IP: This Week's Clue: We Don’t Need No Steenkin' Wires

[David Farber <dave () farber net>]

> Reply-To: "Dana Blankenhorn" <danablankenhorn () mindspring com>
> From: "Dana Blankenhorn" <danablankenhorn () mindspring com>
> To: <farber () cis upenn edu>
>
>
> (This will be posted Friday at http://www.a-clue.com/newsletter.htm).
>
> A-Clue.Com
> by Dana Blankenhorn
> Volume VI, No. IV
> For January 28, 2002
>
> This Week's Clue: We Don’t Need No Steenkin' Wires
>
> A niece down in Texas recently moved to a ranch some ways out of town. She
> wanted phone service, but SBC (her local Bellco) said that not only would
> she have to pay hundreds of dollars to run a wire from the road to her land,
> but the phone company would own that line. When others needed it she’d get
> nothing.
>
> I pointed out that she and her husband both had their own cell phones. Then
> I thought, a dish antenna could bring more TV channels than our cable box,
> plus broadband data service. If someone ran a line of 802.16 connections to
> town and put up an antenna she could have 11 Mbps Internet service. “Why she
> can be more connected than we are,” I concluded.
>
> This got me to do some serious thinking. Why do we need wires at all? Phone
> and cable upgrades cost billions of dollars and take 25 years to pay off.
> They improve service, but only arithmetically. Wireless services seem to be
> improving logarithmically, and if the price-performance doesn’t go up right
> alongside Moore’s Law the principle is the same ­ you upgrade by simply
> changing boxes on either end. Instead of looking for a phone switch, just
> find a fiber connection -- from there bandwidth is both unlimited and free.
>
> Wi-Fi could be the straw that breaks the wired world’s back, but that world
> won’t go away quietly. Subsidies for wires are really what Tauzin-Dingell is
> all about, and equipment suppliers (represented by TechNet) seem to be key
> to getting the bill through. The techies are waffling
> (http://www.newsbytes.com/news/02/173658.html).
>
> Stopping subsidies will be very difficult. Today’s wired infrastructure may
> represent $1 trillion in investment. If the government stands back and lets
> the market work, if it does nothing and watches Wi-Fi take over, then that
> investment will have to be written off.
>
> The question then occurs, can the economy afford the hit? Take a look at
> some of the companies that would likely go bankrupt ­ SBC, Bellsouth,
> Verizon, Qwest, AOL-Time Warner, Comcast, AT&T, Sprint, Worldcom. (You
> thought Enron was a big political contributor ­ these boys wrote the book.)
> Think of the hundreds of thousands of workers employed on today’s wires, and
> the millions more who create and sell equipment for the wired
> infrastructure. Forget Lucent and Nortel -- could even Cisco survive?
>
> My response to that is, can the economy afford not to take the write-off?
> Aren’t we already paying too much for an obsolete wired infrastructure?
> Already, long distance charges are rising
> (http://www.msnbc.com/news/691506.asp). Cable plans cost nearly twice what
> you pay each month with a dish. My second phone line, which is only used by
> the fax machine, costs me nearly as much as my cell phone. How many price
> increases can Americans stomach before they get the message? At this rate
> China and India will be better places to do business in 10 years from now
> than New York City ­ their wireless systems will cost less to use and
> deliver more service.
>
> Right now, however, it seems that Washington is determined to prop up the
> old order in any way it can. The decision to slow cell phone number
> portability
> (http://www.usatoday.com/life/cyber/wireless/2002/01/21/wireless-carriers.ht
> m) really has nothing to do with cell phones. It means that if you switch
> from a wired to an unwired phone your number won’t follow you, increasing
> your switching costs and (perhaps) keeping you on the wire a little longer.
>
> The point today is everything has unintended consequences, even Moore’s Law.
> Enron was one consequence ­ you can’t make a market in a free good, and
> Moore’s Law makes fiber bandwidth a free good. We’re about to find another.
> Air is easier to upgrade than metal. Enron was a political earthquake. This
> looks like an economic tsunami.

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