The growth of the Internet has emphasized functional rather than structural aspects of networking. The end-to-end principle, the concept of “the Internet,” and widespread concern about “bandwidth of connections to the Internet” push into the background ownership interfaces between networks and the geographic structure of interconnection. One result is that opportunities to innovate at the edges conflict with network “pipe” innovation, i.e. the paradox of the best network.
Major industry trends have major implications for network geography. Municipal networks, such as wi-fi networks or open-access municipal fibre optic networks, are a rapidly developing form of network infrastructure. From a regional or national perspective, municipal networks make cities important elements of network structure. If you just understand these networks to be providing Internet connectivity, you miss that they connect residents of a city to other residents of that city in a distinctive network organization.
Network geography significantly affects the cost of providing network services. If communication bandwidth cost is distance-senstitive, then local caching reduces the cost of distributing content. That effect is particulary important for high-bandwidth content such as video. Even if you believe that bandwidth costs will rapidly go to zero irrespective of physical distance, transaction costs associated with providing services are likely to remain distance-sensitive. At any given degree of infrastructure ownership consolidation, the number of ownership interfaces are likely to increase with distance. Ownership interfaces are a source of transaction costs. In addition, customer behavior and customer service have local components. Local knowledge allows a service provider to respond better to (local) customers’ needs.
The economic geography of internetworking is starting to attract more attention. In an interesting presentation at the recent Firstmile conference, Mike Hrybyk discussed BCnet transit exchanges in British Columbia (if you’re wondering, that’s in Canada). These transit exchanges provide a low-transaction-cost environment for the exchange of network services, including peering of local users and user purchasing of network services from a variety of carrier suppliers. Research and educational institutions seeking to foster local network development and to experiment with innovative networks have led the development of these transit exchanges.
The Internet is wonderful. Future forms of internetworking can be even better. Recognizing cities as important structures for internetworking can help to make the Internet better.
Ponder the possibilities for funding network infrastructure. Think about how to contact persons dispersed after a cataclysm. Understand the deep significance of exchanging a chicken. This isn’t highly successful fiction, or merely a fantasy game that you can enjoy from the comfort of your telecom fortress. If you’re not reading Telepocalypse, you really are gonna be left behind!
As an FCC bureaucrat, I’m intrigued by a recent discovery about the spineless gene. I’m trying to understand better the demand for communications services, particularly across sensory modes. A leading researcher on the spineless gene in fruit flies explained:
“Spineless plays a key role in the antenna and maxillary palp, the two major olfactory organs of the fly,” said Ian Duncan. “It’s also important in mechanosensory bristles and in the taste receptors of the legs, wings, and mouth parts. There has been a sensory theme to the gene, and now we learn from Claude’s work that it plays a key role in color vision.”
The spineless gene also produces certain random structures apparent in the eye:
“Nobody knew what controlled this random pattern,” said Dianne Duncan. “Now we know it’s spineless.”
This discovery may provide an important insight into the evolution of the communications industry.
For more information and images of invertebrates, check out this month’s Circus of the Spineless at Burning Silo.
A forthcoming Michigan Law Review article on J.K. Rowling’s Harry Potter series indicates that these books present a “scathing portrait of government”:
a Ministry of Magic run by self-interested bureaucrats bent on increasing and protecting their power, often to the detriment of the public at large.
The author, a graduate of the University of Michigan Law School, explains that Rowling’s critique of government:
is also particularly effective because, despite how awful Rowling’s Ministry of Magic looks and acts, it bears such a tremendous resemblance to current Anglo-American government.
This is mere fantasy. It’s self-interested scholarly attention-seeking that makes little contribution to public knowledge at large.
All of the 21,000 villages in the Indian state of Andhra Pradesh will soon have 100 Mbps Internet service. The state government sought private-sector bids for the project, contributed about 14% of project equity, provided free right-of-way permissions, and signed on as an anchor customer (40,000 government buildings connected for a fixed annual fee). The total cost of the network: about US$90 million.
Connections within villages to residences and business are left to competing local cable companies. Such cable companies have brought cable TV to about 40% of residences in Andhra Pradesh. The state-wide network is required to make available at the village points-of-presence (POPs) wholesale video distribution, telephony, and internet services at agreed prices. This makes the business plan for village networks simple: bring the services available at the village POPs to individual customers for a mark-up. This seems like a practical implementation of decentralizing local connectivity while standardizing wide-area service distribution (pdf).
