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Cooperatively Owned Fiber for Fast and Cheap Internet

Although many have thought that pervasive wireless would eventually become the primary way in which people accessed the internet this article raises another interesting idea: cooperatively financed and owned fiber optic cables running straight to people's houses. It would mean potentially gigabit speeds locally and the freedom to choose an ISP for the backbone connection to the internet. And though one would think such a thing would be cost prohibitive it may actually be cheaper than broadband costs today.
If we build it they will come:
It's time to own our own last mile

By Robert X. Cringely

Bob Frankston is one of the smartest people I speak to. If you don't recognize his name, Bob is best known as the programmer who wrote VisiCalc, the first spreadsheet, realizing the design of his partner, Dan Bricklin. Bob and Dan changed the world forever with VisiCalc, the first killer app. After a career at Lotus and eventually Microsoft, Bob would now like to change the world for the better again, this time by fixing the mess that we call the Internet.

The problem, to Bob's way of thinking, isn't the Internet per se, but the direction powerful political and business forces are attempting to take it. Part of this can be seen in last week's column on Net Neutrality, but Bob takes it further - a LOT further - to a point where it becomes logically clear that making almost any regulation specifically to hinder OR HELP the Internet can only make things worse. And by making it worse I mean inhibit in a severe way the growth of human knowledge, culture, and economic development. It's just a choice between freedom and totalitarianism, simple as that.

To Bob the issues surrounding Net Neutrality come down to billability and infrastructure. While saying they are doing us favors, ISPs are really offering us services they can bill for. Nothing is aimed at helping us, while everything is aimed at creating a billable event. Take WiFi hotspots, for example. Why should the telephone or cable company care about who connects to my WiFi access point? They are my bits, not the ISP's. I paid for them. If I can download gigabytes of pornography why can't I share my hotspot with someone walking down the street wanting to check his e-mail? Frankston's analogy for this is accusing someone of stealing your porch light by using it to read a street sign.

It isn't about service, it is about creating billable events, that's all. And billable events, by definition, are things we have others do because we are unable or unwilling to do for ourselves. So a Verizon or a Comcast does us a favor, they say, by licensing rights to a movie and allowing us to buy or rent it over the Internet. We could buy the rights ourselves, but who would know where to even go? And wouldn't Verizon, as a big buyer, necessarily get a better price? When you have a preferred or exclusive provider versus a competitive marketplace, prices are always higher, not lower. In this case the ISP isn't doing us a favor, they are forcing us to buy from them something that we might well be able to buy from someone else for a lot less.

But they need the money! After all, they spent billions bringing broadband to our homes in the first place. Don't they deserve to be paid back for that huge investment?

My Internet service isn't free, is yours? I'm paying Comcast every month and from what I can glean from the company's annual report, they seem to be making a profit from my business. Is it enough of a profit? Well they'd always like more, but the current return must be good enough because they keep my bits flowing.

To Bob Frankston's way of thinking this all comes down to who owns the infrastructure. The phone and cable companies own the wire outside our homes but we own the wire inside. (It didn't used to be that way, you know. There was a time when the phone company owned the wire in our walls even though we paid for its purchase and installation.) The Internet has been a huge success to date specifically because nobody much controls the electrons. This is as opposed to services like broadcasting where some perceived scarcity of spectrum allowed governments to determine who could give or sell us entertainment and information. The ISPs (by which I mean telcos and cable companies) would very much like to go back to that sort of system, where they, not you, are the provider and determinant of what bits are good bits and what bits are bad.

No thanks.

Frankston points out that we build and finance public infrastructure in a public way using public funds with the goal of benefiting economic, social, and cultural development in our communities. So why not do the same with the Internet, which is an information infrastructure? Well we did that, didn't we, with the National Information Infrastructure program of the 1990s, which was intended to bring fiber straight to most American homes? About $200 billion in tax credits and incentives went primarily to telephone companies participating in the NII program. What happened with that? They took the money, that's what, and gave us little or nothing in return.

But just because the highway contractor ran off with the money without finishing the road doesn't mean we can go without roads. It DOES mean, however, that we ought not to buy another road from that particular contractor.

The obvious answer is for regular folks like you and me to own our own last mile Internet connection. This idea, which Frankston supports, is well presented by Bill St. Arnaud in a presentation you'll find among this week's links. (Bill is senior director of advanced networks with CANARIE, which is responsible for the coordination and implementation of Canada's next generation optical Internet initiative.) The idea is simple: run Fiber To The Home (FTTH) and pay for it as a community of customers -- a cooperative. The cost per fiber drop, according to Bill's estimate, is $1,000-$1,500 if 40 percent of homes participate. Using the higher $1,500 figure, the cost to finance the system over 10 years at today's prime rate would be $17.42 per month.

