Re: OPEC 2.0 -- Barrels vs Bandwidth

[David Farber <dave () farber net>]

________________________________________
From: Bob Frankston [bob37-2 () bobf frankston com]
Sent: Wednesday, July 30, 2008 12:27 PM
To: David Farber; 'ip'
Cc: Tim Wu
Subject: RE: [IP] OPEC 2.0 -- Barrels vs Bandwidth

I agree that we have abundant capacity available but we need to be careful on terminology. A barrel of oil is something 
we consume and it is distributed form sources. Tim’s essential point is correct though the argument is even stronger if 
we challenge the concept of "bandwidth". Why are we paying so much for something that isn’t consumed?

The basic problem is the billing model – once we treat the infrastructure as a profit center and charge for services we 
create costs. While the efforts in Amsterdam and Utah are laudable they need to go another step to escape the idea of 
charging for services and usage.

The particular price of bandwidth isn’t as important as the very idea of pricing by bandwidth rather than paying once 
for the physical infrastructure. It’s even starker when we observe that technology increases the capacity of what we 
already -- a learning experience for those who bet on scarcity of “bandwidth” for first fiber bubble.


Bandwidth is simply a measure and it isn't meaningful in isolation. You can't really talk about the bandwidth of an 
inch of wire in isolation. Bandwidth is only a meaningful measure when we deploy a particular technology. But it 
becomes a billable unit only when we take the next step and a service provider puts a meter on the wire. Nothing is 
being consumed but billable events are being created.

Even if we argue there are constrictions at various points in the infrastructure it doesn’t make to use those 
constrictions as a reason to create false scarcity in every segment of wire. Fortunately I managed to exempt the wires 
within the home form this form of billing by making sure that home networking was DIY and not a service.

This applies to airwaves also. As Tim observes spectrum allocation is an artificial construct based on the technology 
available in the 1920’s and the lack of a corresponding wired infrastructure to relay the traffic. So we adopted the 
idea of single hop signaling over long distances and wired for local connections. Nicholas Negroponte observed that 
with the Internet and digital connectivity this has been turned on its head. Wireless is increasingly used for local 
connectivity in place of phone wires and network wires. Fiber and other digital paths work far better for distance – a 
milliwatt radio now reaches the world. If we convert existing access points to transfer points the issue of whitespace 
may be moot.




-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Wednesday, July 30, 2008 11:21
To: ip
Subject: [IP] OPEC 2.0





________________________________________

From: Ted Dolotta [Ted () Dolotta ORG]

Sent: Wednesday, July 30, 2008 10:57 AM

To: David Farber

Subject: OPEC 2.0



Dave,



Interesting analogy.



For IP?



Ted Dolotta

=============================================================

By TIM WU



Published: July 30, 2008



AMERICANS today spend almost as much on bandwidth - the capacity

to move information - as we do on energy. A family of four

likely spends several hundred dollars a month on cellphones,

cable television and Internet connections, which is about what

we spend on gas and heating oil.



Just as the industrial revolution depended on oil and other

energy sources, the information revolution is fueled by

bandwidth. If we aren't careful, we're going to repeat the

history of the oil industry by creating a bandwidth cartel.



Like energy, bandwidth is an essential economic input. You can't

run an engine without gas, or a cellphone without bandwidth.

Both are also resources controlled by a tight group of

producers, whether oil companies and Middle Eastern nations or

communications companies like AT&T, Comcast and Vodafone. That's

why, as with energy, we need to develop alternative sources of

bandwidth.



Wired connections to the home - cable and telephone lines - are

the major way that Americans move information. In the United

States and in most of the world, a monopoly or duopoly controls

the pipes that supply homes with information. These companies,

primarily phone and cable companies, have a natural interest in

controlling supply to maintain price levels and extract maximum

profit from their investments - similar to how OPEC sets

production quotas to guarantee high prices.



But just as with oil, there are alternatives. Amsterdam and some

cities in Utah have deployed their own fiber to carry bandwidth

as a public utility. A future possibility is to buy your own

fiber, the way you might buy a solar panel for your home.



Encouraging competition is another path, though not an easy one:

most of the much-hyped competitors from earlier this decade,

like businesses that would provide broadband Internet over power

lines, are dead or moribund. But alternatives are important.

Relying on monopoly producers for the transmission of

information is a dangerous path.



After physical wires, the other major way to move information is

through the airwaves, a natural resource with enormous

potential. But that potential is untapped because of a false

scarcity created by bad government policy.



Our current approach is a command and control system dating from

the 1920s. The federal government dictates exactly what

licensees of the airwaves may do with their part of the

spectrum. These Soviet-style rules create waste that is worthy

of Brezhnev.



Many "owners" of spectrum either hardly use the stuff or use it

in highly inefficient ways. At any given moment, more than 90

percent of the nation's airwaves are empty.



The solution is to relax the overregulation of the airwaves and

allow use of the wasted spaces. Anyone, so long as he or she

complies with a few basic rules to avoid interference, could try

to build a better Wi-Fi and become a broadband billionaire.

These wireless entrepreneurs could one day liberate us from

wires, cables and rising prices.



Such technologies would not work perfectly right away, but over

time clever entrepreneurs would find a way, if we gave them the

chance. The Federal Communications Commission promised this kind

of reform nearly a decade ago, but it continues to drag its

heels.



In an information economy, the supply and price of bandwidth

matters, in the way that oil prices matter: not just for gas

stations, but for the whole economy.



And that's why there is a pressing need to explore all

alternative supplies of bandwidth before it is too late.

Americans are as addicted to bandwidth as they are to oil. The

first step is facing the problem.



Tim Wu is a professor at Columbia Law School and the co-author

of "Who Controls the Internet?"



Copyright 2008 The New York Times Company









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