The Information Technology and Innovation Foundation (ITIF) released a new report last week, “A Policymaker’s Guide to Network Management”, authored by Senior Analyst George Ou.  The report is another in a series of reports the ITIF has done on broadband and Internet technology issues in an attempt to sort through the arguments and put on the table well supported facts to help make the debates on various issues more informed.  I have to commend Rob Atkinson who heads the ITIF for his efforts in this regard because I do feel this organization’s efforts have helped lead to less rhetoric and more dispassionate examination of the issues.

In this report, George, who is an engineer and understands the technical complexities, explains how the Internet works from an operational standpoint.  He explains why network management is necessary, even in some cases where networks have lots of capacity.  He also illustrates how various applications and protocols work and how they affect network congestion.  George concludes that ISPs must be able to manage their networks and in some cases prioritization is an important tool.  That said, he also made it clear they should do this in a fair and non-discriminatory manner.

ITIF released this new report at a seminar and discussion that included George, David Sohn of the Center for Democracy and Technology and John Nakahata, who was a key staffer at the FCC a few years ago.   While both had criticisms of the report, I think the most notable comment was from John when he acknowledged that George had made a good case about the importance of network management.

One of the points George and Rob made is that transparency is critical in how networks are managed.  Companies must be open about what their network management practices are, how they implement them, what their purpose is and how they might affect consumers and other industry players.   A questioner from the audience asked whether ITIF believes legislation is needed in this regard and Rob said no, that transparency principles and agency enforcement should be enough.  But he also said that industry needs to step up to this challenge soon.   It was clear he did not believe that there should be too much delay before companies came together around appropriate principles.

Tom Tauke first talked about transparency principles earlier this year at the FCC en banc in February. I offered a blog post that outlined what we thought the principles should look like a few weeks later.   In a nutshell, here is the basic framework as I see it:

• Clear descriptions of the typical performance or range of performance that a broadband service is likely to provide upstream and downstream at peak and off-peak hours of usage;  
• Information about network management practices used to protect the integrity, functionality and usability of the consumer’s broadband service and the provider’s network;
• Clear descriptions of rates, terms, and conditions of all broadband service offerings including specific information on available service plans and any restrictions that may apply;
• Information from applications and content sites about how their offerings can affect the way a broadband connection operates and impact the neighbors sharing a connection; and
• Access to and information about simple diagnostic tools consumers can use to independently assess the performance of their broadband connection. 

Verizon has taken no formal position in terms of what the framework should look like. But I think this is a start.  Rob is right – industry needs to come together on this issue soon.   Even though our FiOS fiber to the home network has lots of capacity, George makes a compelling case that network management remains important no matter how much capacity you have.   I don’t think government rules make any sense in this space given how fast the demand for broadband and the types of applications that ride on broadband networks change.   That makes it all the more important that industry step up to the challenge.

The  U.S. Addendum to the “SMART 2020: Enabling the low carbon economy in the information age” shows that with the right policies in place ICT is uniquely positioned to help other sectors of the economy cut CO2 emissions by as much 22 percent in 12 years -- 2020. Given recent prices, that would translate into gross fuel and energy savings of up to $240 billion, or a reduction of up to 36 percent in imported oil. In short, the report finds that the U.S. could become “a high-tech, high-growth and low-carbon beacon.”

Representatives from the business and policy arenas, including myself, gathered in Washington, D.C., recently at the SMART 2020: How IT Can Save the Economy – and the Planet event hosted by the two organizations responsible for the report -- the Climate Group and the Global e-Sustainability Initiative (GeSI). Verizon was among 11 organizations that helped fund the study.

The SMART 2020 report identifies additional ways in which investments in broadband and other information technologies can boost our economy, create ‘green’ jobs and help transition our country to a sustainable energy system. The report describes the benefits of smart grids, smart roads and buildings, and travel substitution – bringing the work to the employee.

I’ve long believed Broadband to be a form of ‘super capital’ that increases productivity and increases efficiency.  Consider the fact that the ICT sector accounted for 20% of GDP and for more than half of all net new jobs between April ’07 and April ’08.   Communications companies invested $70 billion in America’s network infrastructure in 2007 – an amazing amount. The level of investment reflects the competitive “arms race” between cable, telco and wireless companies, all of which are racing to add more capacity and speed in order to retain and win customers.  

Again, discussions like those taking place in Poznan are essential, but we should not delay in taking steps like those called for in the US Addendum, such as its call for government to provide leadership by supporting public-private collaborations and to lead by example in promoting behavioral change.

