In “Why Doesn’t Washington Understand the Internet?” (Washington Post, Sunday, January 22, 2012), Rebecca MacKinnon documents how often legislation fails to effectively address problems involving or supposedly caused by the Internet and how often Congress considers or enacts policy solutions that are rapidly outmoded by the continuing innovation that is at the heart of the Internet’s success.

The question she asks in her piece is a fair one - but it is also fair to note, as even many who helped found the Internet would admit, that Internet’s design did not incorporate features to enhance security for example or help protect intellectual property or make it easier to protect against threats to personal security.  In addressing problems like these that clearly are a threat today, it is vital to keep the Internet’s core characteristics – as a platform for innovation, free expression, and global connectedness – intact.

How do we do that in today’s policy environment where, as MacKinnon correctly points out, Washington does not understand the Internet?  Many in the Internet “community” fear that too many policy approaches to deal with admitted problems have ended up undermining the Internet’s core strengths.

It starts with recognizing that traditional legislative approaches – based largely on mandates and rigid “Do and Don’t” rules - simply won’t work either to address key problems effectively or preserve the vitality and innovation of the Internet.   This type of approach is embodied in large measure in the Telecommunications Act of 1996 which focused largely on existing industry segments and on the physical networks that underlie the Internet’s operations.  

It is increasingly clear that the Internet ecosystem consists of all of the many players involved including broadband providers, software developers, apps makers, device manufacturers and online service providers.  Innovation, collaboration and competition, rapidly changing business models, and entry by new players as in the case of apps characterizes the Internet ecosystem.

The Internet has evolved through the leadership and the work of many organizations made of up volunteers from a wide array of interests without government domination.  These models of what some call “multi-stakeholder” approaches can provide the basis for the right policy framework for the Internet in everything from privacy protection to security to protecting intellectual property.  What is necessary is to ensure that the government’s role is acknowledged but focused on ensuring accountability when voluntary compliance activities fail to ensure bad actors are disciplined for harming consumers or competition.

What are the elements of this policy framework?

First, a national policy overseen by one federal agency is a vital feature of the framework.  The Internet is global in both its reach and its technical and operational structure and having a single accountable agency domestically is important to maintaining its vibrancy and minimizing harmful government interference.

Second, basic policy principles set out in law and implemented not by regulation but by industry codes of conduct or corporate policies will ensure that effective policies guide companies and organizations in their actions while avoiding traditional inflexible government regulation.  Government should participate in the development of these policies but it should not be allowed to dictate or mandate any outcomes.  The process should be collaborative as is the case today with Internet organizations.

Third, government should only intervene on a case by case basis after an investigation that has proven a particular company or organization has failed to live up to its commitments and has harmed consumers or competition.  Regulation and mandates which are the traditional tools of government should not be allowed under this framework.

Finally, the policies should be technology neutral, applying equally to all players in the Internet ecosystem.  This is as much to help consumers – who should not be confused as to which agency is accountable when markets do not work properly – as it is to ensure fair competition.

This basic framework can apply equally well to most key policy areas ranging from privacy to cyber security.  By using the governance models that have made the Internet a success and effectively involving the government in ways that ensure accountability but do not stifle innovation or the ability to use the Internet freely to connect with others, we can build a model of Internet governance that is right for the modern era.  And we can finally ensure that Washington does get it when it comes to the Internet – and does not get in the way of the Internet’s continuing journey to build new ways to interact, communicate and innovate.

This was first posted today at Verizon’s At Home blog, where I’ve also placed posts about potential, delivery, and innovation – each related to what I’m seeing on-the-ground from the Consumer Electronics Show this week.

Here at CES, it’s a mad house.  I walked the floor Wednesday with thousands of my closest friends, looking for “the next big thing.”

I found something better.

Thousands of gadgets, hundreds of e-tools, and scores and sores of connected devices.  With some pride I noted how much of consumer electronics this year are part of the 4G LTE ecosystem, an ecosystem that wouldn’t exist to this advanced degree without Verizon’s network innovation.

Meters, wireless cameras, handsets, tablets – if you wanted a common theme at this year’s show – “connections” would be what I would say.

But my big find wasn’t that, it was bigger, better.

It was competition.  Phones are computers. Tablets are TVs. Electric meters are phones.  Every one, every innovation competes for the consumer’s attention, to solve a customer’s problem. 

This year I’ve read some reporters were lamenting that big players like Google, Microsoft, Facebook, Apple have either limited, diminishing, or zero presence at CES.  It seems there aren’t enough “big boys” spoon-feeding us “the next big thing.”

How sloppy, untidy, and time consuming is that for today’s tech beat reporter?

Sure, this competitive marketplace isn’t a pretty picture.  It’s more like an elementary school cafeteria food fight.  Lots of noises, new kids chuck stuff, old kids chuck stuff, and everyone wonders what might stick to the wall.

Big and small, old and new; tech companies are chasing one another -- all fighting for the consumer’s attention.  It’s a mad, mad, mad world. No brown paper packages wrapped up with string.  More like a mosh pit of competitors slamming away at and with each other.

CES is exhibit A. The environment Verizon and the scores of other tech companies who build the devices, apps, networks and tools that define our modern lives is viciously competitive.

It isn’t tidy, it isn’t always pretty, but it is a fact.  And if anyone doesn’t see that, they need to come to Vegas.

While it’s bitter cold outside, Verizon is already looking to summer, specifically summer jobs.

Today I participated in the “Summer Jobs +” event at the White House to represent Verizon’s internship program for the summer of 2012. This event was hosted by Secretary of Labor Hilda Solis and Director of the National Economic Council Gene Sperling.

Verizon has established many partnerships to spread the word about our summer internship positions in the hopes of attracting a diverse, dynamic group of young people. We appreciate the White House and their efforts to connect the dots between jobs, youth, and the not-for-profit community that provide the steady drumbeat of support critical to the success of this initiative.

We have been and will continue to provide summer internships rich with practical, on-the-job experience so that interns emerge from their time at Verizon with a competitive edge in their professional journey. This summer we will offer more than 300 internships throughout the company. These opportunities will be posted from January through May.

For more information about the White House initiative, visit: http://www.dol.gov/dol/summerjobs

For more information about Verizon’s internship program, requirements and specific opportunities, visit: http://www22.verizon.com/jobs/campus_internships.html

An article by Joshua Topolsky in the Washington Post (“Software — Not Hardware — Is the Star of the Show”) raises some interesting points about the intersection of devices and software. 

My sense he is both right and wrong – and he misses a key part in all of this - the networks. 

It clearly is true that hardware is less center stage than it used to be but I think this more about the “old” hardware meaning desk top PCs and even increasingly lap tops.   Those well-established devices are far less relevant than they were in the past and things like CPU speeds are less important too because it is so cheap to put lots of horsepower into machines and because, as Sanjay Udani on my staff says, “hardware has become so good that for the most part it has made itself invisible . . . you only notice it when it crashes.”

But mobile devices are still relevant and differentiated in people’s minds, perhaps in part because they are so much more “personal” to each individual than a PC which quite often is shared with others in a household.  It’s probably also due to the fact that tablets and smartphones are relatively new, not as well established.  It remains possible for new players to play up new features in a new smartphone than it is with the many hundreds of PCs out there which as a class of devices have been out there for decades in one form or another.

Further, PCs often are purchased and kept for a number of years.  Not true with smartphones by and large although that may change as the devices become more and more like PCs.   But generally people do update their mobile devices fairly regularly and that makes them think about their devices and the newest features more often.

I’d also argue that as time has gone on with computing devices, they have simply become more integrated, seamless, easy to use machines.  Increasingly it is about the experience you have with devices not about the software or the devices themselves.  Think about how hard it was in many cases years ago to install new software, configure it, and use it.  Same with the PC itself which quite often could have driver configuration problems, incompatible software and the like.  You had to think about the machines because they demanded so much of you to keep them running.  That is not true with today’s mobile devices – smartphones and tablets.

It may be that software will remain the “star of the show” given the apps age we live in today.   Apps are specialized and do certain things well but little else.  So it is easier to differentiate apps and make new ones that gain attention. 

But this is where Topolsky misses the boat.  Mobile devices were also always connected devices unlike PCs which started out as standalone devices.  So communicating and connecting was always a part of the mobile experience. As the server technologies became more robust and as capacity on mobile networks increased, doing things “in the cloud” became more possible and this too helps to differentiate the experience of using mobile devices from older established PCs.

Many apps include location based features that make them run and can add value or features.  This too is a major difference in today’s computing world.   So the entire experience – from network connections to how seamlessly a device integrates new apps – as opposed to each individual piece will matter more as time goes on.  As the new Apple Siri software shows, the cloud, which Siri relies on and other apps will too for processing power, matters a lot too in this experience. 

It could be argued that “invisibility” as Topolsky puts it means that the devices are improved and more reliable, hence less noticeable.  But ultimately people want an experience that enhances their lives and makes things easier.  All of the players in the internet ecosystem – device makers, software developers, apps makers, network providers – have an important role in making this experience as positive as possible.  “No one company can do it alone” as our now-CEO Lowell McAdam said at CES earlier this year.  

