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Democracy and the New Information Highway

America is being rewired. Will the electronic traffic be controlled by users, or dominated by the big corporate players now maneuvering for an inside position?

by Mitchell Kapor

The visionaries sketched it out, the computer literati caught onto it, and now it's all over the mainstream media: a high-speed, fiber optic, new information highway carrying an expanding universe of information and entertainment into the home and the workplace. Thousands of movies, mail-order catalogs, newspapers and magazines, educational courses, airline schedules, and other information databases will be available with a few clicks of a remote control. Two-way video conferencing will revolutionize business meetings, visits to the doctor, and heart-to-heart talks.

This vision has been tirelessly promoted for more than a decade now but with little visible progress toward its realization. Political gridlock has snarled telephone companies, newspaper publishers, cable television operators, and other potential players in lengthy and fruitless congressional and court battles. As a result of this logjam, a justifiable cynicism has developed to fill the gap between vision and reality.

Meanwhile, pioneers in the on-line worlds of computer-mediated communication networks, collectively referred to as Cyberspace, have not been sitting idly by. Employing whatever tools they can find, they are constantly pushing at the techno-cultural envelope. Life in Cyberspace is often conducted in primitive, frontier conditions. But at its best, it is more egalitarian than elitist, more decentralized than hierarchical. It serves individuals and communities, not mass audiences; cuts across national boundaries; and is extraordinarily multi-faceted in the purposes to which it is put.

In fact, life in Cyberspace is shaping up just as Thomas Jefferson would have wanted it: a decentralized democracy, founded on the primacy of individual liberty and committed to pluralism, equality, and community.

Now, for the first time, something is happening with the major industrial and political players, too. A broad consensus is emerging on key business, technological, and political aspects of a National Information Infrastructure (NII). The creation of high-capacity networks by cable and telephone companies seems imminent.

Yet even as the crucial agreements between business and government are forged, fundamental questions remain about the implications of the re-wiring of America. Will we get the openness, freedom, and diversity that represent the true promise of new information technologies? Or will we end up instead with networks controlled by mega-corporations, fostering addiction to a new generation of useless electronic narcotics (glitzy, interactive multimedia successors to Nintendo and MTV), and encouraging instant gratification through sex and violence?

The Consensus
The emerging consensus between business, government and policy watchdogs has three key points:

Private, not Public. The private sector, not the government, will build and operate the NII. The government will fund research, lead the effort to develop experimental ultrahigh-speed networks, help to promote industry standards, and protect freedom of speech and rights of privacy. But the principal carriers of traffic into the home will be telephone companies and cable television operators, not the government.

A Hybrid Net. Much of the public discussion about the new information highway has focused on fiber optic technology. But the networks reaching into the home will actually be hybrids of fiber optic cable and the existing copper wire and coaxial cable used by telephone and cable television companies. Fiber optic cables will be used in the major arteries and portions of the distribution system; copper and coaxial cable will be used in the last hundred yards. To achieve a broadband network capable of delivering high-quality video, voice, and data, it is both unnecessary and too expensive to replace the last segment into the home with fiber optics.

Video Driven. In the near term, the principal business opportunity driving investment in a broadband network will be the delivery of movies on demand to the home. Government regulators are now trying to orchestrate an overall path towards more competition in this emerging market, and the decisions they make will leave an important imprint on the future evolution of the NII.

Happy Accident?
This three-pronged consensus fixes the very broad directions of the new information highway. But it also leaves a wide range of possibilities open, with vastly different implications for the Jeffersonian vision.

The optimistic view of the next decade is that cable and telephone companies will be led by a logic of self-interest to build networks consistent with Jeffersonian ideals, even if they are unaware of or uninterested in the full range of democratic goals. The key assumption in this optimistic scenario is that networks permitting the greatest diversity of content and services video programming, computer software, and whatever else is dreamed up by the mass media and individual users will create the biggest market and the largest sustainable business opportunities.

Moreover, if the communications industry is responsive to key ideas about openness, then the prospects for the optimistic vision are even greater. Openness means a number of different things access to the highway for all citizens; control by users over the services they use and when they use them; relatively easy entry for new firms. If adopted as a guiding principle, openness as exemplified by the personal computer and such computer networks as the Internet can be a driver of prosperity and diversity in any new market.

