ReasonedResponse.com

I'm back in Virginia after a week in Australia (known affectionately as "Oz" to insiders), where I met with Internet industry leaders and spent a few days at the beach basking in their summer sun.

Returning is always a mixed blessing.  Glad to be home and back on US soil.  Suffering a bit from that "wearing-someone-else's-skin" feeling that jet lag always brings.  Feeling tanned and fit from the warm sunny days and surf.  Feeling chilled from the gloomy, foggy cold of winter in the Blue Ridge mountains.  Delighted to see how strong and forward-thinking the leaders of the Internet are in Australia.  Disappointed that the carnival freak show we call "network neutrality" didn't pack up and leave town while I was gone.

Though mush-mouthed pundits here in the States claim that neutrality legislation will simply protect what is and has always been the law of the Internet, in Australia it's a completely alien concept.  They have never had all-you-want-all-the-time Internet, and so they have evolved with a system of data caps and tiered pricing to manage the growth of data and applications.  You can have all the bandwidth you are willing to pay for, up to a point.  Bound to the Internet by two undersea cables to serve the entire continent, the idea that we have spent two years tied in knots over whether to manage our traffic or let everyone run amok on the Internet just elicits a sad shake of the head in Oz.  As it would here, if grown-ups were in charge of Internet policy.

Not that Australia doesn't have some bad policy ideas of its own.  They've just launched yet another multi-million-dollar government test to see if filtering works to control porn and gambling on the Internet.  Sigh...

I did have a chance to chat with Stephen Conroy, the Minister for Broadband, Communications and the Digital Economy in Prime Minister Kevin Rudd's new administration.  And to catch up with Paul Twomey, who heads ICANN.  Had several days of intensive policy discussions with Peter Coroneos, who heads up the Internet Industry Association in Australia.

I like Australia, and always enjoy both the visit there and the joy of returning home.  It's somehow cathartic -- a chance to breathe fresh air and get a fresh perspective on the things that are really important in life.  And in the glow of my February tan and the memory of some excellent red wine shared with friends, the squabbling over Internet policy ranks far, far down on the list of what is important today.

To the Commissioners:

I, Dave McClure, on behalf of myself and the more than 200 million Americans who subsribe to Internet services in the United States, request that the Commission issue a Declaratory Ruling that would require Internet Service Providers to adopt resonable and best practices for the management of their networks in a manner that does not permit discrimination by some Internet applications and users to reduce, block, degrade or otherwise lessen the integrity of my Internet and online experience.

Specifically, I submit the following:

• The principles adopted by the Commission do not pertain exclusively to network operators, but do state that I and other network subscribers have the right to access the content of my choice using the devices and applications of my choice.  It is therefore reasonable to assume that these rules must likewise pertain to individuals and applications that limit, reduce or block my ability to do so.
• As noted by Peter Svensson of the Associated Press, "In the basic configuration, each cable serves about 500 households, which share about 40 megabits per second of download capacity. If each household gets Internet service with a maximum download speed of 10 mbps, that means four of them downloading at full speed can saturate the connection."  DSL does not use a similar shared network, but suffers degradation when even a small minority of users elect downloads that saturate the capacity of the networks.  This degradation is even more significant on optical wireless and satellite Internet connections that are common in rural settings.  This means that a small number of users may therefore reduce my ability to download due to their excessive use of the Internet -- even though I am paying the same rate for my connection.  This is ipso facto discrimination against my ability to access and use the applications of my choice over the Internet, a violation of the principles adopted by the Commission by individual users who over-consume.
• These over-consuming users and applications likewise degrade my ability to use specific applications that include security systems, Voice-over-IP telephony and E-911 services, as well as the communications of Emergency First Response teams, law enforcement, fire and safety crews and others who utilize the public Internet.  They therefore represent a clear, present and quantified danger to the public safety and my personal well-being.
• The Internet was not ever and is not today designed to handle the demands of predatory applications, such as peer-to-peer networking applications, that use "supernode" configurations and other means to utilize a disproportionate amount of bandwidth.  Such applications are specifically designed to reduce and limit my ability to utilize the Internet as stated in the principles noted previously by intentionally permitting and encouraging other users of the Internet to discriminate against my use by taking a disproprtionate portion of our jointly allocated bandwidth.
• Merely adding capacity to the network is an unfair and discriminatory solution to this problem because the costs associated with the additional capacity are to be paid by me and by other subscribers with no guarantee that the additional capacity will not simply be consumed by rogue users and applications as it is today.  Additionally, the requirement to simply add capacity to lessen the demands of the over-users and rogue applications will reduce the investment dollars available for network build-out and enhancements, particularly in rural areas such as the one in which I reside.  This would therefore represent a secondary level of discrimination against my rightful use of the Internet.
• Adding capacity to satisfy the users and applications who are discriminating against me and other users today would unfairly target working families, lower-income Americans, rural Americans, senior citizens and others who cannot afford the financial burden of paying for the use of those who choose to discriminate against us.  To put it more simply, why should lower-income Americans be forced to pay for the excessive abuses of the minority of Internet users who consume disproportionate bandwidth?

