Monday, May 29, 2006

"Net Neutrality" Lining Up As Battle Between Old Economy (AT&T, etc,) and New (Google, Microsoft, etc.)

The matter of the maintenance of "Net Neutriality" is growing to massive proportions in the online world. On May 26th, the US house passed legislation that should keep the flow of online information unfettered by price gouging.

The basic objective is to make sure that the free flow of data remains just that -- free. There's legislation presented and backed by a set of large, old economy telecommunications firms, and led by AT&T, such that faster connection speeds would require payment of a fee. It's believed that this cost is large enough to essentially divide the Internet into "haves and have nots" and hamper the ability of small web-based companies (like mine) to grow. Indeed, the simple application of a charge of any size splits the Internet into two economies. It's for that reason -- to start -- that any user fee proposal should be rejected.

Look, we're not talking about an Internet tax; this is a way for the Old Economy companies to make money. The AT&T's of the world are upset that the small firms like Vonage and Skype are able to undercut their business by offering free long distance service using your computer and their phone lines (!) through the Internet, thus reducing the need for the services offered Old Economy firms.

The Old Economy firms are threatened by the continuation of a process that started almost 20 years ago: the constant and inexorable decrease in market value that they have suffered since the mid-80s. A chain of events started when the Federal Government forced the then-powerful AT&T to share its cable lines with other long distance providers. Ever since that point, the "Baby Bells" have been trying to slow the rate of decrease in market share and in any way.

Now, the only proof I have of this is rather powerful. In 1988 I was to be hired as part of a consulting team led by The San Francisco Consulting Group. I was to constuct a System Dynamics model of the US long distance telephone industry. That team was to determine how the market for long distance service was changing and how the client -- GTE -- should respond to this change. In other words, how they should achieve "a soft landing" as their market share decreased. The schematic I created for the model was formed to have a pattern of numerical behavior such that each long distance company was losing market share as new players arrived on the scene.

That was before the emergence of the Internet, which didn't become a major factor in how we communicate until 1995. But after that year, the number of Internet-equipped computers increased dramatically, as did the number of Internet-based services and companies. In 10 years, we've went from dial up to DSL to Broadband, and the one constant in this process has been the use of phone lines used by companies like AT&T.

Ever hungry for new forms of revenue generation, the firms that provide Broadband service -- and standard telephone service -- saw a way to cut off competition from the "Vonages" of the World: force them to pay for faster Internet speeds.

In this, they found the perfect driver to increase revenues and at the same time hamper the growth of the Global Economy. It's easier now than even before in our history for a small business to have a global reach using the World Wide Web. The cost barrier to entry for many is close to zero if one knows how to find the free services needed.

But from the perspective of thee AT&T's of the World, their revenue gain would be unescapable; absent a way of hacking the system, billions of users would have to pay them for faster access, thus introducing a new barrier to entry for small companies in the Global market.

As I think about it, such a move isn't even good for the AT&T's of the World.


Hackers and Viruses.

The incorporation of such a fee -- an economic tax -- would invite the anger of geeks everywhere. And when geeks get angry, they don't pick fights, they change systems. AT&T would be the target of every geek hacker in the World. Eventually -- I believe -- there would be a set of gates or holes that would eventually hamper the collection of fees for faster access. But I give this process ten years to unfold and another five to render the fee system useless. Meanwhile, the World's economy would stuffer from the delayed birth of the next Vonage, Google, or Sports Business Simulations.

Thank god Congress made the right step toward net netrality.

"Oilers Rap" - An Example of The Worldwide Spread Of Afro-American Culture

This fan was captured on camera "freestyling" -- coming up with rap lyrics on que without notes -- after an Edmonton Oliers NHL Hockey playoff game. His girlfriend provides the "beat box."

Now, if I told you this happened, you might assume the people were black and American. You'd be wrong.

You might think they were wearing "hip hop" clothing. Wrong again. (They're well dressed.)

Marketers should take note of this video, because it's a shining example not just of the Worldwide spread of African American culture, but of how the music tastes of young people have changed. Think about it. The guy rapping in this video probably practices this daily. It's not bad.

Here's the video I call "Oilers Rap."