Competition among network service provides can have large costs (pdf) relative to the cost of the network infrastructure itself. Government initiatives that promote a good structure for competition can help to make broadband services widely accessible at low cost. The Andhra Pradesh Broadband Project promises to do just that. Other innovative broadband projects, such the Singapore National Broadband Network and municipal broadband projects, have different institutional structures. More comparative institutional analysis would be helpful for informing communications policy.
Randeep Sudan, now at the World Bank, helped put together the Andhra Pradesh Broadband Project. He described the project in a recent presentation at the FCC. With his permission, I have posted his slides here.
Democracy depends on an active, informed citizenry that is not continuously angry, frustrated, or depressed. Citizen journalism, open source journalism, grass-roots journalism, the fifth estate, pajamas media — whatever you want to call it — has many potential public benefits. Not often recognized, but most importantly, it is a vital defender of public good humor. Serve the public interest as a citizen journalist!
Customer relations for the old teleco: how the company relates to its customers.
Customer relations for the new communications service provider: the customers’ relations.
The largest share of value in communications services is the value of presence. How can communication services providers measure their performance in capturing this value?
Average Revenue Per User’s Relation (ARPUR) is a practical measure of presence value. ARPUR is Average Revenue Per User (ARPU) divided by some measure of user’s interaction with other users (relations). Such a measure might be the least number of users who account for in total at least 50% of the given user’s communication sessions, time, or revenue. The higher the ARPUR, the more the communication service is creating value through presence.
Persons typically value most highly the presence of family and friends. Limitations of time and attention, which good communication services can help to relax, constrain the number of family and friends that a person can sustain in daily interaction. The value of communication with the family and friends that persons do sustain is typically high and enduring. A good business plan for communication service providers is to capture a large share of this value. ARPUR is a metric of success in doing this.
While not often recognized as such, telephone service is a quintessential presence business. A study in the U.S. in the 1970s found that 50% of residential calls go to a set of five numbers. I think this has been roughly true for personal telephone service in most places throughout the history of telephone service. Creating more value in these relations creates value in this kind of communication service. It’s a presence business.
For contrast, consider an anti-presence communication service: telemarketing. Telemarketing involves mass distribution of information of interest only to a small number of persons. The telemarketer typically does not know any of the persons whom she contacts and does not typically repeatedly contact them. Moreover, most of her contacts probably wish that they did not know that she existed. A good communication service for telemarketing users might have a high ARPU. But its ARPUR would be near zero. It’s not a presence business.
ARPUR might help a new communication service provider steer its business between the imperatives of viral marketing and the long-term value of presence. Viral marketing, like infectious diseases, propagates most rapidly with some highly promiscuous agents. A communication service that wants to succeed virally needs to enable promiscuous agents. On the other hand, promiscuity is inconsistent with large presence value. The business challenge might be to manage change from low initial ARPUR to strongly rising ARPUR.
Suggested analytical exercise: Consider ARPUR for portraiture over the past 500 years. Take the user relation to be the gift of a picture of oneself to another person. What has been the trend in ARPUR? What has been the trend in total portraiture industry revenue? For relevant information on the economic history of the photography business, see Photographs and Telephone Calls in Sense in Communication.
Take-away message for busy communications executives: Get out of the telecom toilet and get your business purring. Stop sniffing ARPU and start making ARPUR!
No nudity, no violence, no profanity — can you [email protected]$%^&* believe this $#^+! YouTube has declared that the Galbi Brother’s Epic 800-Meter Challenge video “may contain content that is inappropriate for some users.” So they want all the sports fans to register before they watch the video (also available without registration here and here).
Indecency is a major communications policy issue. How this issue will play out for online video sharing isn’t clear. Don’t do evil is a good principle both for service providers and users (see truth #6, which extends to users having fun, too).
I sent YouTube a polite email requesting that YouTube reconsider the appropriateness of the Galbi Brothers’ Epic 800-meter Challenge video. That was on Friday, March 3. YouTube hasn’t yet responded to my email.
I think that respect for users implies that YouTube should have some fair process for reviewing “appropriateness” classifications. The same goes for copyright rule enforcement. This isn’t just good business practice — it’s also common decency.
In my quest to stay abreast of trendy technology, I’ve started to use Ajax. I’m sure my teammates will be impressed!