Convergences

Open Video Systems as Net Neutralty: And How Did That Work Out for You?

In a 2006 paper, Solveig Singleton recalled the outcome of the FCC's 1990s experience with Open Video Systems:

A colleague of mine a few days ago referred to net neutrality proposals as "common carrier" regulation for the Internet. And one proponent of net neutrality, answered, in effect, yes, nothing wrong with that. Ah, but wait. Who now remembers video dialtone?

Travel back with me to when the phone companies' main interest was getting into the cable television business. The late 1980s and early 1990s. The FCC, always anxious to encourage competition, were ready to let the telcos in, provided of course, that they operate their video networks so as to allow equal access and reasonable charges and no exclusivity and/or discrimination... on and on. With the 1996 Act video dialtone was swept away and replaced with a regime of open video services, a model requiring operators to reserve two-thirds of their channel space for unaffiliated content. And despite deregulatory intentions it still went nowhere, especially after the federal courts ruled that OVS operators needed local franchises as well as federal approval.

These brave egalitarian proposals never bore fruit. There were a few trials here and there. But basically nothing. It wasn't just that the Internet came along, and interest in getting into the one-way video delivery business waned. The whole regulatory apparatus and process inspired by common carriage was just way too cumbersome and slow, and promised far too little return on investment. If there hadn't been so much delay and complication on the regulatory front, telcos and others could have moved into the video business with some alacrity, before the Net. It was no mere accident of timing that investment moved into then much-less-regulated networks. Investment will always go there.

Right now there are huge opportunities for growth and expansion of broadband networks and services, including content. And problems as well, from spam to capacity limits, from authentication problems to quality of service issues. Hopefully these issues all have technical solutions, but deploying those solutions is going to take some capital. Do we really want to narrow the business models that can be used to raise and recover that capital down to... video dialtone for the Net? Ugh.

A sampling from the FCC's 1996 Final Rule on OVS:

Net Neutrality

At The American: How to Think About Net Neutrality (Sept. 26, 2009). One key point:

[The FCC's] approach assumes that each customer should have only one connection to the Internet (or perhaps two, one fixed and one mobile), and this connection must provide access to everything. Why should this be so? Perhaps a better model would be for every consumer to have several connections, and for each of these to carry unique and proprietary content.

Another:

Is the FCC seriously thinking of applying openness obligations to wireless, with its multitude of providers and exploding usage? If so, why? And if this article were a diagram, an arrow would now point back to [the] point [above].

Speaking of Innovation . . .

The OSTP Strategy for Innovation is one approach: grand plans; deadlines; quotas; let no trough go unfilled; government micromanagement.

In a fascinating article in City Journal, George Gilder describes a different route: how Israel's tech industry was in a decade transformed from a stagnant socialist backwater into a leader in invention:

Israel ha[s] achieved an economic miracle . . . . As late as the mid-1980s, Israel was a basket case, with inflation rates spiking from 400 percent to nearly 1,000 percent by early 1985. As recently as 1990, Israel was a relatively insignificant technology force, aside from a few military and agricultural initiatives. Yet in little more than a decade, the country has become an engine of global technology progress.

How?  Read the article, or the longer version in Gilder's new book The Israel Test. Government policies were important, but not in the sense that the transition was micromanaged. It could occur only because policies that were blocking the creative genius of the society were reversed, largely through the efforts of Netanyahu abetted by U.S. Treasury Secretary John Snow.

It is a great story, and it has profound political implications. Who knew that:

Between 1967, when Israel took over the West Bank and Gaza Strip, and 1987, when the first intifada erupted, those two territories were one of the fastest-growing economies on earth. GDP surged 30 percent a year for a decade, the Arab population nearly tripled, six new universities were launched, and Arab longevity jumped from 43 years to 74.

The article concludes:

[T]rue peace—and the promise of a decent life—lies waiting to be picked up by those Palestinians and Israelis who are willing, and now increasingly able, to invest in creation over destruction.

The Internet on the Internet

The FCC has followed up Chairman Genachowski's Monday speech on Net Neutrality by creating OpenInternet.gov, a place "to join the discussion about the important issues facing the future of the Internet. . . . stay connected to all [FCC] activities on the issue, and share your thoughts and ideas on open Internet."

