Category Archives: Consolidation

Economists still calling computer networks “virtual” while interconnectivity is exposing economic externalities

While artists and designers have discovered there’s no sharp distinction between “real” and “virtual” (aka the New Aesthetic), economists are still talking about “virtual”, even as the networks of computers they’re referring to are exposing the economic externalities the greed of the “first economy” is built on.

Bill Davidow wrote for the Atlantic 10 April 2012, How Computers Are Creating a Second Economy Without Workers,

“Twenty years ago, if you went into an airport you would walk up to a counter and present paper tickets to a human being. That person would register you on a computer, notify the flight you’d arrived, and check your luggage in. All this was done by humans.”
Well, except for that part about “a computer”. And the flight computers in the airplane. And the FAA computers. And….

This is also true:

“Today, you walk into an airport and look for a machine. You put in a frequent-flier card or credit card, and it takes just three or four seconds to get back a boarding pass, receipt, and luggage tag. What interests me is what happens in those three or four seconds. The moment the card goes in, you are starting a huge conversation conducted entirely among machines. Once your name is recognized, computers are checking your flight status with the airlines, your past travel history, your name with the TSA (and possibly also with the National Security Agency). They are checking your seat choice, your frequent-flier status, and your access to lounges.”
While Bruce Sterling can (rightly, I think) say that’s not AI, nonetheless it all happens without much human intervention. And pixelated images of airplanes don’t start to indicate what’s going on in there.

The punchline:

“Here’s the challenge: In the past, every million-dollar increase in economic output generated on the order of ten jobs. In the future, in the productive Second Economy, it may generate only one or two.”
That’s not new. I’m a farmer, and 90% of farm jobs in this country Continue reading →

Against SOPA and PIPA, for an open Internet

If you haven’t heard of SOPA and PIPA, you will today, as reddit, Wikipedia, Google, Craigslist, Free Software Foundation, and many other websites protest those Internet censorship bills today. The so-called Stop Online Piracy Act (SOPA) is a House bill (H.R.3261) and the so-called PROTECT IP Act (PIPA) is a Senate bill (S.968) (most recently renamed Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011). Both have nothing to do with promoting creativity and everything to do with giving a few large copyright holders priority over the Internet, requiring censorship of links to entire domains. Have you heard of the Great Firewall of China? That’s where the Chinese government censors entire domains such as facebook, youtube, and twitter because they contain some content that the Chinese government doesn’t want distributed. SOPA and PIPA would do the same thing, except putting Hollywood in charge of what would be censored. In a perfect example of the DC lobbying revolving door, former Senator Chris Dodd, now Chairman of the Motion Picture Association of America, called the anti-SOPA blackout an “abuse of power”. Funny how it’s only an abuse of power when we fight back.

If you don’t believe me, listen to Mythbuster Adam Savage.

Here’s a technical explanation. And here’s a letter of objection many of the engineers who built the Internet.

Here’s where the anti-SOPA blackout started: Continue reading →

Eyes on their lobbyists’ bank accounts

The plutocrats and their bought politicians don’t care about Internet free trade, but we should.

Scott Bradner almost gets it about the opposition to net neutrality in Eyes in their ankles: The congressional view of network neutrality:

If you work at a company that uses the Internet to sell to customers or to buy from suppliers you should care about the net neutrality discussion.
You should, but you probably don’t have the money to buy some politicians to do something about it, and unfortunately the biggest companies do, and they’re busy doing just that: Continue reading →

Sterling: Samizdat Quality Quality Oligarch Press

bruce-sterling.jpg Bruce Sterling,, who has studied and practiced paper and online media his en tire career, and who also traveled to the USSR and then to Russia, says Prof. Clemons hasn’t imagined the worst:
(((Well, no — the “worst” would be that the publishers keep grinding out product, only it’s evil propaganda entirely subsidized by ultrawealthy moguls who have made themselves the only public source of news and culture. In other words, the commercial press collapses and it’s replaced by a classically fascist press. (Likely run on bailout money.) THAT’s the worst — with the possible exception of a furious proletarian upheaval that forces everyone to read grimy, poorly-printed copies of PRAVDA.)))
It would be easy to see a path from where we are now (half of U.S. media is owned by only five companies that actively suppress stories they don’t want to hear and promote stupid ones they do want) to Bruce’s scenario.

Lessig’s Herculean Holiday Present: Reboot the FCC

1990.05.0243.jpeg Here’s a good test for the new U.S. Executive: to recognize that steady pragmatism means radical change, starting with the FCC:
The solution here is not tinkering. You can’t fix DNA. You have to bury it. President Obama should get Congress to shut down the FCC and similar vestigial regulators, which put stability and special interests above the public good. In their place, Congress should create something we could call the Innovation Environment Protection Agency (iEPA), charged with a simple founding mission: “minimal intervention to maximize innovation.” The iEPA’s core purpose would be to protect innovation from its two historical enemies—excessive government favors, and excessive private monopoly power.

