Trusting Telcos With Internet Is Like Trusting Fox With Henhouse

: It is absolute madness from a policy perspective to trust internet rollout to telco companies. Telcos have a strategic special-interest incentive to delay, hinder, and obstruct any public-interest bandwidth improvements, as ubiquitous, accessible, and economy-boosting bandwidth will shatter their legacy investments.

Around the turn of the century, people in Sweden were laughing heartily at discussions in the United States about whether to connect to the internet using “ADSL or Cable”. It seemed most people were either connected through their phone company or their cable TV provider. To people in Sweden, this seemed mind-bogglingly odd: in the small Scandinavian country, private entrepreneurs had been fibering apartment blocks wholesale for years. I had fiber in my own apartment in 1999, and keep enjoying a 100 megabit-connection with several static, public IPs – from where you’re reading this article, as I run my server from home.

For the record, I should add that it is uncapped, unmetered, and bidirectional. This was a given in 1999, and it should have remained a given, but haven’t, for reasons I’ll get to.

People laughed good at how rapidly things were changing. Placing a phonecall seemed downright anachronistic – why were you paying half a euro by the minute for a nine-kay-six connection that could only be used for a voice application, when you had 100 general-purpose megabits – more than 10,000 times the bandwidth of the 9k6 voicecall – uncapped and unmetered in the wall for a fixed monthly fee? The telcos were doomed to die, the telco business was so utterly doomed to die. The only reason we’d still be making phone calls over the telco network in the short term future was as part of an expected phase-out to something that used the internet instead.

Then, just after the turn of the century, disaster struck the Internet, at least from a public policy standpoint if you want to promote growth and innovation. All the small ISPs were bought out by giant telecoms companies. All of a sudden, if you wanted Internet connectivity, you could only buy it from the old pre-deregulation national telco monopolies: Telenor, TDC, TeliaSonera, KPN, Telefónica.

At that point, the growth in household bandwidth flatlined. Whereas all other IT capacities – storage, computing power, screen sizes – skyrocketed, the growth of household bandwidth just stopped dead and died.

About as predictable as a grandfather clock, really. After, all it made sense: these businesses were about to die from a disruptive upstart, so they pulled a Red Flag, pretended to embrace the Internet, whereas in reality, they are trying to prevent its growth and public utility for as long as possible. The net will disintegrate the telco business (and the cable TV business), and they know it.

It’s not just concrete hinders such as capping, application-level filtering, and metering that the telcos are raising to prevent the net’s utility potential – more than anything, it is the lack of investments in ubiquitous, cheap bandwidth that hinders our economy’s growth; investments that the telcos will never make, proven by the decade-long bandwidth flatline in the graph linked above.

In 1999, Sweden was #3 in household bandwidth as measured by upload, only behind juggernauts Japan and South Korea. Sweden has now fallen to #18, eclipsed by Hong Kong, Singapore, Taiwan… but also by Lithuania, Latvia, Bulgaria, Ukraine, Romania, and Moldavia (!). Overall, the European countries formerly behind the Iron Curtain seem to be leapfrogging the telco-encumbered Western countries.

Creating policy on the pretext that telcos will invest and research in internet bandwidth improvements is policy madness. You could just as well have made policy in the car’s infancy with the assumption that buggy-whip makers would make investments and research on automobile engines. It just won’t happen. It goes against every bit of business sense and strategic interest. What will happen instead is that the obsolete industry tasked with researching their replacement will happily accept any policymaking favors and tax money, do nothing (or even be counterproductive), and then ask for more favors.

You could also look at the Wi-Max fiasco for a very sad story on the topic, if you like. Wi-Max was basically “Wi-Fi for the cities”. It was a long-range wi-fi network designed to outcompete 3G and wireless data for city-wide coverage in terms of cost-effectiveness, reach, and deployment speed. Then, disaster struck as the telcos managed to politically place the Wi-Max frequencies in telco-controlled spectrum space. Predictably, again like a grandfather clock, the standard and the hopes it brought died instantly. We could already have had city-wide unmetered, uncapped, loginless data coverage – but it is just not in the telco operators’ interest. Of course it isn’t. But it is in the public interest. It is in everybody else’s interest.

Techdirt highlights a recent article where the telco lobby is rising its voice in demanding control of the net, in an article titled “EU Telcos: Give us more taxpayer money, and no one’s internet gets hurt”.

So, if you shouldn’t base the internet rollout on telcos (and you absolutely shouldn’t!), what’s the alternative? Saying that something is bad is not enough, you also need something to replace the bad with.

I would argue that energy companies are a significantly better public partner for rolling out the Internet (to give a tangible example of a better option). They are built for decentralization and resilience, not for centralization and control; they are built for five-nines delivery quality, they are built as long-term investments to wire households, and most importantly, they don’t have any existing cash cows that will be killed by the net, so it is not against their strategic interest. This week, until September 24, such a paper modeling a future Internet on the Icelandic energy grid is out for comments. You can access the paper, Islands of Resilience, here.

Oh, and as a final note, my 100-megabit network in my apartment – the network through which you’re reading this very article – is indeed delivered by my local energy company. Unlike telcos and cable, they don’t have any existing cash cows that will be killed off by the internet, and therefore, have no strategic incentive to delay or hinder it. Tell me – do you know anybody connected through a telco company that is running their server from their home? No? None? Not one?

I wonder how many home offices and small entrepreneurs that never took off because they couldn’t start small-scale from their homes, and so, how much damage the telco buyout of the EU Internet has already done to the European economy as a whole?