Bader’s Bits

I have to admit I’m so frustrated by the Net Neutrality issue that I’ve tried to tune it out. The “bad guys” seem to be in the lead, the game seems rigged with money and inside influence, and I feel disempowered as a result. I know I should increase my participation, but the wind is a bit out of my sails.

Well, just when I might be overcoming my cynicism, out come Tim Doyle in the latest Forbes magazine issue with an insightful wrapup of why I should be frustrated. Here’s the article, in its entirety, to save you the effort of registering at their site. Post some comments on what you think.

OutFront
Milking the Internet
Tim Doyle, 08.14.06

Don’t expect a quick decision from Congress on network neutrality. Not deciding is too profitable.

After senator Ted Stevens, the Alaska Republican, explained recently that he opposed “network neutrality” because “Internet” (translation: e-mail) was delayed by the clogged “tubes” of the Internet, his awkward lingo was lampooned by comedian Jon Stewart. The parody became a YouTube hit. Laugh if you want. But the pols get to laugh all the way to the bank: The fight over the Internet and what fees should be assessed for access is a surefire moneymaker–for their campaign coffers.

On one side of the net neutrality fight are the telephone and cable companies who want the freedom to charge Internet companies extra for higher-speed access for their customers–fees they say will be used to build more capacity. On the other side companies such as Google (nasdaq: GOOG - news - people ), Microsoft (nasdaq: MSFT - news - people ), Yahoo (nasdaq: YHOO - news - people ) and Vonage want Congress to bar such charges by mandating what they call “net neutrality.”

The stakes are huge for both sides, so both are pouring millions of dollars into political contributions and lobbying to press their argument. Now you know why Congress would let this debate linger on. As long as the issue stays in play, the money keeps flowing. “Telecom reform has been a cash cow for members of Congress,” says Brookings Institution congressional scholar Thomas Mann. “The battles go on for years, and the fundraising requests never stop.”

Congress has been toying with a rewrite of the nation’s telecommunications law since 2003; net neutrality became a central issue last year. In June there were even signs of progress: The House passed a “reform” bill and Stevens’ Senate Commerce Committee, after 26 hearings, sent one to the full Senate. But this is an election year, so the legislators may not have the time to complete action on a bill.

So far, score one for the telephone and cable companies. They succeeded in keeping net neutrality (that is, a prohibition of volume-sensitive charges) out of both bills. No coincidence that telcos, even by Washington standards, are writing huge checks. Since the start of 2003 the telcos’ political action committees and employees have made a combined $27 million in political contributions and sunk another $146 million into lobbying, according to the Center for Responsive Politics. AT&T (nyse: T - news - people )’s PAC ranks as the biggest corporate PAC donor to Republicans so far this election cycle, at $1.1 million. Why so much? “Telecom is one of the most heavily regulated industries in the country,” says AT&T Chairman Edward Whitacre.

The biggest recipient of telco largesse during the 2005–06 election cycle, with $114,000 in contributions, was Senator Conrad Burns. He’s the Montana Republican whose reelection has been endangered by his connection to the scandal involving convicted lobbyist Jack Abramoff. In June Burns joined other Republicans in killing a net neutrality measure. Burns says he prefers less regulation.

The lightly regulated Internet companies and their execs have traditionally spent less time and money lobbying Washington. Microsoft, Yahoo, Google, Ebay and Amazon (nasdaq: AMZN - news - people ) have spent a total of $37 million on lobbying since the start of 2003, a fourth of the telco spending. Their PACs and employees have given $14 million in campaign contributions. But some Internet execs are substantial Democratic donors. Google Chief Eric Schmidt, for example, has donated $42,500 since the start of 2004, including $9,500 to the Oregon Democratic party and to Senator Ron Wyden (D–Ore.), who has vowed to block any anti-net neutrality telecom bill.

Yet PACs and individual donations don’t tell the whole story. There’s a newer source of money and influence here: the Internet itself. In years past, telecom legislation barely registered with voters. But net neutrality is different, whipping up grassroots passion throughout the Internet.

