Re: Economics is Dismal

[David Farber <dave () farber net>]

Let me comment on this. While spectrum may or may not be in short supply (how we allocate it is stupid), the 
"hardwired" infrastructure is just beginning in terms of speed etc. It is more on a Moores law than you would gusess. 
It also blends into directions in processor design. Yes it may entail replacing existing plant (after all we did get 
rid of such in the past) and it may harm the profitability of current carriers but it will happen. If not in the USA, 
elsewhere.

Dave

________________________________________
From: Bob Frankston [bob37-2 () bobf frankston com]
Sent: Saturday, March 22, 2008 11:34 AM
To: David Farber; 'ip'
Subject: RE: [IP] Economics is Dismal

In reading about failures of the telecom model I want to keep shouting “I told you so and I’m telling you so”? Why is 
it so hard to recognize that these so-called failures are really a way of the marketplace saying “don’t do that” and 
looking for an effective alternative such as separating infrastructure from the services that us the infrastructure? 
How dismal do you have to be to focus only on failures when there is a solution begging to be considered? Just say 
“no!” isn’t enough – you have to find something you say “yes!” to.

Why would an economist blame physics and not a badly constructed marketplace -- one that is a creation of regulation 
and not at all beholden to marketplace forces? Of course the marketplace isn't attracting new entrants -- what company 
would be foolish enough to go into a business in provide more capacity when capacity is the biggest threat to the 
current business model? And if one is so foolish to bid on “spectrum” then it is just gaming others and not creating 
new value.

And again, madness is taking a model that can’t work and redoubling the efforts by handing the content to the 
gatekeepers.

And bandwidth is a construct -- copper, glass, radios and plastic might cost something but they are relatively 
inexpensive and the cost of lighting them up is coming down rapidly. You only need 2Mbps for most HDTV – that’s not 
much.

Why do people continue to assume the pie is finite, our needs are “excessive” and Moore's law doesn't apply to 
connectivity?



-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Saturday, March 22, 2008 09:49
To: ip
Subject: [IP] Copyright is dead



Copyright is dead - March 20, 2008

<http://www.contentagenda.com/blog/1500000150/post/630023663.html>



No wonder they call Economics the Dismal Science. At the Internet

Video Policy Symposium in Washington yesterday (co-sponsored by

Content Agenda), a chorus line of academic economists postulated that

content owners face a far more difficult challenge than they know in

monetizing their content on the Internet, and that the odds that we

can build our way out of the current debate over how to manage scarce

online capacity are virtually nil.



The most enthusiastically glum was Gerry Faulhaber, a professor at the

Wharton School of Business at the University of Pennsylvania and the

former chief economist for the FCC. According to Faulhaber, copyright

is a dead letter.



"Copyright is a very big issue in the legal world today, but in the

business world, when you talk to consumers about protecting

copyrights, it's a dead issue," he said. "It's gone. If you have a

business model based on copyright, forget it."



According to Faulhaber, the "world of open piracy," created by digital

technology will always thwart content owners seeking to leverage the

monopoly granted to them by copyright law.



"The music industry is yet to figure this out," he said. "The current

iTunes model is probably the best they can do. In both movies and

music this is likely to result in substantially lower revenue for

content owners." The movie studios will have an even tougher time than

the music companies, according to Faulhaber, because some of the

monetization models that can work for music--such as advertising--

probably won't work for full-length movies.



The likely result? "Content providers will have to hook up with the

conduit guys," Faulhaber said. "They're the only ones in a position to

monetize content online because they can control its distribution."



Faulhaber was also gloomy about resolving the current stand-off over

the allocation of bandwidth.



"Video takes lots and lots of bandwidth, and bandwidth is not cheap,"

he said. "If bandwidth were cheap, the business would be attracting

new entrants, which clearly it isn't."



[snip]





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