Yochai Benkler on The Broadband Plan

Yochai Yochai Benkler is one of a handful of people who our firm regards as inspirators. We've read everything he's written and find ourselves quoting him regularly in meetings. This is a picture of Yochai making a point at our first Union Square Sessions event on peer production.

So when I came across Yochai's op-ed today in the NY TImes on the National Broadband Plan, I stopped skimming and focused, I read it twice.

Yochai agrees with many in the tech industry, me included, that we need a National Broadband Plan. But in classic Yochai fashion, he doesn't think it goes far enough. He says:

Take the commission’s “100 Squared Initiative,” which aims to get
100 megabits-per-second service to 100 million households, at
affordable rates, by 2020. Meeting the speed target shouldn’t be
difficult; industry is well on track to achieve it within the decade.

is the hard part — because there is no competition pushing down prices.
The plan acknowledges that only 15 percent of homes will have a choice
in providers, and then only between Verizon’s FiOS fiber-optic network
and the local cable company. (AT&T’s “fiber” offering is merely
souped-up DSL transmitted partly over its old copper wires, which can’t
compete at these higher speeds.) The remaining 85 percent will have no
choice at all.

This is the problem. There isn't enough competition on the access side of the Internet, both wireline and broadband. The rest of the Internet stack is hypercompetitive and is innovating at a mile a minute. But in access, we have monopolies who go at whatever speed suits them. There's nothing pushing them to go faster.

Yochai ends a fantastic op-ed with this point:

If we stay the present course, the commission’s new policy will build a
better wireless network around a more entrenched monopoly system,
lodging an insurmountable obstacle in the path toward bringing
America’s broadband network up to speed with the rest of the world.

That's a sobering thought.

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#Politics#VC & Technology

Comments (Archived):

  1. MattCope

    Stupid question: why will 1/3 of Americans need or want 100Mbps service?I concede that we can’t predict what level of broadband capacity we’ll need in 2020, so it may be wise to err on the upside.However, rolling this out won’t be free (for either the private or public sectors). Given that this may divert capital from other projects (curing cancer, paying down the deficit, solving energy problems, e.g.), why should this be a priority?

    1. Kevin Vogelsang

      This is a value-based question. But I’d say information access is just as important as the others you’ve mentioned.It could be claimed that people don’t necessarily need fast connections, so long as they have a connection. But, Having a slow connection is a huge impediment to consumption.Better information flow is the foundation for solving any problem, such as the ones you’ve mentioned.

      1. MattCope

        If I can expand your argument – “better information flow is the foundation for solving any problem” – can we say that projects should be judged on the basis of the return on investment they provide?That is to say – if, by improving information flow we can cure cancer, the cost of the improvement is justified.I have not seen any data that says the return on investing in information flow will provide a positive return. Yes, it’s possible that such an investment could lead to a major breakthrough (like curing cancer), but that would be speculative at best. And it’s my view that the US government can’t afford any speculative investments right now.

        1. Kevin Vogelsang

          Don’t need the data to show that better connected and informed people is a worthwhile investment. The internet has changed the world by connecting people and improving information flow.But again, these are value-based statements (as all statements are really) that require intense debate to figure out which are the priority. Better information access has my support. (Although, I’m not certain what role government should play). It has had and will have huge implications for innovation. On your end, curing cancer seems to be high on your list, which is a speculative investment, that you could (emphasizing “could”) calculate a terrible ROI for right now.Funny enough, in the article I posted in a comment below, they talk about doctors using high def imaging to do long distance cancer diagnosis.

          1. MattCope

            I agree that better connecting and informing people is a worthwhile investment, in a vacuum. But it comes with the opportunity cost of not solving another problem.If I had my way, any incremental public money would go towards deficit reduction – but I chose curing cancer as a stand-in for something I thought would be universally valued.More than anything, I’m skeptical of government’s role in “developing” an industry, except to the extent that it enables competition, which is at the core of Fred’s post.

        2. paramendra

          Turning my water tap on does not cure cancer. So I should not turn the water tap on?

          1. MattCope

            Of course not, silly goose.You’re so silly.

          2. paramendra

            No, that is an apt metaphor. What Mark and I are saying is it is basic. Food, water, internet access. Internet access is that basic. For us internet means high speed internet. At 100 mb we are finally talking.

          3. ShanaC

            Although communication costs are often among the first place people send money on in third world countries according to the likes of the World Bank and the OECD, it isn’t clear completely what will happen in terms of social and economic structural changes that they will cause. And it also isn’t clear what will happen in terms of other surrounding issues, such as delivering basic medicines…So internet ipso facto isn’t the basic need- it is delivering network capabilities so that people can communicate some problem to another so people can act on information.

          4. MattCope

            I agree – communication is a necessary, not sufficient condition to developments.However, does the argument that we should award need – not merit – really hold water?

          5. paramendra

            Ultimately it has to be the full internet, ultimately it has to be 100 mbps also in those parts of the world (I was born in India, grew up in Nepal next door). But you are right, before we get there, we might have to make do with the barebones mobile phones and text messages and a lot that are still possible through the basic applications. Overall broadband will have major positive impacts on a host of issues, from infant mortality to sexism. The internet is a catalyst for all sorts of social and economic issues. That is my primary fascination with the internet. The technology is secondary.