In April conservative groups such as the Gun Owners of America and the Parents Television Council teamed up with liberal stalwarts MoveOn.org and the Consumer Federation of America, among others, to form Savetheinternet.org. Already one million Internet users have signed the group’s online petition. The opposition hasn’t been entirely spontaneous: Ebay Chief Margaret Whitman sent millions of customers an e-mail warning of a “two-tiered” Internet. Ebay, Yahoo and Microsoft have formed their own site, Itsournet.org, to gin up opposition.

Democrats in particular see a potential way to profit from the net outrage. During the last presidential election more than half of Democratic donors, but just a fourth of Republican ones, made at least one donation online, according to the Institute for Politics, Democracy & the Internet. Possible presidential contenders Senators Harry Reid, Hillary Clinton and John Kerry have all vowed to oppose any bill that doesn’t include neutrality. “Moveon.org has seized on this and tried to make it a litmus test for Democrats,” says AT&T lobbyist James Cicconi.

Indeed, seven-term Congressman Albert Wynn (D–Md.), who voted for the House bill, faces a tough primary test from Donna Edwards, a foundation head campaigning on net neutrality. In just six weeks Edwards raised $190,000, 40% of Wynn’s war chest.

Stevens says he doesn’t yet have 60 votes to overcome a filibuster and move a telecom bill lacking network neutrality. Cicconi says the telcos won’t accept a bill with it. And so the spending goes on. In April AT&T and others hired Clinton-era White House press secretary Michael McCurry to run a coalition, Hands Off the Internet, and its Web site and blog. Grass roots, ostensibly

I don’t often choose to spend my time with lawyers, but Martin’s not your typical attorney. He’s hip to the latest in media rights, open source licensing, local politics, and other topics and he’s always a interesting conversationalist.

Anyway, Martin wrote a response to The Oregonian’s editorial on Net Neutrality. This national issue has passionate local advocates. Right on, Martin!

That’s how this article on the latest legal and business trevails of the record labels begins. They just can’t seem to get a break. Even now that they’ve gotten hip to online distribution and sold over 1 billion tracks through iTunes, there’s another prosecutor exploring price fixing charges.

And now that Steve Jobs and Apple got their way by keeping the flat $.99 per track pricing, the record companies have lost online pricing power.

I don’t mean to gloat, nor do I think Apple and iTunes are perfect, but it’s nice to see how market and legal forces can affect even the most arrogant companies.

David Isenberg is the real deal. He’s put together the most definitive presentation about the Net Neutrality issue I’ve seen. It’s here with audio narration. Must reading!
David comes out of AT&T, and in the old days he wrote an article called The Rise of the Stupid Network, that presciently described how the Internet’s principles would challenge those of the incumbent phone networks. The problems the Internet created for the Bells is what has led to the crisis we now face.

For those of you looking for the “dumbed down” version of the issue, here’s a video, while not entirely accurate in my view, introduces the subject to lay people.

I must admit I liked it when life was simpler. The computer and Internet industry was run by the proverbial “400 geeks” that just kept moving from one company to another. The last thing we had to worrry about was the government.They didn’t care about us, and we didn’t have to care about them.

First Microsoft learned that they needed to care because their monopolistic position created suspicions of anti-competitive behavior. They pretty much beat the rap in the U.S., but the EU has taken a tougher stand (more). Microsoft’s behavior, especially after it squashed Netscape flat, pretty much took the oxygen out of the software startup environment, because no one had a good answer to the VC’s question: How will you compete against Microsoft? In my humble opinion, Microsoft, while it offers many admirable products, has until recently effectively stifled much potential software innovation.
Fast forward ten years. It ain’t about Microsoft any more. The answer to the VC’s question is “open source” and/or “software as a service” and the investments are flowing. But thanks to the Internet and convergence, software is just one of the vehicles of computer innovation. It’s now the Internet and its use as a content distribution and communications network that’s where the action is. And while it seems as if it’s a wide open web, there’s huge money and control at stake. And now the big boys are in on the action and throwing their money and influence around; not so much to innovate, but to protect what they’ve got. And they are trying to protect it by getting laws passed that tilt the playing field in their favor.

