13
Bits Mean Business
Bits behave strangely. They travel almost simultaneously, and they take almost no space to store. We have to use physical metaphors to make them understandable …
The Internet was designed just to handle just bits, not emails or attachments, which are inventions of software engineers. We couldn’t live without those more intuitive concepts, but they are artifices. Underneath, it’s all just bits.
—Hal Abelson, Ken Ledeen, and Harry Lewis1
The Internet makes data productive, abundant, and—in many ways—priceless. Yet data has no natural scarcity and therefore costs as little as sunlight and gravity. Data also yearns toward abundance by proliferating in ways that gravity and sunlight cannot. “The Internet is a copy machine,” Kevin Kelly says.2 This amplifies a problem that Thomas Jefferson saw two hundred years ago when he argued against regarding ideas as property. In a letter to Isaac MacPherson in 1813, Jefferson wrote,
He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.
That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.
Data has the same combustive and light-giving power as ideas. In Code and Other Laws of Cyberspace, Harvard Law School professor Lawrence Lessig summarizes a seminal effect of this:
Born in a research project in the Defense Department, cyberspace too arose from the unplanned displacement of a certain architecture of control. The tolled, single-purpose network of telephones was displaced by the untolled and multipurpose network of packet-switched data. And thus the old one-to-many architectures of publishing (television, radio, newspapers, books) were complemented by a world in which anyone could become a publisher. People could communicate and associate in ways that they had never done before. The space seemed to promise a kind of society that real space would never allow—freedom without anarchy, control without government, consensus without power. In the words of a manifesto that defined this ideal: “We reject: kings, presidents and voting. We believe in: rough consensus and running code.”3
The words Lessig quotes were spoken in 1992 by David Clark, one of the three authors of “End to End Arguments in System Design,” and a leading figure in the Internet Engineering Task Force (IETF), which has produced many of the Internet’s defining protocols.4
Some other Internet protocols, however—notably those the phone and cable companies use for data transmission—are not defined by the IETF. Nor do they express the ethos of “rough consensus and running code.” If your Net connection is ADSL (usually abbreviated as just DSL) or over a fiber-optic connection from a phone company, it’s using protocols defined by the International Telecommunications Union, or ITU, which began as the International Telegraph Union in 1865.5 If your connection to the Net is over a cable TV system, the standards employed are DOCSIS, which is an ITU standard maintained by CableLabs, a cable TV industry association.6
For the last hundred years or more, the ITU has been mostly a phone company institution, and it remains so. Thus, its interest in supporting new economies is compromised by its interest in sustaining old ones—and also by the interests of governments that are involved in the process. Government interests include imposition of tariffs and taxes, protection of domestic industries, politically or security-motivated censorship, and worse. In other words, the ITU cares less about the Net’s economic leverage beyond what it does for what in the trade are called “operators”: phone and cable companies. In a speech at the Techonomy conference in August 2010, Reinhard Scholl of the ITU spoke glowingly about the networked future, but did not once utter the word Internet.7 Instead, he talked up broadband, an old telco term that puts a gloss over the operators’ plans for shaping the Internet to fit their business models and growth plans.
Since then the rhetorical divide between net-head and bell-head has become wider, and the distinction between the Internet and broadband has become sharper—at least to the degree that the two words are used by each group. For example, in December 2011, Susan Crawford, a law professor and leading net-head, wrote an opinion piece for the New York Times titled “The New Digital Divide.” A sample:
While we still talk about “the” Internet, we increasingly have two separate access marketplaces: high-speed wired and second-class wireless. High-speed access is a superhighway for those who can afford it, while racial minorities and poorer and rural Americans must make do with a bike path.
Note that she says “high-speed access” rather than “broadband.”8
She also uses the word “Internet” twenty-six times in the piece. On the bell-head side, Verizon CEO Ivan G. Seidenberg wrote back a letter to the editor that used the word “broadband” six times and “Internet” just once, because he couldn’t avoid it if he wanted to say (as he did) “The 2011 World Economic Forum global survey ranks the United States first in Internet competition.”9
The prior month, at another Techonomy conference, ITU Secretary General Hamadoun Touré talked up broadband again. According to a Forbes’ report, Hamadoun “explained why his agency’s Broadband Commission two weeks ago declared broadband communications a basic universal human right—on the list now with the right to food, health, and housing.” The report continues,
Universal broadband access is a crucial step to achieving the Millennium Development Goals to eradicate global poverty by 2015 …
The key to achieving global broadband access, he said, is public-private partnership. Having joined the ITU from a career in the satellite communications industry, Touré calls himself “a private sector guy,” and has succeeded in securing the involvement of more than 700 companies in the ITU initiative to extend broadband access.10
No doubt this is a worthy effort in many ways; but it is also a paint job on the body-snatch “broadband” is doing on “Internet.” It’s one more way the ITU and its constituents try to stuff the Internet genie back in the pre-1984 bottle.11
In some ways we already live inside that bottle. Take, for example, the mobile phone data services that are branded 3G or 4G. Those are short nicknames for the ITU’s standards for third- and fourth-generation mobile data communications.12 The biggest problem for both (as it was for 1G and 2G) is that they stop at national boundaries that the Internet was built to ignore.