        3. ShanaC

          We do know it causes massive structural changes in the way society functions. I’ve read bits of Benkler (I should read more)- supposedly he sounds like de Sola Pool (not that I have read de Sola Pool, on my list)How do you predict that?

          1. MattCope

            Those structural changes are unpredictable – you’re right on the money.My argument is that the private sector is more equipped to handle resulting the risks (and rewards) than the public sector.If there is a positive return on investment to be had in developing the nation’s broadband infrastructure, the private sector should capitalize, right? If there isn’t a potential positive ROI, why should we dig a further fiscal hole?

          2. ShanaC

            I personally think they are mixed and this is mostly due to the shift in our concept of borders and nationalism. What is a state in the concept of nation-state? And why is there such a concentration of power of those who will give out broadband, and then again in turn totally diffuse among the demos?

    2. kidmercury

      it’s not a priority. the #1 priority should be cutting spending. spending more than you earn is not a sustainable strategy. looks like we’re going to learn this lesson the hard way.btw, cancer has been cured. the cure is called laetrile. it’s basically banned in the US, though. learn more here.

        1. kidmercury

          wow, thanks for the links — the currency stuff is great. i’m still amazed that i haven’t seen anyone in the virtual currency biz go kook, i’m not sure what they think the end game of their trajectory is, especially seeing how china has already taken steps to show it views social gaming as a threat.i’m back on the rss reader, cleaning out feeds — will have to add this one. thanks

      1. raycote

        No # 1 priority is increasing nation GDP.If you cannot pay your essential bills, it is time to go out and earn more money.But yes there is a lot of very valid cost cutting that is urgently needed. Some of those saving might be used to retool the income stream.Question:What % of real productive GDP is essentially lost to built in obsolescence?

  2. ErikSchwartz

    When you say “100 megabits-per-second” what does that mean?For instance; for all practical purposes everyone has water and sewer service. However if everyone flushes the toilet at the same time the system will crash. Another, if everyone picks up the phone at the same time not all of them will get a dial tone. There’s a huge amount of contention implied in pretty much all services.Does “100 megabits-per-second” imply a contention based system?edit: Let me expand. The internet was designed and scaled with contention based services in mind (email, web browsing, ftp). A whole file gets sent and there is no utilization of network resources while the human reads the document. 100 megabits-per-second implies a desire to do lots of streaming. Streaming inherently is NOT optimized to be contention based. It’s a JIT delivery system.

    1. paramendra

      “When you say “100 megabits-per-second” what does that mean?”That would be 10 times faster than a 10 mbps thing. Arithmetic.

      1. ErikSchwartz

        Cute answer.Can everyone simultaneously get 100 megabits-per-second? If not, the problem is not so hard. If yes the problem is very hard.

        1. paramendra

          Yes, everyone can get to 100 at the same time if enough spectrum is released.

          1. ErikSchwartz

            I think if you do the math you will discover you are wrong.

          2. paramendra

            So if one person is online it is 100 mbps, but with two people it goes down to 50 mbps, and so on? I don’t think so.

        2. paramendra

          Yes, the idea is for everyone to get 100 mbps at the same time.

    2. ShanaC

      I think the issue is that we are likely to flush at the same time in this country when it comes to internet service, as opposed to toilets…

  3. kidmercury

    lol, amazing that you guys still won’t address the cost aspect of this. it is just like funding an entrepreneur. i don’t care how good the idea is or how appealing the market is. if you can’t trust the entrepreneur, and if they have a track record of failure (is anyone going to dispute the notion that the US government is seriously failing and has been for some time now?), no dice. the fact that this painfully simple premise is lost amidst a community of entrepreneurs and investors…..lolthe real problem is ignorance and a complete and utter refusal to take accountability for government, just to ask for handouts with a personal benefit, while ignoring the social costs that all of us are supposed to assume (i.e. war, which of course is the most economically draining activity a nation can engage in, not to mention completely immoral, especially when we live in cognizance, not ignorance, of 9/11 truth). and i get criticized as immature and inappropriate, lol, that really is my favorite part….thanks for the morning chuckles boss :Dthe good news is that “broadband plan” is conducive to internal rhyme. rest assured this will lend itself to artistic inspiration.

    1. MattCope

      KM – I think you’re right on the money vis. cost.I’m not sure that the government can spend $350bn responsibly (i.e., generating a positive ROI).I sort of addressed this above – I’d be interested in your thoughts.

    2. paramendra

      Who is paying for my Google searches? Who is paying for my Gmail storage?

      1. derrinyet

        Google’s advertisers. Or is there something I’m missing about your question?

        1. paramendra

          My question was rhetorical to Kid asking so who will pay for 100 mbps for all of us? The government? The point is all the government really has to do is deregulate the wireless spectrum. And then the market steps in to speed up the internet and bring the costs down.

