IP: The Internet's Dilemma pages 1 - 6 of Sept 2001 COOK Report -- send with permission

[David Farber <dave () farber net>]

Hi Dave, this went to my subscribers on July 8.

The Internet's Dilemma: What Good Is the Stupid Network If the Other Guys 
Own It?
Future to Offer Access to a Public Highway Grid or Exile to Corporate 
Controlled Walled Gardens and OS'?

An Analysis by Gordon Cook

How are we to understand reality as we shake off the hangover of our 
Internet intoxication and face huge, corporate controlled "Walled Gardens" 
of content delivery and monopoly OS?  These "Walled Gardens" are carefully 
controlled 'parks' of vendor content  combined with software designed to 
encourage users not to stray out of the content Garden.  On the monopoly OS 
side of things (Windows XP) the user finds a Microsoft  provided family of 
compatible software tools and services (dot Net) designed to lure customers 
into tying more and more of their daily lives to the vendors products and 
services. The AOL/Time Warner model is built on the old assumptions of top 
down user control and manipulation to sell as much content and connect time 
directed to appropriate web sites as possible. The Microsoft model the 
customer as a reliable source of recurring revenue on a monthly basis for 
the vendor's software and services.

During the consolidation of the "content-is-king model," the Internet 
industry has built up huge capacity of both fiber and bandwidth - one that 
far exceeds the ability of the AOL/Time Warner business model and related 
developments to absorb in the short term. Consequently, the old dot com 
Internet industry has fallen into limbo while people are suddenly looking 
for a basis on which to rationalize its future existence.  This state of 
affairs would have been unthinkable a year ago to all but a few.  Even now 
it is not adequately understood by the industry. The decline of the last 
six months has been precipitous.  Unfortunately, we likely have not yet 
neared the bottom.  We are in a serious muddle with the captains of 
infrastructure companies refusing to treat stockholders with sufficient 
candor. The situation is worsened by the fact that neither the FCC, the 
Congress, nor the Bush administration has a clue that anything is seriously 
amiss.

Trying to bring some focus to our dilemma, this essay points out that the 
edge-controlled organizational principals of the Internet, where no central 
authority dictates precise behavior, can develop, given some assistance 
from government, into an alternative model to that of the central control 
of the "Walled Garden" and monopoly OS. This alternative model is centered 
on exploring a slowly emerging reality of customer owned networks.  Telecom 
as an asset and not a purchased service.

After a decade of the commercial Internet, that system, while it has 
adopted many Internet technology tools, has ownership constraints and 
customer structures that have supplanted the open, anarchistic and 
innovative style of the edge controlled Internet in its early commercial 
stages.  This alternative, innovative model remains most alive in the 
Canadian's work on customer owned networks.  Despite Chicago's Civic 
network, this model is not like to take hold in the United States unless 
and until national policy makes possible an arena of the local ownership 
and control of infrastructure. Preserving the opportunity for local 
ownership and control, will permit experimentation with the innovative 
research into reducing the cost of high speed networks as has been done in 
Canada.  The combination  can create an environment where the next 
bandwidth killer application is much more likely to emerge. (Some do 
suggest however that new telephony, video and audio capabilities in XP also 
may have an impact on bandwidth demand.)

This essay argues that sound public, economic and technology policy depend 
on the development of the alternative model in order to ensure the survival 
of diversity in our media and telecommunications. Finally, it argues that 
the introduction of the customer owned network model is likely the only 
means of returning liquidity to the telecommunications section any time 
soon.  Pump priming in local communities could begin to do much to soak up 
the extra capacity. Thus, the establishment of a public sector alternative 
is in the interests of many large IT companies.  It may also be an idea 
whose time has come. According to the June 25, Interactive Week: "today 
more than 260 sate and local governments operate telecommunications 
businesses ranging from cable television to local phone and Internet 
services." <http://www.zdnet.com/intweek/stories/news/0,4164,2779728,00.html>

Note that sixteen findings of fact summarize this essay on pages 45-46 
below.  Readers are asked to study them before finishing this essay. 
Editor's note: They are also available on the web at 
http://cookreport.com/10.06.shtml .

Let's begin the journey that has brought us to these conclusions.