I don’t know who said, “It can be dangerous to make predictions . . . especially about the future,” but I suspect that if I did a search I’d find it was Yogi Berra.  Making predictions aren't always what they are cracked up to be, in part because too often they involve simply identifying technologies or uses that are growing today and “predicting” that they will grow larger in the future. I even tried my hand at this earlier this year when I offered some prognostications about future technology trends in a blog post. 

The trick with technology predictions, I think, is to put the technology trends you might identify as being important on a lower rung of importance and focusing instead on connecting the dots between people and the technology.  What needs do people have today and how might those be addressed by various technologies?  How are societal needs changing?  What changes in demographics may impact our society and how might technology address those changes?

It is never easy to make predictions that stand the test of time, but I think these ruminations by Shadman Zafar, one of our tech gurus at Verizon, are very thoughtful and focus a lot on what needs people have that technology might address. We also offer predictions about key technology trends both for business and residential customers.  We certainly won’t be totally wrong or right in these predictions but it will be fun to look back at what might have changed, and I'd be interested in feedback and where you see these trends going. 

The following is a guest column I wrote with fellow former Member of Congress Dave McCurdy (D-OK) which ran in the Des Moines Register on 11/12/11.

Our rapidly growing national debt has put our country at risk. We used to say that our failure as a nation to make the hard financial decisions would impact the prosperity and wellbeing of our children and grandchildren.

Now the future is here. It’s no longer about just our descendants. All of us are likely to soon face the consequences of inaction.

If we stay on our current course, in 2025 all of the revenues of the federal government will be used to pay for Social Security, Medicare, Medicaid, and interest on the national debt. We’d have to borrow every dollar we’d spend on defense, transportation, veterans’ programs, and every other activity of government. Of course, at that point, it’s unlikely anyone would consider the federal government as a worthy credit risk.

Our day of reckoning is at hand. To save our republic, we must change course.

In order to put us on the right path, Congress and the president must stop “playing around the edges” and tackle the big issues. This includes both reforming our entitlement programs to slow the growth in spending and reforming our tax code to make our nation more competitive in the world, stimulate economic growth, and generate more federal revenue.

In other words, our elected leaders and representatives must “Go Big” and do it now.

We are not alone in our assessment. At least 100 current members of the House of Representatives and 45 senators — almost equal numbers from both political parties — have called on the so-called congressional supercommittee to think big and reduce the deficit over the next decade by $4 trillion or more. These senators and representatives should be commended for showing leadership on this critical issue.

The supercommittee is charged with reducing the deficit by at least $1.2 trillion over the next decade. With a Nov. 23 deadline looming, its members have yet to find common ground.

To be blunt, the $1.2 trillion in savings is not enough. It won’t stop the growth of our national debt as a percentage of our total economy. Ironically, it may be more difficult to get bipartisan agreement on the continued cutting of the shrinking portion of the budget devoted to “discretionary” spending than it would be to get agreement on tackling the big issues of entitlement and tax reform.

At the end of last year, the country’s debt was 62 percent of our gross domestic product and was growing. But that’s not even half of the story. The real problem is that our nation has been making promises without providing the funds to pay for them. Now the Government Accountability Office reports that the unfunded promises for programs like Medicare, Medicaid and Social Security total somewhere between $32 trillion and $99 trillion (depending on the assumptions used) — in any case, an unfathomable amount of money.

By going big, the national debt is stabilized and will begin falling as a share of the economy. All the benefits associated with a declining debt burden, including a stronger economy over the long term, will be realized. By acting now, we can turn the corner with minimal changes in Social Security, Medicare and Medicaid — changes that will have little impact on today’s retirees.

The alternative to going big now is massive economic disruption, painfully slow growth, and huge cuts in those entitlement programs in the not too distant future. That scenario is playing out around the world. The economic crisis in Greece is the current example of what will happen if we don’t Go Big.

Raising awareness is the first step. We need to motivate each other to act.

We believe a majority of Americans are willing to do what is necessary now to avoid the consequences of unsustainable levels of national debt. Most of us want our representatives in Washington to set aside their partisan differences and support a Go Big approach.

Each of us has a moral responsibility to educate our fellow citizens on the scope and depth of the nation’s fiscal impasse and urge them to call on their representatives — our nation’s political leadership — to enact the spending and tax reforms sufficient to stabilize our national debt, revive our economy, and return prosperity to our nation.

The longer we close our eyes to the economic crisis and our national debt, the more difficult our economic challenge will be and the more painful the cure. The Coalition for a Fiscally Sound America is focused on encouraging our policymakers to work together to meet this critical national need. That is how a nation moves forward. We hope you will join us.

ABOUT THE AUTHORS
DAVID MCCURDY, D-Okla., and TOM TAUKE, R-IA., are former members of the U.S. House. They are co-chairs of the bipartisan Coalition for a Fiscally Sound America. Contact: info@fiscallysoundamerica.com

I was really wowed at the FCC on Friday.  The Chairman and Commissioner Copps recognized several companies for their cool, innovative products and services that help make communications more accessible to people with disabilities. 

Winners included CTIA for their recently launched accesswireless.org website; Apple for their iPhone 4 and 4S; and Universal Subtitles, whose product allows anyone to simply add captioning to any video they post on the Internet, to name just a few.   And Verizon was recognized with an honorable mention for our Verizon Center for Customers with Disabilities, our sales and service center located in Marlboro, MA and dedicated to serving customers with disabilities. We have videophones in our service center to allow customers who use American Sign Language to communicate directly with a customer service representative, eliminating the need for a third party interpreter.

 I also had the opportunity to tour the FCC’s Technology Experience Center, which has demos of the award winners’ and honorable mentions’ products and services, in addition to other cutting edge technologies that provide access to persons with disabilities.  The Center will have these technologies on display through the end of November.

This weekend on the Op-ed pages of The New York Times, Verizon’s CEO Lowell McAdam outlined the tremendous benefit of, and pressing need for, making more wireless spectrum available.  See the link or read below.

 ===================================================================

Running Out of Bandwidth

By LOWELL C. McADAM

Published: October 21, 2011

AT a time of slow economic growth and declining competitiveness, wireless technology remains a shining example of innovation. In the last 10 years, wireless communications companies in the United States have invested hundreds of billions of dollars and unleashed a torrent of new products.

Demand for faster speeds and more applications is growing at a tremendous rate. But without prompt government action, the lifeblood of this innovative sector of the economy is at risk of being choked off.

At issue is the allocation of wireless spectrum, the crucial “real estate” upon which wireless networks are built. A number of wireless companies — large and small, urban and rural — as well as companies like TV networks, cable companies and the government hold spectrum licenses, and have enough spectrum to meet today’s consumer demand. But many other companies depend on spectrum, too: mobile device manufacturers, software and application designers and content creators — all of which make products and services that require fast wireless networks that can connect them to consumers.

The Yankee Group, a research firm, estimates that by 2015 consumer use of wireless applications and services will be almost 60 times today’s volume. And a recent analysis found that the nation’s biggest wireless carriers controlled only about half of the spectrum available for wireless services.

Even with technological advances, a severe spectrum crunch looms over the next decade. Julius Genachowski, chairman of the Federal Communications Commission, has rightly pointed out that substantial amounts of new spectrum are needed to drive the continued growth of the wireless industry.

The Obama administration and the F.C.C. both support the allocation to wireless companies of 500 megahertz of additional spectrum within the next 10 years, effectively doubling the amount of available spectrum. But the challenge of identifying that spectrum and bringing it to market remains. Spectrum can’t be created, only allocated. And reallocating spectrum is difficult, because those who control it are restricted in how they can use the spectrum and whether they can sell the spectrum rights to others.

A disproportionate amount of spectrum is allocated for older technologies or for applications that are declining in use, like broadcast television stations, while large swaths of spectrum are assigned to government agencies that may not be using it or using it efficiently.

We need to change the process for allocating spectrum and get it in the hands of those who can use it to generate economic growth. There are a number of bills being considered in both the House and the Senate that would enable the sale, auction or allocation of spectrum, and the so-called “super committee,” charged with finding $1.5 trillion in debt reduction over 10 years, is also looking at spectrum sales as a revenue generator.

First, Congress should give permission to the F.C.C. to hold voluntary “incentive” auctions, in which current spectrum holders who no longer need their spectrum can share a portion of the auction proceeds, which they are not currently allowed to do and which would encourage them to return unneeded spectrum. It should also require government agencies holding unneeded spectrum to make it available for auction. These auctions must be a priority, as it takes government an average of nine years to bring such spectrum to market.

Second, Congress should establish a fair and transparent auction process that is open to all bidders. In previous auctions, the F.C.C. has excluded potential participants and dictated aspects of a winning bidder’s business plan. The auction process shouldn’t be weighed down by such conditions.

Third, we must establish a truly streamlined approach for those who hold excess or dormant spectrum to sell to those who need it and can commercialize it. The current process can take more than a year for approval, and is often used to impose additional license conditions that are tantamount to backdoor regulation of the industry.

Finally, Congress must ensure that police officers, firefighters and other emergency workers have the spectrum they need, as well as a workable plan and resources for an interoperable nationwide broadband network for critical communications. The system remains as inadequate as it was on Sept. 11, 2001.