    3. Geoffrey

      I agree with you regarding trust, however when is it bad to have a track record of failures and when should I “wear my failures as badges of honor” (from an earlier comment of yours here: http://www.avc.com/a_vc/200

      1. kidmercury

        when you’re completely dishonest and criminal, and when you’ve been failing for a decade (conservative estimate), and when you show a complete unwillingness to acknowledge the scope of the failure and threaten those who call you out on it (as is the case with 911 truth), I don’t think you can drop the “failure as a badge of honor” card, IMHO

  4. Harry DeMott

    It is certainly true that 85% of Americans under this plan will simply be paying an entrenched monopoly – most likely the local cable company – the question in my mind is how to create the competition necessary. The monopoly, as you well know, is a function of cable’s massive infrastructure spending over the years – subsidized by peoples desire to pay for television. More subscribers to ESPN, HBO etc… = 1GHz backbones which spawn Docsis 3.0 and whatever comes next. The question in my mind is how do you compete effectively with that pipe when the economics of laying fiber to the home are ruinous for anyone not already connected to the home. Which means you either get overbuilders like Verizon funding FiOS out of wireless revenues to take the place of their failing copper line business – or you get the local utilities into the game using their infrastructure (running fiber along aerial routes). I’m not sure the laws of physics are going to change anytime soon – so wireless is largely out – so how does the government stimulate competitive demand – without spending the money themselves to do it – or by essentially taking over the cable pipes – or forcing those companies to open up their pipes through some for of basic subsidized service. We’ll probably get a vote today forcing health care coverage on all Americans – perhaps we’ll get a vote in the coming years forcing a 100MBs pipe on all Americans. Who knows? Or perhaps Google’s experiment in wiring a town will prove to be lucrative for them – and they can fund it out of search dollars. The point being that without any sort of adequate return, on a government takeover will get us there.

    1. paramendra

      Why is wireless largely out?

      1. ErikSchwartz

        because spectrum is finite.

        1. paramendra

          It looks so finite because the TV people are hogging most of it.

      2. Harry DeMott

        ErikSchwartz has it right. Spectrum is a very scarce resource – very expensive to do anything with – and as any iphone user can tell you the laws of physics currently do not allow a lot of simultaneous bandwidth over existing systems. Go to Wimax or LTE and you do better but nowhere even close to true broadband anytime soon. To get real wireless solutions – you need a very broad swath of spectrum and many billions of $ to build it out.

        1. ShanaC

          At the end of the day you still might have to. PeopleA) want to be mobile.B) and there are locations where you absolutely cannot run fibre.we’re in a time of great change, and although that change is happening slowly (I know that sounds odd, because we are on internet time, but it is true) I think very long term, that long swath of wireless will slowly open up. The demand will be there. We thought the demand for broadband wasn’t there- and now we can’t get enough of it…

    2. fredwilson

      i think unregulated wireless spectrum is the answer to the competition question

      1. Morgan Warstler

        Benkler is saying we need to nationalize the cable companies, and he says it AFTER admitting we’re going to blow past 100Mbps in the next couple of years. That’s the sobering thought. Even more sobering EUR’s 2020 goal is only 30Mbps.Frankly, he’s full of shit and Fred, I’d LOVE the opportunity to really push these points with him or you. Let me make some points:1. The reason we score “middle range” against other nations is BECAUSE so many people are not on cable modems – they are on DSL and wireless (rural) and they ruin our score. AND many of them are making that market choice. Why is France able to do xDSL etc and make it work? Population density. They are packed together like rats. Long distance high speed DSL is harder to do. Frankly, until we do blimps – rural areas (8%) of our market will drag our averages down.2. There’s not much able to make use of 100Mbps down. Youtube does not buffer because your last mile is clogged – and that’s what most people think. Even using http download (rather than streaming which is much less efficient) the server architecture to provide you a even bursts at 100Mbps is at least a decade away.3. I’ve said this before, but dumping TCP/IP would do wonders for increasing speeds here – even for rural folks.4. The price thing makes me a bit sick to my stomach. Broadband is the cheapest utility we’ve ever seen – it just keeps getting cheaper (in the same way Obamacare is “cheaper”). 500 channels + 30Mbps + unlimited phone for $150? Half my electric bill. Cheaper than my cell phone bill. Twice as much as trash and water. Not even a blip compared to insurance, car and housing. And it improves every single part of my life (I save $150 a month just from comparing HSAs). Who looks at that and complains? He’s OBVIOUSLY a liberal with an agenda. Any free market guy without an agenda looks at that and get s a boner.5. Lastly his suggestion of resalable pipe failed here. Big time. Do we not remember 1998? The marketing costs of customer acquisition was so large that even buying bandwidth wholesale didn’t create a cheaper product.It’s pretty damn fast, it is pretty damn cheap, there’s not much out there that’s making it need to be faster. Keep the government’s paws off my favorite thing.Fred let the VCs fund a wideband content play – something that REQUIRES 5Mbps to experience it, and 10Mbps to make it sing. The truth is KAZAA drove broadband penetration. The Internet had crashed. Billions of dollars in content plays had failed. But right then, when there was nothing to “see” – everyone started getting broadband – during a full blown recession. Why? Kazaa. Somebody got Kazaa on dial up, and a week later they were ordering broadband.

        1. kidmercury

          if anyone would like to send yochai some condolences for being absolutely obliterated by morgan here, yochai’s contact info is here: http://www.law.harvard.edu/…morgan if you are going to embarrass someone this badly i hope you will at least have the decency to mail him a box of tissues.

        2. Dave Pinsen

          “500 channels + 30Mbps + unlimited phone for $150?”We’re getting 54Mbps + TV + phone + DVR for less than that with cable. No complaints here.

