November 2009 Archives

As mentioned in an earlier blog, News Corp's Rupert Murdoch is quite serious about making the Internet pay its own way (as opposed to continue its drain on brick and mortar resources).

A recent Guardian article reports that Mr. Murdoch's campaign is stepping up a notch or two, and that he is now not only firming up his pay-for-content approach, but is also--according to a TechCrunch article--considering blocking Google from indexing the Wall Street Journal (and only making it searchable via Microsoft's Bing search engine).

Now, while I would not want Rupert Murdoch as a father-in-law, I have to side with him in this battle (and believe me, it is a battle; he is drawing fire from bloggers and other commentators: by violating the sacred motto of the Internet: Thou Shall Be Free). Bottom line here, though, whether you pay for it, or not, the Internet content is not free. Someone pays for it, and at this moment, that someone may very well be losing his shirt doing precisely that. This is not fair exchange, and simply cannot last, no matter how many bloggers change the Internet Mantra: Thou Shall Be Free.

There are reports that Mr. Murdoch is also meeting with Microsoft to make his content available only on Bing, which may or may not be a brilliant move.

This, according to another TechCrunch article, which reports that "Microsoft plans to launch an assault on Google's flank, by cosying up to major content providers, especially newspapers that feel hard done by Google News.

"It plans to use Bing as a way to entice them out of the Google eco-system, into one where, increasingly, the content of major newspapers could well be found more often on Bing than on Google."

Once found on Bing, the content will then no longer subscribe to the "Thou Shall Be Free" motto, and you either pay or do not view.

Looks to me like Microsoft is buying traffic from Google, and that may indeed be the only way the might succeed in luring more traffic Bing way.

And it looks to me like the News Corp PayWall might be in place sooner rather than later.

On a similar note, today, the bbc--in another Guardian article--denied any chance of bbc.co.uk ever charging for their content (well, the bbc is mainly funded through mandatory viewer subscriptions, so they can't well charge for the contents twice), so if all else fails, we'll still have access to the bbc.

In a recent paper published by Dr. Kevin A. Hassett & Dr. Robert J. Shapiro, entitled "Toward Universal Broadband: Flexible Broadband Pricing and the Digital Divide," the authors make a very strong case for flexible broadband pricing in order to slow, and eventually reverse,a now widening Digital Divide between the digital haves and the digital have-nots.

In the spring of 2009, 63% of American homes had some form of broadband connectivity. Most of these homes fell within urban, white, and upper income brackets. Of the 37% who did not have broadband connectivity, the majority fell within rural, black, or lower income brackets. Most of these have-nots lacked broadband connectivity because they simply could not afford it.

Ever Increasing Demand

Ten to fifteen years ago, the Internet Service Providers (ISP) could easily predict the bandwidth necessary to meet customer demands. One minute of the then mainly text-based Internet browsing consumed 2-200 KB of bandwidth, a fraction of what the average user consumes today.

Once online music (as in mp3 audio files) grew ubiquitous, the average minute of browsing consumed about 1,000 KB, or five times as much as high-end text browsing.

Add to the mix current phenomena such as YouTube and Hulu (along with Netflix online viewing) and the average minute consumes 9,000 KB or forty-five times the high-end text browser.

And we know that cutting edge developers have applications in mind (if not in the pineline) that will dwarf the video bandwidth requirements. I don't know what they are right now (online smell, perhaps--no, I'm not kidding) but I know they'll use more bandwidth.

Infrastructure

Needless to say, the current ISP infrastructure does not meet ubiquitous broadband access, much less one where each user happily consumes many megabits per minute.

Projections vary as to how much ISPs will have to invest in the not so distant future to meet demand, but one widely-cited report, EDUCAUSE--written by a higher-education technology group--predicts that providing "big broadband" to every home and business, with sufficient bandwidth to meet demand, would require an additional $100 Billion investment over the next three to five years.

Other estimates project a cost of $300 Billion over the next twenty years.

Pricing Issue

Seeing as 63% of households have broadband connections already, and also assuming that the cost of providing broadband connection to the remaining 37% will cost at least as much again (since many of these households are in remote rural locales), adding these 37% as paying subscribers (many of which are not subscribers for the excellent reason that they cannot afford it) will not cover the bill. Far from it.

Per Subscriber Pricing

Should ISPs (and FCC policy makers) decide on spreading the cost of shoring up the infrastructure evenly over the subscriber base, I believe that would spell a continued widening of the digital divide, since per subscriber pricing would then easily double, and if the lower brackets cannot afford $X, they are twice as sure to not afford $2X.

Usage-Based Pricing

The only thing that makes sense as far as pricing goes is a usage-based approach where you actually pay for what you use. Perhaps a flat, minimal administrative subscriber fee for all, with a maximum monthly bandwidth usage, with anything above such maximum limits charged per megabit, perhaps one cent per.

This may even lower the "entry-level" rates, and so allow the 37% currently off the "digital grid" to connect, and so achieve the President Obama promise of "true broadband to every community in America" sooner rather than later.

