Broadband technology began to be deployed in the U. S. in latter part of the 1990’s.  Wireless technology began to grow rapidly in that same time frame.  Both of these technologies transformed the communications industry.  Competition had emerged in the communications industry in the voice and business markets beginning in the 1970’s.   Broadband technology represented the transformation of local networks via the implementation of high speed, Internet protocol technologies.  Wireless networks and technologies became more widespread and reliable and incorporated data services as well.

All of these trends increased competition and choice, made consumers into “prosumers” as Toffler has put it, creators as well as consumers of content, and resulted in an explosion of innovation and investment in Internet based services.  Change entered into our industry in a way never seen in the days when the telephone industry was a monopoly, network protocols and facilities were owned by the telephone companies, and voice was the only communications service available. 

The changes in the industry have been rapid and transformative.  At Verizon, we adopted a phrase that infused our thinking and became common in our presentations – “The World Has Changed.”   Everywhere we look today in the communications and information technology sectors, we see evidence of that change and it has been overwhelmingly good for Americans.  For example, in 2000, only 4 million American homes had broadband connections. Today, over 60 million do and many of those connections are very high speed, including the latest technologies like Verizon’s fiber to the home FiOS services.   Investments in networks by cable companies, mobile services providers and telephone companies began to explode in the early part of this century as new networks were built and networks were expanded.  In fact today, the communications sector – including cable, mobile, telco and other private carriers – invests more annually in networks – upwards of $60 billion – than the entire Federal government spends on the interstate highway system.   To put it another way, the U. S. government spent annually the equivalent in today’s dollars of $20 billion over the last couple of decades to build the interstate highway system.  Our industry has been spending triple that over the last several years to build and maintain the communications networks that underpin our ideas-based economy.

These networks encouraged more use of data services of all kinds and as a “mass market” of broadband consumers went online through the early part of this century, an explosion of new Internet based applications and services arose, encouraging more change and choice for consumers.   We take it for granted today but many of the technologies that became a mainstay of this presidential campaign – such as video over the Internet via YouTube and other services, social networking services like Facebook and My Space, and text messaging services – were either not yet invented or not widely known and deployed in the last election.  Change in the technologies and capacity of communications networks helped transform how we communicate in our politics as groups like the New Democrats Network have so well noted.

As the technologies, consumer demand and services changed and expanded in our industry, we began to transform our company to meet these new challenges and requirements.   We reinvented our company so it could make major investments in the networks of the future, including wireless high-speed data networks and the latest landline technologies including fiber to the home networks.  Billions of dollars were required to make these investments and we increased our scale and capacity by adding to our local network holdings and incorporating MCI into our company.   The global backbone facilities MCI had deployed helped us expand the scale of our company to meet not only emerging local and national needs but the global communications needs of U. S. companies as well. 

We continue today to build these networks, investing approximately $17 billion a year building our FiOS fiber to the home network, expanding our wireless voice and high-speed data network and preparing for the next generation of broadband wireless to be deployed in just a couple of years, and investing in new global data cables, such as the TransPacific fiber line.

We compete aggressively now with the best and most capable local networks ever built anywhere in the world.  Our industry continues to be a mainstay of the economy, investing and growing, even as the economy slows.  These are difficult times but our CEO was asked about our investments recently and our prospects and had this to say:

“We have to retool the work force. We’re not going to do it by hunkering down.  We’re going to do it by reinvesting…. we can’t allow this period in which we feel bad about dislocations to take away from what America should be doing, which is creating competitive edge. If we ever lose our nerve to continue to take risk, then we’re in a lot of trouble.”

In other words, we remain confident that we can continue to grow, add value for our customers and modernize the critical communications infrastructures the U. S. needs to compete, grow and help address key social problems.  That sounds a lot like “Yes we can”.

And it is important that we do - as much as we can.  As Rob Atkinson of the Information Technology and Innovation Foundation has noted, “In the new global economy information and communications technology (IT) is the major driver, not just of improved quality of life, but also of economic growth. Moreover, there are strong indications that IT has the potential to continue driving growth for the foreseeable future.”  ITIF, and the Center for American Progress among others, also point to broadband and IT technologies as keys to helping improve energy efficiency, improve health care delivery and reduce costs, and strengthen our educational system.

Rob suggests that “policymakers need to see IT issues not just as narrow IT policy, but as the centerpiece of economic policy. This means putting issues of digital transformation at the front and center of economic policy.”  We believe our investments and those of our competitors and other industry players are building platforms that can help address key economic and social problems.  There is a lot more these networks can do.  We’ve only begun to tap their true potential and by focusing on the delivery of new services in the health, energy and education arenas, the increased demand will encourage more deployment and more advances in network technologies.