Here’s a partial list of issues being addressed in a Senate bill just proposed:

• Punting the Net Neutrality to the FCC, asking them only to report problems
• Placing limits on recording digital radio like Sirius via a broadcast flag
• Baning digital TV tuners for computers that can record shows off the air

Read more at the Cnet article.
The good news is that the issues are so manifold and complex, and the positions are so far apart from the House version, that passage in this short-sessioned election year is unlikely. The best we might hope for is no action, but no action on Net Neutrality is a time bomb. The worst is that these companies establish effective control of the Internet for their unfair advantage and stifle the very innovation that has made it flourish.
So what to do? Write your congressman. Senator Wyden is on the right side of this issue. Support SaveTheInternet. If your politics allow support moveon.com. Tell your buddies at the big companies like IBM and Intel that they need to be the counterweight against the lobbying heavyweights.
We simply can’t allow the few media and telecommunications companies to turn OUR Internet into THEIR networks.

How’s that for a five year summary of Apple’s future? You’ll be able to say you read it here first.

Hear me out. With the recent management changes at Apple the time is right to move OS X off of its old BSD core and onto Linux. In doing so, all Linux and open source application developers are now in essence writing for Apple’s platform. The distraction of KDE vs. Gnome goes away: OS X and Aqua become the desktop and UI for Linux.

Next, Apple takes Boot Camp to its logical conclusion: virtualizing the hardware and allowing any OS to run. That will make Apple’s hardware the most versatile in the industry. Amongst others, enterprises would embrace it because with one vendor, they’ll be able to run any desktop environment. Big market share growth. Sweet.

To frost that cake, Apple and Intel work together to exploit multiprocessing and multi-core CPUs, and really demonstrate that Vista is the end of the line. With Intel now struggling for direction, and fantasizing they can succeed in consumer marketing, a great solution would be for Apple to start setting Intel’s strategic direction and eventually subsume them. By then Dell will be all over AMD as they chase lower costs. Apple is the only company that can save Intel long term.

So the real frosting on the cake is combining Disney, Apple and Intel. It is what Sony had hoped to become. Whether this becomes one corporate entity or just Steve Jobs’ fiefdom, it would absolutely rule in cool. I just hope that as the empire grows that Jobs is more beneficient than Gates: open it all up a bit and make us consumers happier.
Let me know what you think. And remember, when all this comes to pass, you read it here first.

Yesterday, the House Energy and Commerce voted against the “Markey Amendment” which includes Net Neutraility language by a vote of 34-22.

The good news is a number of congressmen switched votes to the right side and that the issue is gaining public visibility, which means the congressmen will all need to defend their votes. More good news is that 250,000 signatures supporting the amendment were collected at Save The Internet in less than a week. Add your endorsement at their site.
The action now shifts to the Senate, where Senator Wyden’s proposal is being considered.
More news at dailywireless.org: Net Neutrality Down in House and Business Week: Tech Giants’ Internet Battle

It certainly was a great event for the community, and that’s what counts. I felt a sense of optimism that I haven’t experienced in many years about the growth in our “innovation economy”.

We’re very proud to be the Presenting Sponsor for the event this year, and hope that you found it worth your time as well. Leave some comments or email me to let me know what you thought and how we could improve things for next year.

For those of you that would like copies of the presentations, here they are:

• Open source economic development strategy.ppt This is the complete presentation that includes more specific programs and activities.
• Rethink Your Network (Updated pdf with graphics) For anyone with at least a T-1 to the Internet, or looking to put more infrastructure in a data center (like ours!), check out this presentation that describes metro area Ethernet services and how they enable better network deployments.
• Voice Over IP panel A brief overview of the voice over IP market, and why we think VoIP is a matter of “when” not “if” for just about every business.

Robert Iger, the new CEO of Disney, said that the lessons of the music industry screwing up convinced him to offer select ABC TV shows online for free. What a concept! The shows include embedded ads that can’t be skipped (we’ll see how long that lasts).

On the one hand, what’s he got to lose? Everyone is able to watch these shows for free already, so the risk of cannabalizing ABC’s revenues are not as obvious as they are in the music industry. On the other hand, if I were a network affliliate station, suddenly I’ve got another competitor, and so far there’s no room for local ads on the downloaded shows (the ads are different than the ones included in broadcast).

Regardless, those are his problems. Suddenly, though, the obvious has happened: Hollywood’s precious content is now being distributed for free on the Internet. To Robert’s credit he’s doing what his customers are asking for. And other content is bound to follow. How long will it be until we no longer need cable service to get our TV fix? Things are starting to get interesting…