This is why, even though you might be able to use your 3G devices in another country, you also risk bills of many hundreds or thousands of dollars (or pounds, or euros) for “roaming”—even if you’re connecting through the same mobile phone company (say, Orange, Vodafone, or T-Mobile). To the ITU and the operators, roaming charges are a feature, not a bug. National boundaries not only bring bonus payments to phone companies, but tarriff payments to governments. They also flourish in a fog of complicated telco company offerings and policies that Scott Adams, creator of the Dilbert comic strip, calls a “confusopoly”:
A confusopoly is any group of companies in a particular industry that intentionally confuses customers about their pricing plans and products. Confusopolies do this so customers don’t know which one of them is offering the best value. That way every company gets a fair share of the confused customers and the industry doesn’t need to compete on price. The classic examples of confusopolies are phone companies, insurance companies, and banks.13
Ryan Singel of Wired summarizes this problem in “Wireless Oligopoly Is Smother of Invention”:
Imagine if the wireless carriers controlled your wired broadband connection or your television set. You’d have to buy your television from your cable company, with a two-year contract, and when that ended, you’d have to ask them to unlock it so you could take it to another provider.
If the wireless company ran your ISP, you’d have to use a computer they approved, and if you wanted to use a different one, you’d pay more. Want Wi-Fi in your house? That’ll be an extra $30 a month and $150 to buy an approved but functionally limited Wi-Fi device.14
So, on the net-head side, we have open protocols and open software creating open infrastructure that supports boundless opportunities for every economic, social, governmental, or you-name-it entity. On the bell-head side, we have phone companies selling you packaged and metered “data services” that work almost exclusively to the economic benefit of those companies and their partners in government and the “content” business. Which side will win?
In the long run, both, but only when the carriers and their technologies subordinate their legacy businesses to the Internet and its imperatives, which support limitless business opportunities for which the carriers will enjoy first-mover, real estate, and geographical proximity advantages. Maybe Verizon and the ITU will help with that. But not whole-heartedly, to say the least.
As we said in chapter 9, this is a fight between any and only. And there are far more opportunities on the any side.
Prethinking the Impossible
One of the first to see these opportunities was Reese Jones. In the late 1980s, Jones was a graduate student doing brain research at UC Berkeley, and a cofounder of the local Macintosh users group. It was in that second capacity that Jones saw an opportunity: running a computer network over ordinary phone wires. At the time, Apple used a robust protocol it named AppleTalk, which would allow connecting any number of computers together using Apple’s proprietary wiring. Jones saw that Apple’s wiring was basically nothing more than what’s called “twisted pair.” More importantly, Jones saw abundant twisted pairs in existing phone wiring in most homes and businesses. That’s because most phones and phone systems used only two wires rather than four. The “dry pair” could therefore be used to connect computers. All they needed was a little dongle to bridge between the connector in the back of a computer and a standard RJ-11 phone plug. Jones invented that dongle, called it a PhoneNet connector, and started a company called Farallon Computing to sell it.
PhoneNet connectors allowed users to string together reliable do-it-yourself networks of nearly any size. As a plug-and-play system, PhoneNet relieved customers of the need to buy expensive proprietary Apple wiring. PhoneNet also helped Apple to succeed in spite of itself. (This was during the Steve Jobs interregnum, when Apple was clueless compared to the company Jobs rebuilt after returning in 1998.) PhoneNet also brought telephony and computing together in a casual way for the first time. This was intentional. Jones actually liked telephony, which he saw as a business that had worked out many problems already, chief among which was support for the most basic of human needs: to talk with one another.
As it happened, the late 1980s was filled with computer industry buzz around “groupware” and “workgroup computing”—much as there is today around “the cloud” and “social computing.” Jones didn’t buy it. “People don’t compute in groups for the same reason they don’t talk at once in groups,” he said. “What they do is converse. Two at a time. See, at any one time the human brain can only pay full attention to what one other person says. Even when one person speaks to a large group, the relationship is still one-to-one, speaker to listener. Conversation is the bottom line. If computing isn’t about conversation, it won’t go anywhere.”15
So, even though Farallon was a PC business, Jones said his long-term ambition was to make “software for telephones.” He saw telephones as more proven and personal than PCs, and ideal platforms for a boundless variety of applications, all of which would thrive on smart devices optimized for conversations between individuals but hardly limited to that alone.
