallway between PCNA sessions, I made a casual statement about how "technology is a tool." It's an innocuous phrase that has been uttered by millions of technocrats at one time or another.

But Graham looked me straight in the eyes and said, "Andrew, I have to disagree with you. IP is a social contract, not a tool."

The instant he said it, I knew it was true, and I realized I had missed an important piece of the puzzle. IP (Internet Protocol) is a relatively simple set of rules used by all the individual networks that comprise the "Internet." The IP rules work only because individual network operators have informally agreed to abide by them for the last twenty years or so--an informal social contract.

The alarming proposals for a multi-tiered Internet discard that social contract and replace it with business contracts between network access providers and content providers. Content users are left out completely.

As Garth said, "We can't let this happen." I agree.

Stephen Levy is a knowledgeable technology columnist for Newsweek, and his article on network neutrality is short and articulates the issues clearly. As Levy puts it, the Internet may end up with two classes of service: "steerage and first class," with nothing in between.

Such a split would stop the development of new services, and create de facto monopolies for the companies that are already big--think Google, AOL, Yahoo!, MSN. All four of those companies were tiny once, and the reason they were able to grow was because network neutrality allowed them to.

Once the Internet is split by access providers (the telephone and cable companies, for the most part) into free and fee-based classes of services, Levy, Vint Cerf (one of the original Internet developers), and many other believe innovation and competition will come to a halt.

What worries me is that there are too many calls for legislation. Do we really want Congress deciding how the Internet should be run? I don't think so.

The solution is to break the infrastructure stranglehold that the telephone and cable companies have over communities. Community infrastructure investments will not only get them to play by community rules, but as One Cleveland has shown, they can make money using community infrastructure.

I've borrowed the title of Jeff Chester's article in The Nation. Chester raises alarm bells about the plans of the incumbent broadband providers to create walled gardens that give them near monopoly control over what their subscribers can do and access via their broadband connections.

With the encouragement of network equipment giant Cisco, these companies are beginning to plan for massive snooping into every packet of data that flows in and out of our computers. Using Google as an example, these broadband providers want to build massive dossiers about what you watch, who you call, and what Web sites you visit, so that they can sell advertising space to companies eager to sell you something. The broadband providers are ready to jump to IP-based TV, but not the free-ranging, free for all of the Internet. Instead, you will be able to access only that programming your broadband provider will let cross their network, and it will be packaged much the way Google packages everything--with space for ads.

And if a business wants to use its broadband connection to videoconference with a distant client? Well, that may not work at all, or it will work only by paying special fees. Without the counterbalance of public infrastructure, open to any broadband service provider, this will come to pass in many communities.