The Information Technology and Innovation Foundation has just issued a major study that adds even more evidence that broadband is a “transformational” technology as our CEO Ivan Seidenberg said in a speech earlier this year.  But ITIF’s study goes even further calling IT (information and communications technology) “the major driver of today’s global economy.”   The ITIF study is impressive and deserves attention from all policy makers in particular.  It demonstrates that a strong information technology and communications industry is critical to U. S. competitiveness, innovation, economic growth, job creation and helping address key social challenges like better and more efficient health care.

I was most impressed by three aspects of the ITIF report.  First, it demonstrates that IT technologies have been the key factor responsible for reversing the “20-year productivity slowdown from the mid-1970’s to the mid-1990’s and in driving today’s robust productivity growth” in the U. S.   As ITIF notes, productivity is the most important measure and determinant of U. S. economic performance going forward.  IT is a “general purpose” technology that drives economic growth and transformation and ITIF believes that IT will continue to be a major driver for our economy for at least the next decade or two. 

Second, it offers substantial evidence that IT technologies help provide a platform to address major social challenges such as energy efficiency, health care and education.  In the area of energy efficiency, for example, ITIF points to studies in other countries of the world that suggest that more effective use of telemedicine, telework and teleconferencing could reduce transportation demand (including commuting) by up to a third.   Studies by groups like the Global e-Sustainability Initiative suggest manmade emissions of greenhouse gases could be reduced by up to 15 percent by 2020 through effective use of IT technologies.

Finally, it suggests that effective IT use can help not only improve the economy but improve lives and our society by helping the disabled participate more effectively in the job market.  Unemployment in many segments of the disabled community is very high (over 50 percent among some disabled citizens) because their disabilities make it hard for them to get to work places or use existing technologies that are in the vast majority of job locations.   IT technologies and high-speed Internet connections make it possible for many disabled people to work from home or access existing technologies using software enhancements or modifications in cell phones and other devices.  As ITIF points out, while some of the disabled were born with their disabilities or were injured later in life, the reality is that as people age they often become disabled in some fashion, developing sight or hearing problems.  IT technologies can not only help our economy and society by taking advantage of the ideas and training of many disabled people who are not now in the workforce, they can also ensure that they are not prematurely forced to leave jobs because of problems using work place technologies.

One of the key points ITIF makes in its study is that policy makers need to view IT issues not just as narrow IT policy but as the centerpiece of economic policy.  As the study notes, “This means putting issues of digital transformation at the front and center of economic policy.”  I agree with that but would add a caveat.  IT issues should also be at the front and center of discussions around other key policy challenges such as health care reform, energy and environmental policy and education reform.   IT technologies can make major contributions to helping solve these problems too.

This is an interesting question that is raised frequently in the context of whether industry responsibility and oversight models (i.e., various forms of industry “self-regulation”, a term I do not like and do not think fits well with the purpose of these models) work to ensure accountability and adherence to agreed upon industry best practices.   In the context of privacy policy, for example, this issue is one of the key questions under discussion. 

Interestingly, a couple of years back during the debate on net neutrality, I made the argument that industry leadership through some form of oversight/self-regulatory model, coupled with competition and the extensive oversight provided by literally hundreds of thousands of sophisticated online users would help ensure effective enforcement of good practices and protect consumers.  Tim Wu at the time offered the following comment in an interview with the Economist (this is an excerpt from the article in the Economist):

"'The public reaction has already been as powerful and effective as any law,' says Timothy Wu, a professor at Columbia Law School who is credited with coining the term "net neutrality". The debate has put the telecoms companies on notice that they are being watched closely, he says, and has forced them to make public pledges not to block or degrade access. 'Shame can have more power than litigation,' says Mr Wu. 'The market and consumers can control bad practices, but consumers actually have to be aware of what is going on for that to happen'."

The Chatterji and Toffel paper does indeed find that publicly citing companies for their performance, or measuring and publicly publishing how they perform on various standards does have an impact on how companies act.   Letting the public and policy makers know, in other words, how a company complies with its commitments or industry principles is a useful tool to encourage compliance.  As the authors note:

We hypothesize that company ratings are particularly likely to spur responses by firms that receive poor ratings, especially those that face lower cost opportunities to improve and that operate in highly regulated industries. . . We find empirical support for our hypotheses, and present implications for managers of rated

companies and of private and public rating agencies. While negative ratings may “shame” firms that are performing poorly, the threat of regulatory action and the presence of “low hanging fruit” are important drivers of how firms respond to information-based incentives.