        3. yungchin

          > Benkler is saying we need to nationalize the cable companiesI grepped his article for nationali*, no results. If you’re referring to his suggestion to make companies allow competition on their networks… that’s not quite the same as nationalisation. It’s the kind of regulation that comes with privileges. Yes, they invest in infrastructure, so, yes, they should be allowed to reap the benefits too. But also: yes, we gave them the privilege to lay that pipe, so, we should have some say in how it’s used – they’re *our* streets.Re 1: That is just casting doubt on the numbers.Re 2: Are you saying “we don’t need innovation?” A few things I can think of: truly high-def movie delivery without waiting times; continuous backup; thin-clients in the home….Re 3: maybe, but one improvement is no reason to forego another.Re 4: when comparing apples and oranges, you can spin things any which way. “What? It’s more expensive than water? Ridiculous.” “Digging coal up, transporting it, and generating electricity from it only yields twice the pay that shoving some bits down the fibre does??” (Plus, all these other utilities are also provided by near-monopolies.)Re 5: that’s an interesting point. How do you know the wholesale price of bandwidth is reasonable in such a system? So here’s a more extreme proposition: what if you allow the owners of the pipes only to wholesale the bandwidth? That would level the playing field.> Keep the government’s paws off my favorite thing.I’m afraid their hands were already on it, the minute they granted a company a license to put a pipe under the street…

          1. Morgan Warstler

            1. casting doubt on numbers – if everyone who could have cable modems chose cable modems (instead of dsl or wifi) – we’d be #1. It is a market CHOICE. Deal with it. This means we have no problem. It’s like arguing American Healthcare isn’t superior, because we have 35M uninsured. Solving for the bottom is not key function of a technology blog, our job is to race for the future, and let bottom benefit down the line.If you REALLY want the government to solve the “problem,” just have require everyone get cable UNTIL fiber is available to them.2. no it is a INFRASTRUCTURE (server) issue. There’s no Internet service that can even imagine handling tons of concurrent users sucking down say 1Mbps, 2Mbps, etc.3. blah blah – the point is, there are some actually SMART things not being done, that government could be thinking about. SEE BLIMPS.4. This is offensive. $150 for everything cable gives me?!? – this is a great deal. It makes me wonder what your hidden motivations are here.5. Cable companies have contracts with their local towns. Don’t be so cavalier tearing up contracts – it is un-American. Look, I don’t like rent seeking – but you are arguing for MORE rent seeking, not less.Dude, go read up on the Rural Electrification Act – look at how long it took for electricity, phone, and cellular to roll out – then look at how broadband did. Broadband is kicking ass – and it is the one doing it with the least government oversight.

          2. yungchin

            1. Ok, I get your point now. Thanks.2. …and as long as the pipe doesn’t serve such speeds, why build that service? I don’t buy the argument that such a service would not be feasible. Shops like Akamai will have people who know how to handle it.3. I got the point, but how is it relevant to this discussion?4. How do you know it’s a good deal if there’s no real competition? (For comparison, Europeans pay half that if not less – but that’s not a fair comparison because infrastructure can be more compact here)5. Very true, the contracts are in place already, and they should be honoured.> look at how long it took for electricity, phone, and cellular to roll outSure. You’re making the point that things are better than they were before. That doesn’t go to say that inserting smartly chosen regulation would not make things even better. Poor execution of the electric grid roll-out doesn’t mean that all government involvement is bad per-se.(edited and removed 4 lines)

          3. Morgan Warstler

            2. See Kazaa. The correct app would drive it. But you aren’t getting my point – there is actually a physical limitation on server space / size / power.Think back to 98-99, when all of a sudden there were fast gains in server space, because COMPAQ HP etc stated doing 1u servers instead of 4u servers. suddenly in the same cage you could get more through-put.I’m saying the through-put limitation of what is possible is still real. You are assuming there’s plenty of server firepower and not enough pipe. I’m saying there’s plenty of pipe – if we’re going to find the magic app that MAKES people want have 20Mbps down, you are going to need more data centers – a lot more data centers, because it’s going to be SUPER expensive to build – imagine Second Life with 20x the server cost. I’m saying solve that problem and the pipe will solve itself.In economic terms – pipe is like debt in our current economy. Adding more of it, accomplishes nothing.3. BLIMPS – man if the government said, our new moon shot, 10 years from now is going to be low cost, solar unmanned blimps that use satellite tech but from only 60K-70K feet – I’d VOTE FOR THAT. I’d love it. It would blow away cable.4. Saving me $75 a month is not a positive use of government. We have hacker blood in us, we are not supposed to run and ask the government for permission for everything we do.

        4. fredwilson

          i’d love to see you debate Yochai on this the way that Avner debated Mark Cuban at SXSW

          1. Morgan Warstler

            Sign me up. How do we make it happen?

          2. fredwilson

            i don’t knowbut i will look for an opening

  5. Joe Siewert

    Anyone else living in a city that has launched its own broadband service and seen it succeed? Minneapolis has a wi-fi service that is less expensive than cable/DSL alternatives, but because it’s delivered by wi-fi the speeds can’t compete with wires running into homes. It is an example of a more affordable service that is allowed to compete with the larger telecoms.

  6. Kevin Vogelsang

    Here’s a very relevant article on Japan’s network, “Japans Warp-Speed Ride to Internet Future”: http://bit.ly/40Kzc(Man, I want their internet.)As someone that generally falls on the side of government staying out of things, this issue is something I’d like to learn more about. Information delivery matters, a lot.

