SMART Letter #35
March 11, 2000

!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*() ------------------------------------------------------------ SMART Letter #35 - March 11, 2000 Copyright 2000 by David S. Isenberg -- "Keeping the inter in Internet" -- -- 1-888-isen-com ------------------------------------------------------------ !@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*()!@#$%^&*() CONTENTS > Hot News! TeraBeam comes out of the garage. > The New "Vast Wasteland" -- TV over IP, but nothing's on??? > Quote of Note: Len Kleinrock on the open Internet > Smart Remarks from SMART People: Anonymous, Zigurd Medneiks, Mark Gaynor, John Kawakami > More Winners!!! Richest Person in 2020 Contest: Chris Worth, Gordon Connolly, Tom Mandel > > Conferences on my Calendar, Copyright Notice, Administrivia ------- HOT NEWS! TERABEAM COMES OUT OF THE GARAGE The story broke on Page B1 of The Wall Street Journal, March 9, 2000. The headline said, "Hesse to Leave AT&T Wireless," but the real story was in the fine print. Hesse "plans to join an Internet start-up called TeraBeam Networks. The company -- so far under the radar it doesn't have a Web site -- is working on a technology that beams data by laser through the air." The article continues, "TeraBeam will use air, instead of fiber, to transmit information at high speeds, in what some call 'fiberless optics'. Mr. Hesse's arrival at TeraBeam was carefully timed. TeraBeam, which has operated from a Seattle office without even a sign on the door, plans to 'come out' this weekend at the PC Forum conference in Scottsdale Ariz." George Gilder devotes his March, 2000 Gilder Technology Report to TeraBeam. He divulges details of founder Greg Amadon's point-to-multipoint system eye-safe laser system, which is the ultimate in unlicensed, indeed unregulated, wireless transmission. The "massively superior" technology can beam multi-gigabit streams up to three kilometers, Gilder says, and it will "disrupt the business plans of all the 24 GHz (Teligent), 28 GHz (Nextlink) and 38 GHz (Winstar) microwave companies." Gilder goes on to say that, "At 1550 nanometers, the tints commonly used in office building glass function as a passband filter rather than as a blocking filter." Bye bye to roof-rights hassles!, inc. proudly announces that it has an advisory relationship with TeraBeam. More on TeraBeam very, very soon. Now, off to Scottsdale! -- David I ------- THE NEW "VAST WASTELAND" -- When TV over IP arrives, there might be nothing on. By David S. Isenberg In 1961, FCC chairman Newton Minnow saw the future of television. He called it a "vast wasteland," and he said, "When television is bad, nothing is worse." He was perhaps the first person to notice that broadcasting spawns lowest- common-denominator programming. Broadcast video business models today include the infomercial model, the familiar ad-supported programming model and pay- per-view. Of these, pay-per-view would have the best shot at quality, except that even pay-per-view demands eyeballs to meet return on broadcast infrastructure. My house just got 100+ digital channels from Comcast; I expected that we'd find a little Internet-style, random, risky zaniness. Instead we get twenty-four convenient times to watch "The Spy Who Shagged Me." No matter how many channels, there's still nothing on. Contrast this against the narrow-band Internet, a forum for wonderfully chaotic cascades of Web pages flowing from every enthusiast's cause, where content gains meaning from passion, and expression is not necessarily tied to the bottom line. Now TV over IP is on the horizon. Tens and hundreds of megabits to the home will soon be affordable, but if artificially constricted access dictates broadcast-like business models, television's wasteland will persist. PRIVATE COMMERCIAL ARRANGEMENTS That's why I'm bothered by a December 6, 1999 letter from AT&T to the FCC addressing choice of Internet service provider. It says AT&T is "prepared to negotiate private commercial arrangements with multiple ISPs ... [covering] pricing, billing, customer relationship, design of start page, degree of customization, speed, system usage, caching services, co-branding, ancillary services, advertising and e- commerce revenues, and infrastructure costs." If there were multiple competing ways to deliver tens of megabits to the home, an open marketplace would arbitrate access. But AT&T's stance is a problem if AT&T (with TCI and Media One, and resulting ties to Time Warner and AOL) controls the main means of U.S. broadband access. Imagine a future in which every player must make "private commercial arrangements" with AT&T to send or receive TV over IP. AT&T would be able to extract what economists call 'monopoly rents.' In this future, scale matters. The players would be AOL-Time-Warner, ABC-Disney and their ilk. In this future, AT&T would need ABC-Disney at least as much as ABC- Disney would need AT&T. We'd expect sweetheart deals among giants; a "big three" of TV over IP could emerge. People who weren't part of a commercial endeavor would be frozen out. Creative kids, expressive enthusiasts, musicians who aren't swimming in the mainstream, freedom-fighters and fringies under every government, and