The VCXC - Voice Communication Exchange Committee - is a Washington, DC based startup nonprofit, modeled on the Advisory Committee on Advanced Television Service.
Net Neutrality versus New Telecosm by Daniel Berninger
The anxiety about communication scarcity sustaining the net neutrality debate seems at odds with the realization of the bandwidth abundance George Gilder predicted in 1993. Tim Wu's net neutrality and Gilder's telecosm world views anchor opposite ends of the spectrum of possible communication futures. They co-exist because an insatiable human thirst makes communication abundance an oxymoron. Recognizing communication abundance removes a role for the government in allocating scarcity. The debate remains framed as a question about the future, so no one is in a position to guarantee the persistence of abundance. The track record offers evidence for both depending on whether one considers the recent past or telephone company machinations from the last century. The future will nonetheless arrive as either scarcity or abundance depending which of these self-fulfilling prophecies we embrace.
The case for the realization of Gilder's bandwidth abundance predictions seems unassailable given a 1000 fold increase in routine connectivity from 9.6Kbs dial-up modems to 10Mbs always on broadband. I can remember being encouraged to economize on the number of words in email messages during my time at Bell Laboratories in the early 1990's. My 112Kbs always on Internet connection via a Bell Atlantic ISDN connection to UUNet cost $500 per month in 1999. My present Verizon FiOS connection would have cost $20,000 per month in 1993. Moore's Law driven improvements extended the limits of fiber capacity from 10Gbs to 10Tbs between 1993 and today.
Tim Wu's net neutrality can point to the history of telephony from 1876 through Comcast's recent success in extracting special payments from Netflix as evidence of scarcity as profit maximizing strategy. Even conceding plenty of executives remain attached to scarcity business models, the question remains whether past performance predicts the communication future. Does violating net neutrality maximize enterprise value? Generous price to sales ratios reflects investor's awarding premiums to companies with value and innovation driven abundance business models. The same metric shows a consistent discount applied to companies with scarcity business models attracting regulation. The companies relying on scarcity to hold customers captive destroy the prospect for the sustainable growth investors covet. The investment community believes the value of networks requires an abundance business model.
The people sustaining the drum beat for regulated utility designation of IP networks might pause to consider the role of regulators in the demise of the telephone network. Why did 100% of growth in communication capacity and services come exclusively from lightly regulated wireless and unregulated information services over the last 20 years? Do the theoretical fears of scarcity underlying the net neutrality debate survive the IP transition? What role did the regulation play in decisions leaving telephone voice quality unimproved over the last 80 years. What contributions did the FCC make to the present communication abundance? Recognizing the merit of leaving information services unregulated is an indictment of regulation, not endorsement. There exists no disagreement regarding the magnitude of the stakes around communication as an input to the entire economy, but does the rush for government intervention merely reflect learned helplessness?
The net neutrality debate ignores the voluntary and cooperative means already expanding communication capacity in service of the public interest. It addresses the rules government might impose to force telephone companies to serve the public interest. The original framing of net neutrality addressed a conflict of interest between the stewardship of the networks delivering voice, video, and Internet. The IP transition pushes the entire $2 trillion base of communication services onto a single all-IP network. IP networks in telecom operate by the same dynamics as the non-regulation of information technology responsible for the virtuous cycle of continuous improvement driving Gilder's telecosm.
The FCC becomes a Federal Computer Commission to the extent utility regulation arrives for IP networks. The nature of any governance regime requires a means to distinguish between domains of jurisdiction. The bright line distinctions between communication and information disappear in all-IP networks. The leadership of the FCC and the financial beneficiaries of industry lobbying may not see the parallels with the Interstate Commerce Commission legislation abolished in the 1990's. The staff and budget of the FCC already doubled over the last 20 years even as the user base for regulated telecom fell by 50%. The divergence of telecom and information technology after 1956 represents a remarkable twin study and case for the reinvention of telecommunications as non-regulated information technology.
The low value assigned to communication business models relying on scarcity will continue as long as Moore's Law persists. The ability of TCP/IP to traverse multiple media types and the expanding functionality of smart phones promises a wireless version of the declining demand for wireline voice services. There exist no way forward for telephone companies except through expanding the value proposition of networks. The decoupling of application and connectivity by TCP/IP already offers the structural separation sought by public interest groups. The question is whether there is exists a need for a top down government imposition of network neutrality when market forces already punish violations. Everyone agrees all-IP networks represent a turning point for the communication business. Turning a corner requires proceeding with caution before applying the assumptions and conclusions of the past.
Paradox of the Telecosm by Daniel Berninger
George Gilder outlined an optimistic vision of telecosmic bandwidth abundance in 1993 when connectivity meant 9.6Kbs dialup modems accessing barely 100 websites. Twenty years later, hand wringing about bandwidth scarcity represents the dominant narrative in spite of a 1000 fold expansion in routine connectivity to 10Mbs. The same period saw the number of people with access to the Internet grow from 2mn to 2bn and the website count reach a billion. The gloom persists even though the tests of fiber capacity Gilder describes achieving 10Gbs in 1993 run at 10Tbs today. The realization of Gilder's prophecy absent the accompanying optimism creates a Paradox of the Telecosm.
Imagine the malaise should work toward the next 1000 fold improvement succeed in making 10Gbs the baseline connectivity in twenty years. Pervasive pessimism about the prospect of this future does not dissolve the paradox for two reasons. The origins of prior improvements remain in place in the form of the investments sustaining Moore's Law and the fact expanding capacity remains the path of least resistance for increasing the value of networks. The fear of villainous network operators seeking telecosm gatekeeper status does not explain the glum reception for the already existing 1000 fold expansion in connectivity since 1993.
The telecosm contributes to a zero sum race to the bottom moving jobs toward the regions with the lowest common denominator of regulations and labor costs. The litany of economic woes in the news show up as the declining fortunes of society in economic statistics. Correlation with the telecosm does not imply cause, but neither did the telecosm prove economic panacea. Succeeding generations threaten to lose ground for the first time since the Great Depression. The economist peers of George Gilder including Paul Krugman and Larry Summers see the American economy as entering a permanent stagnation only to be lifted by the occasional stock bubble.
The odd state of affairs reflects a failure to act on the larger transformation imperative contained in George Gilder's vision. Gilder points out technologies transform society by driving the cost of a prior scarcity to zero. The industrial revolution arose from machines performing physical work previously requiring human or animal labor. The revolution in computing Gilder describes in Microcosm (1989) reflects the benefits of transistors approaching an incremental cost of zero. The destruction of prior scarcities become revolutions, because prior modes of governance (oppression) utterly fail in the new environment.
The Pardox of the Telecosm reflects the attempt to run the new world of the telecosm without changing the mode of governance. The expansion of books with the decline of America as the primary theme provides both evidence of the paradox and the failure to recognize abundant bandwidth reduces the relevance of borders as organizing principle. Keep in mind it took eight days for a letter to travel from Boston to Philadelphia and 30 days from London in 1776. The status quo reflects 10,000 years of trial and error around governance leveraging the physical integrity of territory. The telecosm Gilder describes in 1993 points to the loss of distance as the primary basis of human civilization.
Gilder's friend John Perry Barlow believes the forces unleashed rise to the level of the human discovery of fire. The increasingly hysterical attempt to recover distance represents both a lost cause and a serious threat of the type of surveillance state imagined by George Orwell. Absent the demise of Moore's Law, the 1000 fold expansion of communication since 1993 becomes a billion billion expansion by the end of the century. The telecosm provides new means for the distribution and concentration of power. The resulting tension gives the telecosm a revolutionary potential George Gilder urges policy makers to push in a positive direction.