The pessimistic scenario is that costs of access to most services other than entertainment will be high; content will be supplied by a carefully chosen set of providers, with most users left in the position of consumers rather than producers of information; networks will be controlled by a few firms; and programming will seek the lowest common denominator. The result will be a population divided by income into information haves and have-nots.

The future lies somewhere between the optimist's and the pessimist's views. But precisely where depends on policy decisions that will be taken in the near term. Optimism, combined with vigilance and a commitment to seek government intervention for redress of private enterprise's failures, is the best prescription for coping with the NII's uncertain future. But before jumping to recommendations about public policy, let's first get an understanding of the major players and the changing technologies.

The Emerging Industry
The big players in NII development are cable and telephone companies, each driven by increasingly sharp competitive pressures to accelerate broadband deployment. The regulatory barriers which have kept cable and telephone companies out of each other's base businesses are surely going to fall in the next decade. The result is that nobody's market share is protected. If telephone companies can offer video programming, cable revenue will surely drop. If cable companies can offer local phone service, the Regional Bell Operating Companies (RBOCs) will be hit where it hurts.

These pressures have produced increasingly rapid movement across market boundaries. Earlier this year, the two largest cable operators TCI and Time-Warner Cable announced major infrastructure upgrades. TCI plans to increase the channel capacity from 50 to 500 channels through the use of digital compression. Time-Warner is developing a “Full Service” network in Orlando, Florida, which will offer cable television, video on demand, and fully interactive capabilities.

The RBOCs are not standing still either. Bell Atlantic, for example, will be testing an interactive, switched, broadband network in New Jersey beginning this year to deliver cable television, telephone, and other services over the same wire.

Finally, the recent acquisition of McCaw Communications by AT&T creates the first integrated local and long-distance telephone company since the breakup of the Bell Capital system a decade ago. This positions AT&T to move independently of the RBOCs in providing new consumer services.

A major target for both cable and telephone companies is an emerging video-on-demand market, competing with the $12 billion market for video rental. The viability of the market for video-on-demand has become an article of faith, based on extrapolation from a fundamental law of nature: no matter how many copies of a hot movie a video store has, there's never one left on the shelves when you get there. With video-on-demand this will never happen, as individual digital realizations of a stored film image can be generated as needed. Add the convenience of skipping the trip to the store, and being able to make last-minute decisions about what to watch, and there is a compelling case for the inevitability of movies on demand.

But major market opportunities are not confined to video-on-demand. Cable companies want to compete for a share of local telephone business (an $86 billion market) by offering a new generation of cordless phones that work through a cable set-top converter. Telephone companies want to supply basic cable television service, and a recent Federal District Court ruling overturning restrictions on RBOC provision of local cable television service points them in this direction. And everyone is hoping major new markets for interactive shop-at-home services will open up.

A final piece of the competitive picture is that the computer industry has now joined the party. In April of this year, Microsoft and General Instruments announced the intention to work together to create the intelligent set-top converter required by the new network. Really a computer in disguise, this next generation cable box will contain an Intel 386 (or higher) microprocessor and multiple megabytes of ROM and RAM.

How all this maneuvering will pan out is of course uncertain. But one thing seems clear that cable companies are better positioned than telephone companies to take advantage of emerging opportunities. RBOCs themselves are pursuing very different strategies, indicating a lack of consensus on the winning broadband formula. Some may not survive the transition to competition in local telephone service others, cognizant of the threat to their installed bases, have bought into cable franchises. But telephone companies are clearly playing catch-up when it comes to providing entertainment services over their facilities. In addition to the technological risks they face (which are shared by cable) they are hindered by a regulatory environment which still contains substantial prohibitions. Moreover, they lack the kind of entrepreneurial culture that encourages rapid strategic adjustments in dynamic environments, big bets, and the will to see those bets through all of which puts them at a disadvantage relative to cable operators.

Hybrid Networks
The technological bases of NII have been shifting as fast as the industry players. Infrastructure rhetoric of the 1980s called for end-to-end fiber, so much so that politicians and press alike have mistakenly identified fiber optics and broadband networks. But the current industry consensus reflecting new technologies for information compression, storage, and transmission is that networks will join fiber optics to existing coaxial cable or copper telephone wire. Such hybrid networks have the potential to deliver a full range of interactive services at a fraction of the cost of fiber-to-the-home.

To accommodate an interactive network, cable television's physical infrastructure will need to be substantially transformed. Today's separate cable systems will be joined via regional hubs, which, in turn, will be interconnected to form a national network. High-capacity video file servers capable of storing thousands of hours of programming will be attached at the regional level.

Existing cable systems will be replaced by fiber optic cable that will reach from the head end of the cable system to a node serving a group of 200-1500 homes. The last segment of the network from the neighborhood node to individual homes will use existing coaxial cable.

This network architecture will be capable of carrying hundreds of channels of programming into every home, as well as custom programs selected by individual households. Initially almost all of the capacity will be used to bring signals into the home, with very little being used to carry traffic back “upstream,” from one user to another. But with proper upgrades, a hybrid network also will be capable of accepting and switching telephone traffic. Over time, the network can be expanded to support full two-way communication applications like video telephony.

Broadband networks for telephone systems are rapidly converging on delivery of the same set of services as the emerging cable network. Here again, deployment has been aided by the development of a new transmission method called “Assymetric Digital Subscriber Line” or ADSL that makes it possible to use existing copper wire to deliver video to homes. ADSL is not yet a perfect substitute for cable: it is limited to sending one channel at a time and will not serve households in which more than one television is turned on. But these limits are temporary. Within a year or two ADSL will be able to carry live news and sports and serve multiple TVs.

A Policy Prescription: Openness
Let's assume all the industry strategies and all the technology shake out in unpredictable ways by the end of the decade. While the precise outcome of battles between cable and telephone superpowers will make a difference to the consumer, more important still are the basic design principles both in technical architecture and in public policy under which the winning entry or entries operate. And the key design idea for the Jeffersonian path is openness.

Openness is an issue in every aspect of the network. A network is either open or closed with respect to who may have access to it, who may supply content, who determines its specific uses, and how its architecture is determined (who can provide the equipment, how interfaces and standards are determined, and whether the technical details are public or private).

The Internet is the paradigm of an open network. It is an interactive medium based on two-way communications, where people who provide their own equipment can fluidly shift between positions of listener and speaker. The public telephone network is substantially closed in its architecture, but, by virtue of being common carriers, telcos are required to be open in access, content, and use. Cable systems, on the other hand, have no such obligation, and exercise very tight control over both content and use.

The Jeffersonian option requires a commitment to openness in all of its dimensions. And it requires that commitment right from the start: it is much easier to build in openness into networks then to add it after the fact. Building an open network will require that policy makers and businesses ask themselves some fundamental questions before committing to any one path.

Who has access to the network? Is it affordable? Many basic human services in health care and social welfare could be transacted over a ubiquitous voice, data, and video network far more easily than by requiring the elderly, the infirm, and young mothers with small children to take public transportation to municipal, state, and federal office buildings. But without guarantees of an affordable connection, the network will further stratify society, not bring it together.

Everyone has the right to telephone service, and local telephone service is inexpensively priced. But universal service has been achieved through a system of regulation which is widely criticized and in the process of being dismantled. Patricia Eckert, Chair of the California Public Utilities Commission, speaks of the co-dependency of regulators and the regulated. The cure for this addiction is more competition. But no one can promise that competition alone will ensure universal, affordable service. Universal service is the baby which must not be thrown out with the bathwater of a dysfunctional regulatory system. In truth, no one knows how to do this yet. It is therefore imperative that, in the public policy debate about broadband networks and increasing competition in local phone and cable service, a universal right to service be given priority.

Who can put content onto the system? In the “video dial-tone” model developed by the Federal Communications Commission (FCC) for telephone companies (which has already been approved), telcos will be allowed to make content available through their own content servers. But they are also required to allow third parties to attach their own video servers to the network, and to charge on a non-discriminatory basis for transport of the content to subscribers who request it. In fact, the FCC has gone so far as to specify that the top-level menu or “gateway” which appears on the user's screen points to the third-party services.

In this respect, the terms of providing content under video dial-tone would generally follow the practice on the Internet there, anyone who wishes to make information available is free to put up an FTP, Gopher, or WAIS server, to which any other Internet user can connect.

Ideally, any user of any network should be able to originate programming from the home. To do this requires a network with sufficient upstream bandwidth to carry at least one compressed video signal (optimally, a minimum of 1.5 megabits/second). Either the basic network itself should have this capability, or, if this is uneconomical, it should be an option which is always available as an add-on. In either case, it should be as easy to provide a service as it is to use one.

In the on-line world, open and closed models exist. Commercial services like Prodigy and, to a lesser extent, Compuserve and America Online, tightly control who can put information onto the service. At the same time, the existence of 45,000 individually-controlled bulletin boards testifies to the fact that a lot of people want to run information services. Networks must be designed to support sufficient upstream bandwidth to allow for maximum flexibility in point of origin.

The model for cable television has been completely different. While cable operators are required to carry most local, over-the-air broadcasts and a small number of public access channels, they are otherwise free to do what they want. An industry structure in which major cable operators are also owners of programming creates a further incentive to restrict content. Time-Warner and TCI, for example, both hold major shares of CNN. They might just think twice before agreeing to carry another 24-hour news service.

The cable industry would need to reinvent itself substantially if it is to open up in terms of content. The federal government has recently given cable a big incentive for such reinvention: the 1992 reregulation act put a tight cap on revenue growth from basic cable services. So growth will require developing new services. These new services might eventually include the use of cable as a carrier for unrestricted third-party provision of content from alternatives to CNN to home videos. In this scenario, enlightened self-interest will eventually drive cable to more openness in content. Failing that, the government must develop a new type of legal regime which obligates a carrier not to discriminate in content, but does not impose heavy, common carrier-style regulatory burdens.

Will novel uses of the network be allowed to develop? In Massachusetts, Digital Equipment Corporation and Continental Cablevision conducted an experiment using idle capacity on an in-place cable system as a ten megabit/second local area network. Technically, cable companies could add a low-cost data service option for access to the Internet and other computer communication services. But cable system operators, who think of themselves as vehicles for the delivery of mass-market entertainment, are likely to overlook the opportunity here because it is so far outside their usual province.

New and potentially revolutionary services such as these should not be overlooked or squeezed out of the market. If users have more control over determining the uses of the networks these new opportunities are more likely to get the early nurturance they need to turn into big, recognizable business opportunities. To accomplish this, we should consider setting aside experimental frequencies on broadband networks for developing significant new uses. This approach is gaining favor in the wireless world, where the FCC is now granting valuable Pioneer's Preferences for such developments, and it should be considered for adoption in broadband as well.

Will system specifications and interfaces be publicly available and defined in an open process? Both telephone and cable companies will develop interface specifications for video servers. Will these be publicly available? Or will the standards be proprietary and controlled by the manufacturer? Computer networks adhere to the open model, while, historically, telephone company central office equipment and cable head-end systems have been quite closed. If specifications can be obtained only through special pleadings, the garage-and-attic segment of developers who create the most radical innovations will be overlooked or even excluded. This must not be allowed to happen.

500 Channels and Nothing On?
Let's assume that in another ten years we all have powerful, user-friendly, innovative gizmos in our living rooms. The basic question remains: Will there be anything worth watching? Can we expect a real diversity of sources and uses of information, or simply an emptier wasteland?

The advantages of diversity seem clear enough, particularly from the Jeffersonian angle. Increased diversity will permit more raw, unfiltered sources of information to reach the people. During the last presidential campaign, more people began to turn off the blow-dried network TV anchors and turn on C-SPAN. Professional pundits were shocked by the size of the audience for the debates and town hall meetings. Direct participation in the political process, an idea fueled by Ross Perot and supported by Bill Clinton, would be well served by open platform for video. Coupled with the interactive capabilities of computer conferencing systems, the dialogue might replace the monologue as the staple of political discourse.

Some argue that diversity will lead to social fragmentation. Others say that most content will be junk. But print, the medium of the greatest diversity, reflects our culture rather than fragmenting it. And noise is the price we pay for signal. In fact, without junk, there is less of a chance for real quality to emerge. Today's noise is tomorrow's signal.