most importantly, the video makers among them (as PC-based digital video technology emerges) could find AT&T prices insurmountable, AT&T bureaucracy impenetrable and AT&T sweetheart deals unbreakable. COMMON CARRIER REGULATION When sweetheart deals between railroads and their content providers paved the road to vertical monopoly in the early 1900s, the U.S. Government brought railroads under common carrier regulation. This made railroads publish fair rates for transport services and open those services to all comers. Today, U.S. telcos are common carriers but U.S. cable companies are not. This frees AT&T to declare its intent to make "private commercial arrangements." The reason is historical; until recently, cable companies were not in the business of interstate transport. (The 'CA' in CATV means 'community antenna'.) Canada has been more vigilant; as cable's function changed, so did Canadian regulations. Today, Canadian cable companies fall under common carrier rules, and Canada is fast becoming the scene of a vibrant, competitive broadband revolution. It is important to note that an AT&T-owned broadband future is but one of several plausible alternatives, and that common carrier regulation is not the only antidote. Perhaps AT&T will fail in its ambitious cable buildout. Maybe another player riding another technology will predominate. My favorite future scenario features multi-provider, multi- access broadband. Perhaps low-cost broadband wireless techniques will emerge. Maybe a U.S. municipal fiber movement will take off. Perhaps DSL will grow mightier. Possibly (but don't hold your breath) power-line carrier technology will prove in. If there were two or three technologies and four or five providers in each region, a robust competitive market would be ensured. The narrow-band Internet will remain a forum for every enthusiast's interest because there are too many ways to connect for it to be otherwise. Common carrier regulation ensures this multiplicity. In the near future, some form of TV over IP is inevitable. When it arrives, I hope there's something to watch. [This article appeared in the March 1, 2000 issue of America's Network. Copyright 2000 Advanstar Communications.] ------- QUOTE OF NOTE: Len Kleinrock "It is exactly [the] sharing of ideas, openness and sense of community that leave [the Internet] so vulnerable . . . Democratic societies have always had to pay a price for freedom, but the rewards have exceeded the cost. The Internet now faces such a situation. The sky is not falling, the Internet will not collapse, and the problem is manageable, but good judgement, creative engineering and care are required to protect its culture of open access." ------- Smart Remarks from SMART People From Anonymous on Tachion: "Maybe you should remind your readers that this Tachion stuff is irrelevant on the Internet, where all you need are IP routers, Ethernet switches and a farm of servers for mail, web, SIP, etc. Do you remember the stupid network? ;->)" From Zigurd Mednieks [] on Tachion: "The Tachion is cool, but it is not quite an unitary as one might imagine: It has the classic car/boat/plane problem. Is it a great router for VPNs? Or is it a great class4/5 phone switch? I doubt that high- performance routers will have the same internal architecture as class4/5 switches. Nor will they have the same lifespan. Nor is it likely (until Cisco buy them up) that both best-of-breed systems will be made by the same company. Nor are the operating and management systems for Internet infrastructure and PSTN infrastructure that well-integrated now. In a way, this is the telephony server problem writ large: Why put your PBX in your Win2k server when in three years you will toss the server but your last PBX lasted 20 years?" From Mark Gaynor [] on modularity: "You should look at a new book by two Harvard Business School professors. The book is "Design Rules" by Carliss Baldwin and Kim Clark (the dean). It is very good. It looks at modularity in the computer industry from 1960 - 1980. I think MIT press published it; I have not seen the book, but have the working papers. I think Clayton Christensen's work on modularity is based on this research." John Kawakami [] on Art Kleiner's idea in SMART Letter #34: "Seems to me that advertising on the Internet has the potential to get a LOT better. IMHO, the ultimate sales will be UPSELLS. That is, you might start buying from a site like Amazon, but over time, you'd be led to specialty sites and brick'n'mortar stores. As you get more esoteric, the line between content and advertising blurs. The more specific your desires, the more likely you are to pay. "This doesn't really solve the problem of getting paid for online writing, but so what? It's not like REAL journalists have needed advertising. It's just the greedy one that need it. I am a fan of KPFK's amateur journalists -- they sometimes outdo the LA Times, and often kick the commercial TV news' ass. A good journalist with a decent syndication agent should be able to earn a living by selling subscriptions. If not now, then soon." [The SMART Letter is yet another model. I don't accept advertising at this point, and I don't syndicate, but it is pretty darn good journalism, even