It took another twenty years, but we have those now with smartphones. Nokia delivered the first, around the turn of the millennium, but Nokia was crippled by its partnerships with mobile phone companies. I remember comparing my Nokia E62 smartphone with a friend’s E61 over beers in Brussels in the spring of 2007. Her E61 had a wi-fi connection. My E62 did not. When I asked the folks who loaned me the phone (one of the benefits of being a journalist for a tech magazine is getting these kinds of things) why the E62 lacked E61 features, they explained that the American carriers (mine was AT&T) didn’t want those features.
I wasn’t surprised. A few years earlier, I had attended a meeting hosted by Nokia. After listening to innovators from a dozen companies—ranging from start-ups to giants—explain the amazing new things they were doing, and how these things might work on phones and other handhelds, one of Nokia’s top engineers explained that the phone industry differed from the computer industry in this fundamental way: OEMs (the name for gear makers like Nokia) knew their road maps, going years out into the future, and so did the operators, who were “partners” in those plans. Listening to this guy talk, I felt like the year was 1450 and I was sitting in on a briefing for plans cooked up between the Medici bank and the Vatican.
He then explained that he already knew what would be going into Nokia’s phones, feature by feature, years in advance. Also, that he could hardly imagine adding the kinds of things we were talking about. The clear message: nobody was going to tell Nokia what to do. Except, of course, the operators. That was why, if AT&T didn’t want wi-fi on a Nokia E62, it wasn’t going to be there.
World Wide Marketplace
As marketplaces go, the Internet is the biggest one of all. It favors nobody and supports everybody, everywhere it works in the world. But the opportunities the Net provides cannot be seen in full if we look at it only through lenses provided by phone companies and governments. Bob Frankston, who co-invented spreadsheet software with Dan Bricklin, does his best to reveal this opportunity in an essay titled “FSM—The First Square Mile, Our Neighborhood”:
Words have a way of reflecting and reinforcing our mental models. We think of telecommunications in terms of content being delivered (as with TV) so we often hear about the “last mile” or even the “first mile.” We should think about connectivity within our neighborhoods—the first square mile to contrast with the first mile traveled …
The problem with today’s telecommunications industry is that is a service industry in which the providers’ incentive is to increase their profit by selling us more services. “Internet” … is a recent addition to the product mix. The more Internet access they provide the less valuable the services are because we can create our own solutions. The other problem with the Internet is that bits are simply bits and they can take any path. I compare trying to make money selling bits with trying to operate a canal across an ocean. In other words the carriers must limit us to using narrow paths across the sea of bits. This is why we are laying fibers along all our highways but only a tiny fraction of fiber is actually lit up and even then only a small portion of the potential capacity is available.
We’re trapped in the Regulatorium—that is, the FCC’s regulatory system that was established during the great depression in 1934 when the marketplace was not to be trusted. Changing legislation requires a political consensus but you can’t get that consensus until you have an agreed-upon alternative. This is difficult when we lack examples and when the very premises that define the Regulatorium are threatened by the idea that networking is something we do ourselves. It’s like asking the railroad regulators to tolerate unregulated car driving.16
Think of cars as VRM tools, which they are. They provide independence for customers and ways of engaging with vendors. To engage with customers with cars, businesses provide parking lots and drive-through lanes. Often government helps, with road improvements, parking spaces on streets, and public parking lots.
The popularity of cars is what caused the paving of roads, the building of highways, the spread of suburbs, and the growth of businesses at intersections and highway exits everywhere. In the evolution of Internet infrastructure, we are today about where roads and parking lots were in 1900, when railroads still ruled the commercial transportation world—but it was beginning to become clear that cars were going to become the first option for people who wanted to shop in places farther than walking distance away.
On the Internet’s sea of bits, laptops and smartphones give us ways to see, hear, and be present in any number of other places, anywhere in the world, at the same time. In this sense their apparent functions are closer to teleportation than to transport. But transport of bits is involved, and the car metaphor does apply—especially around implications.
Look at what the car does for both customers and businesses, and you’ll see hints toward how much more the Internet will do for both.
To see the difference between the Net’s possibilities and the more limited ones of broadband, consider two contexts: “the cloud” and the Live Web.
With the cloud your data can be anywhere. And since your data is bound to get big, you’ll need maximized capacities for transporting that data back and forth between locations. Today’s broadband connections are still highly asymmetrical: fast down, slow up. The main reason for this in the first place was television, which is mostly downstream. But the percentage of data movement devoted to what used to be television is going to go down over time, even if it continues upward in the short run. The growth in Net use and the nature of the cloud both guarantee that.
With the Live Web, you need to be moving data back and forth constantly between your devices and both APIs and cloud services. This too requires maximized data traffic capacities, and minimized interference by carrier restrictions or government blockages.
How much business opportunity will we find on the Net’s world wide dance floor? The best answer might be this question, asked in 1900: How much business would the car bring in the twentieth century?