    1. paramendra

      I don’t feel like it is either/or on the public and private sectors. It is about finding the right mix for the right situation at the right time. Wall St symbolizes dog eat dog capitalism. But there always has been a place for the public sector there. The public sector educated many of the brains there. It is the public sector that upholds the rules of the game and does the policing. It was the public sector that birthed the internet, another example, but the government could not have come up with Google.

    2. raycote

      Kevin – That was a great read – Thanks!The problem for me is my blood pressure goes up when I read this kind of thing. I can never quite grok the level of a-prior commitment most Americans have to this:MEME = CORPORATION GOOD GOVERNMENT BADextreme polemic tone – used only to isolate & dramatize conceptI guess we all tend to stick with the devil we know. That’s fair enough, that devil is familiar –> predictable –> safe. Corporate institutions have for the most part indeed served Americans very well for a very long time.Still, times are changing fast. The nations commerce is becoming ever more dependent on network effects to generate wealth. The old balancing point between public vs private initiatives may no longer be relevant in todays more organically interdependent commerce fabric. That long serving balancing-point-meme may now have been pushed too far into our new network based environment, causing it’s original social design constraints to flip from tool into impediment? It maybe time to consider a new balancing-point-meme between public vs private initiatives, one designed around a more organic, network based, commerce environment.Maybe the concept of the innovator ‘s dilemma, creative destruction, can be applied to important social memes such as this.Getting to preachy here – sorry!I sense from your post that you already get this.As a Canadian, it always strike me as odd that most Americans have such a compelling need to be apologetic for even considering such centrist ideas?Quoting your post”As someone that generally falls on the side of government staying out of things, this issue is something I’d like to learn more about.”American corporations make much to do about their right to manage unfettered by government or union interference. I think the corporations are on very solid ground here. No entity can properly manage it’s responsibilities without full receipt of the requisite authority required to effectively execute.But as an outside observer it seem, what is good for the goose in not good for the gander. American governments are expected to focus, manage and execute the collective democratic interests and goals of the citizenry without any of the same right to manage unfettered by corporate or other special interests demanding the right to exercise extreme ideological and financial influence, even outright obstructionism, over political mangers. Sure opinions and social feedback from them is reasonable but its is more like open war on the right to govern. Lobbying money is a ball and chain on American political leaders. A ball and chain that American Corporate leaders would never tolerate.I AM PRO CORPORATE CULTURE – but balance is good too!It takes to wings to fly!

  7. paulhart

    A process similar to electricity deregulation needs to take place. Looking at Texas as an example (because it’s the one I’m most familiar with, even though I live in Ontario Canada), the companies that maintain and develop the transmission grid are somewhat separated from the retailers that sell electricity service to the general public.The “incumbent providers” in Texas were barred from undercutting the price of the new competitive retailers for several years, to enable the creation of a thriving marketplace. Today full competition exists, but the jumpstart period was necessary to make sure that happened.Today, the internet is as much a public service as electricity, and a similar structure should be investigated. Government’s job is to define the bounds within which a market operates, and then let the participants get on with it.Would this survive the concerted lobbying war against it that the telecoms companies would wage? Depends on how badly you want true competition.

    1. fredwilson

      that’s what the telecom reform act in the late 90s was supposed to do but the telcos and their lobbyists sure fixed that

  8. paramendra

    “….he doesn’t think it goes far enough….”Whoever this Yochai guy is (first time hearing his name, and I am liking his name because my first major dot com was called Chaitime.com, chai is Hindi for tea) I am totally in tune with him. Actually my comment to your broadband post a few days back was totally in line with what he is saying. 100 squared will be too little too late. Only I used stronger language.I came back to this blog today for another reason though. I might have made an insensitive comment yesterday about the Tracked.com widget you have here. I would look at some of the names and say, okay, Zynga, Etsy, Boxee, FourSquare, Twitter, these are some of Fred’s portfolio companies. But I never clicked on “next.” Looks like the widget has three pages. Are ALL of these your portfolio companies? If they are – and I am impressed, wow, you are also invested in Facebook? – then for me to have said you need to take that widget out was grossly insensitive. Granted you yourself sounded like you wanted to take out the entire right side column, but. I mean, this is your life’s work. I take back my comment, and I am now going to proceed to click on “next.”Question: How will you know the recovery is now full throttle? You will know when Zuck takes Facebook public. He is waiting for a total upswing in the economy. Then he will go public.

  9. Dave Pinsen

    Re “inspirators:” I assume Neal Stephenson is one as well, from what you’ve written about Snow Crash. Have you ever met him? I wonder how he imagined the infrastructure of the metaverse was to be built (particularly given the, uh, reduced reach of the U.S. government in the world of Snow Crash).

    1. fredwilson

      yes. Neal is on the inspirator list. we should really compile one and post it.

  10. Mark Essel

    I’d gladly redirect a hefty percent of my yearly taxes towards supporting massive R&D to rapidly scale broadband for all in the US. One thing that can change our society the most profoundly is enormous bandwidth for all citizens. Beyond air, water, food and shelter broadband should be next on the list and the most potent infrastructure we can nurture over the coming decades.I suspect Yochai is dead on with his concern about building a wireless broadband around the existing infrastructure.

