Assuring Scarcity

Tuesday, January 31, 2006

I’ve been struggling to explain the Internet dynamic and why it gives us abundant and inexpensive connectivity. And here we find the cellular carriers themselves decrying the dangers of abundance in their own slides – more bits/cheaper bits is something that they must prevent.

Perhaps they are comparing themselves to farmers who limit the amount they grow to keep the prices up but in the case of providing connectivity the problem is that the carriers represent an artificial business that is a creation of the regulatory environment – The Regulatorium.

We must embrace and encourage abundance and not let ourselves be captive of an artificial marketplace that is unable to sustain itself in the face of any competition. Do they really believe that they are the only ones capable of creating solutions?

Maybe so. After all, the US Supreme Court accepted the argument that Disney must have exclusive control over its creations because they have a special ability to be creative despite their tendency to tell stories based on others’ characters and their need to purchase outside companies, such as Pixar, to stay in business.

Amartya Sen: no famine has ever occurred in a democratic country with a free press and regular elections.

Connectivity is the free press and the economic fuel for the 21st century. We cannot countenance a 20th century telecom regime dedicated to assuring scarcity .

Fear of Abundance

The conflict between the 20th century telecom industry and the abundance demonstrated by the Internet becomes very clear when we look at cellular telephony. Unlike land line telephony, cellular telephony has, from its inception, been able to maintain control over the services provided. They’ve kept the cellular phone from becoming a real portable computing device.

I’ve tried to argue that the current model of telecom assures scarcity and that if we shift the model we would have abundance. It’s nice to know that the carriers agree!

They are explicit in expressing their need to prevent abundance. Why do we tolerate such harmful behavior? It’s not just the rich Europeans and Americans that suffer – it’s far worse in developing countries cut off from the world.

The “strategy” of scarcity becomes very clear when viewing the “IP inter-working (IPI) Overview” from the European Radiocommunications Office. The URL for the PowerPoint report is http://www.ero.dk/0405891D-A250-46F6-9DE4-3894FBF32FDA?frames=no& but it may not be an archive URL. You can find it by searching for “IP Inter-working GSMA ERO”. While the report itself may be only a working document the points it presents the defining characteristics of cellular telephony and make it clear that the biggest threat to the industry are empowered users.

There are many related documents such as http://www.3gpp.org/ftp/PCG/PCG_15/DOCS/PDF/PCG15_17.pdf which touts that the goal is to create “fully interoperable and globally connected IP with QoS value-based pricing and cascade payments”. While it says “IP” there’s a lot of concern about issues such as roaming which don’t arise in the real Internet. That document is very telling – it complains about governments stalling market by imposing taxes and license fees when this industry itself is imposing far more onerous levies by denying the user the ability to create anything that is not billable.

Perhaps this is best seen in the points from a table in the report. It uses what I call blivet logic. It seems to progress from point to point but you find that you started with one interpretation of a word and winding up at the other end with an entirely different meaning. If everyone has access to abundant and cheap bits then you’d expect that to mean everyone can innovate but somehow they say that there are fewer players. Ah – but a player is a phone company – the millions of others capable of creating new value aren’t considered to be players.

Once we’ve made this switch we might as well define innovation as “what a telephone company can do”. If you point out that they couldn’t have done the web they’ll just say that that doesn’t count because … well, just because. They can’t answer so just change the topic as if they suffered a brain seizure and the thought vanished. If they only make presentations to those whose future depends on making sure the blinders are tightly in place you don’t get anyone asking such questions so you can promulgate whatever kind of nonsense you want without worrying about whether it makes sense to those not fully indoctrinated.

While this is not an official standards body it is designed to play the role while avoiding being legally considered anti-marketplace. Any conclusion must be taken seriously – who cares if the stuff in the middle is nonsense. The industry sees abundance as very bad because that would mean you can’t charge as much money. Just accept that conclusion and don’t ask silly questions.

I can understand that incumbents fear competition and price erosion but it seems to be a leap of logic to say that such a marketplace would have few players. Just the opposite – in such a marketplace we would all be players. Instead of a handful we would have millions or even billions of players creating value and there would be the kind of rapid evolution we’ve seen elsewhere in personal computing and the Internet.

