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Wired for Change: Navigating the Global Marketplace Online

Wired for Change: Navigating the Global Marketplace Online


[VIDEO PLAYED] FORD FOUNDATION VICE PRESIDENT DARREN WALKER:
Welcome back. If you think philanthropy and business couldn’t possibly have any shared
interests and values when it comes to the online space, the next conversation may change
your mind. We just saw some pretty stark data and facts and the panel will dive into these
details. So let me welcome a man who produces perhaps the most important annual conference
on technology in the world, and that would be Walt Mossberg, of the Wall Street Journal. Walt will help us explore some of what we
just saw in conversation with some experts from multiple sectors of the economy. Please
join me in welcoming Fred Wilson, Susan Crawford, Elana Berkowitz, and Yochai Benkler. Walt,
the floor is yours. [APPLAUSE] WALT MOSSBERG: Well, we’re going to try to
mix it up a little and talk about this question, which the video set out. We have some of our
own statistics, which I’ll ask for in a second. But you know, we do – the video made it sound
like we’re sort of doomed and dead in the water, and that’s not true. We have an incredibly
vibrant Internet economy here, but we do have a looming – a lot of people think we have
a looming broadband problem, and we want to dig into that and see how the two things can
be reconciled and see what can be done to protect the consumer and what role, if any,
philanthropy has in this. So I’m going to start by asking Yochai to
present the only slides we will present on this panel, which go into some of the state
of the broadband situation. So Yochai, will you kick this off? YOCHAI BENKLER: Thanks. For those of you who
have ever seen me present 70 slides in 15 minutes, [LAUGHTER] this will be very narrow.
Just to connect in a word or two to what we did earlier. If we remember the point of control,
the fact that if you are trying to do access for purposes of activism, for purposes of
art, what you want is an open Internet. One of the core questions is how controlled
versus how open and how competitive in this particular case the pipe is. And one of the
ones we want to look at here is the degree to which there’s market discipline, and the
relationship between that and regulation that forces that openness. What this slide shows is discrete offerings.
This is from data that is just now current. Discrete offerings at the high-end of the
speeds, the higher speeds, mapped onto how fast the offering is and how expensive it
is, and essentially if you’re close to the lower left-hand corner, you’re expensive and
slow. And if you’re in the upper right-hand corner, or in this case because of the aspect
ratio roughly in the middle, you’re fast and cheap. And if you look, the companies tend to cluster
together around countries, and the thing that characterizes Japan, France, Finland, Sweden,
the countries that are up in that area with the hundred megabit-per-second offerings for
$30 to $45 per month roughly equivalent, is that they all have three or four competitors.
And they’ve all essentially gone down a regulatory path that says if you have driven backhoes
and copper or fiber or cable into homes, you have to share that with competitors, who then
invest in electronics, so that you have more competition on these questions of speed and
price. What we see with the U.S. is that we have
a duopoly essentially, and that duopoly doesn’t drive toward higher speeds and upgrading to
the higher speeds, or competing on the prices. When we talk about broadband adoption, it’s
very common to talk about all sorts of other things other than price and speed. But to
begin with, just if you imagine that in fact in the U.S. people for $30, 35, 40 a month,
could get 100-megabit service, international dialing to 70 countries, all inclusive, and
150 digital channels, maybe we would have less of an Internet adoption problem. So that’s the first thing that we see. It
allows us to identify those countries that have had a more engaged regulatory relationship
as it were with their companies in order to require something that has natural monopoly
components to be more competitive. Why is it so hard in the U.S. to get this
across? Partly it’s the politics. One thing that I just want to show in the next slide
is also the connection between the fact that you have a monopoly and the research on it.
So this happens to be a particular subnetwork of a network of papers on the effects of having
this regulatory framework. Most of the debates here, recently, we remember from net neutrality,
they rehearsed a lot of these debates from the decision in the early to mid-2000s of
the U.S., to decide. You see the moment at which broadband penetration in the U.S. starts
to keep going up at certain rates and everybody else goes up. That’s the moment at which we
have a real regulatory difference between us and Europe, and those are the countries
that are going up when you see more competitors. Essentially that fact has been the subject
of enormous obfuscation through academic and think-tank papers that are funded by the industry.
So when we did a review for the FCC as part of their national broadband process of international
experience and we looked at the literature review, there were 18. More than half the
papers on this kind of regulation and investment were funded by industry. And in 17 out of 18 such papers, the results
supported the position of the funder. That – if you talk about one thing foundations
can do (self-serving), it’s actually begin to counteract that effect. And the study that
we did was in fact funded by Ford and by MacArthur. That leaves us in the question of where are
we today in the U.S.? And if you look at the last slide, this is from data that – this
is very crude, we’ll clean this up – this is a beginning first picture of the data that
the NTIA will make public tomorrow in the broadband availability map that we have been
analyzing for the last 6 or so weeks. And this shows you how many places in the U.S.
have more than two providers. And you’ll find that it’s upper Maine has
more than two, which immediately you know means there’s a mistake there. And of course
we’re going to be cleaning up the data and [LAUGHTER] what we find is that there are
… service providers … that make it look like there’s more competition. But essentially,
the map of the U.S. is a map of duopoly as best as the current data shows us, so that
there’s no market discipline, either on the extent to which companies that control the
pipelines are able to restrict the business opportunities of competitors in the network
or at the level of how they rollout to customers; how they actually get people to adopt through
better service, lower prices, and marketing. That is the state in which we are in at the
end of a decade of denying that competition doesn’t emerge naturally in a natural monopoly
market that requires very heavy investment just to get something to the home, and then
very large network … MOSSBERG: So let me just ask you something,
Yochai. Are you suggesting that a company that invests tens of billions of dollars to
a network doesn’t have a right to manage that network? Doesn’t have a right to charge enough
money to make a return, and if they manage their money carefully to make a profit? BENKLER: It depends on what you mean by “have
a right.” MOSSBERG: I mean have a right. BENKLER: Or what the scope of that right is. MOSSBERG: In capitalism. BENKLER: If you – in capitalism, if you have
a company investing money and building a monopoly you don’t have a right to… MOSSBERG: No, I said a network. They’re building
a network. AT&T built a network, Verizon built a network, Comcast built a network. Don’t
they have a right to get a return on that and don’t they have a right to have some freedom
to manage it? BENKLER: The question is how much is “some”
and what is the content of the right? To just say a right, to just say “some” doesn’t solve
the problem. The question is overall, whenever you make a market regulation, whenever you
make decisions and tradeoffs between how much you regulate, how much you protect property
rights, of what kinds, in what model is about how you get things efficient, how you get
things competitive, and how you get things innovative. You always make these decisions in terms of
what works overall for the economy. You never make it on the basis of “I’ve made this investment,
I have the right – ” MOSSBERG: Really? You never make – that’s
the way the market works, doesn’t it? FRED WILSON: But Walt, I think the thing that
you want to remember here is that the copper monopoly and the cable monopoly were both
given to the people who built those networks. Basically, the government gave them the monopolies,
right? They said, okay, you are the only one who gets to build a cable franchise in this
municipality or whatever. And as a result the government gave the monopolies, and in
return for that the government should have the right to regulate those monopolies. MOSSBERG: And is that also true, Fred, of
the Internet. For instance, the wireless Internet system? WILSON: The problem with wireless is that
we keep licensing off very, very valuable wireless spectrum to the highest bidder, and
the people who can pay the most money are the people who have these monopolies on the
wireline. Right? So I think that it’s a big mistake, we should not be selling off the
spectrum to the highest bidder. We should be creating unregulated spectrum, like the
wi-fi spectrum, in which – let all competitors came at it. We need – with our spectrum, we should not
be giving people monopolies on big swathes of frequency. We should be making it unregulated
spectrum and letting 1,000 flowers bloom and let the miracles of technology figure out
the best ways to do that. Now Wi-Fi is the best example of that. I mean
Wi-Fi works phenomenally-well in the performance curve that we’ve seen in Wi-Fi over the past
10 years is vastly superior to anything else we’ve seen in any other spectrum. And that’s
the worst spectrum that there is. MOSSBERG: Well, it was considered junk spectrum.
It’s the only reason it’s not regulated. WILSON: Right. Imagine what would happen if
we took … – MOSSBERG: They thought microwave ovens so
they just didn’t regulate it. WILSON: The problem we have in this country
is not that we’re proposing something that’s socialist. We have no capitalism. We have
no competition in this very important part of the communications industry. MOSSBERG: Well, you’re not going to get an
argument from me. I’ve written numerous columns and said on television and in speeches numerous
times that the pipe companies as I call them, are essentially soviet ministries. And – [APPLAUSE]
– by that I mean that the natural way a free market system should work is that somebody
makes something, a service or a product, and somebody else buys it, a business or a consumer.
And these guys get in the middle. The best example – or here’s two examples.
