by Dana Blankenhorn
Volume V, No. XXIV
For the Week of June 18, 2001

This Week's Clue: Convergence

This Week's Clue: Convergence

SSP (Shameless Self Promotion)

SP (Shameless Promotion)

The Most Essential Site on the Net

Why Broadband Can't Gain Altitude

Establishment to Internet: Drop Dead

Clued-in, Clueless

In looking over my notes and stories from the recent Supercomm show in Atlanta, one conclusion became obvious. True convergence is here.

Convergence means voice, video and data services all coming through the same pipe, all meaning pretty much the same thing. Here was just some of the evidence:

  •  At Supercomm an outfit called mPhase Technologies  demonstrated how easy it is to use DSL (a phone-based data service) to run video through an ordinary phone line. I don't know how the company itself will fare, but the idea is tantalizing. 
  • Nearby Taqua Systems was showing an Open Compact Exchange (OCX) -- a freezer-sized box that lets any ISP handle 100,000 phone lines, just for the cost of filling out the paperwork to become a Competitive Local Exchange Carrier (CLEC). Getting my phone service from my ISP (rather than my Bell company) is also tantalizing. 
  • FCC chairman Michael Powell admitted in his keynote address that present laws describing big differences in how voice, data, and video are regulated are truly Clueless. He wants to turn the FCC into a giant anti-trust bureau, making cases against Bell and cable companies that shut new competitors out from their lines. If he's as good as his word (unclear) and politicians let him do the job (unlikely) it will be a major sea change in policy.

The talk among attendees had a great sameness to it. "We're making $50/month from our (voice, video, data) customer, but with (insert equipment name here) we can turn that into a $150/month customer."

There are lots of routes into that account. Phone lines are one, cable lines are a second, wireless circuits (many of them in unlicensed bands with names like U-NII represent a third, satellite services represent a fourth, and your electrical system may yet represent a fifth. Even if (a big if) government regulators allow all pipe owners to control all customers who connect to them, you should still have five different choices for integrated voice, video and broadband Internet services within five years. If regulators are smart and demand that pipe owners share, there will be even more choices.

Deregulation is important for consumers because while pipe owners evaluate everything based on depreciation schedules, the equipment needed to provide service on these lines can be expensed. For consumers, deregulation would mean a stark choice between 30-year depreciation and Moore's Law. Service providers who can gain access to the pipes will not only drive down prices, but could (if the rental costs for lines are reasonable) greatly increase demand for these resources. In other words, deregulation is best for everyone - consumers, competition, and pipe owners.

But even minimal competition could have a dramatic impact on pricing, and on how we define what's worth paying for. When you run phone service - both local and long-distance - over an IP network , prices can plummet practically to zero. When you run video service - what we now call "cable" - over an IP network, the transport cost of the service falls to practically zero as well.

What does this mean in practical terms? It means practically-free long distance voice, and a growing consumer demand for videophone service in order to keep prices above zero. It means video power moving decisively from the cable operator to the cable network, since it's the channel that provides the value, not the pipe. For ISPs it means you become a "converged" service (offering voice and video) or you die. For consumers it means you buy one pipe, and can switch between pipes easily, so your service costs on all these things plummet.

When bandwidth is free, however, something must cost money. That will be content. All types of content and services based on content - cable channels, enhanced voice services, authors, and Web sites - will be competing directly for the same consumer attention. I will be competing directly against the Backstreet Boys, Pearl Harbor, your grandma calling from Chicago and Tom Clancy for something invaluable. Time - your time - will be sliced into multiple pieces (I watch TV while I have my Web browser on) and attention will be the chief good everyone seeks to gain.

Anyone who can hold attention - either partial attention (from a multi-tasked consumer) or full attention (eyes glued to the screen, clicker or mouse held down to the side) will have obtained the great value of the early 21st century. This column just took 5 of your minutes, 5 undivided minutes of your precious life span, to read. My business task will be to maximize the economic value of that 5 minutes. Your task will be to maximize all the values (economic and otherwise) you got from those 5 minutes. 

Somewhere in there a negotiation will occur, and it's a negotiation that Microsoft, the record companies, the movie industry, and Steve Levy are all wrong about. It's going to be, it's got to be, a win-win proposition or there's no deal. 

SSP (Shameless Self-Promotion)

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"Living on the Internet: How to Make Money, Live Right, and Fight For the 21st Century" is tentatively due for release around Labor Day. I'm still writing it, but it looks good. I call it the "first book of the 21st century" because it is designed to feature hyperlinks in all formats - PDF, eBook, and print. (How about if we call it an I-Book for short?) Drop me a note to get on the mailing list for more information on this book.

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Shameless Promotion

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Takes on the News

The Most Essential Site on the Net

Google has quietly undergone a major new expansion, underlining its importance to the Internet as a whole. (If this company fails we're all in big, big trouble.)

