George Gilder on Telecommunications Policy

Codeine writes "The Testimony of Mr. George Gilder to the Telecommunications Policy: A Look Ahead hearing held by the US Senate Committee on Commerce, Science, and Transportation strongly supports the idea [of] mandated 'open access' to the logical layers of the network, and it is embodied in a new legislative proposal by MCI, A Horizontal Leap Forward: Formulating a New Public Policy Framework Based on the Network Layers Model. The success of the layered model in the LAN environment, migrated to the WAN."

Manipulation

The U.S. now ranks eleventh internationally in residential "broadband" access. Using the FCC's silly 200-kilobit-per-second definition, some now say that 25 percent of American homes have broadband. But by the standards of Asia--where most citizens enjoy access speeds 10 times faster than our fastest links--U.S. residences have no broadband at all.

Hi, I'm Mr. George Gilder. You may remember me from such other testimonies as "Manipulating data" and "Obfuscating statistics."

I would like to inform you that ubuiquity of broadband is in no way related to population density.

Gentlement, I thank you for your time.

Logical Layers and Dependencies

Ideas such as defined network layers, APIs, etc. offer a happy medium between proprietary and open development. The APIs become open to the public allowing different companies to integrate in an existing framework. It seems to me the ideal world would have elements of different approaches to life. Rather than OSS having to push all proprietary software out of existence through a viral legal model, or a monopoly controlling the computer horizontally from OS to Office Suite, a structured layer model could create a working ground for both models.

Re:Logical Layers and Dependencies

The GPL does not prevent people from making compatible software that is proprietary. If it is pushing proprietary software out of existence, it is doing it by being better and cheaper.

from the article

Too long and dense, here's a summary.

The basic theme is, America is supposed to be the home of everything great. Our vice president invented the internet for christ's sake. So why don't we have the best access for consumers?

"The U.S. now ranks eleventh internationally in residential "broadband" access. Using the FCC's silly 200-kilobit-per-second definition, some now say that 25 percent of American homes have broadband. But by the standards of Asia--where most citizens enjoy access speeds 10 times faster than our fastest links--U.S. residences have no broadband at all. U.S. businesses have far less broadband than South Korean residences. South Korea, for instance, has 40 times the per capita bandwidth of the U.S. Japan is close behind Korea, and countries from China to Italy are removing obstacles to the deployment of vDSL, fiber-to-the-home, and broadband wireless networks."

Gilder thinks our government's mucking things up:
"The Telecom Act of 1996... turned into a million-word re-regulation of the industry. Regulatory actions by the FCC and the 51 state utility commissions greatly exacerbated the bad parts of the Act and distorted many of the good parts."

MCI has a new proposal: "A horizontal layers approach would supposedly be a radical shift from the "vertical silos" approach now used, where telephony, cable, and wireless, for example, are regulated based on historical industry definitions, not generic functional categories. The common denominator of Internet Protocol (IP)--supposedly the basis for all future communications networks--is said to necessitate the new layered regulatory approach."

Gilder doesn't think reregulation is going to help, and poses some interesting questions: "Should Google be able to leverage search into Gmail, or to supply content using its proprietary algorithms and its physical network of 100,000 servers? Shouldn't any rival search provider be able to feed off of Google's advanced infrastructure? After all, wouldn't it be impossible to recreate Google's massive web of global intelligence? Doesn't Google's superior infrastructure exhibit "market power"? Might Google actually evolve into a general provider of web-based information management services, rivaling the PC-based Microsoft, or should Google be "quarantined" as a search provider? Or maybe we should structurally separate Google into three companies: an infrastructure provider (its 100,000 networked servers plus algorithmic IP), a content/advertising company, and an information services company (Gmail plus future knowledge management applications). Surely FCC bureaucrats can make these easy distinctions and explain the resulting penalties to weary entrepreneurs who have just spent 10 years of their life building a new service that people really like."

His conclusion: "The real threat to monopolize and paralyze the Internet is not the communications industry and its suppliers, but the premature modularizers and commoditizers, the proponents of the dream of some final government solution for the uncertainties of all life and commerce."

Re:from the article

Our vice president invented the internet for christ's sake

Now Cheney invented the internet too! Sheesh, what's the world coming to ;-)

Call me a Socialist....

But I have always believed that the people should own the infrastructure that companies do business on.

Other than toll roads, we don't allow companies to own our public streets and then mandate to us who gets to use them to conduct business.