As the "smoke" clears, serious issues exist, both at the application and 
the infrastructure levels. Above TCP/IP, at the application layers we have 
the Microsoft death star slugging it out with the AOL-Time Warner death 
star.  Huge vertically integrated, would be monopolies of transport and 
content or OS and content.  Not the most efficient way to do business, but 
because of market share, both companies have great inertia as they move 
forward.  Control of content by those who also own the distribution channel 
is a serious public policy issue.  If you have any doubts, see for example 
the statement by Scott Cleland in a June 27 Precursor Group Advisory: 
"Invest in the 'legal' exercise of market power. Precursor believes an 
investment 'sweet spot' exists with companies that have the market power to 
unilaterally lessen competition and raise prices, but do not abuse it to 
the extent that it results in serious antitrust enforcement. The best 
examples are: AOL-TW bundling "tele-applications" like instant messaging; 
cable integrating vertically into broadband services and content; . .  . ; 
and finally maybe Microsoft bundling "tele-windows" applications into XP."

On June 28th San Jose Mercury, Technology Editor, Dan Gilmor commented. 
"Microsoft and its acolytes are purring with delight today, at least 
publicly. But, they didn't win the overwhelming victory that you're hearing 
about. Not even close. From the ruling (PDF file, about 420K) by the U.S. 
Court of Appeals for the District of Columbia: Given the limited scope of 
our disqualification of the District Judge, we have let stand for review 
his Findings of Fact and Conclusions of Law. . . . . The court may have 
overturned the breakup order. But by the same unanimous ruling it accepted 
Judge Thomas Penfield Jackson's findings of fact and ruling that Microsoft 
a) has a monopoly in the relevant market; b) used unfair business practices 
to maintain its dominance; and c) has to be restrained from further 
abuses." Gilmor continues: "What Microsoft has won is time. It can continue 
its brutal practices for a while longer, building into Windows and Internet 
Explorer and Office any and all technologies that will further solidify the 
monopoly. It can extend its reach into new markets, using its $30 billion 
in cash (which grows by a billion dollars a month. The company surely 
figures that it'll be entirely above the law by the time the law catches 
up. It may work. It has so far."  Ironically if the opinions of some who 
have seen Windows XP are correct in addition to driving a new generation of 
corporate PCs, its exceptional capability in real time messaging, voice 
(through its sip client), and video could also begin to soak up some of the 
industries surplus bandwidth.

This battle is also one over control.  Control of the ICANN DNS root. One 
had better watch whether the Internet Routing Registries are arm-twisted 
into accepting contracts with ICANN requiring recipients of IP number to 
use only the ICANN root for their DNS or loose their IP numbers. If ICANN 
wins the DNS wars we shall see the price of maintaining websites rise.  We 
shall also likely see attempts at websites licensure. To the extent that 
these issues are all entwined with moves by conglomerates who see their 
intellectual property threatened by the Internet to build safe controllable 
distribution channels, the rest of us need to be afraid. Walled Gardens are 
indeed being built to minimize the possibility of the linking of opinion 
and speech beyond what the concentrated corporate global media are willing 
to allow.

Moving down to the infrastructure level, we must realize that the "nethead" 
versus "bellhead" dichotomy may have outlived its usefulness.  The 
bellheads have spent billions on building their own IP networks.  A sober 
look at reality says phone companies will not turn into stupid network 
Internet companies over night as their only path to survival.  The are 
doing quite well as phone companies thank you.  In fact, how well they do 
seems based, more and more, on the facilities that they own.  Every telecom 
player has built TCP/IP data networks and in this respect is playing in the 
internet game. Depending on its customer base, one companies network will 
be structured a bit differently from that of its competitor.  But contrary 
to the expectations of some pundits, its hard to see any "pure" internet 
plays out there.  Hard as Level 3 and a few others tried, the PSTN was 
simply too big to swallow.  Everyone had access to both Internet (nethead) 
and circuit switched (bellhead) technology and everyone used that access.

