more on Getting Universal Service to Work

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dana Blankenhorn <danablankenhorn () mindspring com>
Date: July 21, 2004 1:15:07 PM EDT
To: dave () farber net
Subject: Re: [IP] Getting Universal Service to Work
Reply-To: Dana Blankenhorn <dana () a-clue com>

http://www.corante.com/mooreslore/archives/005176.html


Oram's Razor
Andy Oram has a long story at O'Reilly today detailing the problems with
universal service and public policy.

It's a great historical overview.

But it's missing one key ingredient. And it's a surprising ingredient 
for
Andy to miss.

That ingredient is Moore's Law.

Moore's Law applies to fiber, and it applies to data radios as well. 
Their
capabilities grow faster-and-faster, faster-and-faster. It's the impact 
of
Moore's Law on both these areas that have blown away the financial
assumptions of the telcos, and the assumptions built into the universal
service debate. (Image from Hitachi.)

Oram rightly criticizes conservative critics of the universal service 
ideal
as "in no sense constructive" in their spirit. But he never really 
looks at
just what has made these criticisms so powerful over the last several 
years.

That something is Moore's Law.

When something holds its value as you own it, you can safely buy it over
time. If it fails to hold its value, you have to shorten the payment 
period.
Thus 30-year home loans are a good deal for both you and your bank, but 
car
loans are pushing it at 5 years.

The problem is that networking capacity, both the cost of moving a bit 
over
a long distance and the cost of delivering that bit at "the last mile" 
of
the network, is falling in value even faster than the car in your 
driveway.
When the radios of today are more than twice as capable of handling 
local
traffic as those of two years ago, and the technology of fiber lines 
show
similar improvements, you have blown a hole into any long-term financing
scheme.

No one, not a private company, not a municipality, not the federal
government, can justify building telecom capacity today on the basis of 
a
30-year note. Not when that capacity is going to be worthless, in real
terms, just three years from now.


Oram's Razor, as I call it, doesn't cut through this question. (Image 
from
fnal.gov.)

The critics' policy prescriptions don't approach this problem, either. 
But,
in refusing to deal with it, they do come closer to a solution than the
advocates of government.

The real solution, as I've said, is to endorse full competition. Let the
Bells die. Let the cable operators die. Demand that any company wishing 
to
use some of their infrastructure be able to get it, at low, low 
wholesale
prices. The recipients can invest this money as they see fit, but they 
must
be made to take it.


In the end the only worthwhile assets the Bells and cable operators will
have are publicly-controlled -- telephone poles and electromagnetic
spectrum. Everything else is ripening fruit. (Image from CompUSA.) When 
it's
ripe treat these assets as right-of-way. The government can promise to
protect it and lease it as many times as the market can bear.

Let it ripen. Let it fall from the tree. But have a new crop coming in
behind it, and new financial models based on Moore's Law, with new
businesses that can provide service to everyone based on real 
economics, not
just fictions.

Every policy prescription I see, across the political spectrum, is an 
excuse
to subsidize either the government or incumbent duopolies. 
Conservatives'
proposals actually violate their own ideological smell test, while 
liberal
solutions all smack of corruption.

The only force that can hold up to Oram's Razor is Moore's Law. If it
doesn't give you the closest policy shave you've ever had, send it back 
for
a full refund. We think you'll be delighted.



----- Original Message -----
From: "David Farber" <dave () farber net>
To: "Ip" <ip () v2 listbox com>
Sent: Wednesday, July 21, 2004 11:59 AM
Subject: [IP] Getting Universal Service to Work


> Begin forwarded message:
>
> From: Andy Oram <andyo () oreilly com>
> Date: July 21, 2004 11:37:06 AM EDT
> To: David Farber <dave () farber net>
> Subject: Getting Universal Service to Work
>
>     http://www.oreillynet.com/pub/wlg/5217
>
>     Getting Universal Service to Work
>
>     The notion of universal service in communications has great staying
>     power. Although the term "universal service" itself has fallen into
>     disfavor--I'll explore why in just a minute--the commitment to the
>     concept remains high, even in our troubled economic and political
>     times. Just try going to the [85]Thomas legislative information 
> site
>     and do a search for bills containing the word "broadband." Most of
>     these bills are striving for some form of universal service, such 
> as
>     high-speed Internet in rural areas.
>
>     But a parallel political universe in universal service has also
>     arisen. A number of researchers in recent years, mostly on the
>     political right, have critiqued the long-standing ideal of 
> providing
>     everybody with communications.
>
>     ...
>
> ----------------------------------------------------------------------
> Andy Oram  O'Reilly Media                     email: andyo () oreilly com
> Editor     90 Sherman Street                       voice: 617-499-7479
>             Cambridge, MA 02140-3233                  fax: 617-661-1116
>             USA                         http://www.praxagora.com/andyo/
> Stories at Web site:
> The Bug in the Seven Modules     Code the Obscure     The Disconnected
> ----------------------------------------------------------------------
>
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