"Freeconomics", future of the Internet and network neutrality

[Here are some excellent additional pointers on the development of "freeconomics" and the resulting impact on the future of the Internet. As Susan Crawford points out in her insightful blog, carriers want to remold the Internet into the mobile telephone business model where every service and application is monetized in which they earn a small percentage on each transaction. Hence prioritized services, QoS and walled gardens are essential to their future. However, counteracting that trend is the development of many new free services and applications from Skype to Google Earth. As I pointed out in my last post many companies in the UK and France are offering free Internet, telephony and cable in creative bundling. If free is the way of the future Internet - then how is the infrastructure going to be paid for? One possible solution is something like our Green Broadband project. Some excerpts from Chris Anderson's and Susan Crawford's blogs as well as this article in Financial Times-- BSA]

Green Broadband and Free Gigabit Internet to the Home http://www.canarie.ca/canet4/library/customer/Green_Broadband.ppt

The Rise of Freeconomics
Chris Anderson http://www.longtail.com/the_long_tail/2006/11/the_rise_of_fre.html


[..]
I begin my economics of abundance speech with Carver Mead's mind-bending question: "What happens when things get (nearly) free?" His answer is that you waste them, be they transistors or megabytes of bandwidth capacity. You use them profligately, extravagantly, irresponsibly. You shift out of conservation mode and get into exploitation mode. You do crazy things like offering people the ability to put their whole music collection in their pocket, or promising the average email user that they'll never have to delete another message to conserve space. Just as Alan Kay "wasted" transistors to create the graphic user interface, we will all learn how to waste newly abundant resources, retraining our minds to ignore our instincts about costs and scarcity.

Today we have an unprecedented number of resources that are closing in on free when measured in units that were once meaningful to regular folks. Through the 1950s and 1960s Mead watched transistors drop from $100 each to $10, then $1, then $0.10, then a penny. Then, in the 1970s as transistors were integrated into semiconductor chips, they fell to a millicent and then a microcent. They're now nearly down to a nanocent--virtually free. Hard drives now go for about 30 cents per gigabyte, or .03 cents per megabyte (I remember my first 10-megabyte drive, which cost me a few weeks salary at the time). Bandwidth now costs less than ten cents per gigabyte at retail, and it wouldn't surprise me to hear that it's fallen below the penny-per-gigabyte level for big commercial outfits. How long would it have taken you to download a gigabyte of data in the old dial-up days, if you could even keep a connection open that long?

With apologies to Levitt and Dubner, I'll cheekily call the emerging realization that abundance is driving our world "freeconomics". Understanding when to shift out of scarcity mode and start giving away what you once held dear is a core competency for our age. Heck, there might even be a book in it!


Why giveaways are changing the face of business
Michael Schrage http://www.ft.com/cms/s/2/01e4b1a4-9741-11da-82b7-0000779e2340.html

Never in history has so much innovation been offered to so many for so little. The world’s most exciting businesses – technology, transport, media, medicine and finance – are increasingly defined by the word “free”.

Google charges users nothing to search the internet; neither does Yahoo nor Microsoft MSN. E-mail? Instant messaging? Blogging? Free. Skype, the Luxembourg-based company that is now a multibillion-dollar division of Ebay, offers free VOIP – Voice Over Internet Protocols – telephone calls worldwide. San Francisco-based Craigslist provides free online classified advertising around the world.

In America, the Progressive insurance group gives comparison-minded shoppers free vehicle insurance quotes from its competitors. Innumerable financial service companies offer clients free tax advice, online bill payments and investment research. Michael O’Leary, Ryanair’s colourful founder, predicts his discount carrier may soon offer free tickets to his cost-conscious euro-flyers.