PERSONAL CELL PHONE ACCOUNT OF PRESIDENT-ELECT OBAMA ACCESSED BY UNAUTHORIZED EMPLOYEES

BASKING RIDGE, N.J. – Verizon Wireless President and CEO Lowell McAdam made the following statement today:

 “This week we learned that a number of Verizon Wireless employees have, without authorization, accessed and viewed President-Elect Barack Obama’s personal cell phone account.  The account has been inactive for several months.  The device on the account was a simple voice flip-phone, not a BlackBerry or other smartphone designed for e-mail or other data services.

 “All employees who have accessed the account – whether authorized or not – have been put on immediate leave, with pay.  As the circumstances of each individual employee’s access to the account are determined, the company will take appropriate actions.  Employees with legitimate business needs for access will be returned to their positions, while employees who have accessed the account improperly and without legitimate business justification will face appropriate disciplinary action.

 We apologize to President-Elect Obama and will work to keep the trust our customers place in us every day.”

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About Verizon Wireless

Verizon Wireless operates the nation’s most reliable wireless voice and data network, serving 70.8 million customers. Headquartered in Basking Ridge, N.J., with 71,000 employees nationwide, Verizon Wireless is a joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE and LSE: VOD).  For more information, visit www.verizonwireless.com . To preview and request broadcast-quality video footage and high-resolution stills of Verizon Wireless operations, log on to the Verizon Wireless Multimedia Library at www.verizonwireless.com/multimedia .

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.

At Verizon, our TV system was all-digital from the start although we did simulcast a few channels in analog format so that customers could see these channels without using a set top box.  Earlier this year, at the FCC’s urging, however, Verizon agreed to discontinue those analog simulcast channels before Feb. 17, 2009.  We have now done that.  

However, we did not move analog channels to different tiers of service as part of this process, and FiOS TV customers still receive the same channels, in the same tiers as they always have.  In fact, we provided a digital adapter to any customer who had analog TVs connected to FiOS without a set top box.  These adapters were provided for free as long as that customer remains a Verizon FiOS TV customer at their current location.  This digital adapter not only allows the customer with an older, analog TV to receive the small subset of channels that had been simulcast in analog format in an improved digital format, but also enables those customers to have access to the hundreds of other digital channels available on FiOS TV without adding a full-featured set top box.

So for Verizon customers there was no need to subscribe to a different, more expensive service tier to continue to receive the same channels, and, in fact, using the digital adapter, customers were able to receive more channels, not fewer, on TV sets not equipped with a FiOS set top box.

As we have told news reporters, we are confident the FCC will agree that this was an appropriate way to handle the change and we believe our customers agree as well.

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.

The highly-anticipated Vice Presidential debate tonight at 9pm EDT (Oct. 2) can be seen on your Verizon Wireless phone.  In fact, Verizon Wireless customers have two ways to watch U.S. Senator Joe Biden and Alaska Governor Sarah Palin debate live from St. Louis.

1.  V CAST video: CBS News covers the proceeding, in real-time.

2.  V CAST Mobile TV stations including NBC, MSNBC, CNBC, FNC and CBS are expected to carry the debates live, with their usual news commentary teams.

As we've reported, our landline telecommunications network continues to function despite widespread power outages in the region.

Where commercial power is lost, backup generators and batteries are powering many Verizon facilities, ensuring that customers served by those facilities continue to receive phone service. Verizon also is setting up phone banks in key locations in our southeast Texas service area, offering free local and long-distance calling and Internet access to people affected by the hurricane.

Where Ike’s winds downed lines and poles and knocked out service, we’re assessing the damage and have begun restoration. We expect to bring in technicians from other parts of Texas the coming days to expedite the restoration of service for our customers in southeastern Texas. Similarly, we’re restoring service in several Midwestern states after Ike’s heavy rains and strong winds passed through.

We're also aiding disaster-relief efforts with grants and contributions. The Verizon Foundation has awarded a $20,000 grant to the Texas division of the Salvation Army, and another $20,000 grant to the Houston chapter of the American Red Cross. In addition, the foundation is offering a 1-1 match for contributions made by Verizon employees to nonprofit organizations that are providing aid in the areas affected by Ike – including Texas, Illinois, Indiana, and Ohio.

In these and other ways, Verizon is supporting rebuilding efforts and helping people get their lives back in order following this devastating hurricane.

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.    

Verizon and law enforcement agencies encourage consumers to not attempt to cash the fake $4,500 check and to not provide any personal information to the “claims agent” that the fraudulent letters instruct them to call.

Anyone who receives one of these letters should report it to the United States Postal Inspection Service.

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: