Originally published January 29, 2001 at Software Arts Technical Notes. Original article can be read here. Published on KurzweilAI.net February 11, 2002.

By recognizing the need to separate connectivity from applications we have the opportunity to unleash the power of the marketplace that has served so very well in computing and in the Internet.

History

Like any other system, our understanding of telecommunications has evolved and changed. In engineering the phone system, there were a myriad of technical problems to be solved in order to be able to carry voice conversations over long distances or even around the world. The signal had to be delivered with precise timing with every component of the network adjusted just right. Because the equipment was so expensive there was great emphasis on precise planning for capacity.

Similarly, television was an amazing feat of engineering in the 1930's. It took very precise engineering to synchronize the video beam in the kinescope (the camera) with the image shown in the receiver. Many technical tricks were used including interlacing so that successive scans filled alternating lines to produce a smoother image. People then took advantage of the accidental properties, such as adding closed captioning by using the "vertical blanking interval" (the time it took to move the beam from the bottom back to the top of the screen).

The rise of the Internet in the 1990's (though the process actually started decades earlier) has demonstrated that we can now treat both telephony and television as streams of bits over a packet network. In the network itself all packets are treated the same with no special handling for audio or video streams. The network doesn't even have the notion of a circuit since successive packets needn't go to the same destination.

Connectivity

The pragmatic definition: Connectivity is the unbiased transport of packets between two end points. This is also the essential definition of "IP" (Internet Protocol).

There is a strong boundary between the IP layer and the applications built upon it. TCP, for example, is an application protocol. In the term "TCP/IP" the slash emphasizes the separation of the two.

The virtuous cycle

Since no application's packets get special treatment, the IP layer created a new commodity, connectivity, and set in motion the virtuous cycle of low prices generating new applications. These applications generated new demand. The new capacity created to meet this demand drove down the unit price but generated higher aggregate revenue to the connectivity providers.

It is still difficult for many people to grasp the power of the virtuous cycle set in motion by an effective marketplace structure. In the 1970's the military paid millions of dollars for computers that were far less powerful than the machines we use for children's video games.

It also means that now telephony and television can be treated as streams of packets built upon the connectivity layer. There is a caveat in that we need sufficient capacity in our networks to carry this traffic. Early efforts to send audio and video over the Internet were limited by the capacity of the network but it is now becoming common and accepted to listen to live events over the Internet and, unlike radio, there is no predefined limit on the quality.

We now have home networks running at 100 megabits per second bought along with pencils at the local stationery store. And soon, a billion bits per second will be common. We already have Internet backbones that support a trillion bits per second per strand of fiber.

Applying this to telephony and television

What does this mean?

We can now treat telephony and television as applications built upon any available connectivity. We are already used to the idea that we access any Internet service from any provider.

We have seen a harbinger of this in the 1970's when the Federal Court mandated that telephone service be defined as the jack on the wall and not include the telephone itself (this was the Carterphone decision). Until then, we couldn't plug in our own answering machines or modems. The phone companies saw themselves as providing phone calls rather than connectivity.

This is merely a shift in point of view. But then, all that Copernicus did was shift the reference point for computing the orbit of planets from the Earth to the Sun which simplified calculations even though it was initially less accurate than Ptolemy's epicycles.

If we go back to first principles, we would treat connectivity as just another utility like water and electricity. Hauling bits would be no more mysterious than hauling garbage. In fact, some cities are already providing their own connectivity by laying municipal fiber. (Canada is leading the United States at this point.)

With connectivity as just another utility we would expect to have all television content available at any time just like we expect to have the web available. Instead of a dozen broadcast slots (which we call channels) we could view not just any of the myriad of television productions available, we would just as easily view our children's soccer even if we are traveling on another continent and would be free to choose our viewing surface, be it a large low-resolution "TV" or a small very high-resolution reading surface. And, as we've learned with the lack of interest in video phones, we also appreciate the option of talking without the burden of also looking good (and attentive).

If this sounds familiar, it is because it is the stuff of science fiction. But it is also reality and is already happening. It is remarkable that there is no longer anything remarkable about the "kindergarten-cam" which allows parents to watch their kids from the office.

The problem with assuming today's framework

If we turn from the exciting reality of the Internet back to the other reality of Telecommunications we experience culture shock.

But for those who live within the complex world of telecom regulation day in and day out, the idea of going back to first principles isn't shocking, it's simply inconceivable. It represents a degree of reengineering that is dismissed as naïve and politically unrealistic. Once you accept the premises of the regulatory framework, all of its intricacies seem reasonable and necessary.

Yet, even many within these heavily regulated industries acknowledge that we will eventually have gigabits of connectivity everywhere and thus the revenue for voice telephony is already dropping to zero. By maintaining two very different kinds of businesses within a single corporation the shareholders are denied the ability to maximize the value of the shares by making an informed choice. Instead the profits are used for cross-subsidies and, as we have seen, for the operators own naive investments in dotComs.

We feel the pain in the tale of John Henry as he has to come to terms with the technologies that leave him behind. In a different example, ulcers had their own mystique associated with the moral judgment associated with stress. This made it difficult to accept the fact that they were just another easily treatable bacterial infection.

The solution

But it is simple.

Once we see that connectivity is the basic resource and that telephony and television are simply applications built on connectivity we can seize the opportunity to replace complex regulation with the power of the marketplace. We can heed the examples of the IBM Consent decree that allows for the hardware/software industry. We also have a precedent in the remedy wherein the FCC required that television networks divest themselves of their studios.

We need to start by recognizing that there must be a distinct connectivity business in order to avoid the inherent conflict between the commodity business of providing connectivity and the business of delivering services and content. Even with the best of intentions the incumbent application providers are advantaged by benign neglect. The only remedy is a strong separation.

This means we must require that existing companies separate their "wire" operations from their content/service businesses. The hard part is making the transition from a business model that assumes the compelling advantage of owning the "wires". The lack of effective alternative paths allows the providers to charge for bit streams according to their value and not their cost because neither competitors nor customers have effective alternatives. To the extent that regulators fashioned competitors, they were created in the image of the existing players and thus CLECs (the competitors) were all too often miniature replicas of the ILECs (incumbents).

Marketplaces

The test of whether an industry is propelled by Moore's law is whether, when I ask for more, I get more. In the current broadcast model, for example, a cable TV provider uses a gigabit pipe to send the same programs to all homes. Getting a second interface (set-top box) in my home doesn't increase choice or capacity. If that same wire were treated as 10 megabits per interface (assuming 100 homes per segment), then buying a second interface would double the capacity to that home. The ability to buy more capacity at commodity prices represents a dramatic change.

We need to remember that there is a big difference between being pro-business and being pro-marketplace. Capitalism is all about marketplaces. Capitalism fails if we try to preserve a given business model. In telecommunications if we simply preserve a business then we have failed.

By recognizing the need to separate connectivity from applications we have the opportunity to unleash the power of the marketplace that has served so very well in computing and in the Internet.

   [Post New Comment]
   Mind·X Discussion About This Article:

		I agree posted on 11/11/2005 2:19 AM by phillip	[Top] [Mind·X] [Reply to this post]
	Although I believe this article is a little out dated I do believe it touched on a few things that have become true over the last few years, and are in fact changing the way we receive telephone and TV content. The author finishes the article by concluding that, "by recognizing the need to separate connectivity from applications we have the opportunity to unleash the power of the marketplace that has served so very well in computing and in the Internet." This in fact I believe has become quite true over the last few years. Most recently with the proliferation of VOIP (voice over IP), which as an industry has grown quite fast over the last few years. The popularity of VOIP ties in very well when the author says, 'Connectivity is the unbiased transport of packets between two end points. This is also the essential definition of "IP"' The author does go on to say, "Since no application's packets get special treatment, the IP layer created a new commodity, connectivity, and set in motion the virtuous cycle of low prices generating new applications." which is not in fact entirely true. It has been show that certain Internet Service Providers on occasion will give priority to packets that are not being sent for the purpose of VOIP.1 This can cause choppiness in a conversations audio, and can definitely hurt the VOIP providers. The packet blocking has been met with swift legal action, but it seems as if ISP's for the time being will get away with this.2 Overall though, VOIP is growing at a very fast pace. It is much cheaper than current long distance phone planes over traditional phone lines. It does seems that within the next few years VOIP will become a major player in the telecommunications industry. The author also goes on to write about the advances in TV content availability. On this issue too I also believe that the author hit the nail on the head with some of the things he mentioned he would like to see. In the article he refers to them as 'science fiction', but a few short years later and it looks as if the way TV is broadcasted is going to change. The first recent change is the addition of TV on cell phones. This is a feature that also uses IP technology. 3 For instance Telus Mobility in Canada now offers a few TV channels such as news, weather, shopping, and sports networks. 4 In addition to this many TV networks have now decided that they will allow a selection of their TV shows to be downloaded for a small price. This service will operate in a similar manner to the Apple ITunes service that has been highly popular over the last few years. The companies that are planning to do this include CBS and NBC.5 TV is also now streamed directly over the internet. For instance tv4all.com offers various television channels from many countries around the world free of charge. There have also been other reports recently outlining planes for streaming TV over the internet from large TV providers such as NBC. Overall, although this article seems a bit outdated now, it does touch on some key points. It also makes some good predictions for the future that seem to be coming true. 1 www.vonage-forum.com/article1734.html 2 www.internetnews.com/infra/article.php/3485271 3 www.msnbc.msn.com/id/6305929/ 4 www.telusmobility.com/on/wweb/mobile_tv.shtml 5 apnews.myway.com/article/20051108/D8DO98PO0.html

		one emission to two receptors posted on 11/11/2005 8:51 PM by eldras	[Top] [Mind·X] [Reply to this post]
	thanks for your refs. Do you know the methd the internet uses to transport one packet to two destinations? this seems remarkably familiar!

		Re: Connectivity: What it is and why it is so important posted on 03/20/2006 12:53 AM by smartkid	[Top] [Mind·X] [Reply to this post]
	Bob Frankston's proposal of separating connectivity and content on the Internet is a step towards making connectivity just a utility, but is not a solution that creates a proper marketplace by itself. Frankston's idea that the current structure of Internet connectivity must be replaced is valid and necessary to allow for content and application growth. With connectivity to the Internet controlled by companies that also provide their own content, a conflict of interest arises between providing unbiased access to all content and services as a connectivity provider, and promoting your own products as a content provider. The underlying factor is that there are no companies that provide connectivity as their primary line of business, and consumers that 'wander the Internet' represent potential losses in advertising and product/service sales. AOL is perhaps the most classic example of this. In addition to providing its customers with access to the Internet, customers are bombarded with AOL content including security centers, learning centers, travel guides, and messaging programs, all in an attempt to try and keep the customer from using a competitor's products. The previous post made by Phillip touches on how connectivity providers are disrupting and blocking VoIP packets that could hurt their revenues. In the case of Vonage, the FCC forced Madison River (the carrier blocking Vonage's calls) to pay a $15,000 fine and refrain from blocking any calls. However, since this ruling, Vonage continues to face call blocking from other telecommunications ISPs. Furthermore, Nuvio, a small internet phone service provider, has stated that its calls are being disrupted and admitted that port blocking was inevitable, given the ease and economic benefits associated with it. Therefore, we must look at the impact that connectivity providers are having with their attempts to throttle the growth of the application. Will VoIP grow as envisioned, or will lower VoIP packet preferences from different carriers spurn the application's potential to have a major impact on our society? If the application does become a major factor in telecommunications, will small companies be able to survive a fight with various many different telecommunications providers, or will we only see large companies involved in providing a VoIP service? The answers to these questions are currently unknown, but will have a large effect on whether we achieve the type of marketplace envisioned by Frankston. Even if Frankston's vision of separating content and connectivity providers is achieved, there may still not be the emergence of a marketplace where the user can freely access any service, as the concept of 'Net Neutrality' will play a crucial role in Internet content and service delivery. The debate on Net Neutrality involves the idea of whether connectivity companies that own broadband pipes can configure networks to show favouritism towards certain packets. This includes having the ability for the connectivity providers to charge content providers fees for fast delivery of packets. If the U.S. Commerce Committee decides to side with the connectivity providers on this issue, there may be serious impacts which would hurt the concept of a marketplace, and in turn, the user. The most severe impact lies with rumblings that certain content would be blocked from customers. Ed Whitacre, CEO of SBC, has suggested that it is only a matter of time before they implement a 2-tiered internet and begin to make companies such as Google and Yahoo pay a fee in order to have their content accessible by SBC customers. If SBC is allowed to do this and Google decides not to pay up, the impact of not having access to Google could be enormous and would greatly hurt the user. A second major effect that could arise if content and service providers are charged fees to use the network is a higher cost paid by the customer. "'It seems to me that if broadband operators are charging Google and Amazon for the use of their network, then those costs will automatically get passed on to consumers,' said Gigi Sohn, president and co-founder of Public Knowledge, a Beltway advocacy group. 'And ultimately that will lead to higher prices for consumers.'" Furthermore, if new applications introduced into our society don't provide immediate benefits, consumers may be less willing to pay even higher costs during the application's early stages. This could lead to many applications dying in their infancy, resulting in fewer services that could benefit our society in the future. When looking at how AOL tries to force its content on its customers, and the issues surrounding telecommunications companies blocking VOIP packets, it is clear that Frankston's idea of separating content and connectivity is the best route for creating a proper marketplace. However, contrary to Frankston's idea, issues surrounding net neutrality are proving to make the solution anything but simple.