The Internet is about diversity, and in the last couple of days, I've been from one end of the Net to the other. In the beginning of the week, I was part of a program for an association of small, rural telephone companies. At the end of the week, I was at a conference to explore the meaning of Web 2.0, the shorthand for an Internet made richer by content created by users, which in turn makes other content and products more valuable.
In Phoenix, the Western Telecommunications Association (WTA) held its “Bootcamp” conference on the basic issues that need to be addressed by the rural telephone companies. Their world is a traditional, regulated telecom world. It is built around the subsidies known as the Universal Service Fund (USF), the system by which telephone companies with lower costs, generally in urban areas, help to cover the costs for companies in rural areas with higher costs to serve customers.
The WTA perceives a threat to its USF support, and has started a campaign called “Keep America Connected,” to persuade lawmakers and the Federal Communications Commission (FCC) not only of the value of their service, but to keep the support flowing. They are afraid that the universal service “reforms” talked about in Congress and the FCC will hurt, rather than help them. They are acutely aware that some rural Republicans, like Rep. Joe Barton (R-Tex.) and Sen. Jim DeMint (R-SC), are their worst enemies on USF issues.
Their world is full of concepts like the separation of costs of telephone services into those designated to the interstate jurisdiction and those designated as intrastate. It is about how telephone companies compensate each other for carrying each other's traffic (intercarrier compensation). Their world is neatly ordered, with business relationships between the traditional parts of the industry set out as they should be.
Traffic goes from local lines to interstate and back into local networks. Those companies need access to the networks of the larger Bell companies, and asked the FCC to make sure that they get connected to the Bell networks on a reasonable, non-discriminatory basis. At the same time, they aren't sure whether they should discriminate against customers by cutting favorable deals on their broadband services. In a panel discussion of Net Neutrality, I suggested non-discrimination should be equally applied. If small, rural telcos wanted to press for non-discriminatory access to Bell networks, they should also be in favor of a Net Neutrality standard to protect consumers and applications providers.
These are the people who hold at least some of the key to economic development in rural America through selling broadband to consumers. For their communities, they can be the only broadband game in town. Theirs is a life not yet governed by the “series of tubes” that is the Internet – literally and figuratively. Out of about 100 people in the room, only a handful had heard of that description of the Internet by Senate Commerce Committee Chairman Ted Stevens (R-Alaska), and a description of the Daily Show's sketches using the term brought a lot of blank stares.
At the other end of the spectrum is the Web 2.0 conference in San Francisco. It is attended by software engineers, designers and entrepreneurs who are on the cutting edge of the newest products and applications. The people at the conference are taking the musical concept of the mash-up and applying it to the Web, in large part through open interfaces among products. Building a social networking site that would like to integrate Skype or Flickr? Go right ahead. Their world is much more convoluted. Traffic may start at one end, but then go every which way as packets are distributed before ending up at their intended destination.
The place of the telcos in the mesh was aptly described by Niklas Zennstrom, the CEO of Skype, the Internet-based, peer-to-peer telephone service. “We're helping telephone companies sell broadband,” Zennstrom said, meaning that better applications drive demand. One imagines what the rural telcos would think of Skype – as a threat to their core business, not as a software application. Zennstrom is clearly someone on the edge of the network. Most innovative services didn't come from the telcos, but by small and innovative companies.
The Web 2.0 conference featured a Net Neutrality debate on Wed. between Google's Vint Cerf and Cisco's Bob Pepper. But the stage for their discussion was set the day before by IAC Chairman Barry Diller, who said Net Neutrality was “a no brainer.”
“How there can be a debate about Net Neutrality is beyond me,” Diller said. Yet they had one anyway, with Pepper arguing that Net Neutrality would lead to price controls on the Internet and that the legislation in the Senate that will likely die in the lame duck session would give the FCC sufficient authority to enforce Net Neutrality principles.
Cerf disagreed, saying there was no certainty that price controls would result, said the legislation didn't recognize the complexity of the Internet.
There are times when we imagine the Internet industry as being populated only by a handful of companies. Conferences like this disabuse that notion. There were thousands of people in San Francisco, and 5,000 turned away. Even though a Google exists, they are working to invent a better search engine, or a better social network. There are startups trying to capture information on events from basketball games to PTA meetings into one giant calendar.
At lunch at the Phoenix conference, one participant with a long background in telephony was talking about Google's purchase of YouTube. It was a good move, he said, because Google was buying the competition. That's a standard view of the world. The disruptive view from San Francisco is that there will be a next YouTube, and you better be ready for it. Even if the telephone companies aren't ready, the applications developers are and the customers are. The network had better be ready and the telcos, and cable companies, had better be ready to provide better non-discriminatory services than we have now.