Several recent articles and news reports over the past week or two made
me again ponder on the future of ‘bit pipes’. Long the fear of many
operators that they would be commoditised into a ‘mere bit pipe’; I’ve
long wondered why it would be so bad, after all. Lots of other
industries do well out of commodities, provided they understand the
rules: – high economies of scale, low operating costs.
But
that’s applying market logic to the communications industry where
economic logic and regulation long ago parted company. CEO designate of
BT, Ian Livingstone, this week called for UK regulators to rethink the
universal service obligations on BT before he would consider a
ubiquitous fibre access network rollout; the Net Neutrality debate
continues to run and run in the US; “structural separation” becomes the
new toy of regulators everywhere.
A few years ago, commenting on
the ludicrous £24 billion tax take of 3G spectrum actions in the UK,
digital guru Nicholas Negroponte commented “All we have achieved is
condemning our children to an information poor society”. Given the
lack of speed of broadband mobile rollout, the taxman’s gain is
society’s loss – and like a boomerang it turns all the way back to
impacting business efficiency and in turn the taxman.
So why are
legislators trying their best to disincentivise ubiquitous fibre roll out. If you or I had a few billion in the bank and someone came
across an investment plan that tried to persuade us to invest in a
major capital program with little or no ability to get any return from
it, we would tell them where to get off. But that’s what legislation
like universal service mandates; controls over what services can be put
over networks (like entertainment); or the inability to charge more for
providing a better grade of service do. They set up a situation where
investments can’t make an economic rate of return and so guess what –
investments aren’t made.
Legislators are good at stopping
things. They are much less good at making things happen. So the
controls brought in to cramp the style of ex monopoly carriers might
have been valuable at one time but right now, the vast majority of the
world’s fixed access networks are decades old copper with ADSL go
faster kit on it to give broadband in the low megabits range. I get
about 600K/bits/ sec on a good day when the farm next door’s electric
cattle fence is not switched on. Some lucky people in towns get up to
8 M/bits. But with a theoretical upper limit of about only about
25Mbits on a very good local loop, the world will run out of capacity
much faster than it takes to re-engineer it with ultra high bandwidth
fibre.
Not so long ago the cry was “what would we fill all of
those hundreds of megabits with even if we had it”. Now we know.
Bandwidth hunger is following Moore’s law norms. Just last week UK
ISP’s were bemoaning the fact that the BBC’s iPlayer ‘play-it-again’
web TV service had been so successful since its launch a few months ago
that it now consumes about 5% of all UK internet bandwidth. And rising
fast.
So my beef of the week is for all of those helping hands
(or helping snouts in troughs!) to butt out of getting in the way of
getting the kind of infrastructure we need to support the kind of
information society people wrote dizzying essays about a few years ago
that is finally becoming reality.
Buyers want to buy the fruits
of that capability. Investors want to invest. It’s just all of the
stuff in the middle of sectional interests, out of date regulation and
short term thinking that’s stopping it.
Remember Negroponte’s words.
Posted
Apr 14 2008, 06:38 AM
by
Keith Willetts