What we'd get for our $17.42 per month is a gigabit-capable circuit with no bits inside - just a really fast connection to some local point of presence where you could connect to ANY ISP wanting to operate in your city.

"It's honest funding," says Frankston. "The current system is like buying drinks so you can watch the strippers. It is corrupt and opaque. We should pay for our wires in our communities just like we pay for the wires in our homes."

The effect of this move would be beyond amazing. It would be astounding. No more arguments about Net Neutrality, for one thing, because we'd effectively be extending our ownership and control of the wires all the way to the ISP interconnect. Of course you'd still have to buy Internet service, but at NerdTV rates the amount of bandwidth used by a median U.S. broadband customer would be less than $2.00 per month. Though with that GREAT BIG PIPE most of us would be tempted to use a lot more bandwidth, which is exactly the point.

There would be a community-financed Internet revolution and this time, because it would be locally funded and managed, very little money would be stolen. Dark fibers would be lighting up all over America, telco capital costs would plummet, and a truly competitive market for Internet services would emerge. In 2-3 years whatever bandwidth advantage countries like Korea have would be erased and we'd be back on track building even more innovative online industries.

This would be a real marketplace not a fake one. Today's system is a fake because it depends on capturing the value of the application -- communications -- in the transport and that would no longer be possible because with the Internet the value is created OUTSIDE the network.

"One example of the collateral damage caused by today's approach is the utter lack of simple wireless connectivity. Another is that we have redundant capital-intensive bit paths whose only purpose is to contain bits within billing paths," Frankston explains. "In practice, the telcos are about nothing at all other than creating billable events. Isn't it strange that as the costs of connectivity were going down your phone bill was increasing -- at least until VoIP forced the issue."

"We have an alternative model in the road system: The roads themselves are funded as infrastructure because the value is from having the road system as a whole, not the roads in isolation. You don't put a meter on each driveway. Tolls, fuel taxes, fees on trucks, etc. are ways of generating money but they are indirect. Local builders add capacity; communities add capacity and large entities create interstate roads. They don't create artificial scarcity just to increase toll revenues -- at least not so blatantly."

"I refer to today's carrier networks as trollways because the model is inverted -- the purpose of the road is to pass as many trollbooths as possible. We keep the backbone unlit to assure artificial scarcity. Worse, by trying to force us within their service model we lose the opportunity to create new value and can only choose among the services that fill their coffers -- it's hard to come up with a more effective way to minimize the value of the networks."

A model in which the infrastructure is paid for as infrastructure -- privately, locally, nationally, and internationally can create a true marketplace in which the incentives are aligned. Instead of having the strange phenomenon of carriers spending billions and then arguing that they deserve to be paid, we'd have them bidding on contracts to install and/or maintain connectivity to a marketplace that is buying capacity and making it available so value can be created without having to be captured within the network and thus taken out of the economy.

So why not do it? Well the telcos and cable companies would hate it. Who made them gods?

 http://www.pbs.org/cringely/pulpit/pulpit20060629.html

additional commentary:
 http://arstechnica.com/news.ars/post/20060701-7177.html
 http://politics.slashdot.org/article.pl?sid=06/07/01/0559230
local points of presence connecting to ... what exactly? 02.Jul.2006 23:21

pay no attention to the men behind the curtain

> When you have a preferred or exclusive provider versus a
> competitive marketplace, prices are always higher, not lower.

That's right, ALWAYS!

Well, not really.

This is the doctrine behind what the energy companies did to California, remember.

Business owners are always going to be whining about how some particular regulatory structure they like at the moment is "freedom" and how anything else is evil. The point is not how many players there are on the field, who might all be screwing us equally well -- look at what happened to the payphone industry when it was deregulated -- the point is whether regulators are genuinely independent and genuinely acting in the public interest.

I support public or cooperative ownership of "the last mile." What "the ISP's" have to contribute, though, is open to further investigation. They may just be institutionally protected middlemen, like liquor distributors. I support public or cooperative ownership of the entire internet.

amen 03.Jul.2006 00:15

Brian

Holy shit, I just crapped my pants.

I vote yes, and hopefully the "Ayes" will have this issue very soon.