How come I can’t go to Best Buy and find 25 different cable boxes, which I can choose
from, with all kinds of different features and things like that? How come – and Steve
Jobs actually at the conference I ran – I run – gave a very good analysis of why more
progress isn’t being made on IPTV. He said it’s not a technology problem. It’s a go-to-market
problem. As long as the cable guys who are, as you
said, give a monopoly in these localities, give you the box or charge you very little
for it, you’re incentive to go out and buy another one is greatly diminished. Same thing with the wireless networks. Why
– I don’t mind as a consumer paying for the use of somebody’s wireless network. I do mind
when they say these are the only phones that work on it or I’m going to put my apps on
the front of your phone if it runs on my network. That kind of stuff. SUSAN CRAWFORD: Well, just to put a sharper
point on it, what we’re experiencing in this country – the reason we’re struggling with
capitalism versus what these networks are and how they should be regulated is that there
are different kinds of networks. The water network, the electricity network – those are
essential inputs for society – that everybody needs in order to flourish. Same thing now with high-speed Internet access.
But we’ve got two natural monopolies that are showing up in America. One is the wired
connection. Yochai suggests it’s a duopoly. He’s actually being kind. In the urban centers
in America, there is nothing but a wired cable monopoly. These guys got together, divided
up the country among each other, and said okay, you take Minneapolis, I’ll take Sacramento.
Cluster their operations. MOSSBERG: Was there actually a meeting at
which they did that? CRAWFORD: Leo Hindery, who’s a wonderful guy
here in New York, has been quoted many times as calling this “the summer of love” in 1997,
where they all got together and said, look, this is a natural monopoly service which means
it costs a lot to put it in. The cost curves decline extremely sharply when you start adding
new entrants. It doesn’t cost anything to add a new person. And the barriers to entry
are unbelievable given these franchises that were handed to cable companies. So that’s all good. So let’s solidify. Let’s
divide things up. They did that. They are now firmly in place, and no one seems to be
questioning the fact that we have an absolute natural monopoly in wired access, and it’s
also emerging in wireless. These two companies – AT&T and Verizon – have
most of the spectrum in the nation. They’re also connected to backhaul which allows them
to quickly get their services out in ways that Sprint and TMobile can’t efficiently.
So we’ve got a grinding problem of monopoly for an essential input and nobody seems able,
politically, to question it. MOSSBERG: And the two wired and wireless,
will they compete? CRAWFORD: Well, AT&T and Verizon are saying
wireless goes over here and we’re putting all our eggs in this basket. Cable guys are
taking wired, and they’re all claiming that competition is rampant. But in fact, because
of Shannon’s Law which still operates despite all the lawyers in Washington, a wireless
connection will never adequately substitute for the incredible speeds that are possible
over the cable plan. MOSSBERG: What’s Shannon’s Law? CRAWFORD: Shannon’s Law talks about the information
carrying capacity of any communication’s channel. So what you have to take account of is both
interference and the spread of bandwidth for that channel. Wireless, you’re out at Times Square. There
are all kinds of things there. Unless you’re the guy standing next to the tower, it’s a
shared communication channel. There’s a lot of interference and not that much spectrum
that’s made available in a big bloc for that connection. The cable pipe is like a great
big clear underground conduit. No interference and lots and lots of bandwidth inside that
pipe. So a cable operator just tested a connection
at 1.3 gigs with existing equipment. That’s what’s possible over the cable plant. Wireless
will never get there. MOSSBERG: There are things other than cable.
There’s fiber. I mean I have FIOS at my house. CRAWFORD: Right. Verizon backed off in March
and said they’re not going to do it anymore. MOSSBERG: Not going to do it anymore? CRAWFORD: Because it’s so much more expensive
to upgrade your copper phone wire. Remember what you… MOSSBERG: I don’t have as good a deal Yochai
as you were pointing out in some of these other countries, but I get 35 megs down and
35 megs up. It’s a symmetrical system. And I pay about – I want to say 65 or 70 bucks
a month or something for that. BENKLER: So I’m where Susan is on many things,
but I have very different reasons for it. The natural monopoly part has to do exactly
– when you’re with FIOS and the reason Verizon is offering it is because it costs Verizon
between 1500 and 2500 bucks per household to get you that fiber to the home that allows
them to compete at 50 or 100 megabits with cable. It costs Comcast between 70 and 100 dollars
per household because Comcast only needs to replace electronics. It doesn’t have to bring
backhauls in. That’s sort of the natural monopoly and that’s
why we’re going there with cable. CRAWFORD: I agree. Yeah. BENKLER: On the wireless, I think one of the
things we’ve learned from wi-fi is that you can share spectrum and that interference is
a feature of the particular model we have. So for example when you say “their wireless
network” – Verizon – it’s exactly the flip of they invested in the copper. What it is is government has a certain model
of what efficient wireless networks look like, and it includes a set of dedicated channels. Because it’s got that engineering model anchored
in the 1920s or teens, it sells off those things. And then no one else can use them.