If you think about it, this is a clear and blatant call for manipulating a marketplace so that only the privileged few can create new products and they can even specialize without worrying about competition. Best of all they can charge as much as they want.

They use the word “quality” but never tell how it is to be measured. That’s because they are defining the measures. Quality sounds like a good thing but it’s really another way of saying that they will decide what people can do and what is important. What is important is what contributes to their revenue or, to put it another way, how much value they can take from their users.

Quality is a dangerous word – it’s used to justify arbitrary policies. The telephone companies tout their quality but Voice over IP is starting to sound better because they are using “quality” to mean the minimum that they can get away with. The whole network limits the quality because that’s all they think necessary for the applications that they decide are important. It prevents innovation! This is endemic throughout the phone network. In the 1980’s they tried to sell me an office LAN that ran no faster than a dialup modem. I declined because I was already using multi-megabit Ethernet! Imagine if I had no choice but to buy connectivity from them!

Their story is accepted because it seems necessary to pay them to give us connectivity but that’s not true. It’s like paying the railroads to build roadways. You don’t do that, you build roads based on the need for roads. You fund connectivity in the same way – so it can support other activities and not as a profit center in its own right. You’re paying people to carry your bits just like you pay them to carry your garbage – you don’t expect to sell them your garbage.

They are simply rigging a marketplace because they seem to be necessary – where is the enthusiasm for enforcing antitrust they use against Microsoft?

IPI Principles and Goals

The “IPI Principles” slide is also interesting. It makes it very clear that even though the carriers use words and act like they are embracing the Internet they are talking about something entirely different. It’s seems to be an Orwellian inversion of the Internet. In fact, they are explicitly doing everything to undermine the defining principles of the Internet and are attempting to take back control from the users who are treated as hostile competitors.

Original

Explanation/Translation

IPI Principles
End-to-End service delivery Womb-to-Tomb – every element is controlled and corralled into sessions. No power at the edge. This is the opposite of how the term was used in the original paper.
Service interoperability Of course you want to be able to interconnect services. In the Internet such interfaces evolve and grow as need. In the world of telephony the interfaces are brittle and difficult. Sending a picture from one cell phone to another still works only in a few limited cases.
Third party management This is really a concession to let some outside companies into the walled garden if they can add value to the carriers. It’s not an open initiation.
Customer Protection Seems more like protecting the carriers from the customers.
Initiating party pays Grab the money while you can. Paying for what? If the connectivity is already available then what is the user paying for?
Supporting value-based service pricing. Ah ha—they are paying the carriers for services! But only those services that are valuable, i.e., profitable to the carrier are supported. Can’t let the users create their own services because then you can’t charge them for the value. This is basically a tax on any new value created outside the network. Or, more to the point, it prevents the creation of new value.
Customer choice This isn’t choice in the sense that most people think of it. It’s Hobson’s choice – you can get horse you want from Mr Hobson as long as it’s one of the ones he has chosen for you. Or, as Henry Ford once said, you can buy a car in any color as long as it’s black.
IPI Goals
Create environment to grow IP services The carriers really want to use IP because they say how cost-effective it is to use the real Internet but this is using IP without the philosophy. The fact that they may use IP protocols is not that same as allowing users to make full use of IP. I’ll grant them that it does make interpretability a little simpler but you are still limited by versions of real protocols
Create environment to grow IP services Customer centric in that the goal is to find things to sell to customers. Empowering them is not a concept that can be tolerated
Introduce a fair distribution of value Considering that the users are denied the ability to create value that is not taxed by the carriers I can only interpret this as an agreement to divvy up the loot among the carriers and their partners who create the services.
Foster continuous market growth But not too much growth – can’t let users get ahead of the carriers.
Establish alternatives to access-only based inter-working This seems to be an attempt to deal with the consequences of reintroducing circuits and path dependencies. It’s nicely solved by the real Internet but than this is the anti-Internet
Ensure several models available in the market Markets – can’t have global simplicity. Must enforce local prerogatives for the carriers. This appeals to those who fear the empowered users and people in general.

