roundtable: New: INFRASTRUCTURE ANALYSIS

roundtable: New: INFRASTRUCTURE ANALYSIS

New: INFRASTRUCTURE ANALYSIS

Richard K. Moore (rkmoore@iol.ie)
Thu, 16 Feb 1995 10:14:06 +0000 

Message-Id: <199502161017.KAA05251@GPO.iol.ie>
Date: Thu, 16 Feb 1995 10:14:06 +0000
To: roundtable@cni.org
From: rkmoore@iol.ie (Richard K. Moore)
Subject: New: INFRASTRUCTURE ANALYSIS


One of the most central questions being discussed on this list is:

      "What regulation, if any, is appropriate at this point
       in the developement of the cyberspace 'frontier'?"

The opponents of regulation argue that "infrastructures" (in the USA) 
have typically been developed on an entrepreneurial, unregulated, basis, 
and that regulation came later -- after markets developed based on those 
infrastructures.  The railroad industry, with "tracks" as the 
"infrastructure" has been cited repeatedly to substantiate this argument. 
The image of tracks being layed across the western wilderness, with 
little evidence of existing markets, indeed seems compelling,... until 
you analyze the analogy being asserted.

The fact is that the broadband infrastructure, _when it is first 
installed_ will already be much more complete and mature than the initial 
track-system was.  The table below illustrates that the broadband system, 
with "dial-tone" signal running over it, is not compable to raw "track" 
alone, but is comparable instead to a market-ready transport system.

In addition, there is a tremendous backlog of intellectual property
(videos, television shows, online databases, ...) ready for immediate
distribution over this new channel.  Futhermore, the end-user delivery
infrastructure (the installed base of television sets) is totally in 
place. Only small, inexpensive, control boxes need to be deployed, in 
parallel with broadband. And the "market" -- the viewers -- is fully 
mature: it is already consuming these same properties over other channels, 
and can be expected to avail itself of the new channel as soon as it 
becomes operational (because of its enhanced consumer options).

Not only that, but a vast network of "tracks" has _already_ been laid 
(the cable networks).  Please note that cable is fully capable to serve 
as an an intial broadband infrastructure: that's why the telcos are so 
keen to buy up cable, and are already negotiating deals along that line.

Clearly, when the "electronic infrastructure" goes operational -- which
could begin within a year in urban areas -- the marketplace will already 
be at a state of maturity and size that the railroads only reached after
_decades_ of market development.

It is therefore appropriate, in seeking regulatory precedents, that we 
look at the railroad industry much later in its life cyce -- at a point 
where a significant proportion of the nation's goods were travelling over 
it.  The pioneer days of track-laying are simply not relevant to our 
current situation.

>From this more accurate perspective, it is clear that _common-carrier_ 
regulation is the appropriate and necessary framework for this new 
infrastructure.  Just as with the railroads, the national good 
(_economically_ as well as socially), is best served if the the 
infrastructure is available on a level-playing-field basis to all 
third-party content owners.

As part of such a common-carrier framework, a _minimal_ layer of
price/access regualation is necessary:
    o  The pricing formula must be equal for all content owners.

    o  The price must be based on the "transport resources" used:
           - for rail, the basis is: WEIGHT & SIZE
           - for broadband, the basis is: BANDWIDTH.

    o  Access must be available on a non-descriminatory basis
       to all content owners.

What I'm suggesting is a _very minimal_ regulatory framework, aimed at
maximizing competition and economic growth.  I see no need for the
government to involve itself with the following matters:
    o  the dollar amount of the tarrifs
    o  public access to the infrastructure
    o  whether telcos own cable
    o  whether telcos own content (but the accounting procedures need to
       be monitored to assure fairness to third-party content owners)

I have complete faith in the free market to bring the price down to where
public groups can afford to use it -- unsubsidized.  The competition from
video-rental stores and existing television channels will guarantee a
reasonable pricing level for broadband.

There _is_ a natural-monopoly aspect to this industry, and I see no reason
to compel the construction of wasteful, redundant physical facilities.
Cables won't be forced to sell to telcos: cables can stand their ground 
and offer only to lease facilities; or they can choose to compete 
themselves -- they should be free to make their own decisions.

I hope this analysis is useful to the discussion on this list, and I look
forward to your thoughts on this matter.



             ======================================================
             |                         :                          |
             |   RAILROAD PRECEDENT    |       CYBERSPACE         |
             |                         :                          |
             |====================================================|
             |    physical property    |  intellectual property   |
             |    ^^^^^^^^^^^^^^^^^    |  ^^^^^^^^^^^^^^^^^^^^^   |
  TRANSPORT  |                         |                          |
 MARKETPLACE |      <autos> <oil>      |   <talk shows> <news>    |
             |    <lumber> <cattle>    |  <movies>  <databases>   |
             |          <...>          |          <...>           |
             |_________________________|__________________________|
             |                         |    + carrier signal,     |
             |     + rolling stock     |       "dial tone"        |
  TRANSPORT  |     ^^^^^^^^^^^^^       |     ^^^^^^^^^^^^^^       |
   SYSTEM    |           _____         |                          |
             |  ________ \ []/__\/     |                          |
             |  |______|-|_______}     |    --010-1-00-01-11--    |
             |   oo  oo   OO   oo      |    ========<>========    |
             | ####################    |                          |
             |_________________________|__________________________|
             |         track           |    wire, cable, fiber    |
             |         ^^^^^           |    ^^^^^^^^^^^^^^^^^^    |
    INFRA-   |                         |                          |
  STRUCTURE  |    -----------------    |                          |
             |    / / / / / / / /      |     ========<>========   |
             |   -----------------     |                          |
             |                         |                          |
             ======================================================


__________________________________________________________________________

-Richard          *******************************************************|
                  |-Don't let the grinch steal cyberspace-|  Guard your  |
                  |--CYBERSPACE INC won't have listservs--| Cyber Rights |
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| rkmoore@iol.ie  | Ask to see: {    "Magna Carta analyzed"           }  |
| Wexford Ireland |             {"Declaration of Rights in Cyberspace"}  |

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