Of course, Milton Friedman, the Nobel economist, is right: just as “there’s no such thing as a free lunch”, there is also no such thing as a “free innovation”. These “free” offerings are all creatures of creative subsidy. Free search engines have keyword-driven advertisers. Financial companies use cash flow from profitable core businesses to cost-effectively support alluringly “free” money management services. Ryanair counts on the lucrative introduction of in-flight gambling to make its “free tickets” scenario a commercial reality. Innovative companies increasingly recognise that innovative subsidy transforms the pace at which markets embrace innovation. “Free” inherently reduces customer risk in exploring the new or improved – and bestows competitive advantage. To the extent that business models can be defined as the artful mix of “what companies profitably charge for” versus “what they give away free”, successful innovators are branding and bundling ever-cleverer subsidies into their market offerings. The right “free” fuels growth and profit. Technology has successfully upgraded King Gillette’s classic “razor & blades” business model.

The simple reality is that technology will continue eroding entry barriers to provocative cross-subsidy. The more digital or virtual a process, product or service, the faster and easier crafting clever subsidies become. Scale matters, too. Global scale facilitates global subsidies. Just as advertisers subsidise free Google searches, marketers can easily download advertising-supported “free” songs, videos and games into iPods, Sony PSPs and Nokia phones. Internet-based telephone calls similarly lend themselves to sponsorship: “This free call from your brother in New York is brought to you by Tesco . . . please press #1 to accept . . . ” While that prospect will not thrill traditional telecommunications companies, consumers might appreciate the “free” choice.


Susan Crawford on Network Neutrality http://scrawford.blogware.com/blog/_archives/2007/9/10/3221233.html

[...]
Non-neutrality also serves the interests of those who would like (more generally) to see the internet morphed into something much more akin to the current wireless model here in the US: a fully-monetized network, permitting use of particular applications that share their revenues with the network access provider. (This network would not be the same thing as the internet.)

Another document came out last week that ties this all together. It's from the ITU, and it's called "Trends in Telecommunication Reform 2007: The Road to Next-Generation Networks (NGN)."

The ITU defines "NGN" as a network that provides quality-of-service-enabled transport technologies. The idea is that packet transport will be "enriched with Multi Protocol Label Switching (MPLS) to ensure Quality of Service (QoS)."

Translation, as far as I can tell: packet transport becomes the same as circuit-switched transport. Prioritization is controlled; it's a network optimized on billing.

Digital rights management: Desirable, inevitable, and almost irrelevant

[Here a couple of pointers to the issue of DRM. The first is by the famous iconoclast Andrew Odlyzko titled "Digital rights management: Desirable, inevitable, and almost irrelevant".

The second pointer is from Paul Budde who was privileged to follow a presentation by the award-winning Canadian essayist and novelist, John Ralston Saul.

Both are well worth reading on the issue of DRM and the related topic of Identity Management Systems (IdM) which, in many cases, an essential component of DRM and is an equally unproven, illogical and has the potential to be undermine some fundamental freedoms we take for granted in society-- BSA]



http://www.dtc.umn.edu/~odlyzko/doc/drm2007.pdf
Digital rights management: Desirable, inevitable, and almost irrelevant

DRM is attractive for several related reasons. Content providers feel they can get more control over their wares. Such control is comforting in general, and could enable new methods of charging, which might provide greater revenues. More generally, the Internet is enabling sellers to ¯nd out much more about buyers' ability and willingness to pay, and also (through DRM and other techniques) is providing sellers with tools to control usage (and thus prevent arbitrage), leading to unprecedented opportunities and incentives for price discrimination [8, 9]. Thus it should not be surprising that extensive e®orts have gone into research, development, and deployment of DRM.

Yet the record of DRM so far is not too inspiring. And a rising chorus of voices (including Steve Jobs of Apple) is urging the content industry to give up or at least relax its insistence on DRM. The lecture summarized here will review the arguments of DRM skeptics. This abstract provides a very brief overview of some of the main points. References are given to my papers, where those points are explained in more detail, and citations are provided to the extensive literature on the subject.