if I do say so myself. Its support comes from people who like my ideas and views enough to hire me as a Prosultant(sm). John Kawakami says it above; the line between content and advertising blurs. (Prosultant is a service mark of, inc.)] ------- MORE WINNERS!!!: RICHEST PERSON IN 2020 CONTEST [The folks below took a little more time to develop 2020 foresight, but better late to the future than never.] From: Chris Worth [] "The richest person in 2020 will be . . . All of us. Because the concept of wealth will be radically different in 2020. Talking about billions of dollars won't work, because there'll be a mind-numbing variety of virtual currencies, including something called 'stock options on your brain'. Young people will IPO themselves. (The old economy set will still think such valuations are a bubble.) "In fact, certain forms of wealth will only be valuable to some constituencies, not to others. (Note that Bill G's billions can't buy him respect on the Net today.) There won't be any general agreement on what constitutes wealth, just on how much the market seems to value someone relative to a particular thing. Anyone still using generally accepted accounting principles will be regarded as a fraudster. (See, some things don't change.) "Saying one person is richer than another will be as ridiculous as saying one skin colour's superior to another. And it won't lead to economic chaos - the markets will take care of that. Unless, of course, you regard chaos as the inability of governments to measure something." [I don't know what Chris is smoking, but I sure hope he passes some this way! -- David I] From: Gordon Connolly [] "We need to figure out why *any* person has achieved 'richest person' status in the past. We have seen such success in the oil industry, and we can look into the history of international banking. It comes down to some basic tendencies within the individual such as cunning, ruthlessness, and dealing without mercy in the affairs of others. "In the past, people have gotten rich by finding some area of public need or desire, then cornering the market and controlling the competition by buying them out or ruining their ability to advance. There are plenty of people who are bright, talented innovators with terrific ideas, even killer apps. But they are not ruthless enough. The story of how these innovators were derailed is the story of how to be the world's wealthiest person, today, tomorrow, or 20 years from now. The one who will reap the largest monetary rewards will be the one who controls the marketing of the product and runs competitors off the road. "Therefore, my vote for 2020 still goes to Bill Gates even though I don't know what he will be controlling by that time." From: Tom Mandel [] "The richest person in the world in 2020 will be one of two people: one invents a pill you take which makes you handsome, brilliant and motivated to buy some small commodity from the inventor daily, the other is the only person on whom the pill has no effect. "If everyone takes the pill then everyone is impoverished, yes? And, enslaved as well, yes? Left are two people. Each illustrates a form of wealth -- money and autonomy. Or, if you prefer, power and pride. It's an old beatnik parable." ------- CONFERENCES ON MY CALENDAR March 20-23, 2000. Orlando FL. IBC "Unified Communications Conference." It's not just "Unified Messaging" anymore! I think I'm giving the keynote at 8:45 AM on March 21st. The information on the web at is as thin as it comes. If you really need to know, contact Anne Bacon Blair, 508-481-6400 ext.645. May 7-12, 2000. Birmingham UK. World Telecommunications Congress. I am an invited speaker for the session entitled, "What's your network IQ?" Answer: Too high. For info, see May 23-26, 2000. Laguna Niguel CA. VORTEX. I am still lobbying Bob Metcalfe to let me run a session on "The Network We Really Want to Have, and Why We're Not Building It," but Bob is still being coy. For more info, see June 7-10, 2000. Toronto ON. TED CITY. My only role here is as a paying member of the audience, but I think that Richard Saul Wurman does a real job with his TED conferences -- every one I have been to has had deep lasting impact. You can't shoehorn yourself into his regular Monterrey CA stand in February, but there are still a few spaces for June, and I would like SMART People to be there if they can. ------- COPYRIGHT NOTICE: Redistribution of this document, or any part of it, is permitted for non-commercial purposes, provided that the two lines below are reproduced with it: Copyright 2000 by David S. Isenberg -- -- 1-888-isen-com ------- [to subscribe to the SMART Letter, please send a brief, PERSONAL statement to (put "SMART" in the Subject field) saying who you are, what you do, maybe who you work for, maybe how you see your work connecting to mine, and why you are interested in joining the SMART List.] [to unsubscribe to the SMART List, send a brief unsubscribe message to] [for past SMART Letters, see] [Policy on quotes: Write to me. I won't quote you without your explicitly stated permission. And if you ask for anonymity, you'll get it.] ** David S. Isenberg, inc. 888-isen-com 908-654-0772 ** -- The brains behind the Stupid Network -- **