The latest move is into translations, a business that had been tried (unsuccessfully) last year by e-Lingo. Google has not sent out a press release on this, but if you search on a term that has a lot of foreign interest (like "powerline Internet") you'll find several text symbols -- [ New! Translate this page ] - which lead to a "translate.google.com" page (which you never see) then on to your page, not in German or Brazilian, but in English.

Admittedly it's pretty rudimentary English, given that it's a total machine translation. Here's a brief example from a news story in Heise, Germany, on powerline Internet trials. "Who up to 31.7. announces itself is for the datentransfer in both tariffs in the first three months overall only 4.90 euro to pay." (I'm not criticizing here, just pointing out that you'll need to be flexible in your reading of the English to get the meaning.)

Google's move into Usenet was well-publicized since it meant the acquisition of Deja.Com. This launch is more like that of the Google Toolbar , a feature I've been using for more than a month now to great effect. The site has still not been spoiled by an over-abundance of ads (just text ads on keywords). My guess is the clickthroughs on those ads are pretty good. I'm starting to feel proprietary toward this site, as are millions of other people, but so far the folks at Google have been outstanding stewards of this important resource.

Why Broadband Can't Gain Altitude

The continuing efforts by record companies to police the Net by punishing ISPs and throwing offline anyone who they decide violates copyright is having a profound effect on extending the Internet recession. It's time for everyone trying to make a living in Internet commerce to get these jokers to back off.

What's at stake is nothing less than the definition of copyright and your rights (if any) in an Internet age. These companies are seeking to exterminate broadband accounts (which must be authenticated before being turned-on, and for which there aren't ready alternatives) simply on their say-so, for the "crime" of holding files they decide haven't been paid for. It's a true Star Chamber proceeding (not even a Starr Chamber proceeding, which at least had news coverage). The companies' attempts to gain international government sanction, and even assistance, in this campaign of terror is nothing less than an effort to kill the Internet until it conforms to their extortionist financial demands.

More important, the whole controversy underlines the lack of checks and balances in the present Internet governance system. All work on defining what can and can't be done, or how "laws" are to be enforced on users, is being managed by a small clique of cops and spies. There is no way for We, the People to check this power, except through lawlessness. There is no impartial, international judiciary to adjudicate disputes, no control over the power of private parties.

Joining the Internet once meant people felt they were coming to America. Under the regime of the record companies, it's soon going to feel more like coming to Russia, or China, or worse. Until the people have some other means of non-destructive pressure, a basic set of rights and a check on both private and government power, it's hard to see this recession turning around.

Establishment to Internet: Drop Dead

It's very popular right now to deride the Internet as dangerous, and its users as radicals. In some cases this represents Clueless reporters with no imagination piling-on . Sometimes it's more sinister.

Cass Sunstein's "Republic.Com" is more sinister. Based on the evidence of political chat rooms (notorious for their flame wars and lack of moderation) Sunstein, a University of Chicago professor, has concluded that the Internet is dangerous to democracy.

His main concern is the "group polarization" found mainly on right-wing political sites. A group of people who actually think Fox News is "fair and balanced" get together, they start exchanging notes, and pretty soon Timothy McVeigh is a martyr to freedom, while the children he slaughtered were Tools of the Inquisition. This has Sunstein, a long-time opponent of the First Amendment , leaping to the conclusion that democracy is threatened. Worse, it has the rest of the "political establishment" nodding in agreement.

In fact the sites he criticizes, like "FreeRepublic.Com," , are merely the political equivalent of porn. If you think free people are in danger from seeing one another naked, or engaged in faux reproduction, then you are indeed ready to throw over others' right to speak and read and think for themselves - in favor of you doing it for them. The same is true here. Yes, the Internet can enable people like McVeigh, but that's not the Internet's fault - McVeigh himself was created by books like "The Turner Diaries" well before the Web was spun. Those who would ban the online interactions of conspiracy theorists would also burn books.

The proper course is not to ban speech, or to ban interaction by haters. It's to shine a light on hate speech, and interact. Sunstein wants to have the government force political sites to link with sites that oppose their views. (Make those nuts read and re-read Fred Rogers until they conform.) Instead, concerned people with different views should just visit the sites of the nut cases, monitor their activities, and engage carefully with their users. We need fewer establishment figures like Cass Sunstein and more like Morris Dees to save the liberty of the Internet, and to maintain liberty in general.

Clued-in, Clueless

Clued-in is DSL Reports, which has become the pre-eminent site for those looking to get broadband service by incorporating user comments.

Clueless is "United Online" , the merger between former free ISPs NetZero and Juno. It's not competition for others, it's another case of 1+1=1 (or less).

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