The fundamental issue that limits current use and future prospects of DRM is ... to maximize the value of your intellectual property, not to protect it for the sake of protection.

DRM all too often gets in the way of maximizing the value of intellectual property. To someextent this is the fault of the DRM technologies. We simply do not know how to build secure systems. The last half a century demonstrates this conclusively.
[...]




Changing societies and the role of telecoms http://www.buddeblog.com.au/changing-societies-and-the-role-of-telecoms/



Introduction
I was recently privileged to follow a presentation by the award-winning Canadian essayist and novelist, John Ralston Saul. He was lecturing at the same conference at which I was speaking – the annual local government management conference (SOLGM) in Wellington New Zealand.

John has been hailed as one of the great thinkers of our time. He gave an awe-inspiring presentation, full of new ideas and philosophies about our society, culture, economic developments, the environment and aboriginal values.

[..]
John mentioned that our western societies still had not adjusted to the new economic order. Our modern economic society started somewhere around 1770 and was based on competition for limited resources, capital, labour and also the products we produced – food, clothing, luxury goods and so on were scarce. However since the 1960s the economic order has changed from one based on scarcity to one based on surplus.

[...]

The fallacy of Intellectual Property rights
As we have moved away from agricultural and manufacturing societies we have changed into a society that is based on ideas and information. It is therefore unforgivable that we are limiting the growth, and the flow, of ideas and information through Intellectual Property rules and regulations.

According to John, the inclusion of Intellectual Property into the WTO is severely hampering the flow of new ideas and information; it is attempting to control the dissemination of ideas, thus making the spread and sharing of them increasingly difficult. This is damaging the new economy!

In the digital media industry we see this happening through Digital Management Rights (DMR). This is a totally unsustainable state of affairs and needs to be changed.

There must surely be better ways to protect Intellectual Property.

At the BuddeComm Digital Media Roundtable in August clear evidence was given that people are prepared to pay for Intellectual Property, but that it needs to be based on conditions that are acceptable to society as a whole, and not on power of the few who want to protect the scarcity economy.

[...]

This first-ever international policy forum on the participative web will bring together experts from around the world, from policy makers and academ

This first-ever international policy forum on the participative web will bring together experts from around the world, from policy makers and academics to business executives and a wide range of civil society. The presentations and discussions will be around the themes of Creativity, Confidence and Convergence will contribute to the OECD Ministerial Meeting on The Future of the Internet Economy in Seoul, Korea, 17-18 June 2008 (www.oecd.org/FutureInternet).

Preparations of the 2007 Participative Web Technology Foresight Forum by OECD and the Canadian government taking place in Ottawa (Canada) on 3 October 2007 are well underway and registration is now open.

Questions to be addressed in the Foresight Forum include: What does the future hold for the participative web? What are the trends and impacts on knowledge creation, business, users and governments? What are the implications for enhancing confidence and trust in the Internet? What is the government role in providing the right environment for stimulating Internet innovation and economic growth?

The details of the Forum and means to register are on the OECD website are at: http://www.oecd.org/futureinternet/participativeweb. The site includes many tools for online participation. Please participate!



Speakers include: John Lettice, Founder, Co-founder and editorial director of The Register, Jungwook Lim, Vice President for Service Innovation, Daum Communications, Robert Sutor, Vice President for Open Source and Standards, IBM, Jonathan Taplin, Professor University of California, Micheal Gill, Chief Executive Officer, Fairfax Business Media, Hemanshu Nigam, Chief Security Office, MySpace, Bob Young, Founder, Lulu.com, Antony Williams, Autor of ‘Wikinomics’, Paul Misener, Head of Global Public Policy, Amazon.com, Andrew Herbert, Managing Director, Microsoft Research, Cambridge, UK, Daniel E. Atkins, Director, Office of Cyberinfrastructure, The National Science Foundation, Kiyoshi Mori, Vice Minister Policy Coordination, Japanese Ministry of Internal Affairs and Communications, Bill St. Arnaud, Senior Director Advanced Networks, CANARIE Inc., Andres Monroy-Hernandez, MIT Lego and Lifelong Kindergarten initiative, Ginsu Yoon, VP International, Second Life, Quitterie Delmas, AGORAVOX and responsible for blogosphere of French Presidential candidate Bayrou, Ellen Miller, Executive Director, Sunlight Foundation, Anne Bucher, Head of Division, Directorate General Information Society (European Commission), Gary Davis, Deputy Commissioner, Office of the Data Protection Commissioner, Ireland, Michael A. Geist, Canadian Research Chair of Internet and e-Commerce Law, Sangwon Ko, Executive Director, Division of Information Industry Research, Korea Information Society Development Institute, Chris Kelly, Vice President of Corporate Development and Chief Privacy Officer, Facebook, Richard Simpson, Director, E-Commerce Branch, Industry Canada / Chair ICCP OECD Committee, and notable representatives from civil society such as The Public Voice, CPTech, etc.

Will the the Future of the Internet be free?

[Chris Anderson - the author of the "long Tail" and senior editor at Wired Magazine is working on a new book about a new model for business on the Internet aptly called Free. Google and other companies pioneered the concept, but there are now many other examples of how this business is transforming even the delivery of basic Internet service.

For example in the UK and France, because of strongly enforced structural separation (actually functional separation) and unbundling there is a host new companies offering creative bundling of services where they offer basic DSL Internet for free. TalkTalk, Sky, Iliad are examples of this innovative approach. In other cases companies are bundling free music downloads with their Internet service.

One of the best examples of this business model is Inuk networks - www.inuknetworks.com. They have been working with the UK university research network (UKERNA) to deliver free over the air TV, telephony and Internet to students in dormitories at universities throughout the UK. They make their money by selling "eyeballs" to the over the air broadcasters who then get a direct and exact measure of who is watching their programming.

As UKERNA only operates the network, there is natural structural separation between the network operator and those offering services. Kudos to UKERNA for demonstrating how research networks can showcase new Internet business models not only for academia, but for the larger consumer market as well.

Another good example is the Google Earth Flight simulator versus purchasing a PC based product.
-- BSA]


Chris Anderon's blog http://www.longtail.com/the_long_tail/2007/06/three_things_ab.html


Google Earth Flight Simulator http://marco-za.blogspot.com/2007/08/google-earth-flight-simulator.html

The Fiber Bible - a comprehensive overview of municpal and Fiber to the Home projects

[Thanks to Benoit Felten for this pointer who also maintains an excellent blog on all sorts of FTTx activities world wide -- BSA]


Benoit Felten's Blog: http://harmonica.typepad.com/fiberevolution/

The Fiber Bible: http://harmonica.typepad.com/fiberevolution/FttX-in-Europe-August-2007-A.doc

An overview of Fiber

European (Muni and other)
Fiber to the Home and
Fiber backbone projects

Telco 2.0 - Web 2.0 and mashups for telcos

[Microsoft has established an interesting web site of over 145 mashups and Web 2.0 tools for network management and provisioning for telcos. Also the Telephony Online Podcast is very interesting of some good examples of how mashups can be used in telco network environment. However I remain very skeptical how one big elephant in Redmond WA can teach a bunch of other aging elephants to be nimble and agile like a gazelle. Thanks to Frank Coluccio for this pointer -- BSA]

Microsoft Web site for mashups for telcos www.networkmashups.com

A Telephony Podcast: Microsoft and Telco 2.0

Executive Editor Rich Karpinski talks with Andy Chu, group manager for planning and strategy in Microsoft’s Communications Sector division, about Telco 2.0, networked mashups and how carriers can combine new Web 2.0 technologies with advanced network functionality to create altogether new services.

http://ct.pbinews.com/rd/cts?d=244-14118-32-26868-20726-744066-0-0-0-1

First e-VLBI data from China-Australia, China-Europe and Australia-Europe baselines

[CANARIE is pleased to have played a small part in this ground breaking event by providing the lightpaths across North America linking Asia to Europe-- BSA]

Dear all

The JIVE press release of yesterday's successful intercontinental eVLBI
demo involving Australian, Chinese and European telescopes is available
at http://www.expres-eu.org/ShAuEu_fringes.html

A 300dpi impage of the telescopes and paths involved is shown at
http://www.expres-eu.org/PHOTOS/evlbi_map_300dpi.jpg

Yesterday's event demonstrated the first real-time correlation results
from Chinese-Australian and Chinese-European baselines. Data were also
obtained from an Australian-European baseline for a short time as the
target source set and rose in observing areas on opposite sides of the
earth) .

Many thanks to all the astronomers, network engineers and others who
worked so hard to make this such an impressive demonstration.

best wishes to all

George

Japan's Warp-Speed Ride to Internet Future

[Thanks to Jim Baller for this posting. I highly recommend Jim Ballers web site for those who are interested in municipal and community broadband. Lots of very useful and practical information from pole attachments to building municipal networks. Some excerpts from Washington Post article -- BSA


Jim Baller's web site
www.baller.com

http://www.washingtonpost.com/wp-dyn/content/article/2007/08/28/AR2007082801990_pf.html

Japan's Warp-Speed Ride to Internet Future
TOKYO -- Americans invented the Internet, but the Japanese are running away with it.

Broadband service here is eight to 30 times as fast as in the United States -- and considerably cheaper. Japan has the world's fastest Internet connections, delivering more data at a lower cost than anywhere else, recent studies show.

Accelerating broadband speed in this country -- as well as in South Korea and much of Europe -- is pushing open doors to Internet innovation that are likely to remain closed for years to come in much of the United States.

The speed advantage allows the Japanese to watch broadcast-quality, full-screen television over the Internet, an experience that mocks the grainy, wallet-size images Americans endure.

Ultra-high-speed applications are being rolled out for low-cost, high-definition teleconferencing, for telemedicine -- which allows urban doctors to diagnose diseases from a distance -- and for advanced telecommuting to help Japan meet its goal of doubling the number of people who work from home by 2010.

"For now and for at least the short term, these applications will be cheaper and probably better in Japan," said Robert Pepper, senior managing director of global technology policy at Cisco Systems, the networking giant.

Japan has surged ahead of the United States on the wings of better wire and more aggressive government regulation, industry analysts say.

In sharp contrast to the Bush administration ... regulators here compelled big phone companies to open up wires to upstart Internet providers.

In short order, broadband exploded. Indeed, DSL in Japan is often five to 10 times as fast as what is widely offered by U.S. cable providers, generally viewed as the fastest American carriers. (Cable has not been much of a player in Japan.)

Perhaps more important, competition in Japan gave a kick in the pants to Nippon Telegraph and Telephone Corp. (NTT), once a government-controlled enterprise and still Japan's largest phone company. With the help of government subsidies and tax breaks, NTT launched a nationwide build-out of fiber-optic lines to homes, making the lower-capacity copper wires obsolete.

"Obviously, without the competition, we would not have done all this at this pace," said Hideki Ohmichi, NTT's senior manager for public relations.

His company now offers speeds on fiber of up to 100 megabits per second -- 17 times as fast as the top speed generally available from U.S. cable. About 8.8 million Japanese homes have fiber lines -- roughly nine times the number in the United States.

The burgeoning optical fiber system is hurtling Japan into an Internet future that experts say Americans are unlikely to experience for at least several years.

Shoji Matsuya, director of diagnostic pathology at Kanto Medical Center in Tokyo, has tested an NTT telepathology system scheduled for nationwide use next spring.

It allows pathologists -- using high-definition video and remote-controlled microscopes -- to examine tissue samples from patients living in areas without access to major hospitals. Those patients need only find a clinic with the right microscope and an NTT fiber connection.

Japan's leap forward, as the United States has lost ground among major industrialized countries in providing high-speed broadband connections, has frustrated many American high-tech innovators.

"The experience of the last seven years shows that sometimes you need a strong federal regulatory framework to ensure that competition happens in a way that is constructive," said Vinton G. Cerf, a vice president at Google.

Japan's lead in speed is worrisome because it will shift Internet innovation away from the United States, warns Cerf, who is widely credited with helping to invent some of the Internet's basic architecture. "Once you have very high speeds, I guarantee that people will figure out things to do with it that they haven't done before," he said.

Yet the story of how Japan outclassed the United States in the provision of better, cheaper Internet service suggests that forceful government regulation can pay substantial dividends.

For just $2 a month, upstart broadband companies were allowed to rent bandwidth on an NTT copper wire connected to a Japanese home. Low rent allowed them to charge low prices to consumers -- as little as $22 a month for a DSL connection faster than almost all U.S. broadband services.

Web 2.0, SOA and mashups for front line military and medical applications

[The acronyms are getting a bit silly - Military 2.0, Medicine 2.0, Battlefield 2.0, etc. But the underlying application of Web 2.0, SOA and mashups to all sorts of endeavours continues unabated - and the impact remains significant on how these technologies will transform various aspects of business and society. Some excepts from NetworkWorld and a pointer from Richard Ackerman -- BSA]

http://www.networkworld.com/news/2007/082807-us-troops-swap-combat-ideas.html?netht=082807dailynews1&


Troopideas.com is not exactly “MySpace for war fighters," but it’s a Web site that invites frontline troops to post their ideas for improving the combat experience. Engineers and developers then use Web 2.0 techniques such as mashups and wikis to turn those ideas into reality.

Dozens of U.S. servicemen and women have so far posted submissions to the Web site since it was launched early in August. The ideas range from low tech to high tech: Creating a helmet-mounted mirror that lets a soldier see behind his back, for example, and a scheme for blocking the cell phone transmissions used to detonate roadside bombs.

Increasingly, many of these problems are being solved by applying Web 2.0 technologies, such as service-oriented architectures (SOA), wikis and social networking that can help compress the typical product development timetable.

[...]

The information battlefield

Integrating information and creating context for understanding is a recurring theme in problems and ideas percolating up from the field. One soldier described how difficult it is to find out what strike options to use against a potential target. Army units typically have to make separate cell phone calls, for example, to Navy, Air Force or Marine counterparts to discover what artillery or missile or aircraft assets are available. “That introduces tremendous delay,” says Loftus. “Often you have to make a [strike] decision before all those calls get completed.”

Gestalt used SOA tools and interfaces to pull information about available strike assets from the existing command and control systems of the different services, displaying the integrated data on a Web page. Now, an Army commander can see what options he has to strike a target, how long it will take for each to hit the target, and evaluate the results and affects of each weapon.


Medicine 2.0

http://scienceroll.com/medicine-20/

I’m pretty sure that web 2.0, the new generation of web services, will (and already is playing) play an important role in the future of medicine. These web tools, expert-based community sites, medical blogs and wikis can ease the work of physicians, scientists, medical students or medical librarians.

We believe that the new generation of web services will change the way medicine is practiced and healthcare is delivered.

So I decided to collect sites, presentations and services that could be helpful for medical experts. I collaborate with Ves Dimov (at clinicalcases.org), Bob Coffield (at healthcarebloglaw.blogspot.com), Brian Jefferson and Ken Civello (at askdrwiki.com).


I’ve had several opportunities to present my work in many clinics here in Debrecen, Hungary, but now I’m planning to search for universities around the world interested in a presentation like this one below. If you’re interested, just send me an e-mail to berci.mesko [at] gmail.com.

Medicine 2.0= web 2.0 + medicine

[...]