No Longer Internet Versus Telco

Despite the protestations of folk like George Gilder, there is no longer 
any such thing as technology that is inherently "right" for use by 
"netheads" and different technology, the choice of which condemns 
"bellheads" to abject failure.  For example, gigabit Ethernet versus SONET. 
Since products first introduced by Cyras and Cerant in 1999, the cost curve 
of SONET for lighting new fiber pairs is way down and performance 
substantially increased. (Much more about this in next month's issue.) 
SONET is more likely to be used by the "bell heads" simply because of who 
their customers are and experience gained in operating their voice 
networks.  Rather than a tool chest of ideologically right or wrong 
technologies, what we have is the ongoing development of a general tool 
chest of transport technologies that is delivering astounding increases in 
available price performance for moving bits.  Telecom providers' choices of 
tools from the tool chest are governed by their understanding of who their 
customers are, what their geography of service for those customers is, and 
whether or not they own the physical fiber on which they will deliver the bits.

It no longer makes much sense to think of Internet versus telco. Business 
model and approach is determined by the mix of facilities owned.   Plans to 
force the sharing of facilities simply haven't worked. The last two or 
three years have taught us that ownership of the physical transport media 
is likely to be the major determinant of architecture and characteristics 
of one's network.  The Internet began as a collection of voluntarily 
interconnected private networks. There was no single owner of the Internet 
and no one to establish top down rules as in the case of phone companies 
with their vertically integrated infrastructure that was centrally managed 
and controlled in the manner of the 19th century railroads.  However, the 
multiple national and metro fiber nets that have been built since 1995, 
have been perhaps just as expensive to build as the railroads of the 19th 
century.

This infrastructure was built quickly on what turned out to be the myth of 
Internet time as well as bandwidth.  Build it and the customers would 
come.  The problem was that suddenly you had the carriers building data 
networks to sell to enterprise customers that were to a varying extent 
subject to ILEC control in the local loop. You had the new Greenfield 
players going after the same business market. The question was how would 
these businesses go up against the local loop.  Some like Level 3 and 
Metromedia tried building their own local loops.  Trying to do some 
reasonable portion in five years of what the ILEC had done over a century, 
they went deeply in debt.

Others with business plans in hand sold policy makers on the idea of the 
CLEC.  Competitive Local Exchange Carriers were to be structured on the 
assumption that legislation could convince the incumbents to grant 'equal 
access' to competitors.  We now have had five years of experimentation with 
the theory that local loop competition is obtainable by forcing the owners 
of the local loop to enable competitors to sell access at the IP layer and 
above.  Such was the CLEC idea. By the summer of 2001 the CLEC concept of 
competition has crashed and burned.

The ILEC is more entrenched than ever in the local loop.  Companies like 
Next Link were supposed to bring competition at least to office buildings 
in its metro markets. Instead it is deep in debt and cash strapped and will 
likely soon be joined by Yipes!, Telseon, and Sigma rushing into metro 
markets where owners of the fiber itself such as Metromedia Fiber Networks 
and Level 3 are ready to sell against them.

What one has therefore at the transport level are the ILECs as firmly 
entrenched in the huge PSTN as ever.  Some business CLECs are still trying 
to compete for enterprise services against the ILECs. The old line carriers 
are being squeezed in the middle as new competition drains their long 
distance voice revenues and everyone joins in a throat cutting frenzy of 
using fiber, wireless and even copper to bring broadband to the 
enterprise.  Welcome to the chaos of the 'free market."  A structure that 
can't sustain itself has been created.  As it sorts itself out the critical 
public policy questions will be first whether government does anything to 
maintain open and equal access to physical rights of way.  The second 
critical issue will be what policy does to move toward enabling customer 
owned networks.

How the Internet Arrived at Its Current Position

Over the last decade the technologists have who have created the internet 
revolution have carried Moore's law into telecommunications for the first 
time.  Although for political and structural reasons, prices do not yet 
reflect this, they have given us technology that could bring a gigabit of 
bandwidth into every home school and business in the nation for $100 a 
month. They kicked off an enormous speculative frenzy that is now in the 
process of collapsing.  The irony is that after a trillion dollars of 
investment the difference that has been made in our lives may be turning 
out to be relatively trivial.  The greatest revolution in the history of 
telecommunications that came in with a roar six years ago looks to have 
been rendered impotent by a combination of political and ideological short 
sightedness.  The technology is there.  The fiber is there.  The tools to 
deliver the bits are there.  There's only one small problem.  They are for 
the most part tantalizingly out of reach.  The ILEC local loop monopoly in 
the wake of a grand failure of public policy stands unchallenged.  For some 
the thought that the ILEC may soon provide long distance is seen as 
heralding a return to the pre 1984 monopoly.

The internet revolution has led us to this state of affairs where over the 
ILEC ramparts we can just make out our promised broadband Nirvana. It is 
cordoned off in fiber rich trenches belonging on a national scale to 
perhaps two dozen fiber network companies who bet the bank that if they 
only borrowed enough, they could obtain first mover advantage and build a 
global infrastructure that they could control.  Having grossly 
overestimated the growth of demand for Internet bandwidth, they borrowed 
billions to enable themselves to meet the size of the most expansive 
reality they could imagine.  With everyone racing to grab the free riches 
of their new start ups' IPO, it became in the interest of each new entrant 
into the field to maintain the myth of bandwidth demand because then there 
would really be room in the marketplace for them as well.  Everyone did it 
because everyone else was doing it and - for a while - they got away with it.

In the US a lack of regulation left freedom for rapid technology 
evolution.  It also made gathering of information across the industry 
difficult enabling perpetuation of the bandwidth myth.  Isenberg's analysis 
of the Stupid Network in the summer of 1997 was 'spot on.' But, while it 
spoke the truth, it also helped to nurture an unhealthy arrogance among the 
Internet faithful.  One which said that since the cost of building and 
operation of the stupid network was 100 times and eventually 1,000 times 
less than the money needed to power the intelligent network, the stupid 
network would inevitably drive the intelligent network, wedded as it were 
to the preservation of its antiquated copper local loop, out of 
business.   The figures were writ large said the net heads.  It was time 
for the bell heads to realize they were the dinosaurs and obediently 
die.  The detachment from reality was profound.  Even as PSI was sinking 
under a billion dollars of freshly accumulated debt, Bill Schraeder, PSI 
founder and CEO allegedly told his December 2000 Christmas party that the 
company that would collapse and go out of business long before PSI did was 
AT&T.  Possession of the politically correct technology, Internet 
technology, was thought by the net heads to be the requisite ingredient for 
success.  The libertarian philosophy that ran strongest through the net 
heads reassured them that their Internet was not regulatable nor 
controllable.  Lawrence Lessig in his seminal 1999 book, Code and Other 
Laws of Cyberspace argued persuasively to the contrary. Most did not listen.

It was the bell-headed dinosaurs who in the end turned out to have a 
political intelligence that has trumped the netheads.  The national 
infatuation with what lobbyists portrayed as a free market gave us the 1996 
Telecom Deregulation Act.  Restrictions on combined ownership of transport 
and content and on ownership of telecom broadcast and print media in 
geographic markets were thrown out in exchange for a baby bell promise to 
allow competitors access to their networks.  The act created whole new 
families of jargon.  RBOCs became ILECs to distinguish themselves from the 
newly arisen and supposedly nimble CLECs.  No one chose to notice that the 
freedom given the guardians of the local loop was the freedom to merge and 
use their guaranteed rates of return to buy each other up.  The net heads 
had no guaranteed rates of return. They had instead a blind faith that 
their technology was so disruptive that it would sweep everything else 
away.  They seemed not to notice that they had had to do such things as 
gain access to DSLAMs under the physical control of their ILEC competitors 
in order to give acceptable service.  They seemed to believe that the ILECs 
really had no choice but to sit back and watch the CLECs eat their 
lunch.  Northpoint is gone.  Covad is on the brink and what broadband 
Internet has reached American homes is primarily from the Cable 
companies.  Eight RBOCs have become four giant ILECs with legal and 
lobbying staffs and boundless flows of money to point the finger at the 
foolish net headed Internet innovators.