My 2 megabits worth.

Finland recently announced that broadband connectivity is a legal right of every citizen. Sweden just announced the goal of 100 mb connectivity for everyone by 2020. Other countries are making similar noises, and rightly so.

The World Bank Group recently issued their Information and Communication for Development 2009 report that highlights the need to provide universal access to affordable broadband connectivity.

One paper cites the World Bank report as stating that "for every 10 percentage points increase in high-speed Internet connection there is an increase in economic growth of 1.3 percentage points."

This report goes on to say that the World Bank found that "broadband provides the basis for local information technology (IT) services which create youth employment, increase productivity and exports, and promote social inclusion," and that "access to broadband completes the information foundation for a modern economy and should be a priority in national development plans."

The Report

The report itself, which weighs in at a daunting 340 pages, does make illuminating reading, beginning with the Foreword's opening statement:

Information and communication technology (ICT) is transforming interactions between people, governments, and firms worldwide. In developing countries, farmers receive updated crop prices and public health officials monitor medical inventories by text messages. Women are empowered to make decisions and access new opportunities through online information. Entrepreneurs obtain business licenses in a fraction of the standard time by applying for them through municipal government Web sites. And in an increasingly integrated global economy, ICT enables people to access and share knowledge and services around the world.

The report goes on to cover all aspects of ICT in both developing and developed economies and makes the case (without actually saying so) that broadband access is no longer just a "nice to have" by in many aspects nothing short of a necessary civil right.

ICT Overview

The largest section of this report provides an at-a-glance overview of the state of ICT in each of 150 counties worldwide.

As the introduction states:

"The World Bank ICT at-a-glance country tables present the most recent country-specific ICT data from many sources available in one place. They offer a snapshot of the economic and social context and the structure and performance of the ICT sector in each of the 150 countries covered in the report.

"Data are shown for 150 economies with populations of more than 1 million for which timely and reliable information exists. The table of Key ICT Indicators for Other Economies presents 59 additional economies--those with sparse data, smaller economies with populations of between 30,000 and 1 million, and others that are members of the World Bank Group."

"The data in the tables are categorized into four sections:

• Economic and social context, which provides a snapshot of the country's macroeconomic and social environment
• Sector structure, which provides an overview of regulatory and policy status in the telecommunications sector
• Sector efficiency and capacity, which includes information on investment and revenue and employees per subscriber in the telecommunications sector
• Sector performance, which provides statistical data on the ICT sector with indicators for access, usage, quality, affordability, trade, and ICT applications.

It is the most comprehensive overview of the state of broadband today, and well worth perusing.

It's unstated conclusion--and that does not take much reading between lines--is that broadband access will soon become a financial, if not social, necessity, and may indeed soon become the new Civil Right.

According to a recent report by Finland's Ministry of Transport and Communication, Finland has now, starting in July 2010, made 1-megabit broadband Internet access a legal right, for every citizen.

And not only that, an earlier law specifies that by the end of 2015 every citizen will have a legal right to 100-megabit broadband Internet access.

France, while not taking the full step to make Internet access a legal right, has already proclaimed it a "basic human right," much like freedom or air.

E-Bandonded and E-Solated

It is clear that the Finish (and to some extent the French) government realizes that the Internet is not only here to stay, it has become a part of life--now considered indispensible by most of its users--and that it should be viewed as in the same category as food and water.

And as such, so the reasoning apparently goes, depriving citizens of Internet connection is violations of their human and legal rights on par with letting children starve.

Not far off the mark, especially in view of some interesting statistics out of the UK.

If the 1.6 million e-bandonded children in Britain were to log on tomorrow, they would increased their collective lifetime earnings by 10.80 Billion pounds. Also, those who are connected and use the Internet for such everyday chores like banking and shopping (and, of course email rather than snail mail) save an estimated 560 pounds each year compared to the 10 million e-solated UK citizens who still have no connection.

If every unemployed UK citizen were to learn to find their way onto and around the Internet, they would--each and every one of them--increase their lifetime earnings by 12,000 pounds.

And lastly, should all of Britain be connected and use the Internet as a matter of course, the UK Treasury would immediately see efficiency savings of 1.7 Billion Pounds.

Way of Life

It is easy to see that those born into a world with Internet cannot even conceive of one without it. Much like anyone who has driven a car all his life cannot conceive of a world without personal transportation.

And I cannot but agree. For me the Internet is the marketplace, it is my first (and almost always) only source of information, pricing, and purchasing. It is my ever growing library--I stun myself every now and them with how much information is actually available (it pays to learn all the ins and out of Google and there are a few). It has become my main source of entertainment as well, what with Netflix streaming good films online, and Hulu carrying all the shows you miss (I miss them all as I don't have a television).

Wikipedia tops it all off by being the best (and ever-growing) encyclopedia around.

While I could conceive of a world without Internet (I lived in one for many years) I would be hard pressed to manage without it.

So, kudos to Finland.