    1. paramendra

      Food, water, internet access. Mark, you got it.And wireless is where it is at. Hence the importance of Fred’s (and others’) release the spectrum talk.

  11. paramendra

    “There isn’t enough competition on the access side of the Internet, both wireline and broadband. The rest of the Internet stack is hypercompetitive and is innovating at a mile a minute. But in access, we have monopolies who go at whatever speed suits them. There’s nothing pushing them to go faster.”Finally, for the first time, Fred Wilson and I are “talking.”(1) Hardware (2) Software (3) Connectivity.Paul Allen wanted MSFT to do both hardware and software. Bill Gates vetoed that. He said no, only software. He was right. But by now the biggest virgin territories are in sector three: Connectivity. That is where the big fortunes stand to be made. Hardware and software will hum along, but the biggest disruptions stand to be made in sector three. The dot com space is kinda saturated by comparison, although that space will always stay fertile because the human mind never satiates. But sector three is where big things will be done in the next push.

    1. fredwilson

      i think you may be right, but i am scared of the capital costs involved. if wireless spectrum was dregulated, i might get interested

      1. paramendra

        “….if wireless spectrum was dregulated….”That has to be the primary push.

  12. Tereza

    Sobering indeed. Insufficient competition = big problem.

  13. stephen

    The UK is the competitive model we should look at, numerous providers have driven down access prices and broadened coverage.

    1. Brian Hayashi @connectme

      During my stint at cable operator TCI (then the largest cable operator before being sold to AT&T) during the mid-90s, I had the pleasure of meeting many of the people responsible for building advanced broadband networks in their respective countries: France, Argentina, China, the UK, Japan, Sweden…and many, many more. The pain of the existing wireline telephone networks and the attendant cost curves clearly showed a majority of the world governments they needed to make a change, and fast. Wireless was the top priority, and it was considered a bonus that they could simultaneously add broadband services. I do not believe that such higher speed data services will capture any city’s attention absent significant subsidy, as other needs loom large.Cable operators, in my opinion, are the most entrepreneurial of all of the media and telecom companies, and often get maligned for negative externalities endemic to any network provider. You’re certainly entitled to your respective opinions but I’d urge you to actually visit CableLabs, Comcast, etc. before rendering judgment. Comcast for one has been battling for the right to store video data on its servers for the better part of the last fifteen years – hardly the bureaucracy most people perceive.That being said – it is true that much of the DOCSIS data architecture is mired in the tired HFC and Internet 2.0 thinking that petered out many years before Google’s ascendance, and the promise of the 100 Squared Initiative is heady stuff indeed. My bet is that GOOG will lead the way by building densely wired communities, fortifying their infrastructure, and demonstrating new ways to leverage these new networks. At that point the cable operators will be naturally inclined to partner with GOOG on broader deployment.Will this be a truly national service? I highly doubt it. Qwest is struggling compared to Verizon because our network maintenance costs are so much higher than dense urban hubs like New York or San Francisco. Verizon support can execute 25 house calls in the time/cost it takes for 5 in a city like Denver and 2 in a region like Wyoming. You can talk about rural cooperatives but there are only so many ways to squeeze a turnip…there’s a legal concept of “stranded asset” that looms large in such discussions.

  14. im2b_dl

    Fred as I have said before.. my guess…This is going to be the same issue handled by the eventual two behemoth camps that will be the victors in the final battle for the web. Comcast vs. Google. My guess …and it is a good (very informed one) Google goes after delivery…and that means broadband… Everyone else will fall into those two camps…or if an indie “league” of content and various pieces arise… they will be third. But competition in broadband is not being helped by the the passing of Comcast being allowed to own more than a third of the delivery market last year. That teamed with living room convergent delivery…will add to the final two camps.imho

