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Monday, August 30, 2010

Net neutrality: special issue compared Canadian experience to US, Europe, Japan

I warmly recommend the Global Media Journal Issue 3 number 1 - an entire issue devoted to country comparison's on net neutrality policy now that we have emerged from the phoney (sic) war of 2006-8 (at least outside the US, where they have done things in reverse).
Greg Taylor gives a thorough and thoroughly fair review of my book, and his two particular criticisms, that it is Euro-centric and that it is perhaps too optimistic about the reversal of neo-liberalism in US telecoms policy, are those that I fully accept. Recall the book was written in the bright Obama dawn of early 2009, not the appalled, apocalyptic and rotten summer of Beckian doom.

Friday, August 27, 2010

Special/managed services

There's a lot of interesting comment on special/managed services at the Net Neutrality squad list at the moment: well worth reading. Its worth remembering that common carriers are required to carry on a best-efforts and non-discriminatory basis because they have special privileges associated with that status. Its not a free market, more of a free lunch - which is why they can guarantee dividends.

Tuesday, August 24, 2010

Broadband Internet and economic growth: some thoughts

There's a lot of head-scratching over net neutrality and innovation - and the effects of centralized versus localized innovation on economic growth. On the local side, there are Seely Brown, Benkler, van Schewick, Lessig, and economists Economides, Evans and Brynjolfsson. On the central side, there are any number of managerial experts, and its certainly the case that previous industrial revolutions depended to a large extent on the management of capital and resources, notably in warfare and railroads.
Andrew Odlyzko's latest work has set me thinking, along with Christian Sandvig's reminder of the brutal corporate strategy of the railroad and oil pipeline bosses of the Gilded Age (which I back in the bubble of 2000 decided had been replaced by a new George Gilder-ed Age).
John Seely Brown has long talked of the role of information processing in terms of enabling technologies (or general purpose technologies), and of the second forty year period as more important than the first in any enabling technology's development. This is not new - it is known as Solow's Productivity Paradox - and reflects the socio-economic lag before the full benefits of new technologies can become generally deployed in any market. Hence, the steam engine was invented in 1774, the mobile version - steam trains - in 1805, the iron-clad ocean-going ship in 1843 (and the enormously advanced SS Great Eastern in 1858, largest ship for over 40 years), but their effect was far greater over the third and fourth human generations after their invention (note that Brunel's great ships became respectively a gold rush passenger carrier to Australia and a telegraph cable carrier, thus enabling enablers). The same process applies to the motor car, the microprocessor, electrification and so on.
So with the Internet. It was 'invented' (depending on your taste) in about 1968, so it is now entering its third generation with widespread consumer adoption of broadband.
Its worth adding that these enabling technologies can produce bubbles in investment because their development is so lumpy before it becomes entirely ubiquitous - and Odlyzko's thesis is in part that this bubble speculation is in the long run beneficial for development (if not for investors) as it spurs that ubiquity. Hence the railroads have seen multiple bubbles in investment, which eventually resulted in oversupply of track in the UK, but phenomenal growth in economies which copied that development (as well as in the UK itself). Argentina, Paraguay, Siberia, Utah, the Punjab, Kenya, all benefited enormously from the railroad up to a hundred years after its invention. In consequence, beef, wheat, rice, cotton markets all made huge strides, as did real estate, tourism, postal services, local road transport and so on.
What does this mean for net neutrality? Well, first is that real damage to wider innovation, should it occur, may not matter much until 2050 or so, at which point it will have utterly shattered the lead of .
Second, the core network usages may simply resist innovation - railways have more or less used standard gauge ever since 1850, despite the attractions of broad gauge and Brunel's other innovations. An unmanaged pipe may be best - just as Brunel's 130km/h trains of the 1870s barely needed speeding up for 100 years (and are still timetabled speeds today!). But Japan's bullet trains from 1964, and France's TGV from 1981, are only now being replicated in Germany, China and so on, and the UK is unsurprisingly at least half a century behind with its fiendishly useless railway regulation almost 20 lamentable years old, and no investment or longterm planning.
Third, the network itself may not need to continue to exponentially increase its speed: perhaps Ethernet is fast enough, or at least can be trivially upgraded for consumers. Of course you have to reach Ethernet speeds first by fibre to more or less everyone in the country. So once you're up to speed and have several alternative distribution networks (e.g. rail, canal, road, bicycle/horse now outmoded), you don't need to invest in some maglev type of super-fast service. Take an example: satellites are brilliant at delivering high definition television, mobile spectrum is great for telephony. The fixed Internet doesn't need to do everything.
Fourth, you could fiddle around the edges ('managed services' anyone?) just using the spare physical capacity in the ducts, as railways developed telegraph and telecoms services next to the rail lines. Its what keeps trunk telecoms working in most countries even now - MCI in the US used the railways' rights of way, most UK companies used the same - after all, they had 17,000km of fibre ready for competitors to BT.
But at the centre is the unrebuttable claim that the innovation caused by a largely distributed architecture is the best for innovation - it cannot be rebutted because we don't have enough convincing evidence to prove the contrary, unless one simply maintains that telecoms companies are hopeless innovators and thus should be kept away from fiddling with the system.
However enabling the Internet will become - and it promises a great deal - it will achieve a great deal more in the next fifty years. Whether it will be allowed to do so is what net neutrality is all about, whether you frame the issue in technical, social, economic, political, philosophical or any other terms. A bubble of investment that allowed developed countries to simply run fibre to their customers would solve most of the connectivity part of the problem. How what gold rush fable can we invent to make it happen? How about Free's business model, an all-you-can-eat buffet at 30euros with no sales: the world's greatest ISP?

