An ideal future communications infrastructure, how do we get there, and what is stopping us!

Whenever the discussion of “Net Neutrality” comes up we often getstuck with how the current network is configured, who provides it, andother historical issues. I would like to toss out that history for amoment and offer what I believe to be an ideal, talk about transitionissues, as well as some of winners and losers in that transition (andthus who the greatest opponents are)

Future network infrastructure

Imagine a municipal ultra high speed network (Fiber to the premises/Home,or whatever future technologies may be even faster) that allowed thecity residents to make arbitrary connections from their home to otherpoints in the city. Sometimes they would connect to other citizens, andother times they would connect to companies.

These companies would offer a wide variety of services, mirroringmany legacy services and having the ability to innovatively create more.

What we currently think of as “phone” service would be handled bycompeting companies that offered directory services and voice (andpossibly video for video phones) connectivity between municipalities,as well as gateways to legacy “phone” networks (domestically andinternationally). Voice communication between municipal residents couldgo point-to-point without the need of an additional intermediary.

What we currently think of as “television” service would be handledby people being able to directly subscribe and connect to variousnetworks individually. I may be a fan of CBC and thus I would have asubscription with them. Individual community based stations would berelatively cheap to set up compared to the current system which eitherneeds wireless transmitters or an agreement with both a cable companyand the CRTC. Like the voice services, there would be competingcompanies offering the service of bringing in “television” stationsthat are not part of the networks who offer their stations directly inthe municipality.

Switching from any service a company offers to a competitor shouldbe very easy given the connection to ones home is entirely neutral toany company.

Transportation and utilities offer a path to this ideal

What I consider to be the ideal should sound familiar, as it is thesystem we use for our ground transportation system and many utilitiesincluding electricity. We have municipally owned/managed roadinfrastructure which allow us to travel between any two destinationswithin the city. We don’t have a “Walmart road” as well as a “CanadianTire” road running to our homes like many of us in Ontario have a“Rogers” and a “Bell” wire running into our homes. The municipality —unlike the legacy phone and cable companies — doesn’t claim somealleged right to actively inspect the contents of all our vehicles or“traffic shape” roads based on whether they like the contents of ourvehicles or not.

The electricity system in Ontario offers a more detailed example. Inthe past, electricity generation and distribution were within onepublic sector owned company. This was appropriately split about adecade ago. We now have public sector owned distribution, withcompetition for generation. We have Hydro One, which is wholly owned by the Province of Ontario, and Ottawa Hydro which like other municipal distribution utilities is incorporated as a business with the City of Ottawa as it’s shareholder.

This separation of generation and distribution would be analogous toa separation of transit/hosting and other higher level services frommunicipal network distribution. The municipal communications utilityshould be offering point-to-point communications services within themunicipality, but should not be allowed to offer transit (bandwidth outof the city) or hosting services such that it is not competing with theprivate sector.

Commentators that focus on the money to build the infrastructure,and the claim that they own the wires and thus should be able to profitfrom them in any way they wish, are trying to bamboozle you.

First, many of the infrastructure costs relate to transit, and thusare not included within the municipal utility model I am proposing.There are considerable ongoing costs to maintaining cables under theoceans, or satellite or other long-range communications. This is a typeof service that should be open to competition, something that is notpossible today since transit services are bundled with the municipaldistribution service. For the same reason that Ontario Hydro was split into multiple component parts,our current private sector “owned” communications system should besplit into its component parts to allow competition. The currentbundling and private sector ownership of that “last kilometre”/”last mile” into the home is causing many anti-competitive problems, and stifling innovation.

The other question relates to competing ownership interests. Thewires which are put under our municipal roads and connect to our homesare put there with the permission of the municipality. While Bell andRogers may have paid for the copper, they do not own the land that thatcopper is running through. The superior ownership right is actually inthe land, not the wires.

The ultimate way to solve this conflict is for the municipality toown that infrastructure under the roads. The municipality alreadymanages multiple conduits for water, sewer, and electricity, with theaddition of strands of glass (high-speed fiber connections) being aneasy addition.