Some other useful sites:

Profs Jim Speta, Timothy Wu, and Christopher Yoo are blogging at Net Neutrality Rules: Academic Commentary on the Coming FCC Rulemaking on Net Neutrality.

Techweb has Internet Evolution, a commercial venture billed as "the macrosite for news, analysis & opinion about the future of the Internet."

Corporate policy blogs are writing, cautiously:  Comcast;  Verizon; ATT; Google.

FCC & Broadband Policy: Learning from History

As the FCC strains to produce a National Broadband Plan, it should recall some history, and be humble.

[I]n 1872, a committee on railroad amalgamation was appointed. . . . [A]fter taking a vast amount of evidence, they proceeded to review the forty years of experience. . . .  They showed with grim precision how, during that period, the English railroad legislation had never accomplished anything which it sought to bring about, nor prevented anything that it sought to hinder. The cost to the companies of this useless mass of enactments had been enormous, amounting to some L80,000,000; for these were 3,300 in number and filled whole volumes.
   -- Charles Francis Adams, Railroads: Their Origin and Problems (1878), pp.89-90.

The decision was made not to borrow trouble, as the old phrase goes, but to let the system "develop itself in its own way," and act only in response to actual problems, which worked quite well.

Connections - Broadband & Health Care

A number of posts here have emphasized the importance of policies that promote (or at least avoid deterring) health care innovation. 

CLI's interests extend far beyond health care -- to areas of broadband and telecom, intellectual property, software, innovation (collaborative and proprietary). And one of our fundamental points is that all of these interests are connected.

See, for example, this note by Anoop Gupta, Microsoft VP for Technology Policy & Strategy, on Moving a National Broadband Plan Forward:

Today, broadband is foundational for driving innovation and productivity across all economic sectors, including energy, education, healthcare, and e-government.

For example, at Microsoft we envision a connected health ecosystem that enables predictive, preventive, and personalized care. Telehealth technologies can be used to remotely monitor patients, facilitate collaboration between medical professionals, exchange medical data and images, and instantaneously provide efficient emergency service to remote areas. We see medical research increasingly benefiting from the HUGE amounts of patient and genomics data for drug discovery and personalized medicine.

He links to a letter recording a tele-meeting with FCC Chairman Genechowski and CEOs John Chambers (Cisco); Steve Ballmer (Microsoft); Jeffrey lmmelt (GE); and Steve Hemsley (UnitedHeath) at which the sectoral breadth of the broadband plan was emphasized.

To talk of "broadband policy" is misleading. You can't think effectively about broadband policy as a pure abstraction. You also need to think health care policy, education, and energy.

It works in reverse, too, in that thinking about these substantive areas requires consideration of the capabilities of broadband.

The FCC, in developing a broadband policy, is also developing health care policy, and energy policy,a nd so on. Example: Net neutrality, in its strong form of uniform treatment of all bits, whether related to the latest P2P piracy or on-line surgery, would do a lot to prevent innovation in medical services.

More Praise for Document Collections

A couple of weeks ago, I praised the usefulness of Google Books for anyone interested in historical documents. Three other sites deserve similar mention:

Cornell University's 907,750 page Making of America collection, "a digital library of primary sources in American social history from the antebellum period through reconstruction. The collection is particularly strong in the subject areas of education, psychology, American history, sociology, religion, and science and technology. This site provides access to 267 monograph volumes and over 100,000 journal articles with 19th century imprints."

The Central Pacific Railroad Photographic History Museum, which has numerous photos, maps, essays, and (scroll down on the main page for a list) a wonderful collection of digitized contemporary articles on the building of the transcontinental railroad and its times, and then links to further documents etc.

The Libary of Congress' American Memory collection is a rich vein, including in particular the Congressional Record and its predecessors going back to the Continental Congress.

The relevance to a website concerned with telecom, innovation, and intellectual property? -- The issues at the center of contemporary debates are not new. If a contemporary tech or telecom tycoon sat down with the Big Four of the Central Pacific, they would quickly find many common issues to discuss (including how to deal with a rapacious political system).

