Pete Kruckenberg's Perfect World

Thought 1: Taxes to fund broadband Internet
Publicly-owned infrastructure is funded through use taxes--the costs of the infrastructure are born primarily, even exclusively, by those who use it, often in proportion to how they use it. For example, roads are funded (mostly?) through the (significant) local, state and federal taxes on gas. This case is interesting, since in most parts of the country the road use tax is indirect. Toll roads, with more direct usage charges, are a relatively small percentage of the roads in the U.S. The good and bad of these taxes is that they are pooled together to (in theory) provide the maximum benefit of roads to both drivers and communities.

Jim mentions Art Brothers' ideas on Internet bandwidth funded by per-device taxes. The very outspoken early adoptor "alpha males" of the Internet generation would stone anyone who seriously proposed such an idea. But looking at other public works, its consistent. Whether it's per-device or per IP address or per megabyte or megabit-per-second, it puts the cost burden (in a general sense) of the publicly-owned network infrastructure on those who use it (the most).

Should it be a direct "tax"? Should it be "wholesale", where the underlying costs of the network elements are invisible to the end user, rolled up in a marked-up invoice from their retail service provider? Should it be indirect, like gas tax funds roads (what is the Internet equivalent to gasoline)--and maybe that indirectness would deflect Internet anti-taxation sentiments. How much of the resulting pool should be controlled by local/state/federal government?

And a related point: often comments are made that these kinds of charges/taxes stiffle innovation. I see no indication that gas taxes or road tolls inhibit transportation innovation (which isn't to say innovation happens--I just don't see taxes as a stumbling block).

Thought 2: Is fiber too much, too soon?
I seriously wonder whether fiber-to-the-whatever is just too much, too soon. After a lot of experimentation and investment, no-one can yet point to a clear, credible answer to the simple question "what would I do with a Gigabit to my home?" The answer usually is "by the time you get it, something we don't even know about today will be there to fill the bandwidth."

That's just too visionary for the general masses. The wants, needs and interests of masses change slowly and incrementally. It's a very rare situation when everyone, everywhere, has to have the new thing, now. Of course, every new thing thinks it will be that new thing. Internet and related technologies and services have had that expectation too long. Yes, hundreds of millions have connected to the Internet in only a decade. There is no compelling reason to assume that all of those people have to have broadband now.

I think the argument for "fiber to the whatever" overlooks a fundamental issue. The problem that needs to be solved (if there is one that needs to be solved) is not "lack of fiber to the home"; it's something more like "lack of inexpensive high-bandwidth low-latency Internet service to the home." We have become so fixated on forcing fiber to the home, we don't even know what problem we're trying to solve, and if the people in those homes think it is a problem.

If we step back from the solution (fiber to the home) for a minute, and focus on the problem (lack of high-capacity, low-latency Internet bandwidth to the home), we will see that there are a number of ways to solve the problem. Fiber may (or may not) be the best long-term solution, but it may be infeasible in the short-term for financial, political and social reasons. There may be other technologies that more adequately address the current needs and poli-social-financial environment.

I'm surprised at how few municipalities are considering wireless as a solution, even if it's only an intermediate solution to build enough momentum and acceptance to justify a fiber build. Wireless networks are cheap enough that small mom-and-pop Wireless ISPs are cropping up by the thousands. Instead of funding an expensive "build it and we hope they will come" fiber network, why not invest around 10% of the fiber build cost in a re-usable, re-sell-able high-speed wireless network--maybe even in partnership with a wireless ISP and the existing fiber companies who can build the fiber backbone of the wireless network using existing assets.

Thought 3: Railroads were trying to get into the transportation business

I've heard many times the saying that "railroads missed the threat of the trucking business becaue they thought they were in the railroad business, and didn't realize they were in the transportation business." I recently came to understand that statement may be untrue, and the reasons are applicable to what's happening with telecom today.

I watched a few weeks ago an American Experience documentary on the Streamliners. The program highlighted some of the struggles of the railroads as the automobile became pervasive, and highways were built throughout the US. A point that was touched on briefly, but unfortunately was not a focus of the program, was how much government regulation had an impact on the railroad.

For one, any changes the railroads wanted to make to their existing services had to be approved by the ICC (Interstate Commerce Committee). These regulatory proceedings extended years at a time, and the ICC was primarily focused on ensuring the availability of railroad services to the general population.

At the same time, Congress was pouring money into developing new roads that were undermining the need for current rail services, and making it more necessary than ever for railroads to respond to changing customer needs.

Reading Gilder's editorial and the BCR articles, I can't help but think whether the biggest impediment to change and progress in telecommunications isn't the over- (and often uncoordinated and contradictory) involvement of government. On the other hand, I am quite certain that if the monopolistic ILECs were given free reign, they have no ability to be anything but a monopoly, and they still retain the power to develop self-sustaining monopolies. Regardless, the FCC and Congress need to be more diligent in helping the ILECs to re-invent themselves as competitors in a new diverse highly-competitive, highly-innovative enfironment.

I don't know where it'll go from here. The hope for fiber-to-the-home continues to dissolve. Intel, one of the strong (and aggressive) advocates for fiber-to-the-home, recently (and abruptly) closed their fiber-to-the-whatever group in their CTO office. UTOPIA, the most anticipated and talked-about municipal network in the nation, still (a year later than expected) has not been able to raise funding, and prospects are looking more dim than ever. Clark County, Washington is struggling more than ever, and is no longer the featured case study of fiber proponents. The only shining light I've seen recently are the three cities (Provo, American Fork, Spanish Fork) in Utah County who appear to have sustainable broadband fiber models.

Posted by pete at September 9, 2003 08:45 PM

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