[ NNSquad ] Re: Google response to WSJ 12/15/08 "Fast Track on the Web" story

[Barry Gold <bgold@matrix-consultants.com>]

John Bartas wrote:
> Despite this, I'm inclined to agree with George that minor legislation 
> is not the answer - Congress is clueless and the Duopoly PR machine is 
> too good at muddying the water for a serious policy debate. Ultimately 
> it will have to be a tightly regulated public utility; with a strict 
> cap on profits. Only by stripping off the profit motive can the net 
> stay free.

A tightly regulated public utility is one of the few things I can 
imagine that would be worse than a completely unregulated system.  A 
"strict cap on profits" means limited investment.  Back in the days when 
AT&T was a regulated market, the only people who would buy their stock 
were old people who wanted a nice safe income stream with damn little 
volatility.  You might as well buy muni bonds.

The people who write regulations for things like these have zero 
understanding of economonics.  Rent control boards set the "fair return" 
on rental housing at about what you'd get out of a 1 year CD.  But to 
get the money from a CD you don't need to do any _work_ or take any 
risk.  The money just flows in (with maybe a small glitch if your bank 
gets taken over by FDIC).  So why invest in an apartment building?  You 
have to do work -- either fix things yourself or arrange for people to 
do it, and you always face the risk that the market will take a downturn 
and you'll be left with a half-vacant building and not enough rent 
coming in to pay the mortgage, much less take care of maintenance and 
make a little profit.

And General Telephone (GTE) was using step-by-step equipment nearly 15 
years after #5 Crossbar made it obsolete.  Why?  Part of it was because 
GTE owned Automatic Electric, which made step switches, while the 
patents on #5 Crossbar were owned by Western Electric (owned by AT&T .  
But a large part was because the utility regulators had assigned a 
25-year depreciation to those existing switches.  If the utility 
replaced them any sooner, they wouldn't get any increase in the rates 
they could charge customers to pay for the capital cost involved.

I *really* don't want to see that happen to the Internet.

  [ "Tightly regulated public utility" is a catch-phrase that can
    conjure up all manner of dark images, but in reality there are a
    range of options to be considered between "tight regulation and
    full disclosure" vs. "no regulation and little disclosure" --
    right now the Net-o-Meter is pegged pretty firmly on the latter
    edge.  I refuse to believe that it's impossible to find a middle
    ground that would better serve customers and (in the long run)
    Internet ISPs as well.

    Now, about "It's Not the Same Old Line" General Telephone.  I
    spent the better part of my youth living in West Los Angeles
    areas served by General Telephone/GTE (sidenote, I recently
    received a message from an ex-GTE installer who lived in the
    apartment next door to me at one point, noting how the early
    ARPANET services that I showed him at the time made a lasting
    impression -- mainly inspiring him to leave GTE, apparently).

    Anyway, having spent more time than I like to think about dealing
    with AE Directorized Step-by-Step and Type 80 "Monophones" (with
    rotary dial return spring mechanisms that could wake the dead), 
    I made something of a study of GTE.

    While it's true that there was a complex of issues involved, my
    sense is that the primary factor holding back evolution by GTE in
    those days was an edict that essentially required buying
    everything from GTE-owned Automatic Electric whenever possible,
    and patents aside, AE back then was not exactly a bastion of
    innovative thinking (in contrast to the AT&T Bell System, which had
    a similar arrangement with their own Western Electric as far as
    I know).

    But GTE did have a sense of humor.  Decades ago, General
    Telephone ran a series of self-humiliating TV commercials that
    were rather amusing.  My favorite featured a guy in a suit, who
    says, "Hello, I'm from General Telephone!" -- and then he tries
    to explain how they're working to improve service.  At which
    point (if memory serves me) he's assaulted with catcalls and boos
    from an unseen audience, and ends up with a cream pie in his face.
    Nope, this one isn't on YouTube.  I just checked.

    You just don't get tech ads like that anymore.

    -- Lauren Weinstein
       NNSquad Moderator ]