posts for the 'Investment' Category

With due respect to Harvard Professor Jonathan Zittrain, the Internet isn’t “closing.” It’s changing. In the current Newsweek, Prof. Zittrain argues :

“The Internet and the PC as wellsprings of innovation are living on borrowed time. The new closed models that represent the likely future of consumer computing and networking are no minor tweaks…. The change is coming partly because of the need to address security problems peculiar to open technologies, and partly because businesses want more control over the experience that customers have with their products. The trend from open systems toward closed ones threatens the culture of serendipitous tinkering that has given us the Web, instant messaging, peer-to-peer networking, Skype, Wikipedia and a host of other innovations, each of which emerged from left field. It will produce a concentrated set of new gatekeepers, with us and them prisoner to their limited business plans and to regulators who fear things that are new and disruptive.”

First, it’s absurd for Zittrain to talk about a “closed model” for the Internet. As we’ve amply documented (see here and here for starters), Net users enjoy multiple levels of legal and regulatory protections. These guarantee that users will continue to access their choice of legal online content.

Zittrain almost certainly understands this so it’s dismaying that he doesn’t acknowledge it.

Second, he’s correct about emerging security issues (DOS attacks, botnets, Trojans, etc.), which require network monitoring. But to suggest, as Zittrain does, that the solution lies with collaborative consortiums of programmers is woefully naïve. Current technology can begin shutting down a DOS attack within six seconds of detection. No consortium can possibly make such a lightning decision.

Finally, there’s this:

“Technologies like the Internet and the PC are civic in the sense that they depend on support and innovative outsiders to survive and grow.”

That’s like saying IMAX Movie Theatres depend on outside innovation. Sure, modern filmmakers employ whiz-bang technology to tell stories in a new way but it is IMAX that invests in their theatres to enable that experience for viewers - for example, transitioning theatres from celluloid 35mm film to digital technology. That’s a lot of investment!

For all Prof. Zittrain’s talk of a “critical mass of users to support the common protocols of the Internet,” the reality is that at best, this will be only part of the solution for maintaining a safe online experience. The first line of defense increasingly is a smart network capable of real-time action to combat the Web’s growing security threats. Any federal action (like Net neutrality) that interferes with this ultimately makes the Web less safe and undercuts Zittrain’s stated goals.

We Got Ourselves a Convoy

March 24, 2008

Chalk one up for common sense.

At last week’s Internet Video Policy Symposium in DC, Cowen & Co.’s Arnie Berman offered a sharp response to the claim that Net Neutrality would put a “toll booth” on the Internet. According to press reports, Berman noted that video data on the web is like a bus that’s three lanes wide. So to handle all this traffic – and remember that last December, 140+ million U.S. Internet users watched more than 10 billion online videos – you’d need highways that are 30 lanes wide.

Earth to Google: Care to explain how Net Neutrality helps us fund all that?

Thinking about the future

February 26, 2008

Following the FCC gathering in Cambridge on Monday to conduct a hearing on network management practices, we wanted to share a great piece that ran in the Boston Globe late last year. Elaine Kamarck of Harvard University made some very important points that are worth remembering.

If you did any of those things, you are part of the new world of the Internet, a world where video is rapidly becoming the most popular thing we do online. But video takes up a lot of space, a lot more than text, and the increased use of video means that the Internet is fast filling up. The result is that if we don’t invest soon, we could be seeing, in the near future, the Internet equivalent of an early evening traffic jam on Interstate 93. It could take forever for your photos or video to download or for your e-mail to arrive.

The backbone of the Internet will need to grow. For instance, more fiber optic cable will need to be laid, and that’s not cheap. In the past the big telephone companies have laid necessary cable, and they are the ones best situated to do it again…….

It will be difficult to get phone companies to charge the prices necessary to pay for new investments in Internet infrastructure. No one can make them do so, for the Internet is not regulated. But industry will need to take into account the public interest.

We need to start thinking about a variety of options. Perhaps we should look at different pricing structures for different online activities or require the use of “smart” networks that give lower priority to entertainment-related data than to packets of data in areas like telemedicine. Many Internet activities are in the broad public interest. We need to make sure those aren’t hampered because, somewhere in the world, teenagers are playing online games or grandmas are staring at their children’s babies.

Hesse is More

September 17, 2007

Now this is a breath of fresh air from America’s heartland:

“Though attempts are being made to position net neutrality as pro-consumer, in reality it is very anti-consumer. With net neutrality, Web-based companies would avoid compensating network owners for use of their facilities, leaving consumers and network owners to pay those costs. This would force the majority of consumers to pay for the high costs driven by a minority of Internet users….”

The author is Dan Hesse, CEO of Kansas-based Embarq, who penned this great column on the absurdity of net neutrality for the current issue of Chief Executive. As Hesse notes, in 2007 alone, communications companies are investing $70 billion to upgrade the country’s network infrastructure. With America already behind more than a dozen other nations in broadband access, such investment is indispensable and, as Hesse rightly observes, this investment would not continue if Congress enacts net neutrality pricing regulations.