Business and economic history receive too little attention. Judge Harold Leventhal, an administrative law expert of a generation ago, once said "[This] is the kind of issue where a month of experience will be worth a year of hearings." Our society has generations of experience with many regulatory issues, but this resource is simply not brought to bear on present issues. It is easier, and more profitable for the lawyers, to hold hearings and opine about theory.

Free

My review of Chris Anderson's Free: The Future of a Radical Price appeared recently in National Review Online under the title "The Problem With Zero."

As might be expected from someone who believes that property rights and markets are the roads to freedom and innovation, and are the best ways for communities to cooperate, the tone of the review is dyspeptic:

A line is drawn between those who “get it” and those (over 30) who do not. The focus is on people’s entitlements as consumers, not on their need and desire to be proud producers. An advanced economic machine is assumed, but the conditions necessary to maintain one are no responsibility of the author, or of the reader. Also lacking is any awareness that a working society requires concepts of duty and reciprocity, not just entitlements, that paying for what you get is an important form of morality, or that adapting to the digital age involves questions not resolvable by resorting to Condé Nast’s website-proclaimed mission “to ignite and nourish [readers’] passion.” 

Most of the space is devoted to the point that Anderson and the others in the "information should be free" camp are riffing on the economists' idea that efficiency is achieved when price equals marginal cost, only they fail to understand that this idea is not suitable for home use -- it works only on the blackboard, where capital is completely mobile. Turned loose in the real world, it has done great damage.

In Praise of Google Books

Since I have an interest in that great American epic,the building of the transcontinental railroad, and in the parallels between current public policy debates and earlier railroad controversies, Google Books is wonderful. It provides access to many obscure sources that were formerly available only at major libraries, and difficult to find even then unless one knew exactly what one sought.

Who knew that the 1870 Report of the Commissioner of the U.S. Land Office contains crucial information on railroad construction costs, or that The Political Reformation, a pamphlet put out by the Democrats in 1884, contains cheerfully cynical insights into the venality of the U.S. Congress by Collis P. Huntington, one of the founders of the Central Pacific'?

One benefit of the improved access should be an improvement in knowledge of history. A great problem is that the story of an era gets written a time or two, and then everyone cribs from this work, until, perhaps, a new paradigm is written, and everyone cribs from that. Very few people have access to the sources, and thus the ability to challenge the narrative is limited. The digitization of great libraries is changing this, expanding access and opening up the process to all.

Speaking of Net Neutrality . . .

I. L Sharfman, Railway Regulation (1913), pp. 23-25:

            RAILWAY DISCRIMINATION AND THE PUBLIC WELFARE

The danger as well as the injustice of discriminatory practices cannot be overemphasized. If our industrial life is to reach its natural and most efficient economic development, there must be freedom of enterprise and fairness of treatment for all persons, all sections, and all undertakings. In a sense, transportation is a fundamental industry underlying all others, for it is essential to the conduct of all business and goes far towards determining the direction and conditions of industrial activity. The item of transportation, whatever it may be, is one of the elements in all costs, and the outcome of competition between different producers may be largely affected by any divergence in railway rates which must be paid by each of two or more competitors. It follows clearly, then, that the railway officials who make transportation rates exercise a tremendous power.

By the soundness of their adjustment of rates and by the degree of fairness with which established rates are observed, the railways may profoundly affect—or, even absolutely determine—the prosperity of individuals, of industries, of cities and towns, or of entire sections of the country.

By discriminating between competing shippers, they may destroy the business of one and build up that of another, making one man rich and another poor.

By stimulating or discouraging a particular class of traffic, they may increase or diminish the importance of industries and the extent of production in particular lines of commerce, thus shaping the direction of industrial activity.

By discriminating among cities and towns, they may cause one to grow and another to decay, and thus determine the commercial importance of business centers.

By modifying their rate schedules in special instances, they may determine the location of industries, guide the movements of population, and affect the prosperity and welfare of extensive localities.

By these unfair practices the railways also have it within their power to build up industrial monopoly; and the most powerful of the trusts against which the people are now struggling made their first advances towards control of the market through the agency of special favors in the form of railway discriminations.