[12329] in Commercialization & Privatization of the Internet
Re: NII and Reality
daemon@ATHENA.MIT.EDU (Mark Stahlman (via RadioMail))
Mon May 16 06:16:41 1994
Date: Sun, 15 May 1994 15:59:07 PDT
From: Mark Stahlman (via RadioMail) <stahlman@radiomail.net>
Cc: com-priv@psi.com
To: tkalil@arpa.mil (Thomas A. Kalil)
>Mark,
>
>I disagree with you that the Clinton Administration is trying to "control"
>the NII.
>
>For example -- the major goal of the telecom legislation is to promote
>competition in local telephony and video service by:
>
>- Promoting unbundling and interconnection in the local loop; and
>- Eliminating the cable-telco cross-ownership.
>
>The eventual goal is to have an environment in which any company can offer
>any service to any customer. The transition will be difficult because
>many players have substantial market power that they could use to engage
>in anticompetitive behavior.
>
> . . .
>
>The Administration thinks that enlightened government policy can help
>promote the evolution of the NII:
>
> . . .
>
>The Administration has said over and over again that the private sector
>will build, own, and operate the NII, and that the federal investments
>in pilot projects, R&D, etc. will be a tiny fraction of the private sector
>investment.
>
>The notion that the Administration is trying to "control" the NII is absurd.
>
>Look at how fast the technology is changing. In 1976, a Cray 1 cost $20
>million and delivered 160 MIPS. In 1995, $500 set-top boxes are expected
>to deliver 1 billion instructions per second.
>
> . . .
>
Tom,
Thanks for the update on research funding. I'll look into the references
you cited. I'm very interested in the return to funding of projects that
aren't exclusively military (and hence the re-renaming of DARPA to ARPA).
But sorry, with all due respect, there is no NII. At least, not yet in
this reality. That's precisely the subject of this thread. The normal
buildout of telco, cable and other networks is not an NII. These buildouts
are the simple expression of the growth of various industries under various
constraints -- including regulatory actions. Most importantly, these
buildouts are generally sharply constrained by reality. Unfortunately, the
NII is not.
The NII is whatever Al Gore wanted it to be when he spoke about it on the
Senate floor and it's whatever his folks want it to be now that he commands
far vaster resources from his office in the White House. Al Gore invented
it and now he wants to control it. Unfortunately, there are real networks
that are being subsumed in the expanding NII definition and real businesses
are likely to be threatened by the "enlightened government policy" you are
referring to.
Sorry (again) but it's not "enlightened" to compare any Cray to a set-top
box. It's also not very reality-based to talk about $500 set-tops (about
twice what the market will bear) or about buying 1 BIPs for that amount in
1995. It's just not in the cards, so to speak.
And, on a policy note, it's not particularly "enlightened" to speak about
an "environment in which any company can offer any service to any
customer." That's not in the cards either. At least not in this reality.
And, it's not because of "anti-competitive" behavior either. It's just not
practical or economic. Forget the press releases. They're stage props in
the fight to be deregulated. For a regulated monopoly, today's press
release is just the latest negotiating position.
Industry's don't converge. They never have. They never will. That's
partly why people get so confused when they talk about "Digital
Convergence." Often they fall back on references to "technologies
converging." That's an odd way to refer to the fact that more and more
businesses are using computers. Nothing has converged here. It just means
that digital technology is unstoppable. That's Gilder's Law of the
Microcosm. That says nothing about industrial structure or business models
-- as George would be the first to admit.
In particular, telephone companies and cable companies will not converge.
The collapse of all the big Cable/Telco deals was a result of reality
raising it's ugly head. When I was quoted in the NYT that Malone had "sold
at the top" I was wrong. He didn't sell. And, it was because reality (in
this case the stock market) revalued all the Convergence-Hyped stocks in
Jan/Feb '94 by about NEGATIVE 30-50% -- it certainly wasn't the FCC.
Malone never got to sell because reality took over before the deal could
close. His speech at Yale in Nov '93 (The Broadband Revolution) is
amazingly off base. I seriously doubt he would give it today. I've tried
to start this conversation with some folks at the FCC and I've been shocked
to learn that actual industrial dynamics are not a part of every filing and
every round of testimony in Washington. (I've written numerous articles
and given many speeches on the topic of the implausibility of Convergence
which I'd be glad to forward to you if you're interested.)
The real absurdity in all this is the view that since "the private sector
will build, own, and operate the NII" then the federal government can't
exercise enormous (and very probably destructive) control over it. There
just aren't the tax dollars to pay for deploying any ubiquitous network.
EFF actually believes it was a victory to convince Al Gore to not try to
build it (the NII?) himself. Excuse me? Which movie script are acting in
today? Is this the one about how the Internet was built? Washington
building networks? Yipes!
According to Ron Brown at his speech last month in NY at the Alex Brown New
Media Conference, in exchange for allowing private industry to build it
(the NII?) he and the administration expected a long list of "concessions."
Does he plan to spend his life in a network control center? No, clearly
not. So in that sense, those who operate these networks will "control"
them (pull the levers and punch the buttons) but it is clearly this
administration's intent to exert enormous executive "control" over it's
form and content.
Do you agree that we need a "new social contract" in telecommunications
like EFF's OP 2.0 calls for? Does the Communications Act of 1934 need to
be completely redrafted to address the needs of the "Information
Have-Nots"? You are certainly familiar with the term industrial policy.
Do you believe that this administration is attempted to implement the first
digital industrial policy in US history? (Yes, France, Japan and Singapore
already have one.)
I think this industrial policy effort is unwise on many levels. I think
these policies could lose California for Clinton/Gore in 1996. I think
these policies are generally detached from reality -- particularly
regarding how industries really grow and mature and how new economic
vitality arises in our society. Because of this lack of association with
technical and commercial reality, I think these policies are likely provoke
havoc among the entreprenuers who create new industries. And, for all
these reasons, I'm hopeful that the NII juggernaut stops before it becomes
an economic and political trainwreck.
Mark Stahlman
New Media Associates
New York
stahlman@radiomail.net