The optimism in Gilder's description of the telecosm owes to an ambition for solving the new challenges of governance and improving the human condition. The powers of the telecosm destroy to the extent directed merely to replicate and defend the status quo. The telecosm may require the invention of physical realm like property rights for individual spheres of communication. Paving roads facilitates new types of human interaction and commerce as well as makes it easier to rob banks. The telecosm connects people independent of distance, but it also provides an awesome platform for conspiracy.
George Gilder addresses the resulting policy questions directly in a new book "Knowledge and Power" (Regnery, 2013). He argues it remains a test of governance whether the positive or negative of the new communication intensive telecosm or any new technology predominate. The loss of the optimism responsible for the Paradox of the Telecosm reflects a failure of governance and ambition, not Gilder's vision.
Book Review: Knowledge and Power - George Gilder's New Republic by Daniel Berninger
George Gilder's new book "Knowledge and Power", scheduled for release June 10, 2013, completes a technology trilogy with "Microcosm" and "Telecosm". Gilder applies Information Theory, pioneered by Claude Shannon in 1948 around questions in telecommunications, to the forces at work in the economy. It takes some time to get comfortable with the abstractions of Information Theory, but Gilder deserves credit for finding a strikingly original metaphor for the relationship between the governed and government.
All of Gilder's books point to the entrepreneur as hero providing the surprising insights and discontinuous jumps in progress. He maps these surprises to the notion "entropy" as the "information" in Information Theory. Gilder's key insight comes in recognizing the sharp distinctions between message and medium make Information Theory applicable to any context where an input produces an output - like economics.
The turning point comes in Chapter 9 - Fallacies of Entropy and Order - when Gilder breaks with libertarian orthodoxy and attacks the notion "spontaneous order". Gilder concedes government must exist to create a reliable container - called the "channel" in Information Theory" - for economic activity to exist. Information Theory nonetheless preserves the merit of minimalist libertarian intervention as means, because conveying information remains the end purpose of any communication system.
The recognition economies require both order (i.e. channel) and disorder (i.e. information) provides a means of unifying liberal and conservative perspectives. The challenge of creating a working relationship between champions of government (channel) and enterprise (information) goes to the heart of an obstacle plaguing theories of governance since "The Republic" by Plato. The intractability of disputes between liberals and conservatives owes to an inherent truth in both perspectives, but Gilder shows neither offer a complete model of governance.
This unified theory of governance does not require Gilder to recant assertions or complaints in previous books. The bulk of "Knowledge and Power" covers familiar ground in the Information Theory context with the same blind spots likely to animate book reviews. The introduction of the Information Theory framework nonetheless provides a basis for moving beyond mere hand waving. It provides a way to understand why the prosperity of the 1990's gave way to the malaise of the 2000's via a destructive interaction between channel and information Information Theory calls "noise".
Critics may dismay to discover history grants the application of communication theory to the organization society a status even more exalted than George Gilder claims for himself. The status of the human condition and prospects for a global population reaching 10 billion by 2050 addresses a much larger question than the course of capitalism for the few percent of us living in America. A Nobel Peace Prize seems small reward to the extent Gilder's ability to popularize ideas puts communication theory in play as a new way forward.
As with all great insights, the merits of organizing society around a theory of communication seems obvious in hindsight. The capacity for war deals with the fragmentation of authority, but the extent and nature of civilization turns entirely on questions of communication. Claude Shannon's Information Theory and the transistor arose from AT&T Bell Laboratories as solutions to problems of communication. No one can dispute the realization of George Gilder's predictions in "Microsm" (1989) and "Telecosm" (2000) regarding the pervasive expansion of information technologies in the economy. The new book "Knowledge and Power" complete the trilogy by connecting the Information Theory juggernaut underlying iPhones and megapixels as a foundation for organizing society itself.
Choosing Between World Peace and Utility Model in Communication by Daniel Berninger
The exodus of the communicating public from the PSTN threatens the utility regulation of telephone companies. The proliferation of communication applications using unregulated information technologies creates the policy equivalent of heating a house with every window and door open. A 50% increase in the annual funding of the FCC since 2000 corresponds with a 70% decline in the end user constituency of regulated networks. The adoption of Internet like IP networks by telephone companies leaves policy makers heating an empty house.
The resulting crisis among defenders of the utility model reflects a remarkable irony. Forces shaping communication networks represent the literal (not just metaphorical) realization of a war game. There exist warrior modes of interaction with zero sum (I win/you lose) consequences and peacenik modes with non-zero sum (I win/you win) outcomes. Utility regulation arose as a means for peaceniks to contain the threats posed by the warriors in control of communication networks. Internet protocol put the peaceniks in control of the communication network. The subsequent decline of the regulated PSTN and embrace of the IP networks forces peaceniks to choose between world peace and the utility model of communication.
The defenders of utility regulation argue the threat of market power and vertical integration remains unchanged by a transition to all-IP networks. The solution in the form of utility regulation also remains unchanged since the arrival of government intervention with Kingsbury Commitment 100 years ago. The case for non-regulation starts with adding world peace to the stakes in play. IP networks provide a means of comprehensive communication connecting humanity across all distances without regard to country of origin. The risk regulations pose to IP networks as a new font of communication abundance takes world peace off the table in any return to utility regulation. Conceding the need to regulate IP communication grants fragmented jurisdictions of authority across 200+ countries the right and ability to disrupt the global flow of communication.
The reluctance to regulate the Internet reflects recognition of the social benefits generated by the network of networks in the absence of government intervention. No one anticipated the juggernaut to emerge from the internet protocol at the moment of invention in 1973. Nor even beyond a few true believers and futurists 20 years later in 1993 did anyone suspect the extent of the transformation of communication by 2013. The promise of IP networks reflects the continuous improvement possible in an ecosystem driven by software innovation and an inexorable Moore's Law doubling of transistor density. The nature of the utility model of communication yields a telephone service entirely unimproved over the same 40 year period.
Even utility theorists concede the Internet as a special case where non-regulation works, but the Internet represents an existence proof for the benefits of any IP network. Internet protocol alters the mathematical imperatives of communication networks as a war game. The transition to all-IP networks by telephone companies creates new opportunities for revenue growth like HD voice and a diversification of services speeding the return on investment capital. Moore's Law promises an on going reduction in the unit cost of network capacity and a sustainable means to expand addressable market entirely missing in the case of the PSTN.
Peacenik's cannot avoid the requirement for a presumption of innocence in any fair trial of the threat the transition to unregulated all-IP networks poses to the communicating public. Regulators skeptical about the unique merits of IP networks remain obligated to identify market failures justifying re-regulation. Calls to defend the regulatory status quo must remain linked to explicit social benefits. In any case, no one can argue preserving the utility regulation of telephone companies contributes to the cause of world peace...the time has come to give peace a chance.
World Peace by Daniel Berninger
Seventeen years ago this week, John Perry Barlow identified world peace as the purpose of connecting humanity to the Internet. Skeptics complain about the grandiosity of "A Declaration of the Independence of Cyberspace", but critique of the status quo and aspiration for world peace continues to unify Internet advocates. The sentiment represents a common thread from Susan Crawford to Kim Dotcom to the Occupy movement and the hactivist collective Anonymous.
The first observation I would make is that we have it within our grasp to connect every person on the face of the Earth to each other and all human knowledge. We have an opportunity to pursue a policy of plenty versus poverty." "We would would have to be a pretty stupid species not to take advantage of this opportunity, but there are problems..." Vint Cerf
Freedom2Connect Conference, Washingtion, DC May 21, 2012.
The number of Internet connections rose from 35 million at the time to 2.4 billion today, but world peace awaits the new Social Contract John Perry Barlow promises in the first half of the of Declaration. Social contracts like coercion provide a means of navigating the human capacity for horror and virtue. Social contracts aka governance represents a central question in philosphy beginning with Plato's "The Republic" circa 380 BC and the controlling factor in quality of life from Somalia to Switzerland. Barlow's Declaration points to the Internet as something new for philosophers pondering means to world peace. Territorial demarcations from fences between neighbors to international borders become less important to the extent communication alters the arbitrary power of birthplace over opportunity.
