DSL Prime: History Favors Freedom

History shows that less government delivers more broadband, but in the U.S., "less government" just means giveaways to the monopolies, which explains why they're doing better elsewhere.

by Dave Burstein of DSL Prime and Future of TV [April 15, 2008]

Arthur Clarke's Three Laws and Broadband History
A genius died
"When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong."

• They said DSL couldn't be done. Joseph Lechleider's colleagues at the labs almost laughed. A few years later, 8 megabit units worked.

"The only way of discovering the limits of the possible is to venture a little way past them into the impossible."

• AT&T believed in the impossible. Chip vendors promised they could get 25 megabits over 5,000 feet and AT&T designed U-verse expecting 5,000 foot reach. They are still turning away millions of customers, because that speed isn't reliable beyond about 3,000 feet.
  
  
• Garth Freeman also was counting on miracles at Buzz Broadband in Australia. When he discovered vendors made impossible promises of non-line-of-sight and through wall performance, he told a conference, "WiMAX doesn't work." That CommsDay story quickly went around the world, but is a stretch. Wimax works, just not well enough for Garth.

"Any sufficiently advanced technology is indistinguishable from magic."

• Magical thinking, as Susan Crawford puts it, dominates far too much of the policy debate. The 2+2=5 crowd has nearly magical powers of persuasion, but look like fools behind the Emerald city curtain when confronted by the real wizards who built the net. David Clark and David Reed, two brilliant pioneers, had an enormous effect at the FCC hearing. The Red Queen arguments of Comcast's David Cohen just fell apart. Tim Wu is on target calling for more expertise in policymakers. He describes the current U.S. system of picking mostly D.C. lawyers and similar as "like choosing from among Nike's lawyers to find coaches for the U.S. Olympic team." Both Tim and Susan are brilliant law professors who have taken the time to learn the technology, and would normally be ideal choices for policy positions. But law is not the skill we need.
  
  
• Magical thinking has also led to one of the cruelest policy decisions in my lifetime: allowing the price of grain to double and triple. "People are starving in Africa so that American politicians can court votes in farm states," is a vicious way for Paul Krugman to put it, but probably true. Using corn to make fuel is one of the main causes, and only those totally ignorant of technology can believe it either smart or moral. It requires nearly as much fuel to raise the corn as is produced, while taking the grain that could feed people in need.

How We Won Freedom for Wi-Fi
Deregulation that creates competition
For the George Mason conference "The Genesis of Unlicensed Wireless Policy," Chuck Jackson and Tom Hazlett's group brought together Dewayne Hendricks, Mark Fowler, Michael Marcus and key FCC veterans for a perspective on why unlicensed happened and why it works so well.

Wi-Fi and other unlicensed spectrum is continuing to revolutionize communication, probably the finest example of how removing government barriers can be a smart move. Most DSL connections and personal computers support Wi-Fi, and hundreds of millions of ports have shipped. Anton Wahlman believes the combination of Wi-Fi at home and traditional wireless out of home will transform mobile phones as well. Dewayne Hendricks and others are using unlicensed wireless bands to provide service, especially where phones don't reach.

At the George Mason Conference, Chuck Jackson brought together many of the people responsible for creating this opportunity. Vic Hayes gave credit to the FCC decision in 1985 to open the 915 MHz, the 2.4 and 5.8 GHz bands designated for Industrial, Scientific and Medical (ISM) applications. Mike Marcus in turn traced that to Charlie Ferris in 1979. He asked the spectrum team to identify promising technologies that are blocked by anachronistic regulations, with a goal of getting out of the way. His science lead, Steve Lukasik, hired Mike Marcus after asking him, "what technologies might bloom if dated regulations were removed?"

Twenty years later, the real world results of unlicensed are proven. That suggests extending unlicensed, spread spectrum David Farber and most of the FCC Technical Committee strongly advised providing much more spectrum for unlicensed use, but Powell and Martin rejected that proposal. The most promising technology currently held back is ultrawideband spread spectrum and related "white spaces" issues. The technology works well enough and is rapidly getting better. You can broadcast at low power using spread spectrum and cause minimal interference. Combine that with first checking for other active users, and the real interference will be minimal. Exclusive licenses for large amounts of spectrum are now technologically obsolete, except for very limited science and security applications.