With these actions, Congress can generate tens of billions of dollars to cut the federal deficit, meet demand for wireless broadband and create a broadband public-safety network. We must not allow this opportunity to slip by.

Lowell C. McAdam is the chief executive of Verizon Communications.

I asked a member of my staff, Matthew Schwartz, to write a blog post on the anniversary of the printing of the first Gutenberg Bible, and to offer his perspectives on it. His thoughts are below.

The words you are reading right now did not exist just a few moments ago. The time from their inception as a few electrical signals in my brain to their current reality as words on your computer, possibly hundreds or thousands of miles away, can be measured in mere hours (and that’s only because it took a while to get this blog entry posted).

When a technology becomes ingrained, we tend to take it for granted. The Internet stopped being miraculous to most people several years ago – and reproduced digital text was likely the first Internet technology to lose its luster. But the shine can be restored if we take a step back, look around, and just think about what is going on here. For the first time in the existence of our species, anyone is able to instantly publish his thoughts, and have those thoughts instantly accessible everywhere in the world.

This is incredible. It’s even more incredible when one realizes that, for almost the entirety of human history, the ability to publish at all was limited to a very select few.

September 30 was the 559^th anniversary of the publication of the Gutenberg Bible, which makes this a good time to reflect on where we once were, and how far we’ve come.

Imagine for a moment it is the year 1011 and I want to publish a blog post. My options are limited. First, the word “blog” wasn’t coined until the late 1990s, and in any case Internet connections were awfully spotty a thousand years ago, what with the Danes capturing Canterbury and shutting down the Internet.  But let’s say I want to write something – perhaps a diatribe against the Danish imprisonment of our beloved Archbishop – and disseminate it to as many people as I can. Well, unless I’ve got unlimited power and resources, this will be extremely difficult. Even supposing I know how to read and write (a privilege limited to precious few, usually clergy), and even supposing I can get my hands on some ink and parchment, I really have no way to get the message out. It’s not like I can gallop to His Royal Kinko’s and ask them to make a thousand copies.

A thousand years ago, the act of publishing consisted of manually copying something, word-for-word, onto a new piece of parchment. Basically only the monarchy (with their scribes) and the Church (with their monks) were able to marshal the resources and manpower to accomplish such a gargantuan task. By the time Gutenberg came along, printing techniques had advanced to the point where manual copying was no longer necessary; the traditional method was to make a wood carving of each proposed page, lather the carving with ink, and then make a rubbing. This was still burdensomely expensive and time-consuming, and only the most popular texts were carved into wooden plates. Large books took years of effort, it was hard to store the plates for later reprinting, and it was nearly impossible to correct mistakes without recarving the entire plate.

Gutenberg’s innovation was movable type. A goldsmith, Gutenberg was familiar with the use of different metals and alloys in creating molds. Over the course of 15 years, he developed a hand mold that allowed printers to quickly typeset letters on a page. A repurposed wine press, once used to squeeze the juice from grapes, now pressed ink-covered letters onto parchment.

Gutenberg had created the first assembly-line for books. Before his creation, a scribe could hand-copy a few pages per day, or by using ink blocks a few dozen.  The Gutenberg press allowed an individual to produce at first hundreds, and ultimately thousands of pages per day.

The ability to publish – once limited to kings and popes – was now available to anyone who could pay for a print run. And books were no longer rare commodities for the very powerful. Within a few decades, hundreds of print houses were operating all over Europe, each using Gutenberg’s invention. By 1500, Western Europe printing presses had produced more than twenty million copies of books – about 30,000 different titles. Over the next century that number increased tenfold. Later, when the Industrial Revolution brought steam-powered presses and publishing houses moved to rolled paper, mass production of printed works flourished. For the first time in human history, ideas were able to be dispersed on a wide scale, and one can make a strong argument that without the printing press – which allowed quick dissemination of new advances in knowledge – the Scientific Revolution might not have happened.

And yet. The printing press was one of the most important inventions of mankind – and that makes it very easy to romanticize it. As much as it revolutionized knowledge, it was still fairly difficult for the average citizen to gain access. Book publishing houses could run the work of their favored authors, and of course newspaper publishers became perhaps the most prolific users of the press – the entire newspaper industry was nicknamed after the device! But other than the occasional letter-to-the-editor, most average citizens lacked access to the press.

And that’s the way it stood for nearly five hundred years.

Until, sometime in the middle of the 20^th century, some computer scientists in the Department of Defense were trying to figure out a way to send information from one computer to another. Out of that initial testing – mankind’s first foray into digital communication – grew ARPANET, a whole host of Internet protocols, and ultimately the World Wide Web as we know it.

I want to reiterate that the ability of an average person to instantly publish on a global scale is very recent, going back no further than two decades. Even with the dawn of personal computers in the late 1970s, a computer-owner with a printer could self-publish no more easily than someone with a typewriter and access to a mimeograph machine. Only once all computers were connected to a worldwide network did the ability to digitally publish come into being.

Human beings have existed in our present state of cognitive development for the past 50,000 years.

The printing press was invented 500 years ago – just the most recent 1% of human history – and, with only a small percentage of our species having access to publishing, it still jump started modern society, the rapid spread of ideas, the Scientific Revolution, and the world as we know it.

The World Wide Web was invented just twenty years ago, and already it connects over two billion people – almost a third of the world population. And the pace of data creation on the Internet is incredible: According to a recent study, in any 48-hour period in 2010, more data was created than had been created by all of humanity in the past 30,000 years. And by the year 2020, that same amount of data will be created in a single hour. 

It is too early to tell what the fruit of this globally-connected mind will be, but we are already seeing some early results. The pace of innovation has skyrocketed. Social networks are serving as catalysts for democratic uprisings around the globe, as formerly disconnected societies see what is possible. Developing nations are now getting connected via mobile networks at a rapid pace, bringing the previously disconnected masses into the digital age. Some believe that within a few years, anyone who wants to anywhere in the world will be able to connect to the Internet.

The world isn’t just getting connected; it’s getting connected at ever-faster speeds. Not only can billions now send text – a major innovation – they can also send pictures, movies and graphics in mind-blowing variety. Advanced high-speed networks have laid the groundwork not only for a revolution in thought but also a revolution in creativity.

And while manipulating text and pictures is an amazing feat, a further revolution is building as machine-to-machine connections grow. Estimates of how many automated devices will be connected to the Internet in the future tend to dwarf the number of mobile phones and home computers. These devices will monitor and help manage everything from home energy use to medical conditions. And now with the cloud, we are seeing the huge computing power that is available via the Internet put to use in genetic analysis. The cloud would not exist if not for the ability to link thousands of computers that can interact and interpret data en masse.

Gutenberg created the first real means of producing texts on a wide scale. But he never created a distribution mechanism to make information real to the world. That only happened with the construction of every advancing landline and mobile network. Connecting people and devices is key to making information really relevant. There’s no way to know exactly what future communications technology will bring, but it will certainly be every bit as world-altering as Gutenberg’s original invention.

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Matthew S. Schwartz, a graduate of Georgetown Law, is a Verizon Internet and Technology Policy Fellow.

Cecelia Kang has an interesting piece in the Post today (“A Nation Outnumbered by Gadgets”, Washington Post, October 12, 2011) that highlights a couple of intriguing trends in the communications technology space: the fact that the number of mobile devices in use has exceeded the total number of Americans and the fact that Americans have up to two dozen digital devices in their homes that connect to the Internet.

These are significant trends but I think Cecelia is overlooking some deeper trends and implications in this same vein.  I mentioned many of them in a post I did a number of months ago and they are worth highlighting again.

First, while the number of digital devices that connect to the Internet is important, the capabilities of these devices and the way they are used is what is fundamentally different and important.  After all, we’ve had electronic devices in the home since the 1970’s (some estimates are that homes had 8 or more devices in 1975) but the functionality and use of these devices – not to mention their number – is quite different now with important impacts on networks, applications, software and creativity.  As I said in my original blog post:

Consumers today simply have more electronic devices of all kinds in their homes and these devices – unlike the case just a couple of decades ago – are all digital, many can communicate with each other and share data, and many have lots of memory, processing power and customizable interfaces.   Today, some estimates are that many homes have upwards of 30 digital devices and these are just the communications devices in the home. 

More importantly, Cecelia’s article completely skips over other devices in the home that will be or in some cases already are networked.  As I said in my post:

These figures do not include devices like dishwashers that are also becoming intelligent and in some cases networked too.  In fact, devices like dishwashers will communicate more and more in the future as machine to machine connections multiply.   Because all of these devices communicate or can exchange data in many cases, consumer demand for bandwidth is growing.  Consumers can create more information of all kinds from video to audio to written content.   Information can take many forms and people can communicate in many ways due in part to the many devices they have to interact with the data and entertainment that is on the Internet and the cloud today. 

Already, there are more than 62 million machine to machine devices – many in use outside the home to monitor gas pipelines, security and the like – with projections this could grow to well over 2 billion such devices in less than a decade.  So, while the fact that the number of mobile devices exceeds the total number of people in our country is amazing, machine to machine devices are at least as significant a trend, although they may not get as much attention.

