a sad opposition

In the debate over “network neutrality,” there is a sad and unneccesary opposition between two streams of innovation.

One is bandwidth innovation. The telephone companies claim to champion increased bandwith available to the consumer. They claim that without tiered bandwidth access for big websites, they won’t have incentives to build the next generation of networks.

Notice their rhetoric acknowledges only bandwidth innovation: they say the most important thing the American net needs is more bandwidth, so they can give us more channels of TV. Note also they only acknowledge one source of innovation: themselves. All Google does is freeload on their wires. Who cares where companies like that come from? After all, the telcos have such a sterling history of innovation.

The other stream is applications innovation. Companies from Yahoo to Google to Flickr stand on the other side of the debate as proven innovators. These post-AT&T-breakup companies have delivered wave after wave of new technology to customers around the world.

Notice how the telcos have framed it: you can have one stream, from us, or another, from them. You can’t have both.

It’s interesting to compare their attitudes to those of the applications innovators. In a recent interview, James Gosling had this to say about American telecom firms:

Q: Has North America’s extensive fixed-line networks held back the jump to massive mobile development?

A: No. The place it’s been most advanced and most interesting is Japan, and Japan has at least as much old-line infrastructure as North America. … They [NTT DoCoMo] came up with this scheme of encouraging third parties to develop lots and lots of services in the hopes that that would drive network usage. They came up with a methodology where you could be a software developer for their network. What it took the join was essentially nothing. So, you get two guys and a dog going off to do a game. The game would get popular and the way that popular culture works it explodes really quickly. People were going from napkin to millionaire in two months. This started this huge feeding frenzy of developers, writing all kinds of software, making it really easy for people to get at. It really hinged on having this mechanism from the phone company that allowed third-parties to do all kinds of stuff, to get great diversity.

I don’t know how many times I’ve been in conversations with people [in North America] where they go, “Well, we think DoCoMo was stupid for giving up all that revenue. We want all of it. We’re going to have our developers develop all the games.” I actually had somebody from Telus say to me, “You know, we did this analysis and we decided that there are eight apps that people need on their cellphones. So we’re having our developers develop those eight apps.” And it’s like — (Mr. Gosling scrunches his face with incredulity) — the person just so deeply doesn’t get it.

First, the kind of apps that phone companies generate tend to be mind-numbingly bad. And you can’t actually predict what’s going to be successful. In a lot of these things that are truly social experiments, you got to try stuff. You’ve got to have the creative weirdoes out there. And by and large, creative weirdoes don’t work for big phone companies. You’ve got to figure out a way to tap into the creative weirdoes.

So it seems clear that this is what causes this unneccessary opposition: American telcos are unwilling to leave cash on the table. In a very shortsighted, pre-1994 way. I mean, if anyone should have learned the value of establishing an innovation ecosystem in the past ten years, it’s the telcos. But every time their executives open their mouth, they make it clear they haven’t learned a thing.

Worse, the limit of their vision is profoundly narrow. They want to sell more channels of television. Exactly what the world needs: we have conventional broadcast, cable, sattelite, and now AT&T delivering more video. Aain, I’m reminded of 1993: a communications revolution was coming, and right-thinking folks knew it would be based on the Internet, but there were all these visions of 500-channel TV, too. And you know what, we do have 500-channel TV now, and it’s not changing the world. Is it even making much money?

Maybe it’s an organizational culture thing. Maybe the telcos need to go through the same kind of near-death experience IBM did in the mid-nineties. Maybe they just need to die. I find a scenario for their death (er, marginalization) easy to imagine. That’s a future post.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s