Deregulation results lately have been discouraging. The U.S. since 2001 has been the world leader in deregulation, and in that period fell from leader to also-ran in broadband. In 2000, five U.S. broadband networks had a substantial national build, with commitments for 90+ percent DSL coverage by 2004. As competition dies, telcos cut investment and only 82 percent was actually servable in 2007. Basic phone service charges have gone up, and even basic long distance charges have been increasing since 2005. Research and manufacturing have been more than decimated.

What's the difference between policy that worked wonders in 1990 and seemingly similar ideas that failed miserably in 2005? My first answer is that the 1980-1995 dereg brought in new competitors in long distance and new technologies and vendors in wireless. The rules eliminated in 2001-2005 did the opposite. The U.S. eliminated protections that were necessary for new entrants to survive in broadband against carriers with enormous economies of scale. Japan and France maintained those protective rules, resulting in faster broadband growth and lower prices. Since 2005, many LD rates have gone up, because previously unthinkable mergers were allowed (AT&T/SBC, Verizon/MCI).

If I were in D.C., I would make sure to check out the George Mason events, especially because the price is right (none). They recently brought in Andrew Odlyzko, with the provocative writeup "]Internet traffic is doubling every three months,' wrote Business Week, on October 9, 2000. Others made similar claims, from the head of the Federal Communications Commission to the CEOs of telecommunications companies. None of this was true, as many millions of investors discovered. Yet almost everyone repeated it, ad infinitum. Except for Andrew Odlyzko, a researcher at AT&T Labs. He knew and said otherwise."

Odlyzko is currently providing data that makes clear the web is highly unlikely to slow down because of video demand, despite what the 2+2=5 crowd keeps insisting. There have been major mistakes on this subject in the NY Times (front page), London Times, and the Guardian.

L.I. is proving to be the most effective lobbyist in D.C.; I wish he was still working in the public sector.

Open Range: $267 Million U.S. Rural Loan for Wimax
Bill Beans' history
Open Range intends to connect 500+ small towns via WiMAX, and is getting strong support from the USDA Rural Loan program. This kind of deployment is what the RUS funding is designed for. Working with RBC Capital, they expect $100 million of additional private funding. They are working with Globalstar to offer satellite service outside their developed area, including using terrestrial ATC bandwidth. Their business plan includes voice from the start, recognizing that most data-only providers around the world have failed. Making rural deployments profitable is hard, but Open Reach has a staff of experienced pros. While some details of their business plan remain confidential, I have enough information to conclude it is a sensible attempt to reach an unserved population. If successful, their strategy and the ATC bandwidth deal would allow them to profitably expand the business. The potential is large.

Bill Beans, the founder and CEO, has 20 years of experience going back to Teleport. Beans also served as President and Chief Operating Officer of ICG in 2000, a company that went from $2 billion in market value to bankruptcy in less than two years.

I have held over here a section here about Beans' tenure at ICG, waiting for some details of the application. Beans and ICG CEO Shelby Bryant settled a securities lawsuit for $18 million. Those who need to know more should check this .pdf file or e-mail me. These are very strong allegations, and I'm being especially careful as the deal has not yet closed.

The USDA spokesman did get me some details of how Open Range would be monitored. Three full time people will be assigned, and they will review every funding requisition. They have a planned five year schedule, and will be regularly determining progress. Everyone at USDA/RUS is aware that 30 percent of loans like this quickly went into default in earlier programs, and they have expanded auditing.

A mutual friend, respected in the industry, knew Beans professionally and writes, "I think he has a fair point concerning his short (one year) involvement with ICG and therefore that he had little or nothing to do with ICG's problems. His TCG and MFS operating experience is certainly a strong point in Open Range's favor." If you are actively involved in this, I urge you to check carefully and not rush to judgment.

Beans graciously did call, but told me it was not an appropriate time for the company to comment.

Copyright 2008 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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