Less than 10 years ago, wired broadband costs ran as high as $60 a month and wireless broadband was a myth. Today, inflation-adjusted prices have plunged 50 percent or more depending on location, while choices have expanded and wireless has become an instant mass-market phenom. Given this, Hesse’s warnings about the cost to consumers of net neutrality’s ultimate cost seem not only correct but downright commonsensical.

Incidentally, on this lovely fall afternoon, we’ll throw another bouquet to the company: that green “origami jet” logo is really cool.

Doing Evil

July 26, 2007

This [60-day] deadline is appropriate in light of the Commission’s failure, after eight years, to develop lawful unbundling rules, and its apparent unwillingness to adhere to prior judicial rulings.” – Final sentence in the U.S. Court of Appeals for the District of Columbia’s 2004 opinion overturning FCC rules on telephone competition

The DC Court of Appeals’ verbal guillotine on federal efforts to create “wholesale” vs. “retail” phone service competition should be a timely reminder to anyone entranced by Google’s siren song urging same kind of federal rules for wireless broadband.

Like a bad Hollywood sequel, Google seems hellbent on pushing Congress and the FCC into making the same mistakes that delayed investment and caused thousands of lost jobs in the phone industry over the past decade.

Let’s go back to those thrilling days of yesteryear: Entire forests were sacrificed to produce the paper necessary for all the NPRMs, court and regulatory filings, amicus briefs, FCC orders, lawsuits, stays, more FCC orders, more lawsuits, and more stays – all in an eight-year adventure in the pointlessness of federally managed “retail” competition. As Adam Thierer at PFF notes, the three FCC attempts at creating regulated wholesale vs. retail “competition” alone totaled 1,575 pages and included 6,770 footnotes. Incidentally, let’s remember that in 2004, the ink was barely dry on a 576-page FCC “competition” plan – its third try! – when the DC Appeals Court struck it down.

As usual, Holman Jenkins has pegged this issue perfectly, though candidly we’re not sure if he’s trying to invoke an image from the old “Kung Fu” TV series or from the climax of “Return of the Jedi”. One thing is certain: With our economy dependent on broadband investment, Google’s plan for new wireless regulation is a loser for everyone except, not surprisingly, Google.

Que viva Roberto de Posada y la Coalicion Latina!

Writing about net neutrality in today’s New York Sun, Don Roberto, president of the non-profit Latino Counsel, explains:

“Today, only 29% of Latino adults subscribe to broadband at home, compared to 43% of white America. That statistical difference represents thousands of potential Hispanic leaders and entrepreneurs that are being left behind when it comes to acquiring the online skills necessary to succeed in tomorrow’s world.”

As for net neutrality, Don Roberto is clear:

“An open Internet is good and we should oppose any effort by broadband providers to balkanize it. But the necessities of competition have proven the best antidote for bad behavior by broadband companies, and the net neutrality campaign may be a case where the cure is far worse than the poison.”

His oped makes a key point about net neutrality and the Digital Divide: By shifting deployment costs onto consumers, Net neutrality hits hardest at the most price-sensitive consumers. They include the millions of Hispanic Americans in underserved communities – a point that LULAC also made to Congress prior to last June’s stinging floor defeat for net neutrality.

Indeed, proponents of net neutrality don’t argue the central point about price hikes hitting the poor and underserved the worst. Instead, they try to dress up their argument for net neutrality with rhetoric about unspecified doom for everyone sometime in the future.

It’s a reach. Or as the old Spanish proverb puts it, “Aunque la mona se vista de seda, mona se queda.

With Memorial Day weekend upon us, countless Americans are finalizing plans for the long weekend and are looking for that one essential of all travel: the perfect reading material. Well, we here at the Hands Off the Internet blog are here to help you out. Allow us to recommend the newest report from the Small Business & Enterprise Council’s 21st Century Small Business Policy Series, titled Telecommunications Policy Choices & Entrepreneurs. Don’t let the title deceive you – this paper is a page-turner, particularly the section dealing with so-called net neutrality and its potential effect on consumers and small business. The bottom line? According to the SBEC,

“The decade-long run on a pro-investment policy with respect to telecommunications and the Internet has created historical and positive changes, as well as unlimited opportunities for entrepreneurship and wealth creation. Now is not the time to be ratcheting up regulation or regulatory uncertainty when untold billions in new investment dollars will be needed to increase broadband capacity, modernize and upgrade the infrastructure of the Internet and incentivize entrepreneurs to develop more innovations that awe and serve consumers.”

We couldn’t agree more, and that was just two sentences. So save yourself the drudgery of plane rides and lounging on the beach by picking up your own copy [PDF]. We promise you’ll thank us for it later.



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