Barred from long distance, with the help of Al Gore and Jay Rockefeller, 
the ILECs made their shrewdest move in the 1996 Telecom Reform Act.  The 
emergence by then of the first two to three thousand independent ISPs 
demonstrated that barriers to entry into the internet flavor of 
telecommunications at the edge of the network were low.  Given the 
libertarian bent of the times one of the most remarkable triumphs of the 
bell heads was their successful passage through congress of a government 
controlled program straight out of the best socialist traditions of the 
1960s.  The Schools and Libraries Corporation was created and merged with 
the remnants of the universal service fund with the task of making sure 
that all of Americas public schools and libraries had access to the 
Internet. Although the enabling legislation made it very clear that the 
means of connection to the Internet that this tax would support was to be 
technology neutral, the RBOC-friendly legal staffs at the FCC were able to 
implement a fix.  As Dale Hatfield who was the Director of the FCC Office 
of Engineering at the time told me in June of this year it was the FCC's 
own lawyers who looked at the legislation and assured the FCC's 
technologists that the legislation gave the FCC no choice but to restrict 
the use of the funds to buying local wireline connectivity services, year 
after year after year.  Spread spectrum wireless radios that could create 
an infrastructure independent of the ILEC local loop were forbidden.

With a single flourish of the pen the ILECs were handed a new local tax 
that now exceeds 8% on every phone bill, business and residential in the 
United States.  Starting at just over two billion a year, the SLC is now 
pouring more than four billion a year almost entirely into ILEC 
coffers.  The massive paperwork required to receive funds from this huge 
bureaucracy has meant that few small locally-owned or community-based ISPs 
have managed to receive any of the subsidies for connecting schools.  What 
the program has done is taken control of local school and library internet 
connectivity away from the communities that pay for it and delivered it 
into the hands of a federal bureaucracy where congress with requirements 
for filtering software reduce all local standards to the lowest national 
common denominator.  Unfortunately, few understand how the SLC has 
defrauded them by removing from the community's control what the community 
is paying for anyway.  Moreover the program distorts the market by 
incentivizing the local communities to utilize the ILECs (to the detriment 
of community-based providers) while it provides national subsidies for 
ILECs to further amortize their obsolete copper infrastructures and learn 
the internet business.  It forces all Americans to provide a second subsidy 
to the ILEC's copper local loops.  In doing so it ensures that the United 
States will never be able to repeat the condo fiber build pioneered by the 
Canadians.  It ensures that local taxes enforce remote stock holder 
guaranteed rates of return instead of enabling local communities to buy or 
build their own locally owned and controlled fiber infrastructure.

Cisco pares 20% of its work force, Lucent teeters on the edge of 
bankruptcy.  Nortel sheds 30% of its work force and ties General Motors for 
the largest quarterly corporate loss in history.  The makers of the hottest 
new optical transport technology are on the ropes.  Level 3 lays off 25% of 
its work force and Global Crossing losses 50 percent of its value in less 
than a week.  We are downing in a glut of unlit fiber and suddenly 
unsalable 'new and wonderful' Internet transport technology.  We may be on 
the edge of a 500 billion dollar fire sale of net head Internet technology.

On the Edge of a Fire Sale?

The stark question that may soon be asked both here and in Canada is who 
will be allowed to buy?  Who is able to buy?  For the last 3 to four years 
the Canadians have had a ready answer.  Their schools and municipal 
governments, through a fortuitous combination of services, have been 
building customer owned dark fiber nets. Canada's national policy has been 
well preparing its citizens for what they now face. An era of 
customer-owned and operated networks.  American policy on the other hand 
has left us with an infrastructure where, when the fire sale begins the 
ILECs, with their guaranteed rates of return, are likely to be the only 
ones with enough cash to purchase and then hold what they have bought off 
the market to ensure that they enjoy another 20 years amortization on their 
copper loops.

We might fantasize that, if we were actually capable of enunciating a 
public interest in Washington DC, lawmakers might craft a means to return 
the school and library fund taxes to the local citizens who pay for them 
and provide some guidance on how local communities could select and acquire 
the most advantageous and appropriate solutions for their communities 
instead of having everything go to the ILEC and its distant stock 
holders.  The only problem is that, unless they could be found among local 
ISPs, we may not have local technology leaders who have the potential 
ability to help local communities carry out their march to local 
telecommunications independence.  We were developing them within schools 
and within local ISPs before the SLC inserted the ILEC fifth column into 
our communities.  If we look for leadership nationally we may find that 
missing as well.  We might hope that the pending five year review of the 
Schools and Library Corporation would provide an opportunity for 
congressional inquiry into the current situation.