If the people (i.e. the government) owned the data infrastructure that telecoms do business on, it would allow for more competition because smaller companies could compete over the same lines without biased interferance from the owners of the lines.

In fact it would drive down the cost of the lines because the governmental authority over them would charge each company a fee to have access plus a usage charge. Total usage fees would remain the same no matter how many carriers compete for the same population, but the access charge income would rise with each carrier that entered the market.

[/soap box speach]

Re:Call me a Socialist....

If the people (i.e. the government) owned the data infrastructure that telecoms do business on, it would allow for more competition because smaller companies could compete over the same lines without biased interferance from the owners of the lines.

The problem with this analogy is that it is the actually building of the lines where we need to concentrate our economic resources. So, if the government owns the lines, then we put an inefficient bureaucracy in charge of the area where we need the work.

When a government or single monopoly completely defines one layer of the puzzle, we create an artificial bottleneck based on the government regulation or the inner mechanizations of the monopoly. Personally, I think we need a maleable structure that allows different companies to compete at different layers.

Re:Call me a Socialist....

Then the government is either going to have to lay the lines itself, or pay someone to do them. No one will do it on their own if they aren't going to own them.

Sitting here in 2004 with tons of unused fiber laid cross-country already, you may find it easy to say that, but when I was sitting there in 1994 wanting to get connectivity for 160 offices across the US, I was damn glad that wasn't the case.

Companies like the original WilTel (who were originally natural gas and oil providers who laid the fiber in the right-of-way of existing pipelines (SPRINT did the same thing with railroad right-of-ways) made it possible to have high speed digital connectivity at a time when the government regulated monopoly of RBOCs and their artifically drawn LATA boundaries made supposed 'public' lines completely unavailable. Yes, this all happened because of the AT&T breakup. Still, we'd be glad to have an ISDN connection right now if private industry hadn't filled the need.

Then again, you might be talking about the last mile, as the article was. Once again - why lay the infrastructure if you aren't going to own it? No one will. If you are going to wait for the government to do it, you are going to be waiting a long, long time.

The fundamental problem is that the existing copper local loop is 'good enough' to provide some access. Therefore, there is no drive for the government granted monopoly of local telephone providers - technically the owners of the local loop - to improve it. In this case, the granting of monopoly powers works against us - but it is still necessary to provide service on the local loop and at the CO.

There is no real solution to the problem that doesn't involve losing something. Pick 2 out of 3 - service, speed, low price. Most people aren't willing to compromise on #3 or #1, that's why you have shitty lines.

Re:Call me a Socialist....

Part of the way governments enforce the local monopolies is with strict regulations on who can string fiber...when and where. I worked with a mining company that could not network two buildings on their property because the bureaucracy considered the dirt road between the buildings a public access.

why lay the infrastructure if you aren't going to own it?

One solution to the last mile problem is to let individuals own it. Having individuals owning the wire to a neighborhood NOC and being able to rent services from anyone providing services to the NOC would distribute ownership of the last mile. It also gets over number 3...individuals are not happy paying a high rent for the last mile, but would be willing to fork out bucks when they own the resource outright.

OSI 7 layers?

Who the heck actually uses the 7 layers? Nobody, that's who. The ISO seven layer model only has native environment that it works on, the Flip Chart, or it's modern day replacement, PowerPoint.

This guy actually wants to let people lock in "content", and it sounds to me like DRM is perfectly fine with him as well.

What a putz!

--Mike--

George Gilder, a guru in his own mind

George Gilder seems to have succeeded solely on the basis of his belief in his own power as a prophet of the future. As those who subscribed to his stock market newsletter found, he was a legend in his own mind, not in reality.

George Gilder was a largely unknown hack author of little read books that many would regard as sexist before he wrote Wealth and Poverty which caught on with the Reagan administration believers in "supply side" economics (we know this today as the economics of tax cuts and massive federal budget deficts). Although "supply side" economics has returned, it was largely out of favor with the administration of Bush Sr. and the balanced budget faction of the Clinton administration. So Gilder reinvented himself as a technology guru. The fact that he has no background what-so-ever in science or technology did not stop him. He interviewed those who did and wrote up his impressions in breathless terms.

The peak of Gilder's trajectory was his stock market newsletter which had thousands of subscribers who were willing to pay thousands of dollars for the privilege of reading the thoughts of the master. This and the opportunity to get early access to Gilder's hype which was moving the market in many cases.

