Monday, August 22, 2005

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What's the best way to deal with broadband?

Earlier this year Thomas Bleha published a provocative essay in Foreign Affairs that argued the U.S. had lost its technological leadership on the Internet:

[T]he United States has fallen far behind Japan and other Asian states in deploying broadband and the latest mobile-phone technology. This lag will cost it dearly. By outdoing the United States, Japan and its neighbors are positioning themselves to be the first states to reap the benefits of the broadband era: economic growth, increased productivity, and a better quality of life.

The September/October issue of Foreign Affairs has an interesting exchange of letters between Bleha and Philip Weiner on how best to rectify the situation. Bleha prefers "top-level political leadership" and "a national broadband strategy with bold deployment goals." Weiner offers some excellent cautions to this strategy, including this fascinating bit of protectionist trivia:

The current fcc is not to blame for the lack of spectrum available for wireless broadband; U.S. broadband policy is hamstrung by a series of protectionist decisions that Congress and earlier commissions made years ago to govern the transition from analog to digital television. These decisions, intended to protect U.S. television manufacturers from Japanese competition, dedicated large swaths of spectrum to television broadcasters, which now reach only approximately 15 percent of their viewers "over the air" (as opposed to via satellite or cable connections)....

Bleha's most troubling argument is his claim that the U.S. government should support certain technologies as part of its economic development strategy. To appreciate how risky the proposal is, consider the rise of advanced television and advanced mobile-phone service, both of which prompted regulatory strategies of the kind Bleha champions -- and both of which ultimately backfired.

It was the threat of Japan's rise in the 1980s that spurred the course toward digital television that the United States still follows today. Washington committed wide swaths of spectrum to digital television, leaving U.S. mobile-phone providers with less bandwidth than they needed and only about half the amount of their European counterparts. The entire effort assumed that Americans would continue to watch television shows broadcast over the air. Yet over the past two decades, more U.S. consumers have begun to watch cable and satellite television, undermining the rationale for this expensive policy, which has also delayed innovation and imposed unjustifiable costs on the nation.

Meanwhile, the European regulatory authority decided that the advent of digital, second-generation cell phones required governments to promote the technology known as the global system for mobile communications, or gsm, to ensure a compatible system throughout Europe. Wisely, the United States refused to favor any given technology and instead allowed marketplace experimentation to guide development. That strategy yielded the superior code division multiple access (cdma) technology developed by the California company Qualcomm, which uses spectrum more efficiently. The transition to the next generation of mobile telecommunications standards (which are based on cdma technology) will be much smoother for those U.S. companies that have adopted cdma, such as Verizon Wireless and Sprint PCS, than for their European counterparts.

Bleha also urges Washington to commit to supporting the installation of ultra-high-speed fiber connections to one-third of U.S. households by 2010. But his proposal may be foolhardy: even though fiber appears to be a promising technology today, such technologies have failed in the past for a variety of reasons, leaving investors with little to show for their money. (Remember digital audio tape recorders?) The U.S. government should be leery of endorsing particular technologies -- or even certain transmission speeds -- before it knows more about them and whether the market can support them.

Read the whole exchange.

posted by Dan on 08.22.05 at 11:09 PM


government investment would likely lead to a country that's heavily built out on isdn and cat3 ethernet and has no money for startups.

would you let the folks who run the dmv run your technology sector?

posted by: nospam on 08.22.05 at 11:09 PM [permalink]

What nospam said.

I'd rather not have the US government picking winning technologies. Bureaucracies tend to think in terms of perpetuating the status quo, and what's going on in the IT sector is rapid innovation. I don't see how combining the two would benefit anyone other than the bureaucrats.

Reviewing and amending or repealing outdated regs would probably be the most helpful thing the government could do with regards to telecoms. If people don't want broadband enough to pay the going rate, why should the government go out of it's way to promote it?

As far as 'the benefits of the digital lifestyle' are concerned, exactly what are they? Would anyone mind explicitly spelling it out?

posted by: rosignol on 08.22.05 at 11:09 PM [permalink]

East Asia is known for its super competative manufacturing sectpr - and its super corrupt retail sector. Americans have enjoyed the best of both worlds - cheap asian manufactured goods and a cut throat retail sector to get those goods to market as cheaply as possible.

The change that will bring to Japan and its neighbors the benefits of growth, increased productivity, and a better quality of life will be when Walmart and CostCo are allowed to enter their markets freely.

posted by: Jos Bleau on 08.22.05 at 11:09 PM [permalink]

I believe that Hollywood and the music co. had a lot to do with the lack of support for Digital Tape. The same is coming down the pike for the next version of Windows. It will require a special Monitor to view High Def. on a computer screen. They have gotten MS to attach the HDCP copy protection stuff clear thru to the hardware in the monitor. The Digital Rights will have to have a HDCP monitor or it wont allow you to play it. The same is coming for the new Blu-Ray High Def DVD's. All the current HD TV's you have now will not be allowed to view the new HD Blu Ray discs unless they include the HDCP all the way to the actual display. NOT just in the internal electronics. This means you can only view what MS and the MPAA or RIAA allows you to view. They circumvent all "Fair Use" and make no pretense about it. With the collusion of the Orin Hatches of the world.

But hopefully DVDJon will crack it within a few days.

posted by: Bill on 08.22.05 at 11:09 PM [permalink]

MS has little choice on this one; it's either support HDCP or have no ability to play back legally purchased HDTV content from Blu-Ray or HD-DVD disks at full fidelity at all. The standards for the new media formats support HDCP and the studios won't produce content without it. Standalone Blu-Ray and HD-DVD players will require HDCP-capable TVs to playback protected content without downsampling to DVD resolutions. Cracking the copy protection violates the DMCA, so no commercial OS will do it (OS X.5 will do the same thing Windows Vista does here). If you want to be angry at someone here, it's the studios, not Microsoft.

posted by: Dave on 08.22.05 at 11:09 PM [permalink]

"I'd rather not have the US government picking winning technologies."

Same here, but OTOH, remember the AM stereo fiasco. The FCC doggedly refused to pick one of the plethora of systems, so you couldn't count on being able to listen in stereo to whatever station you were interested in. Hear any AM stereo stations lately? Didn't think so.

posted by: James Jones on 08.22.05 at 11:09 PM [permalink]

I think the marketplace spoke pretty convincingly on AM stereo - it sucked. Thank the stars that the FCC did nothing about it.

posted by: Don Mynack on 08.22.05 at 11:09 PM [permalink]

The government doesn't belong in any market - commodity, labor or whatever. If a technology can't make it on its own, then it isn't worth having.

posted by: Scott Kirwin on 08.22.05 at 11:09 PM [permalink]

"I'd rather not have the US government picking winning technologies."

Agreed, perhaps we should ask for help from the Japanese government -- they seem to do a better job.

posted by: walker on 08.22.05 at 11:09 PM [permalink]

Any time the gummint gets involved in technology it falls victim to regulatory capture. The DMCA and the spectrum allocation laws are just examples.

posted by: David Gillies on 08.22.05 at 11:09 PM [permalink]

"Agreed, perhaps we should ask for help from the Japanese government -- they seem to do a better job."

walker-san, do you live in Japan?
I have for 15 years now, and can tell you that the government is more inept here than in America. Most everything is based on hierarchy, length of service, good old boy club etc.

Basically, the government should let individuals work things out the best they can.

posted by: daniel on 08.22.05 at 11:09 PM [permalink]

Daniel, no I live in the U.S. but your account that everything is based on "hierarchy, length of service, etc." is not inconsistent with what I have read and heard. Still, it is hard to argue with results and it seems that in broadband and mobile phone technology Japan and South Korea have enjoyed greater success. It is clear that they did something right (or perhaps didn't do something wrong, or both), even if the two commentators here can't quite agree on what that is.

posted by: walker on 08.22.05 at 11:09 PM [permalink]

The economics of broadband deployment are closely related to population density. A very high proportion of South Korea's population lives in what is basically a single city. This doesn't really have a lot to do with "technological leadership."

posted by: David Foster on 08.22.05 at 11:09 PM [permalink]

David, no question population density is a factor but given that overall South Korean broadband access rates exceed those of each individual city in the United States it is hardly the only one at play.

posted by: walker on 08.22.05 at 11:09 PM [permalink]

Gov't involvement could lead to another Minitel (France). It was mostly used for dating and porn.

I skimmed that article and didn't find any compelling app mentioned that requires the gov't to encourage boradband right now. VOIP is nice, but not compelling. Most mobile phone services are boring. Do you need to pay a vending machine with your cellphone? Or maybe you're the type that wants internet access on your fridge.

A killer app, or lots of compelling apps, will get more customers to sign up for broadband. The argument that you need subscribers before entrepreneurs can build services is weak. There are enough subscribers now to support most businesses (iTunes, NetFlix). What you need is for the media businesses to work out a good internet business model.

The South Koreans have the world's best blogging software. So what? I can download their code and run it in English if anyone wants it. Even if the Japanese invent some wonderful mobile phone app, we can copy and extend it here in no time. I just don't see any reason to panic.

posted by: Dude on 08.22.05 at 11:09 PM [permalink]

I wish there were a richer dialog than "business!", "government!", "business!". I've seen letters in the WSJ, in praise of unregulated big business, which could equally well serve in praise of a Stalin five-year plan. And ARPA, when under an administration with a clue, and Bell Labs, before being commercialized, changed the world as no company would/could have. Instead of arguing over which of two similar mixed bags of pathologies we want to suffer from, perhaps the time would be better spent trying to think more clearly about the pathologies, and of ways to mitigate them.

posted by: - on 08.22.05 at 11:09 PM [permalink]

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