Whereas what Fred’s talking about is a universe where you basically say, look, you don’t need
three railroads and everybody has to buy a ticket on someone’s railroad. You can have
highways. And you can have a market in cars. And you can have a market in limo services,
you can have a market in buses, and you can have bicycles. And these are open roadways because we no
longer – we have an internal combustion engine. We don’t need an engine at the end that pulls
over rails. And that’s essentially what’s happened technologically to enable the open
wireless framework that allows all of the market in cars and bicycles and you name it
instead of just a market in proprietary train service. MOSSBERG: Because people have chipsets and
those chipsets – BENKLER: Exactly. MOSSBERG: – get better and they can go into
phones. They can go into tablets and laptops and whatever. WILSON: A good analogy is the conversion from
circuit-switched networks to packet-switched networks. So the telephony network was built
on a circuit-switched model. So when you and are talking the dedicated line, and the Internet’s
built on a packet-switched model. We just sent out packets over the wire and on the
end of it we’ll recombine the packets. MOSSBERG: So Elana, you actually worked on
the broadband plan which a lot of people think turned out to be not very impressive in the
end – [LAUGHTER] – not your fault, not your fault – ELANA BERKOWITZ: Thank you. MOSSBERG: Not your fault. Last time I checked
you were not the chairman of the FCC – I could be wrong but. So – BERKOWITZ: Last time I checked as well. MOSSBERG: So was this kind of thinking debated
and reflected in that plan? BERKOWITZ: I mean so undoubtedly competition
issues and spectrum issues were big things that we were considering and a number of the
other issues that were considered discussed in the plan. Some of which were mentioned
by Gigi earlier in terms of modernizing the universal service funds that actually went
to support getting low-income people connected to the service that they need now, which is
broadband. We’re all part of it, and I think as many
of us have seen this sort of ultimate outcomes and impact of the broadband plan have yet
to be seen and realized on certain frontiers. But I just thought I’d step back for a second
and give a little taste of what was inspiring parts of the broadband plan to answer the
question. These are all the issues, the challenge of
competition, the challenges of slower broadband at greater prices. Why do they matter so materially? And I guess I would just say they matter very
materially for two different reasons. The first is America is living in times of
increasingly concentrated disadvantage. We have an increasing gap between the rich and
the poor. The poor increasingly economically isolated, and it was mentioned in the video
that 35 percent of Americans are not broadband adopters. As I’m sure we can imagine that 35 percent
is not randomly scattered throughout our population. The 35 percent who are not adopting, they
over-index on low-income communities tremendously, on communities of color, on people with disabilities,
on people who speak English as a second language. And to the extent that we think that broadband
is a critical enabler to doing commerce, to getting educated, to finding your next job,
if we believe all those things – and I think most of us in the room probably do – the fact
it’s the most disadvantaged in our communities who do not have access to these tools should
be a source of particular concern. The second point which is a bigger one, and
I’m sure that people on the panel can speak to this as well, is the American competitiveness
perspective. We already saw that Americans are receiving
lower amounts of bandwidth at higher prices and obviously this is a problem for a number
of reasons. But one anecdote that I like is not that many years ago, I think 2003, 2004,
fully one-quarter of Americans had jobs that weren’t even listed in the Bureau of Labor
Statistics as employment categories in 1967. Now I don’t know what all those jobs are,
but I think one thing that we can say, we don’t know the course of innovation. I don’t
think any government agency could accurately produce – rather predict – what the jobs of
the future will be. What we do know particularly since jobs that are ICT-enabled are growing
both in the U.S. and abroad at a higher rate than average jobs. They pay more than average
jobs, and they drive so much of the economy. We know that many of those jobs of the future
will be built on networks. And so insuring the health of our networks
I think is both critical in terms of insuring that vulnerable populations get access to
opportunity and also in terms of insuring American competitiveness. So I just wanted
to put that – MOSSBERG: So Fred, let me ask you, if you
looked at that last map, and really any of Yochai’s slides and the video before, it would
seem like we’re talking about a country that couldn’t possibly be leading anybody in the
world in things that run over these networks and the kinds of companies you invest in.
Whether it’s services like Facebook or software like Android or hardware like iPads, we know
we lead the world in these things and actually 10, 15 years ago, we lagged in a lot of these
things, and now we’ve had this tremendous burst of energy in these products that depend
on these networks. So how can you explain that? Is it just that
the broadband trends we’re talking about haven’t hit yet or – and we will be doomed – or is
there some way that people are getting around it? What’s going on, what explains that contrast? WILSON: Well, I think that in the places where
a lot of the science is being developed in the academic setting and also in industry,
particularly the high-tech industry, these broadband issues are not nearly as acute as
they throughout the balance of the United States. The companies that we’re invested
in have all the connectivity that they want. And they will spend what it takes to get it. MOSSBERG: But they’re selling their services
and their products out to people not only in the United States but around the world.
But we’re talking primarily about the U.S. Some of those areas in the middle there, you
know, I mean – WILSON: Right. MOSSBERG: So if you can’t get on Facebook
with any reasonable – WILSON: Well, you can. The reality is that
Facebook is built for a low-band, mid-band type of solution and the iPhone works pretty
well all around the country. I mean would it be better if you could get higher speeds
on the phone? Yeah. Would new applications be built? I mean YouTube’s a kind of interesting example.
Probably from ’97 to 2004 or 2005, there were no less than 100 companies that tried to do
what YouTube did, and they all failed. And then all of a sudden YouTube comes along and
they’re successful. And I think there are a number of reasons, but one of the most important
reasons was that broadband penetration hit a tipping point, where enough people had high
enough speeds that an application like YouTube became valuable to them. And that’s just an example of something that
didn’t work, didn’t work, didn’t work, and then did work.
So what are all the other things out there that are not working, not working, not working,
that could work if we just had better broadband? MOSSBERG: And I think also you would agree
that when the iPhone came out – and this has been replicated now in Android and some of
the other platforms – but when the iPhone came out and we had this really good handheld
computer essentially that you could carry around in a purse or a pocket, YouTube adapted
to that. WILSON: Right. MOSSBERG: And started re-coding their video
to work with the iPhone. WILSON: Yeah, lower bitrate. MOSSBERG: Lower bitrate, H264, whatever they
needed to do – put aside the whole flash argument – but I mean the point was, they made it work,
and they made an app for it, and the same – so you could pick up an Android phone or
a Windows phone 7 or an iPhone today or Blackberry, whatever, and YouTube is there and it’s available.
They were nimble nobody to say, okay, first of all as you pointed out, they understood
the network situation and then they understood the device situation. And they’re putting
it together. But I just wonder if we’re not going to hit
a point where other countries are going to have services and have devices and have software
that can do things that ours can’t because there … situation is better. WILSON: We have it now. In Korea, for example,
the amount of bandwidth they have to the home in Korea is mind-boggling. And as a result,
over-the-top video services that we couldn’t even imagine here in our country are standard
fare over there. CRAWFORD: So frustrated with the actions of
incumbents around America. There are about 70 communities that are taking things into
their hands. And opening up their own fiber networks. I mean municipal broadband, so that
they can have hundred megabits connection to every single home, and they’re finding
it’s useful for things like telemedicine, distance education – smart grid is a great
application for all this – so that you can monitor your own electricity use and bring
it down in comparison to your neighbors. So we don’t even know yet what might be possible
with higher speeds. Over the top video is an obvious example and if you both own the
pipe as Comcast does, and own a lot of valuable content, like NBCU, you have a built-in conflict
of interest. You’d rather see your video going faster and being more interesting to people
than anybody else’s. So these marketplaces can’t even develop in
the current context. MOSSBERG: These municipalities that are doing
this – CRAWFORD: How about that? MOSSBERG: – to use Yochai’s figures when he
was talking about FIOS and how much it costs Verizon when they dug that little trench in
my yard to put that fiber up to that box, with that laser in it, which is what they
did. Don’t these municipalities spend that much money too, maybe even more? CRAWFORD: They’re taking advantage for example
of existing electrical utilities. So you can use your network and lay fiber on top of that,
which is a lot cheaper than what Verizon has to do starting from the start. But yeah, it’s
expensive but you just say it’s worth it. The social – Chattanooga which has one of
these networks is seeing businesses come to the city because there’s an open fiber network
that’s in place. WILSON: It’s not as expensive as you might
think. My partner and I have been down to City Hall a number of times trying to convince
the Bloomberg Administration to do this, and so Verizon as part of their FIOS franchise
with the city has committed to put fiber in every home in the five boroughs by something
like 2013, and that’s going to cost them between 2 and 3 – maybe 4 at the most – billion dollars.
And that’s a lot of money. But it’s not that much money if you look at how much value New
York City could extract if New York City was the one who was spending the 2 or 3 or 4 billion
instead of Verizon, then we would own the fiber instead of having some corporation that’s
going to gauge the hell out of us and rate-limit the network. I mean why do we let a corporation own that?
Why don’t we just spend the money and build it ourselves? MOSSBERG: Don’t corporations own the electrical
power grid? [APPLAUSE] WILSON: Excuse me? MOSSBERG: For the most part, don’t corporations
own the electrical power grid, too? WILSON: Yeah, but they’re highly-regulated,
right? I mean I don’t think – we could do that with Verizon but I think they would scream
bloody-murder if we tried to do that with Verizon. CRAWFORD: And in 18 states the incumbents
have passed legislation that would prohibit a municipality from doing this for exactly
this reason. WILSON: They did – I remember in Pennsylvania. CRAWFORD: Yeah, it’s a big problem. MOSSBERG: Yochai? BENKLER: This is a 30-year piece of infrastructure.
You put in fiber now; it’s not the next quarter. It’s not the quarter after that. What reasonable
public company is allowed to think in terms of 30 years? That’s not how you build infrastructure. CRAWFORD: Yeah. BENKLER: Look at our high-speed rail. It’s
not how you build infrastructure. You can’t think like that. MOSSBERG: I’m sorry; I can’t look at our high-speed
rail. – [LAUGHTER] – I will be on the Acela tonight, but I wouldn’t consider it high speed. BENKLER: I’ll be walking next to you. – [LAUGHTER]
– You glossed so quickly on that – putting aside Flash – but couldn’t you say a little
bit more about what it means – MOSSBERG: I could say a lot about it. It just
didn’t seem relevant to what I wanted to ask you. BERKOWITZ: But I think it is relevant in the
question. So the whole question of innovation, and – look. Why does the U.S. have a lot of
innovation? We have a much better – if you look at the world economic forum index of
what it is that we’re good at as opposed to what we’re bad at. We’re good at VCs. We’re
good at academia. We’re good at academia to VC connection. But we’re crappy in the same exact studies,
we’re crappy at connectivity to the nation. So the fact that we are able to overcome having
three hands tied behind our back because of our political system doesn’t mean that it’s
the right thing. Take your flash – right? If you had an open wireless framework that
actually anybody could run and you could take this computer and use the wi-fi anywhere and
run anything on it and wouldn’t be connected to the one company that decided not to develop
flash, you’d be in a different situation. You look at France today. Iliad, the third
provider that came in using this third framework, decided it wasn’t willing to buy spectrum
on the third – that the French government was requiring too much. What did they do?
They implemented wi-fi boxes at the end of the network so that every single home connection
at these speeds has two sides. One side is for your own private secure network. The other
side, every other subscriber of Iliad whenever they happened to be next to somebody in the
network has mobile connectivity. MOSSBERG: Well, you know, I happen to know
that there were discussions among some of the biggest companies in Silicon Valley a
few years ago about doing exactly that. Not by some government mandate but just why don’t
we make all our Wi-Fi routers or all wireless routers that we sell, have these two sides
to them? And one would be sort of an open guest side.
There would be appropriate security in there so that somebody walking by using it couldn’t
see anything on your network, and you’d be actually contributing wi-fi. And basically,
it never happened. I don’t know why. WILSON: You need an entrepreneur to make this
happen. In the case of FON – F-O-N – which is a company that’s run by a great entrepreneur,
Martin Varsavsky, they created the company, FON, and then they went to a British telecom,
and now every British telecom broadband modem or router, whatever you want to call it, that
sits in a home, has a Foneros, which is the open channel. And the cool thing about Foneros is that if
you’re broadcasting an open channel, then you can also receive from a Foneros somewhere
else. So you’re basically creating this mesh network based on broadband to wi-fi. And I
think we’ll see that in this country, particularly if the incumbents start to extract either
too rich of a deal or possibly too much rate-limiting on their networks. MOSSBERG: Well, this is – and we need to get
to Q&A, but I just want to close the loop on this because this is the point we shouldn’t
not cover which is one of the trends that’s very clear, it’s being covered heavily in
the Wall Street Journal, New York Times – everywhere – is these pipe companies, these carriers
are saying we’re either going to charge you more when you go over a certain amount, and
who can count megabytes and gigabytes that have been consumed, and it’s really quite
a punitive amount when you go over. Or we’re going to throttle you. Some of them are actually
out there – the wireless guys – saying, hey, we’re not going to charge you more. We’re
the good guys. But by the way, if you do go over – suddenly we’ll cut your speed in half,
or whatever it is, for some period of time. You’re saying that if they go too far in that
direction, people will find a way around it? WILSON: Absolutely. I mean look at Egypt.
People figured out how to get on the Internet in Egypt, right? I mean you turn something
off that people want, or you cut it back, they’re going to find another way. Don’t make
your music or your films available? I’ll steal ’em. Okay? Not that I want to steal ’em, but
if you deny people something that they want, that they’ve come to expect and rely on, then
they’re going to find it. This is technology we’re talking about. CRAWFORD: Yeah, frankly, physical here, that
wireless connection has to hit fiber pretty quickly in order to get anywhere fast, and
as we get used to higher density speed applications, people won’t want to live without it. Maybe
they’ll want to leave the incumbent, but there won’t be any choice. And that’s our policy
problem – MOSSBERG: But he’s saying there will be – there
can be choice. CRAWFORD: But that infrastructure of putting
in fiber – MOSSBERG: We can innovate our way around this. CRAWFORD: We can’t innovate our way around
fiber. Someone has to actually install it. That’s the problem. BENKLER: What Susan’s saying is add the fiber
to the cell tower or fiber – MOSSBERG: The backhaul. CRAWFORD: Yeah. BENKLER: Or coax cable to the home to make
the jump. MOSSBERG: Okay, is there a question? It’s
hard to see with the light – CRAWFORD: Yeah, really, this blinding light. MOSSBERG: Anything we can do about the lights
for this part of it? AUDIENCE MEMBER: I wanted to say thanks for
the discussion of municipal fiber, which is an issue dear to my heart, and thank you Susan
for pointing out the 18 states that have Telco written laws that preclude municipal competition
in broadband or various forms of telecommunications. It sort of puts a lie I think to this myth
of competition and the vibrancy of our competitive market, that a single industry can preclude
the emergence of competition even by a community voting to invest in its own community. And I would add to that that the other thing
that is faced in the many places where there is municipal fiber, and the hundreds more
where there would be but for these barriers, are years of litigation by very deep-pocketed
companies, PR campaigns enlisting everyone from unions to other entities, to lobby against
these kinds of projects, and pretty significant political efforts. And major American cities have spent years
studying whether to build open fiber networks along the lines of what you were suggesting
for New York, but actually in cities where there is nothing close to what Verizon is
building in New York, such as San Francisco and Seattle, where if cities of that kind
of level of technological sophistication and innovation are stuck with the technology of
the early 1990s, we’re in trouble as a nation. But they are not proceeding, and part of the
reason is because of these kinds of barriers. So to answer one of the questions that was
raised – forgive me, I’m getting to my question – the question I think was about what can
the philanthropic community do, and in this regard with respect to protecting nonprofits
and local governments who want to try to build opportunities for real competition and real
bandwidth, is there a role for the philanthropic community in trying to provide that kind of
competition? So, I’ll change it from a comment to a question and give it to you. MOSSBERG: Anybody want to answer? CRAWFORD: Sure, I think this panel shows that
there’s a very close connection between innovation and competition and government policy. It
actually makes a difference what the policy is. And so groups like Public Knowledge and
Free Press and these other guys that are trying to make sure that the right rules are in place
for a level playing field are incredibly important. And philanthropy has a role in helping them
along and funding the research that is otherwise funded by the incumbents. BERKOWITZ: And also I’d suggest another role
as well. First off, I think that for foundations that are currently not investing in Internet
issues, I see the Internet and the issues that surround it as ways to accelerate the
work that you’re doing across other sectors, whether it’s education or health or financial
inclusion. And that’s why these issues need to matter because, for instance, this is … 1.7
billion people globally by 2012 will have a cell phone or access to one, who don’t have
access to formal financial services. We’re going to have a shortage in 2020 of
up to 200,000 physicians. What would remote diagnostics be able to do if world clinics
could actually get a high-speed video broadband connection? So to the extent that philanthropic institutions
are focused in other areas, the Internet and the health of our networks and the accessibility
of our networks, whether they’re Internet, mobile Internet, mobile voice, matter to all
these other areas if you want to sort of amplify your impact in those areas. One particular area within that where I think
the philanthropic sector could help is I think there’s a communications challenge in telecommunications
policy, which is – I mean I know I was – I remember my mom sent me an e-mail, very apologetic
e-mail saying, “honey, I read the first four pages of broadband plan, and then I fell asleep.”
[LAUGHTER] And I actually felt that for a document about telecommunications policy,
I thought it was relatively lively, but [LAUGHTER] the point being there’s a communications challenge. And as someone who is on the older end of
being a digital native, the truth is I was doing online organizing for young people for
a number of years before it frankly even occurred to me that the Internet as it was wasn’t an
actual state of being; that there were active choices that had shaped it the way that it
was shaped. And it was a long process of learning what
those active choices were, and we’ve mentioned some of the great nonprofits that are trying
to do that communications work. But I think we could be a lot more innovative, a lot more
creative and I think it would be a great space for the philanthropic sector to think about
playing in. WILSON: I’ll second that. What people say,
that we shouldn’t regulate the Internet. We’re not talking about regulating the Internet.
We’re talking about regulating Internet access, and yet that message doesn’t get out because
for some reason the people who are fighting the good fight don’t have either the right
words or they don’t have the right channels to get those words out, and a little bit of
investment in some real basic soundbytes in marketing would be very helpful. BENKLER: Just to add as opposed to repeat,
though I agree with everything, best practices communities around, be it municipal or civil
society, successful efforts, identifying those, identifying the experiments, and creating
best practices. And the second is investing in the technological
hacks and workarounds that Fred was throwing, which actually is also directly tied into
trying to come up with ways to solve the Egypt-type Internet shutdown. This is something Mark,
you and I, were talking about earlier. Finding ways of technologically taking the installed
base of Wi-Fi as it is, without any single change, and developing ways for people to
build their own networks whether what they’re working around is monopoly or government censorship,
the problem is the same problem, a tightly-controlled pipe. The solutions need to be the same kinds
of solutions. MOSSBERG: Okay. I’ve just been told we have
one minute. So does somebody have a really quick – go ahead. Quick. AUDIENCE MEMBER: So – Mark Zimmerman from
Mozilla, and I guess I would love to go into how the hackers and the entrepreneurs are
going to disrupt at the edge of this. I think we can’t just dismiss that, and I think Yochai
and I talked about doing a big public innovation challenge around that. So if people are interested
in that, we may go down that path. But the question I had for you guys, just
as a closing piece, is we’re basically talking about openness, competition, the Internet,
business innovation. But we’ve just sat at the bottom layer of the Internet. And there
are other layers of the Internet where we’re seeing things close, right? So we’re seeing
in apps, there’s a very few vendors who control who can sell what. We’re seeing in identity and single sign-on
one vendor controlling that whole space. And so I guess the question for you guys, don’t
we also need to focus on where things are closing, where competition needs to exist
in those other layers of the Internet? WILSON: I’m more optimistic that the market
can take care of those problems. We thought Microsoft had this monopoly that was on operating
systems that was unbeatable. The government got involved. Couldn’t really do much, and
then the market got involved and look at them now. They’re a mere shadow of their former
self. AUDIENCE MEMBER: But in that case, I’m not
necessarily saying that the government should do that. I’m saying should we be concerned?
And we were part of the market that got involved in fixing that particular problem, and I’m
talking about doing that to Facebook and Apple? WILSON: Yeah, yeah. Look open source and new
companies and venture capital – I really think at the higher levels of the stack, we’re in
good shape. The problem is that you’ve got to get onto the Internet, and unfortunately
that is – maybe unregulated spectrum is the great white hope there. But beyond that, I
don’t know what – or maybe these mesh-type networks, hack-type things, might work. But
I’m much more worried about the access layer. CRAWFORD: Yeah, there’s a frankly physical
aspect to this, like transport and electricity and water, and where there are so few choke
points, it really makes a difference. So let’s cope with that and it will go up the stack. MOSSBERG: Okay well – BENKLER: Although I do think… The basic
model we’ve seen here is the right one to think about at all of these layers. Now it
might be that in specific layers the constraints aren’t so tight. And there are other fixes.
But the basic question, do you have a choke point where someone can control up and down
the stack? If so, that’s a target you need to disrupt. MOSSBERG: Well, thanks! I appreciate it, and
thank you … [APPLAUSE] 10

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