The Internet revolution has come and, in the absence of intelligent public 
policy, it may have already gone.  It has created a tremendous burst of 
innovation.  A burst that now looks to have been mismanaged to the extent 
that the people who did the least to advance the new technologies seem most 
likely to control them.  We may be left not with the edge-controlled 
intelligence of the Stupid Network but with the central authoritarian 
control of the likes of AOL Time Warner owning the content and leasing the 
conduit from "ma bell," while together they carefully plan to influence 
public thought and "monitize" every customer minute.  This happens while 
Microsoft plans to use its OS monopoly to let it insinuate its software 
into controlling all our personal data while charging us a monthly rental 
fee for what we used to own and control ourselves.  Divestiture of the ILEC 
local loop is an attractive looking answer to our problem. But Verizon with 
its political muscle has just killed that in Pennsylvania.  In the absence 
of an extraordinary upheaval, the bell heads may well have won.

Is Public Policy About to Become as Important as Technology?

Given the situation that we have just described, it seems increasingly 
inevitable that we are facing two choices.  The imposition on 
telecommunications in general and the Internet in particular of the 
centrally owned top down telco controlled model where everything is run via 
central authorities like a vertically integrated railroad.  Under such a 
model the demand for profit by those exercising the central control will 
stifle any further serious innovation.  This is the current situation in 
the United States.  It stands in stark contrast to the direction that 
Canada has just outlined for itself in its new National Broadband Task 
Force Report.

We have argued before that locally owned infrastructure free to be run by 
local schools governments and research institutions with continuing 
innovation of the internet protocol and tool set is for the national and 
global economy in the 21st century what the interstate highway system was 
in the middle of the 20th century for the US.  Tim Denton and Francois 
Menard two of Canada's leading netheads understand this very well.

What they enunciate below in a few short paragraphs is a description of why 
the internet is fundamentally different from the telephone system.  This 
difference is overwhelmingly important and it is understood by almost no 
one in the United States where the libertarian fundamentalists have allowed 
the debate to be framed in terms of free market success and failure.  The 
result is that the older, wealthier forces of the centrally top down 
controlled telephone system are in command and in control of access.  In 
the US public policy is subsidizing the ILECs through the SLC tax to put 
schools and libraries on the internet. Public policy instead needs to be 
enabling community control through finding ways to make community ownership 
of local networks feasible.

For several years - especially in Canada the debate has been over open 
access to carrier owned facilities. In the United States this debate has 
rarely made it out of the barrel of specialist think tanks or lobbyist 
cabals.  The debate has simply never reached the level of general public 
awareness.  Experience has begun to convince those who have fought to 
define public access as mandate to be able to attach devices directly to 
carrier owned fiber that - short of a network of government financed 
inspectors and enforcers - access to facilities owned by others is simply 
unworkable.  There will always be things that the carrier owner will do to 
favor its operation of its own physical media above that of everyone 
else.  With facilities ownership the storied "level playing field" is a 
pipe dream.

The concept of customer owned networks is just beginning to come into 
focus.  Therefore it is not yet possible to point with certainty to any set 
of preordained outcomes.  We may watch what is happening in Canada and see 
that more and more bandwidth at prices far cheaper than the carries can 
provide is an integral part of the equation. Edge control and local 
experimentation will be enabled.  For example, if a municipal network owns 
its own fiber, it will have its own set of customers who come to it because 
it will be able to provide a service of a kind that ILECs, carriers or IXCs 
find it uneconomic to provide. Customer owned lambdas more over will enable 
users to waste bandwidth and do things that are not feasible in the 
commercial world of companies struggling for enough customers to pay the 
interest on their bonds.

Such customer owned networks will have to provide their own operations 
staff and assume responsibilities that many other customers of commercial 
networks would not want to do.  One danger of the current consolidation is 
that the will likely be fewer clueful local ISP staff to assist in 
operation of new local public network. Oc course they could outsource to 
those local universities whose staffs have a clue. Unfortunately those 
universities are generally in Canada. In the US we have Internet 2.   Like 
the schools and libraries corporation, Internet 2, in the name of 
subsidizing meritorious bandwidth usage, has primarily helped to offset the 
cost of high speed pipes from the traditional telcos.  Research and 
development on spreading the deployment of broadband and making it cheaper 
has never been a serious concern within Internet 2.

