SMART Letter
#35
NEW 'VAST WASTELAND'
March 11, 2000
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SMART Letter #35 - March 11, 2000
Copyright 2000 by David S. Isenberg
isen.com -- "Keeping the inter in Internet"
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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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
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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!
isen.com, inc. proudly announces that it has an advisory
relationship with TeraBeam. More on TeraBeam very, very
soon. Now, off to Scottsdale! -- David I
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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.]
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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."
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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 [Zigurd_Mednieks@msn.com] 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 [gaynor@eecs.harvard.edu] 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 [johnk@cyberjava.com] 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 isen.com, inc.)]
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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 [chris@chrisworth.com]
"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 [GPConnolly@aol.com]
"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 [tmandel@mightyacorn.com]
"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."
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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 http://www.ibcusa.com/ is as
thin as it comes. If you really need to know, contact
Anne Bacon Blair abaconblair@ibcusa.com, 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
http://www.wtc2000.org/info.htm
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
http://vortex2000.com/
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.
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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
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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