OPEC 2.0: Bandwidth is the New Oil
nytimes.com
nytimes.com
The higher telco profits come at a great cost to the economy as a whole. Bandwidth is today just as important to economic growth as any other basic infrastructure.
The geographic challenge of the US is a red herring. Monopolistic laws, regulations and just plain old collusion, along with very high barriers to entry (regulations again) are responsible for the sorry state of US bandwidth.
I'm not sure how serious an issue bandwidth really is, though. It doesn't seem to be the limiting factor in many activities.
I'm wondering if we could find a study or report that measures online commerce output in relation to a country's commercially available maximum bandwidth. That could be a pretty graph to look at.
That's the sign of a bad analogy. He should have just made his point (a sensible one) and got on with it, without what to me looks like attention-grabbing hand waving.
He keeps going on about consumer telecom. Does anyone seriously believe that household consumption of cable TV, web surfing, and cell phones is an economic driver? Seems kinda ridiculous to me. They're just consumer amenities.
The problem in both scenarios is that there is an inherent conflict of interest when these bets pay off. At the point where every single member of a society relies on a particular infrastructure to maintain quality of life, it suddenly becomes more important to make certain this infrastructure is available than for the company to make a large profit.
I thought this context was implicit in the article. I think what the author is saying is, because of this dynamic, we the consumers need to be aware and take measures to protect our own self-interest as this dynamic plays out once again (so ATT does not become the cash machine that Exxon is.. at our expense). The "oil addiction" analogy sort of dumbs this down, but that's cool with me because as a result the author is reaching a larger audience that more cerebral arguments could not touch.
- Bandwidth, pre-wifi, was likely to be a local monopoly or at best, duopoly. Oil has OPEC, but that's a cartel at a different level.
- Tons of industries require large up-front investments.
- Oil and bandwidth are regulated in very different ways.
- Wifi/wireless, as he points out, really changes the picture in some important ways.
So, while you can draw a few comparisons, many others are invalid, and I'd have preferred his article had he stuck to the central point, rather than attempt a comparison that strikes me as a bit opportunistic in its grab for attention.
At the same time, I think good analogies beckon more questions and push for further clarification. I got that from this article, and explored a few thoughts that never occurred to me before.
> "A future possibility is to buy your own fiber, the way you might buy a solar panel for your home."
... and connect it to what?
I mean, what the hell was the guy thinking? A solar panel is something that sits on your house, like a TV antenna. The effect that buying your own fiber would have is about the same as buying your own natural gas lines. You can't exactly switch natural gas providers on a whim either.
Maybe I should go into business selling reporters their own fiber. I'm sure they'd go for it if I said the magic words 'Net Neutrality'. Then this author could have a nice new spool of fiber sitting in his basement, to go with the solar panel on his roof.
Oil is a finite resource. You can increase infrastructure to get more but in the end there is no more than a finite amount of oil on the planet.
'Bandwidth' on the other hand is infrastructure dependent. Increase the number and width of pipes (or tubes! :) and you increase data throughput.
The point is, once the cost of adding bandwidth exceeds the value to the market due to shortages of materials, energy, real estate, maintenance, etc you run into the same situation. Bandwidth availability has an s-curve like any other resource, and once you pass a certain threshold its just too expensive to add more pipes. It may not happen soon, but it will happen eventually. Its the same problem on a different time scale.
What makes oil special is that it cannot be produced. It is finite. Bandwidth can be produced. While we might be dominated by a few companies, there is nothing stopping you from raising money and building out your own fiber. Yes, it's a massive undertaking to build a fiber network, but it can be done.
With oil, we can't make more of it as demand increases. We can lay more fiber. Likewise, a country without oil can't turn itself into a country with oil while a company without fiber can make itself into a company with fiber.
While we don't have a plethora of people owning fiber, if the price ever starts going up like oil, more producers will enter and the prices will stay in check. That isn't the case with oil.
Many “owners” of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation’s airwaves are empty.
The solution is to relax the overregulation of the airwaves and allow use of the wasted spaces. Anyone, so long as he or she complies with a few basic rules to avoid interference, could try to build a better Wi-Fi and become a broadband billionaire.
That's like saying that 90% of the sky is empty so air traffic control is not doing its job well enough. Just give everyone a pilot's license and tell them to watch out for other planes...
The empty spaces are important.
Today, I am able to watch instructional/recreational videos at a reasonable download rate with my cable connection, I do not want to digress and go into how much I am or should be paying for it (read FREE).
Luckily, I still remember the Web 1.0 bubble days and here is an article about a company (Enron :-) ) that wanted to trade bandwidth.
http://www.internetnews.com/xSP/article.php/8_253861
Also, if I have to speak for the Internet backbone providers alone, then it is certainly not a cartel.