FCC opens door to ISP wipe-out

Re-monopolizing the phone serviceĀ 

US telecoms regulator the FCC has signaled the end of the independent ISP, a move which will leave DSL provision concentrated in the hands of just a few large providers. The move, which turns local DSL provision from a regulated monopoly into an unregulated monopoly, also has repercussions for rural telephony providers, who will lose a chunk of subsidy, and has potentially chilling consequences for free speech.

Unless state regulators step into the void just vacated by the Federal regulator, however, every independent DSL provider will find itself at the mercy of the Baby Bells when its contract expires – and the Baby Bells have no compulsion to renew those competitors’ contracts. Continue reading “FCC opens door to ISP wipe-out”

GoogleNet – the ultimate embrace and extend?

We’ve been reading stories about the “end of the internet” ever since the internet was exposed to the public more than a decade ago. Telcos, media companies, infrastructure hardware providers, and operating systems monopolists have all taken their turn as the villain in this particular drama. So far not one has succeeded.

But the really scary thing about “the end of the internet” was never how easily it could be achieved, but that it might be welcomed by most of the people who actually use it. Now Google has helped drive the point home.
Continue reading “GoogleNet – the ultimate embrace and extend?”

Netizens: white, wealthy and middle class (and full of it)

Diversity in action: bloggers

“The Internet is becoming more and more widespread and will increasingly represent a scientific random sample of the population,” claims ICANN’s newest board member, Joi Ito. Quite what scientific experiments he will wish to perform, once the desired sample size has been reached, remains a mystery. But like many people who spend too long in front of their computers, he’s talking about a Platonic ideal rather than the real world.

A survey by the US Department of Commerce’s National Telecommunications and Information Administration shows that the internet has entrenched the divide between rich and poor, and the races. Statistics reveal an internet that’s overwhelmingly white, wealthy and urban. And the net’s best days may even be behind it. The pace of internet adoption has tapered off to a trickle, with a substantial part of the population not interested in the internet at any price.
Continue reading “Netizens: white, wealthy and middle class (and full of it)”

Chris Anderson makes me a bet

“Or the arrival of the Web browser, which blew millions of minds, making a mouseclick feel like teleportation.”
Chris Anderson, Wired

I was really calling the editor of Wired magazine, Chris Anderson, to check up on which weird and interesting drugs he was taking when he wrote the sentence you see above you.

[* answer below]

Anderson bet me that in five years time, there will be more 802.11 chipsets then there will be mobile phone chipsets. Naturally, opportunities like this don’t come up every day, so of course I took him up on the offer.

It was an affable chat, but by the end it was clear to me that Chris hadn’t just drunk the Kool-Aid, his metabolism has mutated itself, Science Fiction-style, to produce the stuff on demand. So you never need go thirsty ever again.

“The technology is Wi-Fi, and it’s the first blast in a revolution, called open spectrum,” he writes, “that will drive the Internet to the next stage in its colonization of the globe.”
Far from colonizing the globe, the Internet has failed to create much of a plut even here, in the land of its birth.

From recent research, we learn that half of the richest nation on the planet has cottoned on to the Internet for what it really is: a boring, stupid and expensive information tool that doesn’t really work very well.

True believers dismiss this significant part of the population as Luddites. But I think they’re making a sensible value judgment on the quality of the information they’re receiving. It’s not that they don’t get it: they are simply exercising a vote and it’s a pretty smart one: The PC-Internet proposition has value, but the experience is awful. It’s not as easy to use as a can opener or a remote control. So where do you think our Brothers and Sisters go?

C’mon. This isn’t hard to figure out.

However, to indulge the Deregulation Lobby for a moment, we must confess: it’s certainly a beautiful dream.

Home grown WiFi networks will cover the nation, giving us unlimited Internet access and phone calls, and the evil carriers will melt into history.

Who doesn’t want to believe?

Show us the money

However we must have a rational basis on which to proceed. And the problem with this alluring vision now is that there won’t be enough money to sustain it. After all, everyone expects public WLANs to be free.

“It’s a hype cycle like we had around dot-coms. It’s not focused on technical or economic reality,” Qualcomm VP James Belk tells Business Week, a point we made here

Qualcomm founder Irwin Jacobs tells the magazine how expensive it is to provide WiFi access, and the hidden costs that the lobbyists often fail to point out.

“We believe Wi-Fi will explode in homes, large businesses, and college campuses,” he says. “The real question is: Is there a business [behind] providing Wi-Fi in hot spots?”

“The problem I have is seeing a long-term financial model in hot spots. Wide-area coverage, such as EV-DO, will provide high data rates over larger areas than Wi-Fi can. If you’re paying a monthly rate to your cellular provider for the capability to get data anywhere, would you pay more to get Wi-Fi in hot spots? No. Plus, EV-DO is secure and requires less power than Wi-Fi does.”

Successful WiFi companies sell into the three business sectors Jacobs mentioned above, and stay well clear of the public access sector:

“Hotspot is a good idea – but who gets paid?” Ben Guderian, a marketing director at SpectraLink told us. SpectraLink has a good business selling into health care and commercial organizations, and this week launched two new campus 802.11 phones.

“When you try to make Wi-Fi cover a wide area, it’s absolutely the worst way to do it, Martin Cooper, told CNET recently. Cooper is credited as the first person to make a cellphone call (in 1973, he led Motorola’s cellular project).

“In order to cover a city, you need a million sites; we actually did an analysis of that. And every one of them has got to have backhaul. So it turns out it’s neither economical nor practical. ”

Can I climb up your pole?

Writing in the investor magazine The Chili, Woz Ahmed, sums up the Bubble and adds another hidden cost to Jacob’s list: infrastructure build out. This isn’t a problem on campus or corporate networks, but planning permission is time consuming and expensive.

“A WLAN operator must have the expertise to select, obtain planning permission, commission and manage hotspot sites. It may be uneconomic to do this, as the potential number of WLAN users will always be lower than cellular voice users.”

Even in densely populated urban centres, “it will not be cheap, as premises owners are contributing to the WLAN bubble by charging operators high fees for attractive hotspot locations, such as airports, conference centres, hotels, major transport terminals and routes.”

Of course, these inhibiting factors don’t apply in a campus environment, or the home, as SpectraLink’s Guderian told us, “The cost of wireless is getting low enough so that wireless can save wiring for both voice and data,” he told us.

Indeed this is where WiFi poses an acute danger to the incumbents:

In The Chilli’s opinion, WLAN is the Rabbit of Internet data, given its weaknesses in standards fragmentation, interoperability, roaming and business model. Rabbit was a hotspot initiative by Hutchison launched in 1989 which failed because the seamless coverage offered by the 2G networks was so much more popular. People appreciate the certainties of something just working. It will be amusing to see the WiFi lobby explain to their mothers, and other relatives, that you only need to “reset your Mac WEP parameters” every four hundred yards to keep your WiFi phone working, and we eagerly the responses to this modest request.

Advantage Incumbent

But who expects the carriers to vanish overnight? Debt-laden they may be, but they still have a steady income. And the traditional carrier business model has a significant advantagein economies of scale, over new entrants. The carriers have made expensive investments in upgrading their networks, but it voice. 3G networks are roughly four times as efficient as the 2G networks and more savings will be achieved as the old networks are turned off. Data is just a bonus.

Admittedly, the carriers had expectations for mobile data that were almost as unrealistic as the WiFi/spectrum deregulation lobby has now. If only they’d asked the other half, the people who have voted with their feet when asked to comment on the glories of the Internet.

The successful models for mobile data have been the ones that eschewed all pretence to be “The Internet” – WAP was sold as “the mobile Internet” – and delivered us a simple social service or communication channel.

Forever Blowing Bubbles

But you have to wonder how the bubble-boosters affect the prospects of successful businesses, such as the SpectraLinks who have built solid businesses on 802.11. In no small part, by wisely avoiding the public access arena.

It’s not as if the wireless world isn’t interesting enough already. There’s a frantic pitch for the retail markets going on right now, for the last “yard”. Because so many people have phones, and they trust them to work, there’s a lot of maneuvering around “Proximity Servers” and local wireless gateways. These represent serious gambles for the investors.

But the WiFi Bubble is interesting if only because, a couple of years after the greatest loss of wealth in human history, it proves that we have astoundingly short term memories, that we are incapable of fixing structural problems with our trust capital relationships, but most of all, because we insist on perpetuating the dippy belief that technology can provide all of our answers.

These delusions remain here on the West Coast. I suspect these folks will realize pretty soon that American capital – already thinking of a Sinofied Dell – has cut them adrift.Ā®

[*] Since you insist. This extraordinary statement had us leaping to the phone, such was our curiosity. Was it, we wondered DMT or Peyote? “Is this on the record?” Fraid so. “I’m, erm, much too boring to do anything like that.” Shame.