Then there was the fall. As the 2000 stock market crash erased the value of many of the stocks that Gilder touted, his subscribers deserted him in droves, much poorer for the experience. Gilder had invested in the stocks that he hyped and his investments were largely wiped out. Gilder was also making money holding conferences and was left with conference committements and no attendees. In the end he was heavily in debt, his bubble wealth wiped out.

But true ego maniacs and pundits never die. They just continue the process of reinvention, whether as Governor of California or as an expert in telecommunications. So here we see Gilder again blowing hot air on topics that he has a shallow understanding of. And, as always, coloring his presentation with the usual Republican freemarket ideology (regulation bad, taxes bad, poor people weak and shiftless, unrestained free market good, rich people good).

Where Gilder is wrong

First, despite all the whining for Federal subsidies, broadband Internet access is at 45.9% this month. It just passed 56Kb/s modem access. (There are still a reasonable number of users at lower speeds. Amusingly, the fraction of 14.4 Kb/s users has been relatively constant for years.) High speed home Internet access is growing at about 8% per year. Korea is at about 70%, and Canada is at about 64%. Korea saturated at around 70%, and Canada seems to be levelling off around 70%. The US should hit 70% broadband in about three years.

That's higher than cable TV ever reached. Cable TV has been stuck at roughly 65% for many years. And it's way above book and newspaper penetration. Far more people have Internet access than buy books. Newspaper penetration is down to 55% or so, and has dropped about 10% per decade since 1950.

Remember, the US has flat rate local phone service, but many other countries don't. So dialup access was and is cheap to buy.

So this isn't a problem.

As for the "layering" business, we've had that ever since telephone deregulation. You can buy bulk bandwidth cheaply if you can get it to your site, or go to where it terminates. Look how little bandwidth costs for a colo server. Bulk long-haul bandwidth is incredibly cheap.

Good for the Customer, US, and Business is best

I live about 30 miles away from New York City and still can not get any wire-DSL, wireless local-loop or Fixed Position Wireless (Google the phrases), ... why be forced to share the cable. Data is data; So, why not have three or more companies that are able to provide all services (phone, HDTV, data, internet, ...) and content that I/you select/want and just one bill for $100 or less a month. I'll pick my provider and keep them as long as they keep me happy for a good price.

"Building a new service that people really like." OR "The real threat to monopolize and paralyze the Internet is not the communications industry and its suppliers, but the premature modularizers and commoditizers, the proponents of the dream of some final government solution for the uncertainties of all life and commerce."

Open standards, technology, innovation, laws, concepts, ... providing a real performance incentive and dynamic Capitalist "Open Market" is the way to go. Any law that mandates control/protection of sectors (special interest) in technology, customer base, media/content, ... is a big-bad mistake for economic development and the citizens of a nation. Let performance, total-cost (environment, health, welfare, ...), and customer satisfaction rule the market.

Allowing special/proprietary interest to control the market and customer is Un-American, Communistic, and anti-capitalist, everything many of US are against, unless you're a rhetoric and dogma hog like many politicians and fools. Bad businesses must fail, file bankruptcy, and pass into history. Just as that HP CEO said no USA worker should have a god given right to a job, I say no business/CEO should have a Government granted right to market share and/or customer base. We should never protect any market sector or customer base for corporate welfare and customer exploitation as we have been doing by laws for special interest during the last 30 years (at least). It will just promote more enrons for US. Act in the customers interest with laws that allow and promote choices, freedoms, options, ....

OldHawk777

Gilder opposes layering, open access, competition

The original post is wrong. It implies that Gilder supports the MCI position. But Gilder's testimony opposes it. Gilder is, like many extreme right-wingers, a fan of unregulated monopolies. He does not believe that monopolies should be regulated; he thinks that technology will magically render them powerless. His record in picking technology investments, however, is rather spotty, to be charitable.

In Gilder's world, the incumbent telephone companies, who had government-granted monopolies, should be allowed to have total control over their usage and content. No competing ISPs, no uncensored web sites, no competing web merchants, if that's what the monopoly wants. If they want to charge $100/month plus $5/hour for dial-up access, fine. Anything else is, to him, excessive government regulation. He'd permit somebody else, of course, to string new wires on the street, but the impracticality of that is not his problem.

He should be relegated to the dumpster of other failed nut case prophets, and left with his fellow creationists to ponder the problems of a world where scientists and rational thinkers are allowed to question his faith.