I don’t think I’m exaggerating much – it’s all about assuring total control.

It starts out using the term “End-to-End” but in the opposite sense that it’s used for the Internet. In this it’s more like “Womb-to-Tomb” – they control every aspect of the service. It’s that QoS thing. That along with ideas like “Acceptable Usage Policy” (AUP) is a way to impose their rules on users and maintain their control and value (AKA, high prices).

The Anti-Internet

The slide titled “The Future” is perhaps most telling. It makes it very clear that this is the anti-Internet. They use Internet words but to mean just the opposite. George Orwell would be impressed. Unlike Big Brother this is done in plain sight almost as if they are clueless. And maybe they are.

They are bringing back circuits, AKA sessions for no purpose other than being able to charge for them and their ability to apply their own definition of quality. A circuit gives the carriers control over relationships – if you allow the relationships to be maintained outside their network they lose control. As we see with the Web, Skype and other Internet applications not only is there no need to maintain the relationships inside the network, it is very difficult. That’s why you get dropped calls as you travel though cellular dead zones. Of course, it also means you can’t fill in the dead zones yourself.

The purpose of a session is to create a billable event out of nothing. You don't need them to charge for a service but you do need them if the carrier wants to get in the middle so it can meter your time and bill you. Even if you are not exchanging packets and using resources you can still be billed! That might’ve made sense in the old phone network but now it’s nothing more than a way of charging you even if you are using no resources at all!

They must prevent users from creating sessions outside the network in order to charge for them and they don’t have the concept of letting the users determine what works and what doesn’t. The carriers will decide that for the users! Notice all those proxy’s – more mechanism for no purpose other than adding complexity and when you have enough complexity it’s easy to tell any story you want and get away with it. We have layers upon layers which assures that you can’t reduce the costs by eliminating mechanisms that don’t add value to a particular application.

It’s truly the Anti-Internet. The Internet itself is accessible only in terms of external services. IP transports like EVDO and HSDPA are considered services and not fundamental transports. And they are charged at a premium – like being forced to buy bottled water rather than tap water.

And look at that – a cute little DNS of their very own! And they don't' use neutral terms like Top Level and Second Level Domains. They refer to them as Master and Slave domains and infest them with all sort of strange complexity. What is entirely and completely missing is the idea of users controlling their own domains or zone files. Can’t give the sucker (oops I mean the user) an even break can we?

I don’t really think they realize how clueless they are about the Internet. They are used to a command and control structure and the very idea that users can create their own protocols is outside their conceptual space. They are very used to defining standards and evolving them slowly. The idea that the Internet approach is to start out by playing with ideas and those that are commonly accepted become standards though even then they are not enforced except by gaining favor.

SMS and MMS are broken versions of Internet protocols. They love SIP (Session Initiation Protocol) because it looks like a tradition Telco-protocol but users can create sessions directly without a third party SIP server and they can choose other ways to initiate sessions. They like SIP because they think they can maintain a stranglehold over telephone numbers by using their own DNS.

Why Not Abundance

Why not indeed? The report makes it very clear that they acknowledge there can be abundance. It’s easy to understand that they fear it but the document seems to be as conspiracy to evade antitrust. There is a tradition of exempting telecommunications companies from such rules so I can’t say they are violating the law but they are violating the principles by using their control of the transport to prevent the users from having real choice and opportunity. That might have once made sense when we didn’t understand how digital systems worked. They will try to defend their control by shouting “Quality” but as we’ve seen with VoIP abundance is a far better path to quality both because it gives the user the opportunity to define quality as per their own needs and, more important, if you limit yourself to allotting a scarce resource you can’t do better. If you dole out a 64kbps voice path the user can’t opt for full multi-channel audio – something most people consider higher quality.

Today we have the Internet as a dramatic example of how to create abundance. And the document acknowledges this! They’ve done the hard work.

Maybe they are so locked into a narrow view that they are completely unaware of the damage they are doing.

There is no excuse for continuing to accept scarcity and its consequences.

It’s the 21st century and we understand that we can have abundant connectivity. Why are we continuing to tolerate scarcity? How can we allow this to go on?

Bob Frankston Site