Monday, August 23, 2010

Thursday, August 19, 2010

Ofcom research: managed services as telcos' only answer to declining revenues

Ofcom's annual bumper research volume is now out - and shows UK mobile voice revenues finally reducing in response to termination rate cuts (Fig 5.2) - 7 years after technology caused the same for fixed voice. Note that fixed broadband connections have stalled at 65% of total households and any increase in broadband subs is from mobile - notably dongles.
There are at least 4.1m broadband users (in only 3 years from launch), and 6% of households appear to have only mobile broadband (with 9% having both). As data speeds increase, this might grow, though patchy coverage and ludicrously low caps (1GB/month typically, though my 5GB/month package from 3 is adequate) discourages growth (see p.295 on how rubbish it is perceived). Unsurprisingly students and those who change address often in private rents - early-career types - are those who most want to avoid long-term contracts. Ofcom also shows - unsurprisingly - that mobile data use is growing much quicker than revenue (Fig 5.6) - though its still a barely significant 1% of total data revenue use. With 4m Jesus-phone users, that may increase.
With managed IP networks representing 20% of Internet volume but video 30% (double web surfing) it will be instructive to see how that managed fraction increases over the next 2 years. CAGR for IP traffic is steady at about 70% in the UK. At pp285-6, Ofcom explains that the overall trend is towards throttling and capping usage - and explains that this unsurprisingly is driving consumer concerns about net neutrality.

Wednesday, August 18, 2010

Dutch Court Strikes through Cable Unbundling

It's been ages since I last published something here—sorry, Chris!—but I've had an insanely busy summer. Hopefully everything will be back to normal business shortly when the fall semester starts—whoever said academics can relax during the summer?

This came in today: Dutch telecoms regulator OPTA lost a case today against the four Dutch cable companies, effectively preventing OPTA to unbundle the Dutch cable market. The Dutch were the first to implement such an unbundling scheme in cable, which by now has been standard practice in DSL for years. In fact, one firm normally active in the DSL market had already successfully entered the (analog) cable market in the Netherlands by leasing lines from cable firms Ziggo and UPC.

After OPTA got the green light from the European Commission to unbundle analog cable, the four cable providers active in the Netherlands immediately filed suit to prevent such from happening. I'm still reading through the opinion of The Trade and Industry Appeals Tribunal, (aka the Administrative High Court for Trade and Industry), but this is looking bad.

The court mainly slams OPTA for its definition of the geographic scope of the Dutch cable market. Whereas OPTA claimed the cable market to be consisting of a number of regional monopolies— which warranted special intervention like unbundling—the court had none of that. Rather, the Tribunal takes the scope of the Dutch cable market to be national, and thus sufficiently competitive to prevent intervention. This argument on the geographic market for cable is strengthened by the finding of the Court that the product market is pretty much uniform throughout the country.

I have been a big fan of OPTA's cable unbundling, and I was actually about to enter into a contract with a new entrant company to get cable. I've never really bought the ladder of investment theorem, but in this market it may arguable may work well in a different way: cable unbundling enables entrants already active in the high-end digital TV market to offer an entry level service to attract new customers. This basic service does not so much generate enough revenues to allow the entrants to invest according to the LoI principle, but rather creates a stepping stone for consumers towards double, triple, or quadruple play packages that these entrants couldn't offer before. And this makes the telecoms market more competitive as a whole.

So I would urge OPTA to appeal. To be continued, hopefully...