I therefore petition the Commission to issue the following as Declaratory Rulings:

• That the protections specified in the Principles adopted by the FCC with regard to my right for non-discriminatory access to Internet content using the applications and devices of my choosing be clarified to extend to users and applications that actively discriminate against me by using a disproportionate percentage of the available shared bandwidth on my network.
• That network operators be required to implement reasonable practices to ensure that this discriminatory behavior does not occur, and that the Internet access and use of any one subscriber is not unfairly diminished, degraded or blocked by the actions of any other user or application.

Regards,

Dave McClure

ReasonedResponse.Com 

I wasn't sure whether the acqusition of Yahoo! by Microsoft was a good idea, until I saw how violently Google was howling in protest and gearing up to try to convince politicians to block the merger.  If Google is that dead set against it, it's probably a good idea.

Don't get me wrong; I don't dislike Google.  But they are a company that drips of arrogance and talks about world domination as though it were their birthright.  They are a company hell-bent on foisting ever more ads on consumers, and on penetrating our private lives to enrich themselves.  Oh, and they were involved in that less-than-sterling Chinese censorship of the Internet.  So much for "network neutrality." 

I'm actually thinking the merger could be a very good thing.  Consider what it can achieve:

• Yahoo! will get better management.  The company has struggled in recent years both with lackluster performance and in its competition for valuable ad dollars.  Microsoft can help with resources and direction that will give greater balance to the online advertising markets.
• Microsoft will get back in the broadband game.  While Yahoo has built an impressive presence and co-marketing agreements that have built its portal strength, Microsoft has languished with failures of its WebTV and MSN products.  A merger would give Microsoft another shot at doing something of note online.
• The merger would set up Microsoft's online applications strategy, enabling it to better compete for the active desktop with Google and others.
• It will re-energize the stock market, helping to stave off another recession.  In fact, this kind of merger activity could trigger another round of mergers and acquisitions, propelling the markets to new heights in 2008.

I'm always skeptical about whether a merger will generate the benefits and synergies claimed.  But in this case, and unlike so many of the latter-day dot.com mergers. there does seem to be a real opportunity for both companies to grow, for shareholders to see a decent return on their investments, and consumers to see benefits in the economies of scale and innovation possible.

I grow weary of the "Woe-Is-US" crowd.  You know, the progressives and pundits so desperate to find fault with the United States that they have spent the past five years trashing our broadband deployment efforts and demanding that we mandate the kind of heavy-handed, draconian regulation that nearly killed the railroads in the 19th Century.

But as William Shakespeare noted in the Merchant of Venice: "Truth will out."

