[Infowarrior] - You Don’t Want ISPs to Innovate

[Richard Forno]

You Don’t Want ISPs to Innovate

	• By Ryan Singel  
	• June 24, 2010  | 
	• 5:38 pm  | 

http://www.wired.com/epicenter/2010/06/you-dont-want-isps-to-innovate/

There’s a complicated fight in D.C. right now over how the FCC classifies broadband services, so it can regain the power to impose some basic rules on the industry.

Free-market groups and the industry are banging the table, arguing against the consequences — saying that the FCC is trying to regulate the internet and will kill innovation.

Here’s the simple truth: You don’t want your ISP to innovate.

At least not in the way, they want to “innovate.”

The net has seen an explosion of cool services in the last decade — Google created a search engine that works, Facebook created a social network that helps people stay more connected, webmail became a viable replacement for desktop software, you can collaborate online through wikis and online word processors, and everyone in the world can now have their own online printing press, thanks to blogging software. YouTube became the world’s online video repository, while Netflix and Hulu are demonstrating the future of online video rentals, and sites like Wikipedia, Yelp and IMDB put encyclopedias of knowledge at the disposal of anyone with a net connection and a bit of curiousity.

Where are the major players in the U.S. broadband industry in all of this innovation?

Basically, nowhere. The U.S. is 26th in the world in terms of online access. The industry’s investment in deployment of fiber optics — the transport medium of the future — is laughable (with the noted exception of Verizon, which has devoted significant money to its FiOS buildout — despite being punished by Wall Street for doing so.)

Instead, they are jealous of online services that make money from ads. AT&T’s former CEO Ed Whitacre famously declared that Yahoo and Google couldn’t use his pipes for free, failing to mention that it was the company’s paying customers who were requesting pages from those sites.

Now the industry’s paid pundit Scott Cleland, who runs a faux grassroots group called NETCompetition.org, is arguing that the government is trying to “shift the burden of Google-YouTube’s gigantic video distribution costs completely onto the backs of broadband consumers” by forcing ISPs to follow some fair play rules.

Cleland’s laughable argument depends on the idea that Google has some secret backdoor to the internet where they don’t pay to send YouTube videos or search results to its customers. In fact, Google has paid for or built huge swaths of internet fiber, builds massive data centers around the world to reduce the distance content has to travel to users and pays for bandwidth like any other company on the net.

Still, ISPs would love to find a way to be paid for both sides of their networks — from their users and from online services. And they want to get paid from the packets flowing inside their networks, too.

When ISPs Innovate

In the last couple of years, ISPs “innovated” by changing how they handle users who type in a URL that doesn’t exist. Under net protocols, the ISP’s DNS servers are supposed to report an error code to your browser in those circumstances. Instead, ISPs are now serving up pages with ads, sometimes in ways that introduce huge security risks.

As a reaction, Google set up a fast, ad-free DNS service. And if you want to see what real innovation in DNS looks like, take a look at OpenDNS, which has built fraud protection, security measures and optional web content filtering into its robust DNS service.

ISPs have also long insisted on customers using “installation” software that did nothing but drive customers onto ISPs’ web properties to get ad dollars; tried to sell — for a monthly fee — wireless home network capability you could set up easily with a $50 router (and then blame service problems on any home wireless networks you didn’t buy from them); and even hijack address-bar searches that might otherwise, per the browser settings, use an actually useful search engine like Google.

ISPs also recently dipped their toes into another innovation: Selling access to everything their customers do online in order to build profiles on them and secretly insert targeted ads into other company’s web pages.

That idea came from a company called NebuAd, which drew attention after Charter Communications — the nation’s fourth largest cable operator — announced in 2008 it would start letting the company spy on its users. A firestorm ensued — smaller ISPs admitted they had secretly let NebuAd spy on their customers — and ISPs soon dropped their interest after Congressman Ed Markey made it clear that any ISP participating  would come under very close scrutiny from his telecom committee.

At about the same time, Comcast was found to be using the tactics of Chinese government net censors to clamp down on peer-to-peer services. The company was sending fake signals to users’ computers, ostensibly to reduce congestion on its networks. While peer-to-peer services are often used for illicit sharing of copyrighted material, the company had no way to differentiate that from legitimate uses — getting updates from online games, downloading open-source software and sharing music and movies that aren’t copyrighted.

That practice didn’t stop until the FCC stepped in with a series of hearings and an order to cut it out and disclose to its customers how it manages its network.

This is the kind of innovation that free-market groups like the Progress and Freedom Foundation and paid shills like Scott Cleland want to protect.

But that’s not the kind innovation that Americans want or need.

Why Your Broadbrand Crawls, Not Sings

What we want and need is fast, reliable and affordable internet access.

The dirty secret of ISPs is that even as broadband usage on their networks continues to increase 30 to 40 percent a year, their annual costs for shipping data onto and off the net’s main pipes continues to fall.

The problem isn’t the cost of shipping data.

The problem is that the large ISPs answer to Wall Street and instead of planning and investing for abundance, they prefer to spend their time thinking of ways to extract more money from customers without having to invest significantly in future-proof infrastructure.

Thankfully, Americans instinctively know better. When Time Warner Cable tried to introduce laughably low broadband usage caps, Americans howled with outrage and the company was forced to beat a hasty retreat.

The biggest public excitement over broadband in the last few years came not from any of the ISPs, but oddly from Google, which announced it would choose a lucky few communities to get ultra-fast, fiber optic broadband, free from ISP interference. Communities — 1,100 of them — created detailed plans, including ones that went so far as to “rename” their towns and create embarrassingly corny YouTube videos.

The message was clear: Americans hunger for better broadband.

Meanwhile, in reality, if you want fast broadband in the United States, hope you are somewhere in Verizon’s core territory or surprisingly, move to the sticks.

There are 18.2 million homes in North America that have fiber connections ending at their doorstep and more than 5.8 million subscribe, according to a recent report from the North American Fiber to the Home council.

While most of those are Verizon, the surprising story is that many small, rural telecoms — some of them co-ops or family businesses deeply invested in their community — have decided to invest in all-fiber networks.

And their communities love it — in these non-Verizon networks, more than half of the people who could subscribe, actually do, and in some projects more than 70 percent do.

But the large telecoms would rather spend their money and time fighting the FCC over some basic regulations — the right for Americans to use the software, services and hardware of their choosing, without  unfair discrimination by ISPs — than build world-class networks.

They’d rather plot to get themselves some of that sweet money flowing to online services, instead of concentrating on what the country really wants and needs, which is fast, cheap and open internet access.

The ISPs would rather be in a world where certain online services are locked only to certain ISPs — like ESPN’s streaming video is now — so that they can have a lock on customers that isn’t dependent on them actually building out the best infrastructure they can.

Building out infrastructure means redirecting stock-dividend dollars and putting them back into the company, which Wall Street punishes companies for — and which hurts the massive stock packages of telecom executives.

It’s literally not in telecom executives’ best interest to invest in broadband and solid networks.

That’s why you get companies like Time Warner trying to squeeze customers into limits on the amount of data they can use — not because bandwidth is expensive — but because building a real network is. It’s far better, in their minds and for the stock price, to focus on bleeding as much from their current customers using self-serving policies instead of gaining loyalty by making networks that are generous, quick and reliable.

When towns get tired of begging for fast internet — only to be told it doesn’t make financial sense for telecoms, they sometimes decide to build their own fiber networks.

And then telecoms sue the cities — as they did in the case of Monticello, Minnesota, and run to state legislators to write laws outlawing citizens from organizing their own networks as Time Warner Cable did in the case of Wilson, North Carolina, which set up its own fiber network known as Greenlight.

That’s why AT&T is more interested in trying to figure out how to divide their network into fast and slow lanes so it can levy a speed tax on video services like Google’s YouTube, than it is in creating a network that’s fast and reliable.

Even now in San Francisco, one of the springs of innovation on the net, a standalone DSL line from AT&T costs $35 a month for a top speed of 1.5 Mbps down and 384 up, with reliability that’s simply embarrassing.

There’s no real argument being made that the FCC’s attempt to re-reclassify broadband legally wrong. By the letter of the law, broadband providers are clearly “telecom services” and the FCC is now simply undoing an intellectually dishonest move by the Bush FCC. Moreover, the FCC is being reasonable in its attempt to impose several small obligations (including making broadband accessible for the disabled and possibly adding some privacy requirements), while exempting internet providers from the bevy of regulations that applied to the phone network to deal with its monopolistic nature.

In fact, the FCC is permanently passing up the opportunity to do one thing that might actually spur some ISP competition

Instead, the telecoms, their fake grassroots organization and their libertarian supporters are making false claims that the FCC wants to regulate the internet.

It’s a sideshow. The FCC’s proposal is simple and makes sense. The proposed rules don’t apply to online services and never will. The rules are focused on the transport layer and will help curb the worst excesses of an industry that actually hates itself. The broadband barons don’t want to provide you fast internet. It’s too close to being a utility for their tastes (that’s boring and lacks huge profit margins) and requires too much investment.

They want their own flashy video competitors to YouTube and advertising systems that target ads to you based on what zipcode you live in.

That’s not innovation.

It’s time to put the FCC sideshow aside and put the focus where it ought to be — on why the nation’s telecoms are putting Wall Street ahead of American citizens and a truly modern infrastructure.