Existing infrastructure

Most people in Ottawa would be surprised that we (the City of Ottawa) already own a fiber communications network called Telecom Ottawa. It is part of Hydro Ottawa Holding Inc., with the City of Ottawa being the shareholder.

Telecom Ottawa is not currently configured as I envision, but it isa start. It currently charges rates that mean that its services areonly within the reach of companies needing the bandwidth. While it willoffer point-to-point communications services between points in theregion, it also has bundled Internet transit services. Competingtelevision and “phone” transit services are also not available aspoints on this network, meaning that it is not possible to replace yourBell and Rogers copper with a Telecom Ottawa fiber connection andeasily connect municipally to competing “voice” and“television/multimedia” services.

The really bad news is that the municipality doesn’t have a future facing vision for communications, and plans to sell Telecom Ottawa to Atria Networks LP.Rather than seeing our communications infrastructure mature as ourground transportation and utilities have, we seem to be headed in theopposite direction.

The political debate

While the model I propose promotes a highly competitive privatesector to enable a more vibrant future knowledge economy built on basicinfrastructure, the legacy providers of various services object. In mymodel the legacy phone and cable companies would no longer be able toleverage their previous monopolies in the “last mile” to impose specialinterest restrictions. Prices would go down and innovation would go upas an direct effect of competition. It is unlikely companies like“Bell” or “Rogers” would continue to exist in this free marketcompetitive environment.

Incumbents in the content industry (major motion picture andtelevision studios, major label recording industry) are also not happy.The Motion Picture Association of America is already speaking out against Net Neutrality,legitimately worried that having a neutral network will open up thelegacy motion picture industry to much needed innovation andcompetition. We will have far more creativity with more money going tocreators if composers, authors, performers and makers of entertainmentcontent are able to skip the legacy intermediaries and reach audiencesdirectly. While the legacy industry associations are opposed to NetNeutrality, they would likely be appalled by my proposal of going muchfurther and revoking monopolist private sector ownership and controlfrom the “last mile” communications infrastructure to our homes andbusinesses.

Not surprisingly, the Independent Film and Television Alliance has a very different viewthat is supportive of net neutrality, making obvious that this is aboutanti-competitive issues. The MPAA position is clearly not aboutprotecting the interests of film and television producers, just thenarrow special interests of the legacy major studios. While the phone,cable and major entertainment industry lobbiests often claim they areprotecting a free market capitalist system, nothing could be furtherfrom the truth.

Any innovation and progress brings with it many winners and somelosers. We didn’t cry for the horseshoe and straw-bail hay companiesthat were nearly wiped out by the advent of the automobile, and weshouldn’t cry for the legacy phone, cable, motion picture or recordingindustries as we modernize our communications infrastructure to betterenable competition and thus more creativity and innovation.

This will be a very hard fought battle to allow us to move forward.The legacy phone, cable and entertainment industry are very powerfulpolitical forces. Any list of top lobbiests in Canadaor elsewhere is a whose-who of those working for the legacy phone,cable (broadcast undertakings) and entertainment industry. This makessense given these are industries that have to continuously confusepoliticians in order to justify their very existence in a world thatwould otherwise modernize and replace them.

I believe the current opposition by incumbents to simple NetNeutrality rules for Internet services will likely backfire for them.The more people get upset about violation of the end-to-end designprinciple for the existing neutral Internet, the more people will seethe necessity for the vision I have presented in this article.

Note: The description for a recently released book For Sale to the Highest Bidder: Telecom Policy in Canadasuggests it will discuss this issue. Not having read it yet I cannotoffer specific comments. It does have two articles under the heading of“Net Neutrality”, one by Dr. Michael Geist and the other by Ben Scott.Other Contributors include: Maude Barlow, Genevieve Bonin, BruceCampbell, Andrew Clement, Phillipa Lawson, Graham Longford, MaritaMoll, Amelia Bryne Potter, Marc Raboy, Leslie Regan Shade, Mel Watkins,and Julie White.

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