At the most fundamental level, we maintain that public policy must begin to 
address the question of moving access to the physical network level.  In 
other words it must decide how to deal with those entities wishing to build 
customer owned and operated fiber networks. Aside from the current severe 
problems of the industry, the motivator for these actions is the fact, as 
we have seen, that many of the private owners of buried fiber may not be 
able to meet the interest payments on their debt. It appears likely that we 
will offered a short  window in time to build a customer owned distribution 
and access system that will use new transport technologies not yet viable 
in the commercial network.  We maintain, that we should take as our model 
something like the individual ownership model enabled by the federal home 
mortgage agencies.  Yes, it *is* time legislative bodies in North America, 
Europe and the rest of the world to offer their citizens an alternative to 
the alarming concentration of media and transport that they have just given 
to the corporate titans.  The US Congress has an opportunity to show the 
rest of us that it has individual constituents.  It must build an insurance 
policy to maintain individual rights. It must recognize that small scale 
edge controlled publishing is in danger.  It must realize that edge 
controlled entrepreneurship enabled by the rise of the Internet is in 
danger.  It must show that it cares about small business as much as AOL 
Time Warner.  If it is not to preside over the final demise of deeply held 
beliefs that the individual is sovereign, it must give the rest of us an 
opportunity to launch a lifeboat.  It must ensure open access to physical 
rights of way and enable the edges to experiment with alternative models to 
the corporate Walled Gardens being built to fence the rest of us in.

It must do this because we made an important choice in this country for 
individual ownership and local community control of the important physical 
necessities critical to the local economy. For example, housing, cars, 
telephones and local highway systems.  It has been our economic preference 
and it is a wise one, that individual ownership stimulates and local 
control generates far greater economic incentive and economic activity and 
much higher gross national product than does central economic planning at 
the national level.  By far the more robust choice is to enable the end 
user to own and be responsible for as much of the physical system as is 
possible and doable. It may be that local stock companies arise in the way 
that local water and electric companies exist where only those directly 
served by the compa ny are shareholders.  In any case it is crucial at this 
singular window of opportunity to find the political will to empower our 
traditional American model of individual ownership and individual 
responsibility for as essential property as possible.  It simply works out 
better in the long run for our national prosperity and social order.  But, 
given that national and even international scope of the problem, action by 
our Federal government will be necessary to enabling positive community action.

The question becomes one of whether the government in the US or in Canada 
steps in with a policy to enable small businesses or local communities that 
want to buy fiber to operate their own networks to do so.  We could design 
a national fiber bank set up to guarantee payments to cash strapped 
national fiber networks that sold fiber strands to local governments, 
schools, hospitals or even businesses that wanted to operate their own 
networks and interconnect with each other in the manner of the internet. 
Given that the government has enacted a four billion dollar plus aid 
package for the incumbent local exchange carriers in 1996 in the form of 
the national schools and libraries bureaucracy, it doesn't seem to be too 
much to do to ask it to make possible entrepreneurship on the part of local 
communities, including community ISPs. It can do this by taking the user 
taxes now collected from local communities and given to the new handful of 
mega ILECs and initiating programs that reward those who want to become 
entrepreneurs within their own community via the building of customer owned 
networks.

Doing this would not only provide a means of stabilizing the current 
chaotic market. Doing this would also set up a very healthy local market 
and resale structure of local communication networks and channels through 
local resellers who look to a federal loan guarantee and standards agency 
modeled after FHA or FreddieMAC, for instance. Very few would argue that 
local housing should be better served if sales and rentals were managed 
from the corporate headquarters of giant monopoly national and 
international corporations. By opening up the possibility of community 
control, would also help to ensure that diversity of telecommunications 
content is maintained.  The government would merely enable liquidity in the 
bandwidth and fiber market and in so doing would also enable continuing 
edge controlled innovation.

The Canadian's Understand

In Canada the Canadian government is completing the build out of the new 
highway system with a requirement of open access to fiber highways built at 
least in part with public money.  Blind obedience to the idol of the "free 
market" in the United States is resulting in the exportation of leadership 
in the foundations of Internet technology to Canada.  The short article 
below explains very clearly what is happening.