  15. sigmaalgebra

    Okay, guys, heavily these are OLD questions with relatively good OLD answers. For “old” I’m talking ballpark 100 years. I don’t see people mentioning the old stuff, and it should be mentioned. Uh, people have been through very similar things before, and long ago some economic principles, solid ‘criteria’, and ‘processes’ were developed.I won’t get out my course notes and text and will just type from memory:Wonder of wonders, it actually IS possible to make a desert bloom. And, then, think of how terrific that would be, cotton, corn, cattle, chickens, lettuce, apples, etc., fantastic stuff. All we need is a ‘water resource project’ to build a few dams, redirect a few rivers, install come canals and pumps, and, presto, turn the desert green! So, let’s appropriate the money for this wonderful project!Yup, that’s what people said often over 100 years ago. And too soon the US was on the way to being broke from such ‘water resource projects’.So, a law was passed: Before spending any such money have to add up and compare (1) total costs and (2) total benefits “to whomsoever they may accrue”. That was the origin of ‘cost/benefit analysis’ and goes back 100 years as a way to decide on water resource projects.So, now we have a proposal to spend money to install cable with descriptions of how good it will be. Okay: Add the costs and the benefits (both as numbers in units of dollars — forget the adjectives and hype) and compare. Fail to do this and roll the clock back over 100 years. Or, we’ve been there, done that, got the T-shirt, heard that line before, 100 years ago, and developed the answer then. Venture partners are really good at saying “No” to proposals to spend money! Financial ‘skepticism’ is called for. Else can go broke doing stuff like that.Next, that there can be monopolies, even ‘natural monopolies’, is also a very old subject. Or, it is understood that each house will have at most one electric power connection. So, we ‘regulate’ the electric utility industry complete with ‘public service commissions’, etc. The economic theory is that a monopolist would serve too few customers; the ‘regulation’ asks that the number of customers be maximized.If we want to have monopolies for ‘the last mile’, then there is plenty of precedents for regulating them. In the case of broadband, the regulators could just ask that the companies provide 100 Mbps or GbE ASAP, modulo capital requirements, etc.All that convoluted CLEC, ILEC, stuff about ‘sharing’ cables, etc. didn’t work very well. So, just return to regulated monopolies for the last mile. Uh, the regulation doesn’t have to be from DC!But there may be some better ways: For one, there are ways to install cable for surprisingly little cost, with very little digging: Part of the way is a machine that cuts a trench, maybe just one inch wide, down a street, puts in a cable, and covers the trench over, all in one stroke. Don’t have to dig up the whole street. And, maybe go from the curb to the house with some version of wireless. Net, there may be some partial solutions with technology, when the business, regulatory, political, etc. environment is appropriate.Then there’s how many of the farms got electricity — The Rural Electric Membership Cooperatives. My father in law ran one in Warsaw, IN. So, could consider some membership cooperatives for broadband.Also, there are some ‘urges’ that should be at least examined and maybe resisted: (1) For any problem, in DC pass a law, set up a bureaucracy, and solve it from DC. To make it ‘affordable’, subsidize it from general tax revenues. (2) Insist that everything to be the same everywhere since otherwise might feel guilty in some sense; so, if we’re to have 100 Mbps, have it for everyone, including some igloo in Alaska or some houseboat tied to a tree stump on a lake in Mississippi.Finally, as I recall, France got all excited about ISDN which the US concluded stood for “I still don’t need” it. Net, ISDN was not a good idea; they wasted money.I’m not totally against DC spending money: Uh, ARPA did nice work with ARPA-Net which some of us have heard of! Digital microelectronics got a big swift kick in the back side for aerospace projects some decades ago, and one result was the microprocessor which some of us have heard of! Then there was the DARPA work in artificial intelligence; I worked in that field, published papers, helped develop commercial software, etc.; well, not all the DARPA projects worked well! My graduate school education was paid for heavily by NSF grants, and the best of what I learned was very powerful stuff. From my time in DC, I concluded that DoD spends money relatively well, but that’s not easy.Yes, on Friday, October 16th, 2009 I did seeYochai Benkler, ‘The Wealth of Networks: How Social Production Transforms Markets and Freedom’, Yale University Press New Haven and London, 2006.and at the time concluded that it was semi-modestly titled, pseudo-technical, and quasi-non-political; summary: Look at all the wonderful things brilliant me can do with that money you have and are too dumb to know how to use well. Uh, the book fills a much needed gap in the literature and would be illuminating if ignited.

    1. paramendra

      Wow, there are more than a half dozen threads to this comment. I don’t know which one to pick.Getting everyone on 100 mbps is not like turning a desert into farmland. It is more like putting the interstate highway into all states.

    2. ShanaC

      I’ve read parts of it. What is interesting is he dedicates it to his father, an Israeli. I think Prof Benkler has personally seen the flowers bloom in the Negev.And you are right about Net costs and how history works vis a vis electricty. We probably should model that model, since there is a good precedent to get (mostly) cheap electricity to the public.

  16. Aviah Laor

    Another problem: faster internet access will make Skype and similar tools even better, so the carriers will have to cannibalize their own calls revenue. How? try to make up for it by internet access rates.The alternative cost of really fast internet video is not only knowledge but also transportation: distant work and collaboration will be easier. This is a good enough reason to support the improved infra, but again it’s a public benefit that does not serve directly any specific player except the end customer which is always last to influence the priorities.

    1. paramendra

      “….. really fast internet video is not only knowledge but also transportation: distant work and collaboration…..”Bingo. It is nothing less than creating a new society, a truly post-industrial society.

  17. ShanaC

    I think there are numerous parts to the question at hand1) How do we make broadband affordable2) who will bear the cost of it being affordable3) Does it have to be in a competitive atmosphere (at least in the end, is that necessary) or is this something like a utility4) how do we prevent people from eating too much internet so that there is still money made by the people who maintain the broadband.4.75) Where does wireless fit into all of this as people decide to go mobile and decide they like speed.I don’t know. I have gotten into arguments about this. There seem to not be amazing answers. When there are, someone call me.

    1. Rahul Deodhar

      I think this is the best approach. We haven’t really clarified the questions so no wonder we are groping in the dark.I have two points.About 4) Today, we can think of the internet as a ever-growing consumption. But is it really? Or will it taper off at some very high level we don’t know yet. As of now, looking at other consumption, it should taper off. So then the question may have to be reworded.By choosing wireless or some specific technology we are creating future barriers. Let it evolve. May be there will tech alignment in the future. Hi-speed fiber will be used for telecommuting while EDGE-speeds will be used for social networking.Third, the applications have to meet the speed midway. Designers have to lower the bandwidth and speed requirements for apps. (That means most of Adobe products will have to be retooled – except AIR maybe)

      1. ShanaC

        Part of the problem with 4 is that we still don’t know what we plan on using the internet for. I’m working on the assumption that we will use it for a lot of stuff, and hence we will need a lot of internet. There was a point in time where people thought we wouldn’t need broadband after all.So I am taking history into account here…

        1. Rahul Deodhar

          I think you are right – I was wondering if Internet is like the “wheel” of today. It is possible it is too big for us right now – but eventually we never know! I think we can be confident that current definitions of broadband and “high speed” are not going be considered adequate sooner rather than later.