WorldCom^wMCI hijacks the OSI model

In their "open access" position paper, MCI (AKA the ripoff empire of WorldCom) calls the multilayered network model "MCI's Layer Model". It's the very familiar OSI network layer model. So it works, but MCI is ripping off the credit. Since they use the change to that (often superior) pirated tech model to justify government deregulation of their business, why won't they use the new tech/law model to continue their fraudulent ripoffs of everyone within reach?

Stopped clocks, etc.

There are some interesting references to companies/technologies that Gilder thinks are going to change everything in the 7-layer world:

Corvis -- link [corvis.com] "using colors of light both to bear the message and to determine the path of the circuit. It radically collapses the top layers of the OSI (Open Systems Interconnection) stack.. A "switchless" web of always-on fixed lambdas (wavelengths of light) can function as both the physical and logical layers of the Net because the intelligence is embedded in the path." ,p> Broadwing -- Broadwing [broadwing.com] Subsidiary of Corvis. "In uniting Corvis, a cutting edge equipment provider, with Broadwing, an infrastructure builder and service provider, [Corvis CEO David] Huber is also betting that IP networks are not inherently modular, where equipment from a thousand providers can easily be cobbled together to deliver high-bandwidth, low-latency services..."

EZchip -- EZchip [ezchip.com] "." Where until now data flowing through the seven layers and numerous sub-layers were parsed and modified by a gaggle of hundreds of chips connected by thousands of wires and glue-logic galore, EZ puts all seven layers of the OSI stack onto one-chip, performing all the essential functions of an Internet router on a single sliver of silicon. The "layers" are once again transcended when EZ's software tools allow programmers to tell the chip what to do without even referring to the rigid layers, channelizations, protocols, and interfaces used in the previous software environment."

It's true he's a Reaganite, but Reaganites aren't wrong 100% of the time. They aren't that useful.

'Course, I also remember something about a company called "Global Crossing."

He concludes:

"The telecom industry is nowhere near some mythical paradox of perfection or cul de sac bargain basement of commoditization. It is still engaged in a thrilling adventure of putting together worldwide webs of glass and light that reach from your doorstep or teleputer to every other person and machine on the planet. It is long distance and it is local, it is packetted and circuited, it is multithreaded and aggregated, it is broadband and narrowcast, all at once. These crystal palaces of light and air will be hard to do and the world will reward the pioneers who manage to build them."

The right solution is to open the market

One of the biggest problems is that people who want to offer better broadband (especially those whos plans dont require leasing any infrastructure from the Baby Bells) face opposition not just from the Baby Bells but also from various regulators at local, state and federal levels.

Make it easier for anyone to come in and lay cables or fiber (subject to some easy to follow rules about where and how it can be laid obviously). Get rid of all the red-tape. (in particular, if you get permission from the owners of all the pieces of land your cables will run through, you should be able to lay any cables or wires you want as long as they dont cause problems for power, water, phone, gas etc).

One sad example (that I cant seem to find any usefull links to right now) is the example of Anaheim california. They spent all this $$$ setting up a world-class fiber optics network, set up a nice NOC full of infrastructure then promptly abandoned it. (last I heard, all thats left is a bundle of fiber ends sticking out of the wall somewhere) I dont know why it was abandoned (and I cant find a link on google that explains why) but anyone with the money and the will to run their own infrastructure like this should not be prevented from doing so by unnecessary red-tape.

Course, another option is to go totally wireless and set up a bunch of wireless points all over town. It would be cheaper than running miles of fiber.

The reason broadband sucks in the US is because no-one is willing (or mabie its that no-one is able) to offer better broadband than the crap you have now. Here in australia, I am getting 512k/128k ADSL with NO download limits, traffic shaping, portblocking, restrictions on servers or whatever else (there are some restrictions on things like running a webserver and selling space on that server but they are perfectly reasonable). Plus, I can run unlimited LAN machines. All for AUS$80 per month (about $US55 at current conversion rates)

It may seem expensive but considering this is 512k/128k, and has no download limits (or, like some other ISPs have, traffic shaping where after a certain amount of downloads your speed gets cut back a bit untill the next month), its pretty good.

Here in australia, all the infrastructure is owned by Telstra. (used to be 100% government owned, now partially privatized, current government is still trying to sell off the rest) Other companies can come in and offer telephone service and DSL broadband over the lines. (and there are are plenty to choose from in both markets)

Unlike the US, we have a government and regulators with some teeth who are prepared to go after Telstra. (just recently, Telstra dropped their retail DSL prices below their wholesale prices and were hit very hard for it by the regulators)