Missing too in this discussion is how other mainstays of our lives – particularly cars – will be and are being transformed by digitally connected, mobile devices. Here is how I put it in my post of a few months ago:

Third is the evolution of cheap sensor technologies of all kinds.  I mentioned machine to machine communications but sensors are keys to making machine to machine applications work and making them valuable in the lives of consumers and businesses.  Sensors are already installed in cars (some 30 computer devices including sensors are in cars today) sending back valuable information to other devices in the car and even sending data back to repair and emergency centers.   Sensors can detect anomalies, report on the status of devices, record information about how a device is working, keep track of inventory and the like.   When connected together with smart networks and servers to analyze data and assess information, imagine what can be accomplished.  Some have talked about the refrigerator with the Internet panel on the outside that will tell you when milk needs to be replaced.  But think about sensors in a home electrical system that can detect shorts or potentially fatal electrical faults that could catch a home on fire if not corrected.  Or a dishwasher with sensors that can report on when a water line is getting weak and might spring a leak.   Sensors combined with networks combined with servers and monitoring computers can help improve lives, save lives, and help us manage our home energy use better just to name a few things.  Machine to machine communications is at the heart of all of this and clearly the traffic on machine to machine systems will soon dwarf what is occurring today on social networks.

Finally, I think all of these devices, applications and innovations will help transform many other aspects of our lives.   This is particularly true with regard to health care and energy conservation and management. This new Verizon ad and information program (“The Power of Plus”) provides a wealth of ideas regarding what mobile and landline communications can do to transform these two vital areas of society.

Cecelia’s piece was intriguing and highlighted some interesting trends.  I just think there is far more to the transformation story regarding mobile and data communications networks that seldom gets much attention. 

I don’t know Steve Jobs and reading through the many Twitter comments and blog posts it is not easy to add to the accolades he so richly deserves.  But in considering his contribution to society and the tech industry, I think three points are worth comment regarding his life.  Having spent 25 years in the Internet tech space – starting in the late 70’s, early 80’s with Commodore PET, TRS-80 and Timex computers (yes, Timex made computers) – Mr. Jobs’s contributions to the development of the Internet and computing technology are undeniable.  But how he did what he did and why he did it – at least as best I can read it – is very important too.

First, change is an inevitable and important part of the success of the tech sector, all of us who are involved in it like to say. But Pip Coburn, a tech trends analyst whom I think is very smart, has a saying (and I’m paraphrasing) – all of us like to say we like change but what we really mean is we like to HAVE changed.  What he means is that even changing software programs or updating to a new version can be a wrenching process because you have to learn the ins and outs of the new version or the new software and it takes time, can be frustrating and you are always wondering what features of functions you may have missed in adopting the new technology.

Jobs seems to have genuinely reveled in change unlike most of the rest of us.  He seems to have liked the journey towards something new and not just getting to the destination. Most of us want to be at the destination and would rather not have to make the journey.  Change is a hard process and humans don’t really like to participate in it.  You have to really love what you are doing in order to risk a lot of go through what can be a very long and difficult process to get to where you want to go.   It took decades – literally – for the zipper to become main stream.  It had many ups and downs – pun intended – but the original creator of the concept never gave up on it.  He never lived to see it become a widely used technology but his perseverance paid off in the end.

Jobs reflected on this process in his wonderful Stanford commencement speech which is now being widely cited in Twitterdom.  Here is what he said when talking about the change he went through after being fired from Apple:

I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.

Second, it seems to me that Jobs also grasped that technology change is not just about designing elegant, exceptionally good products.  It is also about coming up with business models that provide consumers new value, especially in the form of convenience, a very important thing for consumers.  The iPod is the classic example.  There were other music players around when the iPod came out.  But the process of accessing music was complex and confusing for many consumers.  So Jobs changed that by not only coming up with the iPod but with iTunes too.  A new business model was born.  In the process, he provided new value for the consumer and the industry, particularly the music industry. 

Clayton Christiansen’s wonderful “Innovator’s Dilemma” series makes the point that innovation happens when consumers decide to adopt a new technology that does a job they need doing measurably better than what they already have.  That is a higher hurdle than it might seem because again, consumers don’t really like change.  They say they do but most are reluctant to do so.  Psychologists say that is because humans put a higher value on losing something they already have than gaining something new that is not yet within their grasp.   Getting tens of millions of consumers to adopt the iPod was no small feat and it involved, in the end, major changes in thinking about how to sell music to consumers.

This is what is so amazing about the tech industry that Steve Jobs has helped to shape through his vision.  We have called it an “ecosystem” of companies from broadband providers to apps makers to device manufacturers.  It is constantly changing and the business models evolve and collaboration, competition and new innovations emerge.   Two new papers by Jeff Eisenach and Jonathan Sallet describe this process and the ecosystem well and are worth reading.

Finally, I think vision is a critical piece of the success of the tech sector.  I am a big science fiction fan in part because good science fiction can lay out a vision of the future which might be possible and welcome in ways that no one else has thought of before.   Until something can be imagined, it can’t really be designed and built.  Good science fiction can imagine futures and new technologies all of us might want to have. It can also teach other lessons, some much darker. But in the end, it can and often does come up with new ways to see the future that can become a new reality over time.

Jobs reflected this in his thinking about consumers and want they want.  Here is his vision of what his company’s role is in coming up with products consumer would want:

“It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do. So you can’t go out and ask people, you know, what’s the next big [thing.] There’s a great quote by Henry Ford, right? He said, ‘If I’d have asked my customers what they wanted, they would have told me ‘A faster horse.’’’

This is very similar to the comment Wayne Gretzky made about skating to where the puck will be, not where it is. I would only quibble on one point. Consumers may not know they want a specific product – such as an iPod or iPad.  I do think they have some needs they very much know they want addressed such as wanting a device that was extremely portable, one that could fit into a purse, one that had very long battery life, one that could play multimedia in airports.   They know they want all of these things so the trick is making something that fulfills all of those needs, having the vision to see ahead clearly.  That is what Jobs did so well.

We have a communications and computer tech sector that is producing innovation and many new and valuable services for consumers. These companies are all a part of the Internet ecosystem that is vibrant and continues to grow and amaze.  Our CEO Lowell McAdam summed up what I and countless others, both consumers and industry participants, think of Steve Jobs: "Steve Jobs devoted his ceaseless energy and creative genius to technology innovation that changed the world time and time again. Our industry and all of our customers benefited tremendously from his pursuit of excellence. We will miss him. Our heartfelt condolences go to his family and his employees"

Yesterday, there was an interesting exchange on NCTA’s blog between Michael Powell (Former FCC Chairman and current CEO of NCTA) and Gary Shapiro (CEO of the Consumer Electronics Association) about the need for and advisability of so-called “AllVid” rules.  In his blog, Michael does a great job of demonstrating why AllVid rules are not needed.  In defending the need for regulations, Gary pointed out in comments that 15 years ago, the Telecom Act included provisions (Section 629) calling for the FCC to impose regulations that would make set-top boxes available for purchase in retail stores.

It is true that Congress wanted cable boxes in retail stores, but it turns out consumers didn't want to buy cable boxes.  The proof of that is Direct Broadcast Satellite (DBS).  Satellite was excluded from section 629's obligations in large part because consumers bought satellite boxes in retail stores rather than leasing them from the DBS service provider.  But it turns out that consumers didn't want to buy satellite boxes and instead wanted to lease them.  As a result, both DBS operators today provide consumers with leased equipment and I'm not sure if you can still buy satellite boxes in retail stores even if you wanted to.

More to the point, however, is that the whole concept of a traditional set-top box is quickly fading in relevance.  Broadband Internet-connected smart video devices are being sold by the millions - Roku, Boxee, Blu-ray players, Smart TVs, etc. – not to mention game consoles, tablets and smartphones.  These devices are able to pull content from a variety of sources online.  Multichannel video providers - cable, telco and satellite - are scrambling to make their own services available on as many of these devices as they can as quickly as possible and many were demonstrated at Gary's amazing Consumer Electronics Show.  And we continue to see new evidence of this every day.

Very soon, the smart video devices that consumers are buying every day will work on any video provider’s service.  This was the motivating vision behind both 629 and the AllVid proposal and the good news is that it is happening much faster than anyone could have possibly predicted just 18 months ago when the National Broadband Plan was released.  Rather than having the FCC double down now on what everyone  acknowledges has been 15 years of failed regulatory policy, it is time to wake up and realize that the goals of 629 have been achieved and move on to more pressing matters like reforming Universal Service for the broadband era.

It's time to let go of the grievances of the past and focus on the reality of today - a reality where consumer electronics makers, programming distributers, application developers and content creators are working together to bring consumers an AMAZING array of choices.

Every time a device connects to the Internet, it gets its own unique “Internet Protocol” address. The current system, IPv4, has been around since the early 1980s, and provides for about 4.3 billion addresses. By the early 1990s, however, it became clear that the available addresses would someday be depleted, and so a new addressing system, IPv6, was created. IPv6 has a capacity of 3.4 x 10^38 addresses. That’s a hard number to visualize, but think of it this way: It’s far more than all the grains of sand in the world, and more than enough to forever guarantee an address to every device that needs one.

Only one problem: IPv6 adoption has been slow to take off. To ensure everything works smoothly, many domains have been limiting IPv6 deployment to approved networks – a practice known as DNS whitelisting. Although this helps with the gradual transition to the new system, some groups have been concerned that whitelisting could be abused, used to accomplish non-technical objectives that could be anti-competitive in nature.

This week, the Broadband Internet Technology Advisory Group (BITAG), which I have been actively involved with since its founding, released a report offering several solutions to speed IPv6 adoption. The suggestions include limiting the duration of the use of DNS whitelisting, being open and transparent about whitelisting policies, and using primarily quantitative data to determine which sites are whitelisted, to minimize any impression of discrimination in the decision-making process.

It sounds unremarkable: A problem was identified, an advisory group formulated suggestions, and a report was released. What is remarkable is that this group exists at all. This isn’t just a bunch of armchair observers proposing solutions that make sense from a policy perspective; these are actual engineers from different sectors of the communications industry, from academia and from the advocacy community coming together to determine, from a technical perspective, the best solution to pressing technological problems that affect how the Internet operates and the user experience on the Internet. The Internet and broadband industry has never seen anything like this.

BITAG can trace its origins to several events. One was a series of roundtable discussions on technology policy at the Silicon Flatirons Center at the University of Colorado School of Law. There, a broad-cross section of the Internet community realized the need for an independent technical advisory group to discuss technical issues. Then there were the Verizon-Google discussions that led to open Internet statements and a joint filing at the Federal Communications Commission on the right framework to ensure openness, innovation and advancement in broadband technologies.  That partnership showed us the value of bringing together companies that have very diverse views and origins to learn together and openly examine all possible solutions to difficult problems.   During our discussions, we jointly proposed the creation of the BITAG and actively worked together with others to establish the advisory group.

A really compelling feature of BITAG is that it draws its members from so many different communities. We have application providers like Google and Microsoft, content providers like Disney and FOX, equipment manufacturers such as Intel and Cisco, and Internet commerce providers including Verizon, Comcast and AT&T. What’s more, institutions like Carnegie Mellon, the Internet Society, and Public Knowledge are integral members, providing a broader perspective when individual companies’ engineers might get caught up in the weeds.

Together, the companies, advocates and academics of BITAG seek to examine and resolve important technical issues related to the operations of the Internet and broadband networks as they affect the user experience in particular. This body of technologists can also provide balanced and thoughtful suggestions regarding best practices for industry and academia, and useful advice for government leaders.

It has taken some time to establish the organization and put in place operating policies and guidance.   It was important to make sure the group’s procedures and guidelines were carefully designed to ensure openness and thoroughness in the way it conducts its work.  Also, in a group with such diversity, it has been important for members to come to understand each other better. Efforts like these with so many members and so many technically challenging issues are not easy to launch and maintain. But we have succeeded in issuing our first report and to me, while the report contains very thoughtful ideas and advice, a very significant aspect of all of this is simply the fact that the BITAG has survived and gotten its sea legs.

As BITAG moves forward, we look forward to tackling the most pressing technical issues of the day and providing guidance to industry and policy makers.

--

With research and writing support from Matthew S. Schwartz and Sanjay Udani

A few days ago, I posted on Twitter an entry about the origins of the smiley emoticon. I asked a member of my staff, Matthew Schwartz, to write a blog post on the anniversary of this event, and to offer his perspectives on it. His thoughts are below.

 =================================================================

Twenty-nine years ago this week, a computer scientist at Carnegie Melon University invented something that changed the online landscape forever. His tools? A keyboard and a healthy dose of whimsy. His creation? The smiley-face emoticon.

As they are wont to do, a gaggle of geeks was interacting on a computerized bulletin board system, speculating on what would happen to the contents of an elevator if its cable were cut. Someone asked about the fate of a helium balloon in free fall. Another asked what might happen to pigeons flying about in the falling elevator. Still another wondered how a popped helium balloon might affect the pitch of the pigeons’ cheeps. Finally a scientist brought the conversation away from pigeons: What happens if the careening elevator contains a lit candle and a drop of mercury?

Five hours later, a message was posted with the subject, “WARNING!” It read:

“Because of a recent physics experiment, the leftmost elevator has been contaminated with mercury. There is also some slight fire damage. Decontamination should be complete by 08:00 Friday.”

Several concerned scientists contacted the author of the message for more details, unaware that it was a joke. Thus the brains turned their attention toward a more pressing matter: the need for an online “joke marker.” Someone suggested putting an asterisk in the subject field of any message intended to be a joke. Another proposed the pound sign because “it looks like two lips with teeth showing between them. This is the expected result if someone actually laughs their head off.” Still another declared with utmost certitude that the ampersand is the funniest character on the keyboard, looking for all the world like “a jolly fat man in convulsions of laughter.”

Finally, on September 19, 1982, a scientist named Scott Fahlman offered an elegant (and, in retrospect, obvious) solution:

I propose that the following character sequence for joke markers:

:-)

Read it sideways.  Actually, it is probably more economical to mark

things that are NOT jokes, given current trends.  For this, use       

:-(

The suggestion stuck. People started using it immediately, suggesting variations, and generally embracing the burgeoning medium of text-based emotional expression. This wasn’t the first time punctuation had been used to symbolize a smile – variants had appeared in some printed works in the 19^th century, and had also been seen in some early science fiction – but this was the first time a specific smiley face construction actually gained traction.

Yet today, three decades later, the emoticon is already becoming an anachronism. Oh, it is still used in instant messengers and text messages, but it’s not needed anymore, and its days are numbered. Even now, when you type “ :-) ” into the instant messaging software of your choice, odds are you won’t see a traditional emoticon at all; most programs automatically convert those three characters into an amusing little yellow smiley face. Technology is rendering the character-based emoticon extinct.

And it makes sense that the emoticon would fade from the scene. It is a relic of an earlier age, of a communications technology that measured its speed in bits per second instead of today’s megabits per second.

Let’s put that in perspective: In 1982, most computer modems received data at a rate of 300 bits per second. (It takes eight bits to make one character.) Text scrolled onto the screen as it was received. Communication was almost entirely text-based, as it simply took too long to transmit images. And even with text, it would take 4.5 hours to transmit your average 100,000 word novel.

Today, Verizon’s slowest FiOS Internet service comes into your home at 15 megabits per second – fifty thousand times faster than the modems in use when the smiley emoticon was invented. (A megabit is one million bits.) At these speeds, our novel would arrive in about one third of one second.

Verizon’s fastest service currently available is ten times faster, at 150 megabits per second. That same book would blink into existence, fully formed, in 0.03 seconds. (That’s faster than you could start and stop the stopwatch to time it.)

Dr. Fahlman and the rest of the CMU scientists were concerned about replacing body language and tone-of-voice cues lost when conversing in text. But with all of today’s available bandwidth, body language need not be lost. Text is just one of the many communication options available. And even a high-definition Skype video chat only uses about 1.5 megabits per second – leaving plenty of bandwidth for other applications.

Last week, a video of two grandparents trying to work their new webcam went viral. While the grandmother pensively tries to figure out how to take a picture, her husband makes monkey faces at the camera. “That’s a pretty good monkey,” he says, admiring his visage. The two continue being playful with each other, wondering why the picture won’t take, until they realize they’ve been recording a video the whole time. The video is adorable – and at its full resolution, requires about 0.5 megabits per second to view. Completely impossible on early modems; barely noticeable on today’s connections.

The quaint emoticon has its charms, but it simply cannot compete with something like this.

Twenty-nine years ago the text-based smiley face emoticon sprang into existence, bound for a long and prosperous life at the fingers of eager early adopters. Although today it is fading into obsolescence in the face of everything from graphical smileys to actual smiles, it rightly holds a special place in history as one of the first major constructions to bring personality to the Internet. For that, it should be celebrated.

Matthew Schwartz, a graduate of Georgetown Law, works in Internet and Technology Policy for Verizon.

In addition to the bevy of our marketplace challengers and direct and indirect competitive pressures in our corner of the Internet Ecosystem, there is this. 

While consumer demand for the services provided on our world-class networks has never been higher, there are some areas – like home landlines – that are declining as more consumers use other platforms, such as text, social networks, and wireless, to communicate.

Couple that landline decrease with the rising cost of health care and you get… well, this graphic below. 

Verizon spends nearly $4 billion a year providing health care for its employees, their families and our retirees.  While it makes me proud that my company is willing to spend so much on this important benefit, addressing the growth of these costs cannot be ignored.  That is one reason why Verizon East union-represented Wireline employees’ contribution toward their monthly premiums (currently zero) is a focus in our current discussion with our unions.

Take a look or share this infograph; I’d be curious how many people you know are facing similar pressures, and pay nothing toward their monthly premiums.

While I usually concentrate on technology trends in the communications/ICT sector, I do spend a lot of time thinking about government policy issues that have an impact on innovation, job growth and evolution of the tech sector.   Government spending does have as much of an impact on the tech sector as it does on the rest of the economy and one of my strong beliefs when it comes to policy debates is that how we frame the issues – and how we talk about them – has a significant impact on whether or not we can make progress in resolving problems.

My boss, Tom Tauke, has done a series of excellent pieces on the budget crisis including some possible areas where agreement may just be possible in finding solutions.  His series helped me think a bit more about the challenges we face regarding the deficit.

I just did a brief piece on the deficit and how to look at it that is focused on the way we define government spending and the changes needed to address the deficit.  I think there are a wide array of changes we could consider that are in reality not “cuts” in government programs or “tax increases” but instead are really things we can do to modernize and update our policies and bring them in to today’s economy and society.

My comments were posted on the Daily Caller and I would be interested in the thoughts of others on this topic.

Broken policy requires level-headed reforms that advance a greater good.  As we have all painfully seen this year in Washington, this is easier said than done. 

The debate around how to reform the archaic inter-carrier compensation (ICC) and Universal Service systems (USF) seems have been with us forever. Major players have historically never seen eye-to-eye, and in fact couldn’t even agree on the scope or nature of the problems. This has been the downfall of any effort to modernize and streamline these subsidy programs.   

What’s at stake? Besides rationalizing rates and distributing subsidies, the most necessary element of modern economic life: connecting several million mostly rural Americans to broadband.   

Reform has been attempted countless times over the last 15 years, but squabbling parties (yours truly included) couldn’t find common ground and real progress was never achieved. 

After all, when the sitting FCC Commissioners publicly announced their intent to tackle this tough challenge in 2011, a group of companies and associations with major interests at stake did the unthinkable – we sat down, discussed our differences face-to-face, and found common ground on which to build a detailed and realistic reform proposal.  In other words, we decided that for change to happen, we all had to make concessions.  (You can see details of the proposal here.) 

The proposals are not perfect, and no one got everything they wanted.  So perhaps our little corner of telecom policy making offers a lesson in the larger debate Tom has been discussing on this blog.  I’m not saying we did the truly unthinkable -- found a way for the Yankees and Red Sox to become BFFs (heaven forbid!) -- but the ABC Plan is proof that solutions can be forged out of what once appeared to be intractable differences.  Now is the time for the FCC to move forward – let’s not let the perfect deny consumers and businesses the benefits of a good solution that will deliver the benefits of broadband and modernized regulation.

With yesterday's mid-Atlantic earthquake on everybody's mind and the possibility of a large hurricane impacting the United States east coast this weekend, it might be a good idea to brush up on your own emergency communications plan.  Verizon offers the following tips to help our customers prepare for and stay connected in the event of an emergency:

• Purchase additional batteries and car-charger adapters for your wireless devices; make sure to keep the batteries fully charged.
• Keep phones, laptops, PDAs, batteries, chargers and other equipment in a dry, accessible location. It is a good idea to keep them in a sealable, plastic bag.
• Maintain a list of emergency phone numbers – police, fire, and rescue agencies; power companies; insurance providers; family, friends and co-workers; etc. – and program them into your phone.
• Distribute wireless phone numbers to family members and friends.
• Forward your home phone calls to your wireless number if you will be away from your home or have to evacuate.
• If your wireless device has texting capabilities, practice sending text messages. (Most have texting capability, but check before you need it.)
• Develop a systematic evacuation and communications plan with family and friends that includes what to do, who calls who, where to go and what supplies and items you will take with you.

If you find yourself in a bad storm or hurricane:

• Limit non-emergency calls to conserve battery power and free-up wireless networks for emergency agencies and operations.
• Send brief text messages rather than voice calls —often text messages get through when wireless networks are overtaxed during a crisis.
• Check weather and news reports available through many Internet-connected wireless phones, and through other wireless phone applications, when power is out.

Other general preparedness tips:

• Take photos or videos of all personal possessions for insurance purposes.
• Have at least $200 in cash in the house for emergencies.
• Store several gallons of water.
• Make sure a trusted neighbor or friend has a spare key to your home, cars, boats, recreational vehicles and safe deposit boxes.
• Have an emergency plan for pets.
• Place emergency items in car trunk.
• Purchase enough food to last at least seven days in your home.
• Have two flashlights with extra batteries strategically located in your home.
• Purchase plywood to cover windows now.

You can learn more about emergency planning by following these links:

http://aboutus.vzw.com/Business_Continuity/Overview.html

http://ready.adcouncil.org/beprepared/

http://www.ready.gov/america/beinformed/hurricanes.html

http://www.nhc.noaa.gov/HAW2/english/disaster_prevention.shtml

[This is the tenth installment of a blog series Tom is writing on the national debt crisis.  They all can be seen here. Related, see also our signature on these two open letters. – CZ]

Without economic growth, it’s virtually impossible to address the long-term debt problem confronting the federal government.  Even with cuts far greater than anything being proposed by the Simpson-Bowles Commission or the Senate’s “Gang of Six -- or even Senator Rand Paul’s $9 trillion package, without growth, we’d just be treading water.  Economic growth is the “sine qua non” of every strategy for overcoming our national debt crisis. 

There have been some terrific pieces published in the last few days which bring clarity to the challenge we face and how we go about addressing it. 

The bi-partisan Committee for A Responsible Federal Budget, which does outstanding work, included a chart in an article entitled “Understanding the S&P Downgrade” that clearly demonstrates why the “proverbial” is now hitting the fan. 

Here’s what the CRFB says:  “Compared to other AAA-rated countries, the U.S. faces perhaps the most severe fiscal situation.  According to the International Monetary Fund, General Government Gross Debt in the U.S. is higher than any other country.  More importantly, all of the AAA countries, save Finland, are projected to have a stable or lower debt in 2015 than in 2011 – while U.S. debt will continue to grow.” 

The Kevin Warsh / Jeb Bush op-ed, “A New Strategy for Economic Growth,” published in yesterday’s Wall Street Journal, made a strong (and what should be obvious) case that the focus of our economic policy must be long-term growth.  Then they outline the core elements of a growth agenda, beginning with fundamental tax reform.

While there’s seemingly endless attention focused on the political divide that is hogtying Washington, what is striking, but rarely noticed, is the amount of common ground that exists on long-term issues.

·         Most Democrats and most Republicans agree that we need tax reform. The Obama Administration and the leaders of both parties on the Hill have called for lowering corporate tax rates to roughly 25 per cent by closing and reducing “loopholes” – i.e., deductions and credits.  While there is a lot of hot rhetoric about taxing the wealthy, there is also general agreement that the same approach – close loopholes and lower the rates -- should be pursued on individual income taxes.  And it’s important to note that Republicans are willing to support “revenue increases” (above the revenue generated by current tax policy) that are the result of tax reform.   

·         Most Republicans and lot of Democrats are willing to make some common sense changes in entitlements.  And at one time or another, Administration officials and congressional leaders on both sides of the aisle have spoken positively about means-testing Medicare, gradually raising the eligibility age of Medicare and Social Security for those who are currently under age 50, and updating the formula for determining cost-of-living adjustments.   

·         On discretionary spending, there are still more reforms and reductions that received support from those involved in the talks headed by Vice President Biden. 

Congress probably can’t move on all the items on even this short list in the next six months.  There’s no doubt, however, that Congress could approve some of these changes.  That would be a huge step forward on what will be a journey, not a sprint, to develop the proper policy environment for economic growth and prosperity.

Our leaders should be focusing policymakers and the nation on the things we can agree on.  That’s how a nation moves forward.   

[This is the ninth installment of a blog series Tom is writing on the national debt crisis.  They all can be seen here. Related, see also our signature on these two open letters. – CZ]

The storyline of the U.S. debt crisis is not always predictable.  The controversial S&P downgrade of U.S. debt is the latest sad chapter.   But the basic plot is becomingly increasingly clear:  the United States is reeling from a debt crisis; that’s different from a normal recession.

For much of recent history, consumers spent more than they earned, banks and financial institutions over-leveraged, and governments spent more than they generated in revenue and made future promises to the baby boom generation that it can’t keep.  The resulting bubbles have burst.  And we – families, businesses, non-profits, governments – are now trying to figure out how to pay down debt.  Or in the case of the federal government, slow the increase in debt.  That’s not much fun.    

Put simply, the cause of this economic problem is different from the normal recession.  Therefore, the solution is different.   

Yet, most of our political leaders and media commentators continue to act as if this recession is like any other.  Whether they’re comparing the “Obama Recovery” to the “Reagan Recovery” or focusing on the ways government can spend more to “stimulate” the economy, the talking points of our political leaders are largely missing the mark. 

As is true with families, businesses, universities, or social services organizations that are facing huge debts and stifling costs to service that debt, there’s only one answer for a debt-burdened government:  curtail deficit spending and get your fiscal house in order.  The sooner that is done, the quicker our economy will begin to grow.

The alternative is massive economic disruption or painfully slow growth.  Those scenarios are playing out around the world, with major economic disruption in Greece, Portugal, Ireland, and Italy and (as noted in earlier blogs) painfully slow growth for over two decades in Japan.

Most of our media and political leaders continue to understate the problem or simply avoid it.  The latest  Jobs Report on Friday was treated as “good news” and another sign that the recovery may be just around the corner.  After all, unemployment ticked down to 9.1 per cent, and the economy added 117,000 jobs, the Bureau of Labor Statistics (BLS) reported.

It was hard to find anyone talking about the real story.  139,296,000 people were working in July, the BLS said.  That’s DOWN 38,000 from the 139,334,000 working the month before.  The percent of the population employed dropped to 58.1, steadily down from 58.5 last August.  The unemployment rate dropped only because the number of individuals leaving the work force -- the so-called “discouraged workers” – increased by 137,000.  

This highlights a key reality about this economic downturn.  Businesses are not simply laying off workers and then bringing them back to the same jobs when consumers start spending again.  Instead, the very nature of the jobs are changing, and many are being eliminated.  That’s just one factor that makes this economic challenge different from the typical recession. 

Most of us prefer to avoid unpleasant realities.  That’s certainly true of those in political office; unpleasantness rarely attracts voters.  Yet, the longer we close our eyes to the economic reality we face and the need to turn the corner on our national debt, the more difficult our economic challenge will be and the more painful the cure. 

I spoke recently on a panel concerning privacy policy sponsored by the Joint Center for Economic and Political Studies.  My remarks are excerpted below.

The Internet economy is sparking tremendous innovation. During the past fifteen years, networked information technologies – personal computers, mobile phones, wireless connections and other devices – have been transforming our social, political and economic landscape. A decade ago, going online meant accessing the Internet on a computer in your home. Today, “going online” includes smartphones, portable games, and interactive TVs, with numerous companies developing global computing platforms in the “cloud.”

The Internet is also an essential platform for economic growth, both domestically and globally.  Almost any transaction you can think of is being conducted online – from consumers purchasing books, movies and clothes; to consumers accessing educational resources; to searching for and applying for job opportunities. 

As powerful and exciting as these developments are, they also highlight privacy concerns.   Mobile devices in particular are transforming how people access the Internet and how they communicate.   Studies from the Pew Center consistently show that African Americans are among the most active users of mobile devices to connect to the Internet.  Mobile has become much more central to people’s lives and more personal to them.  People bring their address books with them in their devices. They personalize them much more than a home connection that may be shared by many in the household.  And mobile users are reachable anywhere they are, whenever they want to connect.  No longer do people call or connect with a location – a home or office.  They connect directly with the mobile device of a person wherever they are.  

To harness the full power of the Internet age, we need to establish norms and ground rules that promote innovative uses of information while respecting consumers’ legitimate privacy interests.

As we go about establishing these privacy guidelines, we also need to be careful to avoid creating an overly complicated regulatory environment.

The United States has a range of data privacy laws that apply to individual sectors of the economy, such as health care, consumer credit, and personal finance. But these laws may not offer protection to some of the data uses associated with consumers’ activities in the Internet economy. An overarching set of privacy principles on which consumers and businesses can rely could create a stronger foundation for consumer trust in the Internet by providing this broadly applicable framework.

Verizon believes it is time to consider how we establish a privacy policy framework that covers all players in the online space creating a “level playing field” that will spur competition and innovation and provide consumers with more certainly and reduced confusion about accountability.  We believe the Kerry-McCain legislation offers a good starting point for discussing such a framework.

The legislation would set forth baseline consumer data privacy protections that are enforceable at law and are based on a comprehensive set of Fair Information Practice Principles or FIPPs.  Comprehensive FIPPs, a collection of agreed-upon principles for the handling of consumer information, would provide clear privacy protections for personal data in commercial contexts that are not covered by existing Federal privacy laws.

The bill also provides a single expert agency – the FTC - with the authority to enforce any baseline protections.   The agency would not pursue its work with traditional rulemaking but instead would use the consumer enforcement and investigation tools that have proven to be an effective model to both protect consumers and allow for the growth of innovation.

The legislation also creates a framework that provides incentives for the development of codes of conduct as well as continued innovation around privacy protections.  It authorizes the use of safe harbors for companies that implement codes of conduct that are consistent with the baseline protections. This approach is designed to be flexible, to keep its requirements well-tailored, and to provide a basis for greater interoperability with other countries’ privacy laws.

The use of baseline principles, safe harbors and investigative enforcement procedures would establish an approach that is broad and flexible enough to allow consumer privacy protection and business practices to adapt as new technologies and services emerge.  This type of flexible but accountable approach will help motivate firms to produce an industry code of conduct as a way to construe and clarify the statutory scheme.  Thus, a baseline privacy framework and incentives for industry to develop codes of conduct can go hand-in-hand.

A baseline law holds the promise of making our consumer data privacy framework more interoperable with international frameworks.  FIPPs is a common language used by many governments worldwide, so use of similar terminology will enhance opportunities for agreement and practical approaches to data policy.  Establishing baseline commercial data privacy principles will contribute to the further harmonization of the global ecommerce market, especially for the countries aligned with the work around privacy in the European Union, the OECD, and APEC.  Improving global interoperability could benefit companies by removing the barriers to seamless cross-border services that compliance with differing privacy regimes can impose.

This process would allow stakeholders to develop codes of conduct that address privacy issues in emerging technologies and business practices, without the need for additional legislation. In this framework, appropriate incentives, such as a safe harbor, will spur business to develop and adopt effective codes of conduct. Compliance with an approved code of conduct could be deemed compliance with the statutory FIPPs.

We think it is time to consider the adoption of a legislative privacy framework.  The legislative framework we adopt should not add duplicative or overly burdensome regulatory requirements to businesses that are already adhering to the principles in baseline consumer data privacy legislation. Legislation should be technology-neutral, so that it allows firms flexibility in deciding how to comply with its requirements and encourages business models that are consistent with baseline principles but use personal data in ways that we have not yet contemplated but could add new value for consumers.  And, domestic privacy legislation should provide a basis for greater transnational cooperation on consumer privacy enforcement issues, as well as more streamlined cross-border data flows and reduced compliance burdens.

With the right policy framework, we believe it is possible to create an environment that gives consumers more certainty, choices and protection while at the same time encouraging innovation and new value for consumers, hallmarks of the mobile services industry.

FiOS customers understand what Tom Cruise was talking about in Top Gun when he and Goose said “I feel the need, the need for speed!”   because FiOS satisfies the “need for speed” in the same way that Maverick’s F-14 did - by delivering a consistently high-performance experience.

Today, the FCC released the results of its broadband performance test program  conducted this past winter by the UK firm SamKnows.  SamKnows and the FCC, with the cooperation of 13 US broadband Internet Service Providers (ISPs), have learned what FiOS customers already knew  – that FiOS delivers blazing fast speeds – both download and upload – consistently, even during the busiest times of day.  Nobody else is even close to matching FiOS’ upload speeds.  And as for download speeds, consumers want a network that is always fast when they want to use it, one that doesn’t get bogged down during the busy hour.  And today, the FCC’s report shows that FiOS delivers.

The report is available for you to read for yourself.  Here’s our news release (link coming soon).

I recommend reading the whole report, but two charts say a lot.  First, chart 11 below shows the consistency of sustained download speeds over 24 hours.  As you can see, FiOS delivers its download speeds consistently all hours of the day.

The other chart worth pointing out, chart 9 below, shows what online gamers already know, that FiOS provides the lowest latency connections available.

I would like to commend the FCC for undertaking this effort.  The staff worked tirelessly over the past year to conduct this test and produce this report.  Their willingness to invite industry collaboration has produced a report that provides a solid, apples-to-apples comparison of broadband ISP performance in the US.  And while we are especially proud of the results for FiOS, the report also shows that – unlike many other countries  – most ISPs in the US do a good job of disclosing to consumers the speeds they should expect and then delivering something close to that speed.  That’s something we can all be proud of!

[This is the eighth installment of a blog series Tom is writing on the national debt crisis.  They all can be seen here. Related, see also our signature on these two open letters. – CZ]

The Committee for a Responsible Federal Budget (CRFB) describes the sheer size of the federal tax code as “several volumes longer than the Bible.”  Such a complicated mess imposes needless costs upon both businesses and individuals.  A simplified system, with lower marginal rates but fewer deductions and loopholes, would ease the tax preparation burden for taxpayers.  More important, it would boost domestic investment and generate revenues through economic growth.

Tax reform should be part of the next phase of deficit reduction.  The Joint Select Committee -- the "Super Committee" -- created by this weekend's agreement on the debt ceiling should include tax reform in its report to Congress.  It would be good for taxpayers; it would be good for the economy; it could pass! 

In fact, the CRFB’s proposal for tax simplification has garnered support from legislators and policy makers on both sides of the aisle, and many of the suggested adjustments to the tax code have been included in the Bowles-Simpson Commission Report, the “Gang of Six” plan, and the tentative-but-unrealized “big plan” considered by President Obama and Speaker Boehner. 

The total cost of tax breaks and loopholes is roughly $1.1 trillion per year.  In 2009, those “tax earmarks” totaled more than the entire amount of actual revenue generated by individual income taxes.  Under the CRFB’s “Modified Zero Plan,” many earmarks would be eliminated, but some of the most important ones, such as the child tax credit and the Earned Income Tax Credit, would be retained.  This would allow for marginal tax rates to be significantly lowered without getting rid of the vital support mechanisms that help families make ends meet.  But even with lower rates, the projected impact of the plan would actually be an increase in revenues to the tune of $800 billion over ten years. 

The Modified Zero Plan also calls for the United States to improve it competitiveness by 1) cutting the corporate tax rate, the second highest in the world, and 2) shifting to a “competitive territorial system” that would erase the incentives for American companies to keep their overseas profits outside of the US.  These steps would bring hundreds of billions home for domestic investment, rather than encouraging our own corporations to continuously recycle their revenues abroad.  It would also encourage companies to invest here, create jobs here, and export products and services to other countries.  That means GROWTH, and economic growth has a predictable side affect:  it generates more funds for the government. 

While making responsible cuts to the federal budget is a necessary and important step in righting America’s fiscal ship, the best way to overcome this debt crisis is through growth, and the best way for the government to support growth is to encourage investment and job creation.  Major tax reform is one way to do that.  It must be part of any plan to resolve our debt problem. 

Lifting the debt ceiling is necessary, but it’s not the main event.  The main event is restructuring the federal government and what it does so that it is financially sustainable.  Why is this necessary?   

Let’s start with the urban legend about a frog.  If you drop one into a pot of hot water, the frog will immediately jump out.  But if you drop one into a pot of water at room temperature and slowly turn up the heat, the frog never notices the gradual change, and will stay in the pot even as the water starts to boil until it, well, croaks.

The past few years have provided ample fodder for economists wishing to dust off the old boiling frog analogy.  Many said that the housing bubble was an example of one such frog, with more and more unsafe mortgage debt piling up until prices could finally rise no further, and the whole thing collapsed.

Recently, however, the frogs have not been individual homes or financial companies, but entire countries.  For years, Greece was able to sell 2-year bonds at less than 5% interest, even as it kept taking on more and more debt.  Then, starting in early 2010, Greece looked around and realized it was boiling:

 (Greek 2-year yield, source: Bloomberg)

Greek 2-year bonds are now jumping by the day.  The rate has gone from under 5 per cent to over 30 per cent in less time than it actually takes the bonds to mature, practically overnight from the perspective of a national government.  Now there are strikes and riots almost daily as Greece attempts to somehow figure out how to cut enough social programs, reduce enough wages, and raise enough taxes to make ends meet.  Rather than putting the country on a sustainable path when there was still a chance to do so, the government waited until investors forced the pain to be much more sudden and much more severe. 

But what about the United States?  Surely that could never happen here, right?  Some economists fear that the government will soon feel the wrath of the so-called “bond vigilantes,” but others, such as Paul Krugman, have derisively said that those vigilantes must be “invisible,” because America’s rates are still so low.  Of course, they were invisible to Greece, too—until it was too late.

When the vigilantes did finally show themselves, Greece was running a deficit that was roughly 13% of its GDP.  This year, the federal government is running a deficit that’s roughly 13% of GDP.  When Greece had to be bailed out the first time in mid-2010, its national debt was roughly 120% of GDP.  Italy, the latest European nation to enter crisis mode as EU finance ministers debate whether a bailout of such a large economy is even possible, has a national debt of roughly 120% of GDP.  At its current pace, our national debt will hit that mark in about two years.

The consequences of not dealing with the main event are visible if we’re willing to see.

Ivan Seidenberg, Verizon’s CEO and Chairman, has joined 17 of his fellow business leaders in calling on Members of Congress and the President “to enact legislation now that lifts the debt ceiling with a serious plan that puts America on a true path to a sound fiscal future.”

Linked here and pasted below is the full letter sent by the Business Roundtable today.

[This is the sixth installment of a blog series Tom is writing on the national debt crisis.  The first five are here, here, here, here, and here. Related, see also our signature on this open letter. – CZ]

Let’s be clear:  the two proposals being presented to the House and Senate by Speaker Boehner and Leader Reid are not solutions to the debt problem.  We encourage these efforts to cut deficits and raise the debt ceiling.  But they are simply the first steps in the long journey America must make to get its fiscal house in order. 

At best, the Boehner and Reid proposals are tiny blips in the upward trajectory of the nation’s debt march.  But because they deal primarily with discretionary spending and potential savings from the gradual end of our military conflicts in Iraq and Afghanistan, they have little long-term impact. 

More specifically, nothing being done here will grow the economy.  And nothing in the Reid and Boehner initiatives will mitigate the relentless upward march of the share of GDP consumed by the entitlement programs – Medicare, Social Security, and Medicaid.  

Without both economic growth (and the tax revenue that comes with it) and entitlement reform, there is no solution to our nation’s long-term debt problem. 

In response to my inclusion in an earlier blog of CBO’s federal debt chart through 2085, an outside economist called to my attention that the CBO stopped the line representing debt under the “alternative fiscal scenario” at 2037 when it hit 200 per cent of GDP.  In its accompanying spreadsheet, CBO uses the phrase "more than 200% of GDP" in the cells for the out year projections, even though it provided the assumptions needed to continue the projection.  If the projections are extended, the chart looks like this: 

(Credit: Dr. John Rutledge)

It’s no wonder that rating agencies are threatening to downgrade U.S. debt even if some version of the Boehner or Reid packages is approved.  In simple terms, they don’t bend the curve. 

That’s why Verizon has joined other businesses in calling for a debt reduction package that includes tax reform that encourages growth and improves the efficiency of our tax collection system.  That means broadening the base by closing loopholes, while lowering rates to make the U.S. more competitive as a place to invest capital.  It will result in more revenue for the federal government.   

We also call for making the small changes in entitlement programs (e.g., updating the formula for determining cost-of-living increases, gradually raising the age for collecting Social Security for those who are now more than a dozen years from retirement, means-testing Social Security and Medicare) that will have no impact on those who are currently relying on these programs but will have major fiscal impact twenty years from now.  The changes also will ensure that these programs survive. 

The crisis atmosphere surrounding the debt ceiling will dissipate when it is raised in a few days.  But the real crisis – the mounting and unsustainable debt – will still be with us.  There’s no time for Congress and the Administration to take a “breather.”   The push for economic growth and fiscal reform must intensify.    

The New York Times discusses a new project that has been shepherded by Blair Levin who helped guide the development of the National Broadband Plan and is now a fellow at the Aspen Institute. In a nutshell, the project brings together dozens of universities who are linked together by very high speed networks with the intent of using them as jumping off points to connect local communities to the university facilities where programs around medical health care technologies, remote education and other data intensive information technology systems are often being developed.  The idea is to create a high capacity test bed to see what kinds of new applications and online services might emerge that depend on data intensive, ultra high speed connectivity.

Verizon’s build out of fiber to the home technologies and Fourth Generation wireless networks demonstrates we are believers in the impact ultra-high speed networks can have on innovation and advances in services in areas like health care and education.  While it is not certain what new applications or services might emerge under this new partnership that is the nature of a test bed.   The universities and research hospitals involved certainly have communities of users and experts who can help provide a needed push to test new applications and services that might help scale more advanced health care services, education services and energy management approaches among other things.  Blair is to be commended for his role in pulling together this unique project and we look forward to finding out more about it and determining whether our advanced networks can play a role.

Many comparisons have been made between the financial crisis and economic downturn that produced Japan’s Lost Decades and the financial crisis and subsequent economic downturn that began for the United States in 2008.  There are many eerie similarities, right down to the “cures” attempted by both governments. But there are also two major differences which should make any American wonder if we’ll even be able to last long enough for a Lost Decade before a much more serious crisis hits.

The first of these differences is the fact that Japan entered its crisis with a personal saving rate in the teens, which means that households were able to buy much of the debt taken on by their government.  When household purchases are combined with those of pension funds, corporations, and the financial sector, virtually all of the Japanese government’s debt is held domestically.  Even in the wake of the financial crisis, Americans have maintained a low personal saving rate of around 5 per cent, meaning that the Treasury can’t count on individual Americans to be buyers at its auctions.

In contrast, when the federal government ran up its huge war debt during WWII, the personal saving rate made a massive jump as rationing was enforced and countless paychecks were deposited into the bank accounts of military personnel who weren’t at home to spend them.  By pushing the sale of war bonds, the U.S. government used the high personal saving rate to fund its deficits domestically.

Personal Saving Rate in the U.S.

(Source: Bureau of Economic Analysis)

 Instead of American households, foreign buyers (and more recently, the Fed) have been absorbing enormous amounts of government debt.  The fact that foreign buyers have so very many dollars with which to buy our debt is actually a result of the second ominous difference between our future and Japan’s past: Japan had us.

When Japan’s stock market and real estate bubbles popped, the country could still rely on being able to run huge trade surpluses with an economy even larger than its own.  Even better, America was about to experience two straight decades of strong, often over-frenzied economic activity fueled by the “irrational exuberance” of the tech bubble and the housing bubble.  The booming exports to the U.S. boosted GDP and created jobs, helping Japan to avoid a long period of outright contraction rather than mere stagnation.

Our federal government has been following the Japanese pattern in an effort to spark the economy into a new round of sustained growth.  But even with Japan’s ability to finance its own debt and run huge trade surpluses – something not happening in the U.S. -- Japan’s debt has shot up to more than 200 per cent of GDP.  Now Japan is simply forestalling the endgame.  With our structural differences, it’s likely that if we follow down that path, ours will come much sooner.