—Reboot the FCC, We’ll stifle the Skypes and YouTubes of the future if we don’t demolish the regulators that oversee our digital pipelines. By Lawrence Lessig, Newsweek Web Exclusive, 23 Dec 2008

Lessig gets the connection with his old topic of intellectual property and copyright. Those are monopolies granted by the federal government, and they have been abused by the monopoly holders just like the holders of communication monopolies: Continue reading →

L.A. Times to cut 250 Jobs: Less Free Press; More Need for a Free Internet

lat_logo_inner.gif There’s good news and there’s bad news:
The Los Angeles Times on Wednesday announced plans to cut 250 positions across the company, including 150 positions in editorial, in a new effort to bring expenses into line with declining revenue. In a further cost-cutting step, the newspaper will reduce the number of pages it publishes each week by 15%.

“You all know the paradox we find ourselves in,” Times Editor Russ Stanton said in a memo to the staff. “Thanks to the Internet, we have more readers for our great journalism than at any time in our history. But also thanks to the Internet, our advertisers have more choices, and we have less money.”

— Los Angeles Times to cut 250 jobs, including 150 from news staff, By Michael A. Hiltzik, Los Angeles Times Staff Writer, July 3, 2008

One reason for these cuts is the housing downturn in California: fewer real estate ads. But there are deeper reasons:
Announcements of hundreds of reductions were issued only last week by dailies in Boston, San Jose, Detroit and elsewhere. Among Tribune newspapers, the Baltimore Sun said it would cut about 100 positions by early August and the Hartford Courant announced plans to cut about 50 newsroom positions. The New York Times and the Washington Post both instituted layoffs or buyouts to reduce their staffs this year.

Besides the changes in the newspaper industry, Tribune carries the burden of about $1 billion in annual payments on its debt, much of which it took on to finance the $8.2-billion buyout.

Sure, it’s happening everywhere. But the L.A. Times is one of the best sources of journalism around. Why did somebody find it worthwhile to buy it out just to load it up with debt and force layoffs?

Whether this newspaper was targetted or not, the handwriting is on the wall for fishwraps. They’ll either adapt to the Internet or die. I suspect many of them will die. That means we’ll lose many of our traditional sources of real reporting. Fortunately, some new sources are arising, such as Talking Points Memo, which bit into the Justice Department scandals and hung on like a bulldog. Yet blogs like that thus far have a tiny fraction of the resources of big newspapers like the L.A. Times, the New York Times, and the Washington Post. There’s going to be a time of unsettlement of the fishwrap plains while the new shops in cyberspace put down roots into the old country.

And we won’t have ready access to either the remaining existing newspapers worldwide or to the new online sources of reporting unless we have a free Internet. Yet another reason that net neutrality is important.

Yet another reason not to let the telcos get away with retroactive immunity. Remember, the telcos currently paying off Congress are the same companies that want to squelch net neutrality. If they can get away with handing over every bit to the NSA yesterday, why would they stop at squelching your P2P today?

-jsq

ATCA Again: Duopoly Against VoIP Long Before Video

TinCanPhone-726651.jpg Back in 1995, an organization calling itself AMERICA’S CARRIERS TELECOMMUNICATION ASSOCIATION (“ACTA”), petitioned the FCC to regulate Voice over IP (VoIP) services. The gist of the matter was:
Permitting long distance service to be given away is not in the public interest.
In other words, if the telcos couldn’t make money off of it, nobody should.

A usually reliable source says:

The ACTA petition was the first time that the FCC confronted VoIP as a policy issue. The FCC, however, never acted on the ACTA petition, and ACTA, the moving party, no longer exists. The question presented by the ACTA petition was whether the FCC had regulatory authority to regulate VoIP Internet software used by individuals to do telephony with each other, with no service provider in the middle.

— VoIP: ACTA Petition, Cybertelecom

It’s interesting that the same telcos that now rail against regulation were happy to try to use it back in 1995 when it suit their purposes.

So ATCA failed to control VoIP via FCC regulation. But they can use volume charging to eliminate both VoIP and video they don’t provide themselves.

The duopoly’s claims of a few people using too much traffic are a smokescreen. The real issue is control: they want to control what passes through “their” networks so they can profit by as much of it as possible. I have no objection to telcos and cablecos making a profit. I do object to them squelching everybody else to do so. On the Internet you can connect any two tin cans, unless the duopoly can cut your string.