Barlow's Declaration questions the wisdom of delegating this new means of world peace to the power politics between nation states and "obsolete information industries". The deference to territorial borders also originates as a means to world peace (Peace of Westfalia, 1648 ) and solution to long standing wars. The embrace of the model by the Founding Fathers of America in 1776 reflects the realities of a period when sending a letter from Boston to Philadelphia took a week and over month from Philadelphia to London. Barlow channels Jefferson in the Declaration and recognizes the Internet as a new way to address universal human aspirations for survival, safety, and social connection.
It seems long over due to heed Barlow's call to start a conversation about a Social Contract benefiting humanity as a whole. Rather than relying on individual companies and policymakers to implement "Do No Evil" principles, cybercitizenry can choose service providers complying with cyber-citizen friendly terms of service. A given terms of service either facilitates communication capacity and trust without regard to geography, or it does not. The Internet offers both means and end in this context. There already exists some push back against companies asserting unfavorable terms of service. The next step involves pushing service providers to adopt a model Terms of Service (aka Social Contract) created by cyber citizens.
Explicitly pursuing world peace shrinks the Internet governance solution space by eliminating the infinity of local optimizations. It no longer matters what one group or another wants from Internet governance. No authority or means of coercion can force a Social Contract on humanity as a whole. Removing the possibility of coercion turns an adversarial process into a collaborative search for approaches benefiting all of humanity. Barlow recognized in 1996 an inflection point between scarcity and abundance making this ambition possible. Moore's Law and the nature of communication, information, and digital goods create an environment where world peace (abundance) is easier to sustain than war (scarcity).
Introducing the IP Transition Framework Commitment by Daniel Berninger
The stunning difference between the pace of telecommunications and information technology progress seems both odd and oddly ignored. Telephone calls offer nearly the same experience today as in 1913 and precisely the same experience as 1950. Voice quality remains a function of standards set at Bell Laboratories in the 1930's (before the invention of the transistor or arrival of modern computing). The subsequent billion fold expansion of processing and networking capacity won no improvement in telephone functionality. The progress of information processing during the same period transforms daily life, and, in particular, consumes the adjacent communication market as mere application of the Internet. Recent euphoria in the mobility realm reflects the benefits of mobile computing, not telecom. A telephone call via an iPhone 5 offers no communication benefits over the first generation of mobile phones in the 1980's.
The remarkably different outcome for these progeny of the transistor represents a nature versus nurture technology policy twin study. It provides a roadmap for reinventing telecommunications as information technology - all-IP telco. The importance of communication and inefficiency of multiple networks led countries to nationalize telephone companies at the beginning of the 20th century. AT&T President Theodore Vail held on to independence by making commitments to the public interest (known as the Kingsbury Commitment) sufficient to satisfy President Woodrow Wilson. AT&T subsequently made the key contribution to founding an information processing industry with the invention of the transistor in 1947. The awarding of the Nobel Prize to William Shockley and team coincides in 1956 with a Consent Decree excluding AT&T from the resulting information processing industry and pushing AT&T's transistor patent into the public domain.
The difficulty of maintaining a distinction between information and communication technology generated a steady stream of controversies ever since. AT&T initially sought to get any and all activities classified as telecommunications. The FCC responded with the Computer Inquiries in the 1960's, 1970's, and 1980's in which AT&T won increasing options to pursue non-regulated information services. This led AT&T to seek classification of any and all activities as information services. Judge Greene's Modified Final Judgment entirely restored AT&T's access to information technology revenues at the cost of divestiture, but it left the policy distinctions between communication and information technology intact. The embrace by AT&T and the rest of the telecom industry of all-IP networks reflects the 2004 FCC FWD ruling preserving the distinction even where information technology provides communication functionality.