Assuming, then, that diversity is an important policy goal, the question is how to achieve it. Here, we can learn an important lesson from the history of cable television.

One of the arguments used in favor of cable was that it would increase both the number of channels and the diversity of programming. The prediction about numbers was certainly right: the average cable system carries dozens of channels which aren't available over the air. But real diversity is qualitative as well as quantitative, and as cable shows we do not get qualitative diversity simply by increasing the number of channels. If systems are controlled by a single operator per market then no matter how many channels there are the desire to seek the highest economic return per channel drives programmers to seek the largest possible audience and the lowest common denominator. So cable channels are now filled with 1950s reruns, shopping channels selling overstocked merchandise, and other commercial detritus. And as the number of cable channels per system continues to rise, we are seeing more and more niche cable services comedy, science fiction, and cartoon channels. It's all the same old television pie, cut into new, thinner slices.

Diversity, then, is not just a matter of numbers. Instead, it raises fundamental issues of architectural design, political control, and business strategy.

As a matter of technology, diversity requires a switched architecture in which some channels don't carry fixed content at all. Rather, a given channel serving the home should be able to carry any particular program content in the same way that the telephone in the home today can be connected to any other telephone in the public switched telephone network.

Above all, though, diversity is now a matter of distribution. Until recently, there were bottlenecks of expensive resources at every stage in the video chain particularly in production. But thanks to advances in video cameras and desktop video, we're down to a single chokepoint: distribution. Without an inexpensive, accessible, affordable infrastructure for the distribution of video material, the diversity of useful video material will be limited, and the potential of the medium will not be reached.

It should be a national goal to create an infrastructure that removes this bottleneck and permits the unencumbered distribution of video programming of all kinds. A worthy model is the infrastructure which supports the distribution of print material the postal system, roads and highways for the transportation of bulk print matter, etc.. This infrastructure includes a taxpayer-supported network of roads and highways for the physical movement of printed material, and subsidized postal rates for publications. The resulting richness and diversity in print media can serve as a role model.

A national video infrastructure may not require taxpayer subsidy. Entertainment and other premium services alone will justify the broadband investment, according to the cable and telephone companies that are building them. But it does mean policies that foster a shift from an ecology of a small number of instances of relatively high quality to a large number of instances of wildly varying quality. Over time, as a new generation of professional and non-professional users learn to master the tools, and as the tools themselves improve, the average quality of production will increase.

Broadband Policy
The critical public choice regarding the information highway is this: If industry builds it, how happy are we likely to be with the result? To what extent will the Jeffersonian vision of diversity, openness, and decentralization of control happen by itself?

The optimist in me thinks we should give telephone and cable companies every opportunity to get it right. More precisely, we should seek to educate and enlighten, while developing contingency plans. Here are some principles that should guide regulators:

  • Encourage competition. Competition does more to keep firms honest than a roomful of regulators.

  • Keep government intervention where it is necessary to a minimum. It should not take the form of heavy-duty regulation of operations, which is self-defeating, but of the adoption, oversight, and, if necessary, enforcement, of certain principles.

  • Ensure free speech and privacy. Constitutional protections of personal privacy and freedom of expression should be extended to the emerging networks.

    As to the networks themselves, they must be built as open systems intended to ensure:

  • Easy Access. Everyone should be able to connect.

  • Diverse Content. Users should be able to determine the content of the system.

  • Multiple Uses. People should be able to choose the roles they wish to play as consumers, providers, or both.

  • Flexible Architecture. Networks must be built as a series of interoperable components with well-defined published interfaces which permit maximum third party competition.

The Jeffersonian ideal a diversity of users and manufacturers, grassroots democracy with true communications among the people, and all the dazzling goodies of home shopping, movies on demand, teleconferencing, and cheap, instant databases is composed of high bandwidth, distributed two-way switching, and an open architecture. It's our choice to make. Let's not blow it.

Originally published in the September/ October 1993 issue of Boston Review

Copyright Boston Review, 1993–2005. All rights reserved. Please do not reproduce without permission.

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