The Broadband Task Force Report Votes for the Internet

By Timothy Denton and François Ménard June 20, 2001

On the 15 th of January 1991, Tim Berners-Lee made the World Wide Web 
program free for anyone to pick up, and thus began the revolution that made 
the Internet a household word. He did not need the permission of the owners 
of the Internet to make it available for free to everyone. There are no 
owners of the Internet. Just like the English language, it is available to 
all who wish to use it. At its core, the Internet is an Esperanto for 
computers.

The most important fact about the Internet is that no one can tell you in 
advance what you can put onto it, just as no one censors novels before they 
are written. The creators of e-mail and web browsers, together with the web 
itself, did not need to ask anyone's permission. New music sharing formats 
(Napster and Gnutella) are out before the copyright interests can stop 
them. Being an open standard, a common language, the net allows new 
services because no one has to seek the permission of anyone to innovate. 
This openness presents a fundamental challenge to the legacy systems of 
telephones and cable television. They run on the principle that the owners 
of the networks define what services are. They are highly specialized for a 
very few purposes, whereas the Internet is a general language enabling 
computers to communicate packets, without specifying what they are to be 
used for. No one owns that language; it is shareware. The best analogy of 
the Internet to the telephone or cable systems is the contrast between 
highways and railways. The owner of the highway does not determine, beyond 
very broad limits of weight and size, what shall travel on the highway. No 
one files a flight plan; you get on and off as you choose. No one exercise 
central control over traffic, with the result that there are crashes and 
traffic jams. Drivers coming on traffic jams re-route themselves. The same 
applies packets on the Internet.

Railways require central control. The path and movement of trains are 
centrally managed. The owner of the railbed owns the cars that travel on 
it, or has strict rules of interconnection with other railways to pass 
traffic. You cannot put rail wheels on your car and get on the track. The 
ideal of the railway, as with the phone system, is a completely 
pre-specified result: telephone calls go through. It is highly conservative 
to change because the whole is engineered for a narrow set of purposes. Not 
so with the Net. The chief fact enabling innovation on the Internet is that 
the owner of the transmission path does not own or control the vehicle 
(application) that uses it. This has allowed creators to innovate and 
people to select what will succeed or fail.

The National Broadband Task Force, which published its report a few days 
ago, had a choice before it: whether to extend the old model, or opt for 
the new, where the users of the network rather than the owners define what 
services will be. To their great credit, they have opened the door to the 
new model.

At the back of the report (http://broadband.gc.ca/english/index.html) is 
the key recommendation. It says that, for any build-out of a network 
employing government funds, there must be what is called "open third-party 
access", and more important, it specifies what is meant by that term. A 
third party is you or me, and by defining the terms on which people can get 
onto the network, they are establishing the bill of rights for people to 
use the networks of the future.

Among those rights were: · The owner of the network cannot knowingly plan 
for a limitation in the types of services which could be offered to other 
service providers or end users; · End users could freely choose among 
different service providers; · Neutral meeting points have to be provided. 
(http://broadband.gc.ca/Broadband-document/ english/appendix_g.htm)

This is the adoption of the Internet model. Open access permits innovation 
without permission. It stands as a remarkable advance in government policy. 
It puts Canada well ahead of the United States, where federal lawmakers are 
proposing to entrench the old model in a new telecommunications bill, at 
the request of the telephone companies.

There are reasons to think this Internet-friendly model could be thwarted. 
Canada has adopted open-access policy before, in the case of cable 
television, and four years later we have still made no real progress in 
defining what it could mean. In this case, however, there is reason for 
hope: with the right conditions set down from the beginning, new Broadband 
Task Force Votes for the Internet.  It decrees that new networks can be 
built on new principles, and avoid the constrictions of the legacy networks.

Anyone who appreciates what a difference the Internet has made in their 
lives should encourage the government to implement this part of the report. 
The Task Force has voted for the future. Let the government know that the 
Task Force recommendations on open access have the support of people who 
use the Internet.

Timothy Denton (www.tmdenton.com) practices in telecom, Internet and domain 
names law and policy from his home base in Ottawa. François Ménard is a 
community network project manager at IMS Experts-Conseils in Trois 
Rivières, Quebec.  Gordon Cook acknowledges many useful phone and net 
conversations with Francois Menard that helped to crystallize his thinking 
for this piece.  He also thanks other reviewers who choose to remain anonymous.


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