The embrace and success of the non-regulation of information technology ironically makes the distinctions unsustainable. A policy discriminating between telecommunications and information services does not work if the former loses all of its customers. The failure to improve voice quality over a period of decades became a problem as soon as the Internet created alternative modes of communication. The developments represent good news from the perspective of the communicating public and there exists at least an order of magnitude more day to day communication today than before the arrival of the public Internet. Porous borders nonetheless always prove problematic for questions of governance. Uncertainty prevails absent a clear delineation of jurisdiction.
The questions of implementation do not diminish interest in long standing communication policy objectives. The fact of communication as a key input to economic and social activity of a country creates the same public interest imperatives today as those driving nationalization of telephone companies in 1913. There remains justifications and interest in policy around network interconnection, disability access, universal service, network reliability, and legal intercept. Competition policy addresses the same questions today as in 1956 when the Department of Justice stripped AT&T of exclusive rights to the transistor. The same public willing suffer monopoly over toasters will pick up their pitchforks against companies seeking gatekeeper status in communication. Communication will continue to attract more policy attention than any other technology including information processing.
Ignoring the special status of communication seems unlikely to work any better for industry than attempts by policy makers to ignore changes in technology. There exists a need for a new Kingsbury like commitment in order to preserve the benefits of non-regulation in spite of turning communication into an information technology. Members of VCXC follow the tenets of the IP Transition Framework Commitment which includes Do No Harm, recognition of the public interest in communication networks, and commitments to maintain parity with information technology around services, devices, and networks. Individuals can add their endorsement of the IP-TFC here and the plan includes recruiting a public advocate to serve an ombudsman type function verifying compliance with the commitments.
The changing nature of incentives in the context of all-IP networks turns compliance with the IP-TFC principles into a matter of survival. Network effects make federation an imperative for communication networks as no company serves of more than a tiny fraction of the world's population. The nature of the resulting network interconnections place an upper limit on the value proposition offered end users (and value of networks). This represents the key to understanding why voice quality has so far remained immune to technology progress. Federation externalizes the vast majority of value and makes market forces impotent with regard to voice quality. AT&T remains the worlds largest telecom company by revenue, but AT&T's network improvements do nothing for 97% of the end points reachable by AT&T's customers. This represents the same challenge Intel suffers in selling each generation of ever more powerful processor. Realizing the benefits of an increase in processing capacity remains out of Intel's direct control.
Gordon Moore's expectation for the doubling of the density of transistors every 18 month drives the entire information processing sector through the modularity of processor, memory, storage, and various other computing functions. The same opportunity exists in the context of communication. Existing interconnection arrangements owe to extensive compulsory rules, numbering standards, and government enforcement. The regime gets credit for preserving the PSTN as a cohesive whole even as the number of cell phones expands beyond six billion. The cost in terms of static voice quality nonetheless represents the root cause of declining service revenue. The proliferation of Internet communication options cut the demand for mediocre quality voice calls in half. It allows 40% of customers to rely on relatively less reliable wireless only voice options.
Keep in mind the cost of deploying communication networks depends only to a small degree on the eventual service offer. Trenching, right-of-way, and labor intensive elements of deploying outside plant (and , for example, the cost of acquiring spectrum) exist independent of whether serving $20 per month voice service or $50 per month 10 megabit Internet access or both. Moore's Law driven inside plant determines the capacity and functionality of networks. The question of whether Internet access justifies new network investment does not arise to the extent flexible IP network interconnects create the opportunity for new services like HD voice. Expanding the functionality of network interconnection expands the range of potential value propositions offered end users. The existence of the Internet breaks the 20th century logic around resisting interconnection. Flexible IP service interworking removes the cap on the value of communication networks and represents the key to the type of sustainable growth investors assign enterprise value premiums.
Transition global telecom industry to all-IP networks and upgrade the universal core voice service to HD voice by June 15, 2018.