Admittedly, the paper does suggest that the threat government might step in is a spur to action but I don’t think this undermines the model.  In fact, it seems to me that industry responsibility and oversight models can only work well if all parties know that government remains watchful and might need to intervene if the process clearly appears off track.   Most of the research I am familiar with in this area – like this paper from Phil Weiser of the University of Colorado – makes the same point.  Overall, I believe this paper adds to the growing body of knowledge about how to make industry responsibility and oversight models work.  Clearly transparency and public notice are key tools in this regard.

In a critique like this, you have to offer a summary of what you think the writer or author is saying in order to provide a jumping off point for further discussion.  Despite the title, Jonathan is obviously very concerned about the Internet’s future and wants it to continue.  He seems to believe that that future could be in one of two directions: the “generative” Net versus what he refers to as a world of “tethered, sterile appliances.”  He clearly sees the “generative” Net as being about technologies, applications or networks that invite or allow customization or unique, new applications or programs.  In this regard, he seems to be suggesting that the Internet based on the “PC”, separate (not integrated) applications and programs, and the so-called “best efforts” Internet is the ideal.

The opposite of this he believes is an Internet that consists mostly of what he calls “appliances”, devices that do not generally allow for the development of customized applications or don’t allow users to experiment and come up with their own programs or services.  The AOL of old is that sort of model and devices like the Slingbox that are not multipurpose and don’t allow a lot of customization or programming are examples of devices of this kind.   Clearly, Jonathan sees the “generative” Internet as providing much more value and utility.

The point of Jonathan’s book seems to be that for a variety of reasons [viruses, Spam, identify theft, etc], we may soon see the end of the “generative” Internet, the “open” Net and the emergence of an Internet that mostly consists of tethered devices or “single purpose” appliances and closed networks.   That is the point behind the title of his book, which is really a play on words.   He clearly believes the future of the Internet is moving more and more towards that “appliancized” model and away from the “generative” one in part because people feel threatened by dangerous applications or malware.

I guess I see that both models will thrive because they serve different purposes and because there are forces that drive the Internet today that simply encourage evolution and choice, while preserving the essential cooperative essence of the Internet that keep it running.

For one thing, the concept of “generativity” seems to revolve only around the notion of new applications, software or content techniques.    Innovation need not be limited simply to a new application or software program in my view however.  Why isn’t a new “applicance” focused on a specific need for a consumer just as much an example of “generativity” as a new program or application? 

This is especially so when you look at how consumers use the Internet today.   Consumers see value in both models depending on what they are trying to do.  If you are principally interested in streaming or downloading videos, why not use a device that is designed for that purpose?  It can be much easier to learn to use such a device, with fewer buttons and no complex software to have to master.  The device will still use IP protocols to communicate and the device itself is “generative” in the sense that it is an innovation, a new idea, a new device meeting a consumer need.   To meet, the ultimate innovation is something that meets a consumer need in a better way.  Why shouldn’t consumers have these sorts of choices and why does this threaten the Internet?  After all, the Internet only has merit if it meets consumer needs and demands. 

The fact is that a big part of “generativity” or creative new ideas and applications comes from connectedness, the “putting together of many heads” through communications technologies.  Ideas and new approaches develop faster the more people are connected via IP technologies.   If you look back just thirty years ago, in most homes, most of the devices were analog, and almost none of them communicated.  Today, some homes have 30 or 40 devices that are IP and data capable and virtually all of them communicate.  Content can be shifted back and forth between these devices and consumers often can customize information or data by taking content from one device and moving it to another.  This explosion in IP devices in the home is a major game changer it seems to me and puts more power in the hands of consumers to generate new content and new applications, regardless of other factors.

Further, it is clear to me that while consumers may well like single purpose or “appliancized” devices that are easy to use and may be more protected against malware, they also very much value the Internet’s open nature.  They want to be able to access all kinds of information on their terms.  This notion is not just deeply embedded among consumers - the same is true in businesses and in government as well.  I know that I would be pretty steamed in my job at Verizon if I felt that my ability to access, use and experiment with content and services on the Internet were constrained by other players in some way. 