While the "Woe-Is-US" crowd was busy chasing the OECD rankings and wailing about how truly awful everything is here in America, calmer heads were working to determine where the trouble spots were occurring and how we might remedy them.  We knew that our data was insufficient to the task, and that we has best proceed with caution lest we create unintended consequences.  We also knew that with the level of private investment occurring in the broadband markets, and the number of competitors ramping up with lower costs and higher speeds, the OECD rankings couldn't possibly be painting a realistic picture of broadband in the US.

New and better data is starting to emerge, and it's not painting the doom-and-gloom scene you might expect:

• Last week, the National Telecommunications Information Administration issued its "Networked Nation: Broadband in America" study concluding that the objective of affordable access to broadband nationwide -- as stated by President Bush in 2004 -- has been realized "to a very great degree."  The NTIA report drew heavily on an FCC study showing that 99 percent of all US zip codes receive broadband service from at least one provider, and more than 80 percent have at least four high-speed providers offering service. Critics have consistently held that the zip code data is misleading, and the NTIA conceded that more work needs to be done regarding deployment, but that the broadband picture is much rosier than studies to date would have you believe.  I'll add another note that your don't see quoted much:  Maybe the zip code data isn't useless at all.  A study by the Huntington, West Virginia Department of Business and Economic Research found in 2005 that Appalachina businesses in zip code areas in which there was a broadband provider saw productivity gains of between 14 and 17 percent.  Direct correlation that validates at least some of the FCC data.
• Also last week came an analysis from John Horigan of the Pew Internet and American Life Project.  Pew notes that the data showing the US lagging in broadband may not be accurate because government assessment capabilities are inadequate.  Horrigan notes that in rural areas in particular, local governments simply don't have the tools to develop a valid snapshot of broadband deployment or adoption. 
• Finally this week, Connectivity Scorecard (CS) released a report not on how countries are utilizing telecommunications technologies to improve social and economic prosperity.   CS, created by London Business School professor Leonard Waverman, measures countries on 30 different indicators. The
  US topped the rankings, followed by Japan and Canada. South Korea, which normally ranks at or near the top in any Internet study, finished in the middle of the pack. Researchers attribute this to the US usage of technology to increase productivity, while South Korea's usage is not predominantly corporate in nature but consumer applications for entertainment purposes.  The study notes that the top-ranking United States, which has benefited the most from ICT, was rated below 7 out of 10, mostly due to weak usage of vast broadband networks, indicating there is room for improvement for all countries. "These results indicate an opportunity for countries to add hundreds of billions of dollars in economic benefit by rethinking how they measure and enable connectivity," the study said.
  

Finally, we are beginning to understand that the problem may not be with deployment but with adoption.  That is, publicly berating broadband providers because of low adoption rates may be a ploy to push political agendas for network neutrality, open access and mandated terms of service.  When in fact we are doing just fine deploying the infrastructure but need to focus more attention on why there are no applications that are driving greater adoption among some segments of the consumering public; on why people do not have the computer skills and literacy to make use of the Internet; and why some people just don't feel the Internet will ever be relevant to their lives.

When I first moved to the Shenandoah Valley a year or so ago, I moved into a land that time had forgotten.  Mostly a poultry farming region with a tad bit of tourism for the famous Luray Caverns, Page County in Virginia was largely a broadband wasteland.

At the McClure Ranch just outside of Luray, my choices of broadband were none and none.  Satellite wan't taking new subscribers, wireless was nowhere to be found, there was no EVDO or HSDPA, Embarq said it would deploy DSL the day after they starting serving ice water in Hell, and the cable company stopped short 1.2 miles away.

That was then, this is now.

A year later, my two neighbors are using a robust and relatively affordable optical wireless connection.  I use Hughes Satellite broadband service.  Two weeks ago, my cell phone suddenly popped with with EVDO service at the 800 Kbits level.  Comcast, not to be left out, is deploying fiber and coax along the streets just to the east of my house, and promise to be here by summer.  The Moose Lodge in Luray is now a Wi-Fi hotspot.

All of this happened because private industry was allowed to do what it does best, without nterference by local, state or federal governments.  They did it with their own money, in at least one case with borrowed money.  And they did it in a way that makes economic sense both for the companies and their subscribers.

The point isn't just that I will soon have a choice of four or more providers when last year there were none.  It is also testimony to the fact that any assessments of broadband in this rural part of Virginia that are more than about six weeks old are worthless.  Any study of broadband that wasn't conducted last week is likely to prod policy makers to make very bad decisions.

And perhaps, it is also a small testimony to the adage that good things come to those who wait. 

The National Telecommunications Information Administration issued a report this week -- "Networked Nation: Broadband in America" concluding that President George W. Bush's 2004 commitment to affordable access to broadband nationwide by 2007 has been realized "to a very great degree."
The NTIA report drew heavily on an FCC study showing that 99 percent of all US zip codes receive broadband service from at least one provider, and more than 80 percent have at least four high-speed providers offering service. The NTIA conceded that more work needs to be done regarding deployment, but says that the broadband picture is much rosier than studies to date would have you believe.

The NTIA conclusion touched off a firestorm of criticism from many sides.  From the legions of Bush haters and detractors.  From that small part of the tech community that has invested politically in the "woe is me" school of broadband.  And from those who just flat don't like the government's inadequate measurements of broadband deployment.

On the other hand, many observers are quick to point out that President Bush should get credit for the rapid deployment of broadband that has occurred on his watch.  They point to his support for a ban on Internet access taxes, his policies of light regulation and deregulation at the FCC, and his support for programs that provide support for broadband loans and grants.

When all is said and done, George W. Bush's legacy as president will not hinge on his record in broadband.  He will be remembered for his largely effective war on terror and the downfall of Saddam Hussein.  He will be remembered for his education policies, though perhaps not remembered fondly.  And he will be remembered for spending his way out of the recession he interited from Bill Clinton.

But when it comes to his broadband legacy, I give him a C minus at best.  Here's why:

• Though he was handed the Internet as a gift from the Clinton-Gore team, he seemed to mostly ignore it in his first term.  I called it a period of "benign neglect," but it was neglect.
• He did appoint Michael Powell as Chairman of the FCC -- one of the most effective chairmain I have seen in the era of the commercial Internet.  But he then stood by as new FCC Commissioner Kevin Martin publicly abused and embarrassed Powell -- a major political gaffe.
• When pressed to say something about the Internet during his 2004 re-election bid, he did stake out an objective for broadband deployment, and that objective has largely been met.  But that has happened through the actions of state and local governments and through the massive investments made by cable, telephone and wireless companies, not due to any coherent federal program or policies.
• He did support three Congressional efforts to keep state and local governments from taxing the Internet out of existence, but that support invariably was late and tepid.
• He has largely avoided strong support for other broadband initiatives, and has been virtually silent as the forces of mediocrity and unnecessary regulation have tried to knee-cap the Internet with their vile "network neutrality" initiatives.
• And then there have been the two attorneys general, who have misused national security letters to force Internet Service Providers to give up subscriber information that should have required a warrant.  Efforts to force ISPs to collect and store data on all Internet users for two years, even though there is no clear benefit from doing so.  And zealous enforcement of an anti-gambling bill that the rest of the world sees as arrogant and illegal.
• Finally, he has used the office of the US Trade Representative to force other nations to adopt copyright laws based on the US Digital Millennium Copyright Act -- and continued to do so long after that legislation was shown to be deeply flawed.  Even countries that were signatories to the original WIPO agreements in their own right were force-fed US law if they wanted to do business with the US.

I'm confident that, on the whole, George W. Bush will be viewed positively by historians.  And in the final analysis, his benign neglect of the Internet may have been exactly what was called for during this growth state of the 21st Century.  But he can't have it both ways.  He can't neglect the Internet and then take credit for its growth.  And he can't side-step the worst of his policies just because broadband companies were able to side-step them enough to continue growing.

My advice: take credit for the economy and the war on terror, and continue to leave the Internet alone.  At least, that's my $.02.