I recently interviewed Bob Frankston to add his expert view to my coverage of the FCC NOI on the National Broadband Plan, but what I got instead was an offer to take the Red Pill. So I did.
We started with my outline of what I thought were salient points. ”How many times will we, the people, pay to build this network that is refereneced in the National Broadband Plan?” I asked. We built it 100 years ago, the military built a piece in the 1970s, various educationals initiatives built pieces in 1980s & 90s, the National Science Foundation unified and operated the military and higher-ed backbones, and then in 1991 the National Information Infrastructure offered tax breaks and incentives to Telcos to deliver fiber-to-the-home (FTTH) for 86% of American homes by 2010 at a cost of $200 billion to the taxpayer. It sounded to me like a good start.
But Frankston quickly turned my attention, when he started talking about the transition from steam engines to diesel engines in the railroad industry. He pointed out,
…not one of the steam engines companies survived the transition to diesel engines. It wasn’t because the engineers couldn’t build diesel engines, but because steam engines were one off designs with each engine requiring a different number of wheels and the ability to negotiate a grade or severe curves or longer distances, the DNA of marketing and customer relationship for steam engines was just different than diesel engines. Had the railroads realized that they were in the transporation business, they would have built airplanes.
…they wouldn’t have built roads as there was no business model in roads.
Why is the railroad a good model for the telecommunications business as described by the National Broadband Plan?
First, the FCC (Federal Communications Commission) was modeled on the ICC (Interstate Commerce Commission) who regulated railroads and sold rights for a price.
This is similar to the FCC’s revenue generating activity in auctioning spectrum to wireless carriers. Just as rights for railroads were treated as private property, so is spectrum. In fact, spectrum allocations are specified in acre units. It is counterintuitive to think of signal frequencies in the sky as acres of land, but that is the current process of transferring our national airwaves into property sold to carriers.
The steam engine versus diesel engine analogy is directly relatable to the battles between so called Bell heads (those specialized in circuit-switched networks that comprised the telephone network and long time employees of telcos) versus Net heads (those specialized in packet-switched networks that comprise the Internet and the newer engineers on the block in carrier staffs). For cable companies, the conflict is between Broadcast heads versus Net heads. The evidence for cable company dysfunction is Time Warner Cable’s inability to realize the opportunity of delivering TV as an application across AOL infrastructure resulting in lower costs and greater audience reach.
Back to railroads.
Modern railroads in the US have these companies reinvesting their profits into infrastructure. European railroads separate the rails business and the by-rail-transportation business. They are two different businesses. And yet, the Internet is more like driving, and you can’t just bend the railroad business and make it a road. With the Internet we create our own solutions.
Bob’s discussion on unneeded and even incompetent complexity in the effort to assure scarcity is best presented in his own article titled, Assuring Scarcity.
The analogy of telcos as railroads and the Internet as roads started to rattle around in my head. Today’s service providers, telecommunications and cable companies, are trying to sell Internet service through artificial billing events. Sending messages is a good example. Why do we pay – at worst – 20 cents per text, but 75 cents per picture message. Both are composed of bits. Once you have the ability to transfer bits, you can transfer more bits.
What would our use of roads be like if today’s telco and cable cos (ISPs) were in charge of roads?
Roads are built by city, county, state and the federal governments. Let’s say that those are the service providers in this case. If these road provdiers were like ISPs and potential broadband providers they might be telcos, cable cos and fiber cos. Each of these companies strings a wire to my house. So, to ensure my “access” to roads the city, county, and state would have to extend their roads to every house to provide access to their brand of transportation service. That’s at least three roads running out to every house.
Each time I drove up on the road, I’d need a way to show that I’ve paid for access to the road. For simplicity sake let’s say that I have an “E-ZPass” to present my crendentials to a reader that would allow me access. And to get the E-ZPass I pay a monthly subscription to either the city and would therefore be restricted to driving only on city roadways. Or if I paid a monthly subscription to both the city and the county, I could drive on both city and county roads, but not on state roads.
This description isn’t different from paying for DSL and Cable TV. Or paying for Cable TV, phone and Internet Access commonly known as a triple play.
Now in this analogy, I’d need the right vehicle to drive on asphalt which wouldn’t work on conceret roads. Concrete roads would require a different set of specs for the vehicle. A choice would require that one decide to drive on the more plentiful asphalt roads or the less plentiful but more stable concrete roads.
Roads have special features. Each time a bridge is crossed, or a tunnel driven through would be an event for a new charge. In addition, if I wanted to take advantage of higher speed limits on the roads I’d be charged each time I increased my speed to a higher level. On city and county roads it might be one charge for 25 to 35 mph and then a fee increase for 45 to 55 mph.
And of course my monthly road subscription would limit the total number of miles I could travel on the road. Any additional mileage would result in a higher monthly subscription or a per mile charge 10x to 40x greater than the montly allotment.
To replicate the cable model, I’d be limited to mass transit. My road experience would need to be shared with a group. The more subscribers on the bus or train, the more stops and therefore the slower my transportation.
If I wanted to use roads during rush hour, an addition charge would then allow me to use roads during those peak periods. I would not be allowed to roam onto roadways even for short periods built by a provider with which I didn’t have a monthly contract.
Using road side attractions would each require it’s own fee. Public restrooms, emergency lanes, emergency call boxes, and rest areas would each read my E-ZPass and transfer the appropriate charge to my bill.
Each trip on roads would require an assessment of which providers I needed to pay to complete my transportation goal. That’s right. Transportation is the service I want, but instead I’m paying for arbitrary road events that are artifically and inconsistently assigned some price.
Telecommunications is an application. This abstraction has been successfully demonstrated byTruphone, Skype and Vonage. TV is an application successfully demonstrated by Hulu andUstream.tv. They are not magically integrated into a physical cable.
We should be asking many more questions as we consider the FCC’s new national strategy. Bob Frankston having thought about these issues since his work at Microsoft and creating “Home Networking” which freed consumers from the carriers owning the network in their house. Sound far fetched? Cable cos and DSL providers in the early days charged for the number of computers one connected to their network – not unlike charging for multiple cable boxes when such equipment was required just to watch broadcast video.
We must the consider this next question carefully. Frankston asks,
Why do we tolerate the claim that fungible infrastructure is a telecom service?
Roads are infrastructure and although they enable one mode of transportation we do not fund them with a service model.