-jsq

Porter’s Five Forces and Net Neutrality: What If Distribution Channels are Open?

brief.jpg Here’s a take on why telcos so adamantly oppose net neutrality:
The eager and almost rabid application of Porter’s “Five Forces” (Supplier Power, Customer Power, Threat of New Entrants, Threat of Substitute Products, Industry Rivalry) to technology products and services has bred an entire generation of MBAs in marketing positions dedicated to developing and maintaining closed systems and closed hardware platforms. This is particularly egregious in the case of business models that are effectively based on distribution channels. In conventional analysis there is nothing wrong with making your living on distribution channels. Remember, that in 1979, when Porter developed the Five Forces framework, distribution channels were highly expensive to create and maintain and, owing to these costs, constructing them effectively presented a significant barrier to entry. Your product didn’t even have to be particularly good, because the threat of substitutes was reduced via the difficulty and expense of the competition actually getting those substitutes (however good they might be) to your customers. Suppliers, if they wanted access to your customer base as a proxy to sell their raw materials, had to go through you. New entrants had to build an entirely new distribution channel. Customers were stuck. You owned the market. But you had to guard this distribution channel carefully. And you had to make sure you hadn’t forgotten something simple and critical. That’s not part of a conventional Porter analysis. But why would it be? Conventional distribution channels are quite physical, antique and boring.

— The Five Forces/Circles of Hell, a Private Equity Professional, Going Private, 27 April 2008

The article goes on to detail how Blockbuster used the old Porter model of closed distribution channels and Netflix used an existing open distribution channel: the U.S. Postal Service.

To spell out the telco connection:

Continue reading →

Postal Hikes and Time Warner’s Role Discovered by New York Review of Magazines

ben_scott_140x140.jpg The New York Review of Magazines catches up with Time Warner and the postal rate hikes it lobbied for and got. First, the bottom line:
…the true price of letting corporations shape government policy: free speech.

— Going Postal, Callie Enlow, New York Review of Magazines, 2008

The NYRB gets into some of the underlying political machinations:
Even Time Warner was taken aback. Halstein Stralberg, co-creator of Time’s rate proposal, said, “There was a new chairman at the commission and there was a totally new environment, and they adopted it, to my surprise.”
The NYRM noted the sudden parachuting in of a new chairman just before the decision as unusual:
In the corporate world, The Progressive Populist would most likely be forced out of business. But should the same rules apply when the product is ideas and the conduit is a government-owned monopoly? To the current administration, the answer is yes, said Cullen. The president appoints the five commissioners that compose the Postal Regulatory Commission. Between the 2005 Time Warner complaint, when the PRC rejected the corporation’s proposed rate restructuring, and the 2006 rate hearings, when the PRC adopted the suggestions almost verbatim, two new commissioners joined the PRC. One of them, Dan G. Blair, replaced George Omas as chairman just one month before the end of the rate cases, a move that Bob Cohen described as “pretty unusual.”
However, the NYRM didn’t follow up on the other chairman, the chairman of the Postal Board of Governors from January 2005 to January 2008, James C. Miller III, and his 27-year-old theory:
“…none should be favored and none benefited. Each party pays the cost of service it consumes, not less, and does not bear the cost of others’ consumption.”
Curious how someone with that philosophy should be chairman just at the time the decision was made.

The NYRM does say what happened, why it was unusual, and who it affected: Continue reading →

Fair Trade: Fixing Antitrust for the Internet

zoe_lofgren.jpg So suppose for the moment that net neutrality is an antitrust issue. Does this bill fix antitrust law enough to deal with it?
Federal lawmakers have introduced yet another network neutrality bill, but this time with a focus on fair trade issues.

This week, U.S. Rep. John Conyers, who chairs the House Judiciary Committee, has introduced legislation that addresses the issue by labeling it an antitrust matter. Conyers’ H.R. 5994 would ban discriminatory network management practices by amending the Clayton Act.

The bill, labeled the Internet Freedom and Nondiscrimination Act, would require carriers to promote competition and allow people to use any device they want to on the carriers’ networks. The bill makes exceptions for emergencies, criminal investigations, parental controls, marketing, and improvements to quality of service.

Under the Detroit Democrat’s proposed legislation, ISPs could give preference to certain types of data, but they must give the preference regardless of the data source. It would ban ISPs from discriminating based on content, applications, or services.

— Lawmakers Eye Net Neutrality As Anti-Trust Issue, The Internet Freedom and Nondiscrimination Act would require carriers to promot e competition and allow people to use any device they want to on the carriers’ networks. By K.C. Jones, InformationWeek, May 9, 2008 05:42 PM

And does this fix the problems Google and Ebay complain about?

Meanwhile, a cosponsor sums it up:

U.S. Rep. Zoe Lofgren, D-Calif., has co-sponsored the legislation.

“Recent events have shown that net neutrality is more than a hypothetical concern. We need a meaningful remedy to prevent those who control the infrastructure of the Internet from controlling the content on the Internet,” Lofgren said. “This legislation will help guarantee that the innovative spirit of the Internet is not trampled.”

-jsq