  18. Prokofy

    I call this guy’s book “The Poverty of Notions”. He’s as virulently technocommunist as they come, worse than you, Fred! Chairman Genachowski has already seized the telegraph stations, so to speak, like Lenin, but it’s never enough for the comrades, is it?! And this isn’t satire or hyperbole, it’s about an enormous resource grab the likes of which we haven’t seen in a long time. Why is substituting AT&T for the monopoly of Google somehow “a good thing”?We don’t “need” a National Broadband Plan, Fred — your technocommunist businesses need them so that you have free and collectivized raw material for your manufacturing. The worst part of this propaganda is when you invoke help for the peasants (rural areas) and students (so…they can download more Youtube and World of Warcraft patches) even though people don’t *have* to have broadband; if the demand was really there, they’d lobby for it in those areas, rather than having benevolent czars dispense it upon them because it helps the czars’ Google.There’s another thing that puzzles me about this funny formula you guys always invoke, that of “competition driving down prices”. On the one hand, you believe in this market magic even though you’re for eminent domain and public subsidy of the scarce resource of broadband. So it’s more like what the Soviets called “Socialist Competition”, not the market. But really, I have trouble believing that this magic always occurs even in “market conditions”. You can’t manufacture competition in areas and industries where it doesn’t exist. And it may never come into existence if the cost of playing is too high. Too many competitors, and some are forced out and some win, and that doesn’t mean that the price goes down. If anything, the prices might rise as competition is expensive.

  19. George A.

    Morgan summed this up pretty darn well. Do we need to relearn what happens to critical infrastructure when it becomes nationalized? I cannot agree that the answer here is nationalization. The truth of the matter is that internet companies are innovating at a mile a minute because they lack infrastructure and they can introduce market dislocating technologies with a few pennies. This simply isn’t the case with access.If you add more providers to the list and you gain competitive honesty but lose waste to redundant resources. Either way, let the market figure it out: Cable guys overpriced video, along comes satellite. Phone guys over price dialtone, along come vonage.Just one last point: someone needs to pay for the infrastructure: the consumer, new media or the taxpayer. It can only be one of those three. If we move adopt net neutrality, we will let new media off the hook and the consumer/taxpayer is going to be stuck with the invoice…

    1. fredwilson

      i totally agree with you that someone needs to pay and i never suggestedotherwise

  20. Yule Heibel

    This might be totally off-topic, but there’s a young guy named Kosta Grammatis who’s trying to build a globe-spanning satellite network to bring free internet to everyone/anyone. See his blog postGlobal Internet Access: A Human Right, which describes those aims in more detail.Sounds crazy, but from what I’ve been told by someone I know who knows about the project, some German companies and other Europeans might be ready to fork over hard cash to fund the research.The project Kosta became known for to date is the EyeBorg, a prosthetic eye with a video camera and transmitter, built for a film-maker who lost one of his eyes. It’s supposed to go into his eye socket to allow him to “record the world from a perspective that’s never been seen before.”Maybe it’s totally insane, but ideas like these get worked on and incubated in a crazy thing called Palomar5 that’s letting a network of under-25s connect and create weirdness that works.Regardless of whether Kosta’s plan can be executed, I think it’s symptomatic of digital natives’ thinking around internet access as a human right. That perspective isn’t likely to wither, it’ll grow.(note: I originally tried posting this with a bunch of links to the various sites I referenced, but Disqus went into an endless “Just a moment…” loop. So I took out all the links except for one, trying again. I guess if a comment has 5 links or so, Disqus doesn’t want to let it go through?)

  21. Chris Clark

    Would this seem like a less daunting project to everyone (the feds, the taxpayers, the ISPs) if we were only trying to provide broadband access to Texas? Not the entire country, just Texas. That seems pretty manageable, right? Certainly more so than wiring the entire country with fiber.One thing that never gets mentioned when comparing broadband access here to that in other countries is the sheer SIZE of the US. France is slightly smaller than Texas. Japan in 75% of the size of France. The ruralness (is that a word?) of states like Idaho and Montana have no analogue in the countries to which we are comparing ourselves. And we can’t just ignore rural folks – six and a half million people live in Alaska, North & South Dakota, Montana, Idaho, and Nebraska.Due to our geography we are simply not facing the same challenges as France et al.

  22. deancollins

    Fred,It might make sense for you (or soemone on the USV team) to spend a little time checking out the current state of broadband in Australia.The advantages is that they have competition in DSL with access to last mile exchanges for all and a weak cabletv deployment.The current Australian govt broadband initiative is about 3 years ahead of the USA and some very interesting Govt/Incumbent arguments are about to break which will slingshot the deal ahead.Some of the ‘decisions’ would never fly here in the USA though because of the USA’s stance on competition (would be seen as to socialistic – heck you cant get healthcare passed, allowing broadband equity for all will never happen under a government program).

    1. fredwilson

      i will do thatthanks dean