Monday, August 16, 2010

Vodafone, Froyo and wireless net neutrality

In the wake of their joint venture's agreement with Google to avoid restrictions on wireless neutrality, its instructive to see what happened when Vodafone HTC users tried to download Android 2.2 in the UK - yup, Google's open platform. It provides HD video support, Flash, and provides wireless hotspot functionality. But all they got was the adware V360 supplied by Vodafone, as the BBC explains: "Last week, many customers who own HTC Desire smartphones were prompted to download a software update which they believed was an upgrade to Android. Instead it installed irremovable Vodafone-branded apps and bookmarks, including links to dating sites. Following a raft of complaints, the firm has backed down and will now offer an update without the applications."
The biggest issue for Vodafone users is the changes, including their branded music store, cannot be reversed, whereas for instance Orange's rival ad bloatware can be removed.
Wireless net neutrality and transparency are overdue some regulatory oversight?

UK neutrality: strange BBC story about BT Vision

The BBC has decided to run a story from the UK, presumably to 'bring home' some of the Google-Verizon action Stateside. But its a funny example they have jumped on - BT Vision shapes traffic so that its subscribers can watch IPTV if they order programmes on-demand. It is only for those subscribers and its presumably an inferred consent - indeed demand - to traffic-shape which is obvious from the service provided. If you don't want traffic shaping for BT Vision, sign up to a different provider and don't look for on-demand video, simples. More to the point, this service makes its selling point that it does offer on-demand IPTV - so its traffic shaping is actually part of the service. It would appear to be entirely transparent before the point of sale that this is what you're getting.
The Beeb does focus on Ofcom's consultation when it has largely made up its mind that the only real problem is consumer transparency (where it has some good ideas): "Just as the regulator Ofcom argued in a recent paper on the issue, BT believes that net neutrality is a wholly different concept in the UK than in the United States."

Friday, August 13, 2010

The broadband future will be postponed

Its worth noting some recent items that confirm that broadband is a low priority in the "advanced democracies":
1. Google's defence of its net neutrality compromise with Verizon (instead of Amazon's approach) is that nothing would happen until way after the midterm elections otherwise, and reading between the lines, if the Tea-Baggers won those elections, nothing might ever happen.
2. The UK is now not aiming for universal broadband until 2015 - no cash left from previous government, they claim, in this as in all things. At least they're measuring what consumer get, even if they're not properly enforcing advertising rules on what they're promised.
3. Broadband penetration in US and Western Europe is topping out at about 60-65% of population, and users don't think extending this to the last 35-40% is a priority. As Neelie Kroes (working in August please note!) wonderfully put it, 30% of Europeans are "digital virgins". Don't expect them to get some soon - except via whatever mobile offers them.
Expect a go-slow on broadband policy in the next 1-2 years as we await global growth, even if Germany just put on a spurt. It promises to be a hard autumn for net neutrality advocates.

Tuesday, August 10, 2010

Google neutrality: mobile/wireless and the future in India

Google last week wrote to the Indian regulator expressing its concerns about an end to net neutrality there. India is the poster-child for wireless-led communications with over 650m mobiles, but less than 40m landlines.
Ovum has just issued a prediction that in 5 years' time (never make predictions, but 5 years is close), there will be 785m accessing fixed broadband and 3.2billion accessing wireless globally (about 1.5billion of those in India and China, if smartphones deploy fast enough).
So the future of the Internet is wireless - yet it is given an exemption from neutrality regulations in the US by Google. This may just backfire on them, because content companies that do deals with ISPs signal, to quote Google's own submision in India: "ways in which broadband providers' practices can threaten the fundamental openness of the Internet".

Hitler on Google, China, parody and corporate interests

Its about copyright, fair use and YouTube, but you get the point about it being pertinent to net neutrality. Magnificent Hitler comment: "I thought they were supposed to be all 'Don't be Evil'".

Good news from EC: Neelie Kroes takes social media seriously

Months and months ago, I made a sly dig at the slow initial progress of the Commissioner's blog - well, she's made remarkable progress since then, with Twitter, Facebook, WordPress, and soon Hyves. Good for you, Commissioner! Now don't sell out on net neutrality despite Vodafone (and Google?) having its soon-to-be-launched offensive offensive.

Google-Verizon wedding cake is made of Swiss cheese

The number of holes in the Google-Verizon "lets be a bit naughty if not downright evil together" plan is quite extraordinary. Eric Schmidt always had something of the night about him and this appears to have his fingerprints all over it, not simply on the WashPost op-ed.
In short, it is a transparent cave-in by Google that makes Verizon into the equivalent of Ofcom - a competition-oriented watchdog on behalf of ISPs not consumers on this one. It is quite laughable that the two companies who do most to regulate East Coast Americans' wired and wireless Internet experience should make that US hairline distinction that: as we're not government (bad) but corporations (good), we're not regulators (bad) but consumer enablers (good).
By the by, as Vodafone owns a huge chunk of Verizon Wireless (the bit that makes real money), its no surprise that they kept well out of the way of the announcement yesterday but will be pouring honeyed words into European regulators' ears about how net neutrality is no longer a problem - for them.
An obvious outcome from yesterday is that when Google is dragged backwards through an antitrust investigation by the EC or DoJ, it will find no favours from civil society after this betrayal. James Grimmelman explains exactly how they are the smartest guys in the room. Al Franken has had a Twitter boost in opposing the deal.
Good luck, Google - you thought China was sticky in terms of political support, you'll find that was a storm in a delicate teacup.
UPDATE: FCC enforcement means in this context self-regulation with very minimal co-regulatory oversight, as Karl Bode explains:
"FCC should have no substantive power of any kind over broadband ISPs, with offenses instead overseen by what will ultimately be the industry itself: 'The FCC would enforce the consumer protection and nondiscrimination requirements through case-by-case adjudication, but would have no rule making authority with respect to those provisions. Parties would be encouraged to use non-governmental dispute resolution processes established by independent, widely recognized Internet community governance initiatives, and the FCC would be directed to give appropriate deference to decisions or advisory opinions of such groups.' In other words, the FCC would act as a show pony, whose authority in issues of enforcement would be superseded by groups created and run by the telecom industry. If you're new to telecom, "independent, widely recognized Internet community governance initiatives" is code for faux-regulatory agencies created by AT&T, Verizon and their massive lobbyist coalitions of hijacked political groups, paid policy mouthpieces and fake consumer advocates."

Monday, August 09, 2010

Google-Verizon marriage based on Third Way

Google and Verizon are in love over net neutrality (forgive the levity but after last week's will-they-won't-they and my nuptials on Saturday, I'm feeling rather pleased to see their - and my- dreams come true).
The 7-point agreement is not quite Amazon net neutrality, but its near as dammit and shows that real battles lie over mobile/wireless net neutrality in future on both sides of the Atlantic (Google caved: see point 6). Verizon has conceded at least no negative discrimination, and real consumer transparency [edit: I optimistically thought they also conceded FRAND, wishful thinking].
Its not clear how co-regulatory the outcome will be. Note fining powers and No.5 - which says Amazon net neutrality but without FRAND. Here's an edit of their own edit:
  1. FCC’s current wireline broadband openness principles would [be] fully enforceable at the FCC.
  2. [Also] new, enforceable prohibition against discriminatory practices [Includes] presumption against prioritization of Internet traffic - including paid prioritization [but see point 5 below]. So, in addition to not blocking or degrading of Internet content and applications, wireline broadband providers also could not favor particular Internet traffic over other traffic. 
  3. Enforceable transparency rules, for both wireline and wireless services [like Europe and Canada, but how enforced?]. Broadband providers would be required to give consumers clear, understandable information [and] also provide to application and content providers information about network management practices and any other information they need to ensure that they can reach consumers. 
  4. New enforcement mechanism for the FCC on a case-by-case basis [like Canada], using a complaint-driven process... could impose a penalty of up to $2 million. 
  5. [QoS is OK if its not in the pipe] allow broadband providers to offer additional, differentiated online services, in addition to the Internet access and video services (such as Verizon's FIOS TV) offered today [e.g.] health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options. 
  6. [Not like Canada or Europe] We would not now apply most of the wireline principles to wireless, except for the transparency requirement. [Instead] Government Accountability Office to report to Congress annually on developments in the wireless broadband marketplace. 
  7. Reform Universal Service Fund, deploying broadband in areas not now available [Burstein on this joyous fight]. 

Thursday, August 05, 2010

Silly Season on Google-Verizon: NYT got it wrong

Its August so this type of thing happens: "A Google spokeswoman told the Guardian: "The New York Times is quite simply wrong. We have not had any conversations with Verizon about paying for carriage of Google traffic. We remain as committed as we always have been to an open internet." Verizon has also moved to dismiss the story. A company statement reads: "The NYT article regarding conversations between Google and Verizon is mistaken. It fundamentally misunderstands our purpose. As we said in our earlier FCC filing, our goal is an internet policy framework that ensures openness and accountability, and incorporates specific FCC authority, while maintaining investment and innovation. To suggest this is a business arrangement between our companies is entirely incorrect."

Tuesday, August 03, 2010

Defining Internet freedom?

Interesting US State Department eJournal issue on Internet freedom - with several well-placed (Epstein, Bambauer, Yu) but introductory academic contributions on Internet freedom and intermediary liability - with obvious implications for net neutrality but more so for their allies' views on self-regulation: "Even in more democratic countries such as the United Kingdom, Brazil, and Turkey, Internet freedom is increasingly undermined by legal harassment, opaque filtering procedures, and expanding surveillance." Well, yes, but you're in a glass house on this one!