The fact is that with the demands being put on the Internet today at all levels, the “best efforts”, “generative” model that Jonathan sees as being threatened is simply evolving.  It can’t stay in place because the Internet is getting bigger, with new applications, new demands and more complex requirements.   In the early days, simply getting networks to interconnect – the raison d’etre of TCP/IP protocols and early routers – was a very difficult business.   Today, with the growing and complex demands we face, players at all levels – whether they are content providers, applications developers or network providers – need to play a role to ensure the Internet continues to serve all needs.   Experts like Dave Farber have made this same point.  I think networks will have to do more too to make the Internet work better and that is not a bad thing in my view.

It seems to me that given the huge number of people using the Internet today, the many hundreds of millions of devices that are connected via the Net, and the expectations consumers have regarding how the Internet should work, there is little danger that the value Jonathan sees through generative devices is really threatened.  I’ve been through many phases in the Internet’s evolution – beginning in the late 1970’s up through today – and there has been constant change and concerns at various times about the Internet’s future.  It is good to ask questions, offer suggestions about the future evolution of the Internet and discuss important trends.   And some of the dangers Jonathan alludes to – including malware of various kinds – do require concerted action.  Empowering consumers with more tools to monitor their own Internet applications and connections is an important concept as he suggests.   More transparency by network, application and content providers is very important as well as we have noted.

I guess in the end, I don’t think that the root strengths of the Internet – its openness and ability to stimulate new ideas and applications – are likely to be overwhelmed by malware and “appliancized” devices.   In fact, I think that devices that are more protected from malware by being special purpose may serve an important role.  But it is always good to be reminded of the Internet’s place in society and its value as a platform for innovation and choice.

Last night during the first presidential debate, Senator Barack Obama included the deployment of broadband technology to all Americans as one of the economic priorities he would establish if he became President.   Senator John McCain supports the deployment of broadband technology and calls it a “top priority” to ensure deployment as widely as possible.   

All year, both house of Congress have been considering legislation that would, among other things, establish grant programs to support mapping initiatives in the states to identify gaps in broadband deployment and to help fund the efforts of groups in the states, like Connected Nation, focused on promoting the deployment of broadband.  The legislation, S. 1492, has passed the Senate and is now pending in the House.   Over the last several years, we have made great progress in a number of states in promoting broadband deployment using mapping strategies and “e-teams” focused on encouraging deployment and helping people get training and PCs so they can take advantage of broadband.

There is abundant evidence that broadband technology can promote economic growth, energy efficiency, improved education programs and better health care.   The multiplier effects of broadband technology are immense.   Relatively small investments in broadband can encourage substantial returns in economic growth, new jobs and innovation.   Dozens of organizations – from the Alliance for Public Technology to the Communications Workers of America to companies like Verizon and Cisco – support S. 1492.  Congress can take a big step to promote a healthy economy by passing this legislation and I hope it does so today.

For example, many of the charts and comparisons I’ve seen, including the one in the USA Today article cited above, appear to compare actual delivered U.S. speeds with advertised speeds in other countries.  For example, in delving down into the Japanese numbers, which is often cited as among the fastest countries in world when it comes to broadband speeds, you find that roughly half of all Japanese broadband connections are not fiber but rather DSL.  While loop lengths are shorter in Japan, the reality is that DSL speeds are far lower than the 63.6 mbps cited in the USA chart.  That fact alone suggests that many of these comparisons are not accurate.  .

Second, the Internet is a network of networks and speeds measured across the net can vary greatly by time of day, the number of router hops involved, the type of network involved, and even factors such as major sporting events that may be occurring (lots of people can be online during a major sporting event, all at the same time, sharing local connections).     Measures based on local routers can be more accurate but even in these cases, downstream and upstream are often very important in today’s online world and you seldom see upstream speeds measured. 

Many reports assessing broadband speeds used voluntary tests to generate results.  Web sites and servers connected to those sites are advertised and consumers voluntarily take the speed tests which generate average speeds based on those tests.  Obviously these tests can vary a lot depending on the number of people using each specific technology (i.e., cable modem, DSL, WiFi and so on) who decide to log on and take them.   They can provide some useful data but again, they often don’t measure upstream speeds at all nor are they really as accurate as weighted surveys might be. 

Ironically, one of those testing sites, Speedtest.net, does have servers in many countries and it does publish its own reports based on speed tests from citizens around the world.   They publish periodic reports about their results and the 2007-2008 report found that average delivered speeds put the U. S. in the upper tier of countries world wide when it comes to speed, near countries like France which is often cited for its high speed DSL service.   Now there are many reasons for this, including the fact that while DSL in the cities in France is very fast, speeds in more rural areas where copper loops are longer may be much slower.   This would tend to make the French averages lower. 

I’m not trying to suggest here that I have the answer as to who is fastest  The point is it depends on a range of factors but more importantly using advertised speeds to compare countries is fraught with problems.  Japan’s average speed of 14 megs as reported in Speedtest.net is far below reports about available advertised speeds in that country.  Further, the Japanese themselves admit that even though they have fiber deployed to many homes, the congestion problems they face are severe.  So delivered speeds may be suffering there, even though they have new technologies like fiber to the home. 

Pricing is another area where the U. S. frequently gets criticized.  Many advocates say U. S. broadband prices are far too high and cite statistics based on a price per megabit.  Yet, again the statistics cited are not quite that straightforward. For example, some say that Japan has one of the cheapest broadband offerings on a per megabit basis in the world.  Yet, the reality is more complex.  Most reports say Japan’s broadband service only costs about $30 a month for tens of megabits of service.  Yet, the reality is that Japan’s service is priced differently.  You have to subscribe to two different services to get an equivalent product to that offered in the US.  For example, not only would you subscribe for the network connection (essentially the equivalent of getting the physical line), but you also have to subscribe to an ISP (the network in Japan is divorced from the content).  For access to a 100 megabit connection and Yahoo! ISP service, you’ll be forking out between $55 and $60.  So both because the service is more costly than many say and because the average throughput delivered is probably far below what is advertised, the comparisons often made between U. S. broadband prices and those of overseas countries are flawed and inaccurate. 

What is even more frustrating in all of these debates about statistics is that if you look to the future, the U. S. is moving to next generation technologies faster than just about any country and we are making progress.  Gartner just came out with a study that suggests that by 2012, the U. S. will be among the top five countries in the world in terms of broadband penetration to the home.  In fact, we will be very close to those countries above us including the Netherlands, and tied with Japan.   New technologies, like wireless LTE broadband technologies which Verizon will soon be deploying, are cited by Gartner as a key reason for the 20 percent jump in U. S. broadband penetration.

The statistics cited regarding broadband speed, penetration and pricing are confusing, often compare apples and oranges, and in most cases don’t measure really important factors such as who is deploying next generation technologies most rapidly.   Mark Twain had a very earthy saying about statistics – “There are lies, damn lies, and statistics”.  He meant this as a humorous observation about how easy it is to assume numbers are always right.  But it is not the numbers per se but rather how they are used and how comparisons are made that is key.    

This is one instance where looking back historically at where we have been is instructive.  I have long believed that Internet connection speeds for consumers are linked with both applications and services and the capability of the devices that hook to the Internet connections, largely PCs at present (although we are certainly going to see more and more new digital devices – like TVs – hooking up to broadband networks too).  If you look back at the historical development of broadband, applications/services, and PCs, you do see a synergy and linkage that is undeniable.   It is clear that broadband providers do respond to market demand as more capable PCs are marketed and more robust and complex applications and software emerge. This is happening now as video surges on the Net and as more and more video presentations are uploaded. 

To take this history tour, I first went back and looked at my past experience connecting to the Internet.  I had one of the early PCs, made by Timex, and went on to own Commodore’s, Radio Shack machines and a wide variety of PC clones.  I loved Macs but our company never went for them so I stuck with PCs.   I connected to online services (I started with Prodigy and then migrated to AOL) using dial up modems sometime in the early 1980’s. 

Broadband networks emerged in the late 90’s built around ADSL and cable modem technologies.  This was somewhat surprising to some of us as we had been involved for some time with ISDN technology which many saw at the time as the future broadband technology.  The telcos were often criticized for not rolling out ADSL as quickly as cable companies deployed their own version of broadband.  The criticism was that ADSL was developed and then “sat on the shelves” gathering dust.  Going back and looking at the history, however, reveals that we had been using ADSL for three or four years before the advent of the World Wide Web.  We were adapting it for on demand video which at that time was thought to be the underpinnings of the “Information Superhighway”.  Once we saw the web, ADSL was repurposed for web access but we had “proved it in” during our on demand video trials of the early 90’s.

The history of any industry can get hazy with time.   The tendency to view “then” through the prism of “now” usually happens spontaneously, without our awareness.    I think it is important to understand just how far we have come because we can make mistakes in policy by misremembering the facts.    

So, as a reminder of how much has changed and how fast, here is the table I’ve put together about the history of Internet access and broadband.  My thanks to Larry Plumb on my staff for helping me fill in the gaps in this chart: