How Can the Stimulus Plan Help the Internet?

Wired is running an article raising the question of how a US economic stimulus plan could best help broadband adoption and the internet in general. We discussed President-elect Obama's statements about his plan, which would include investments in such areas, but Wired asks how we can avoid the equivalent of the New Deal's "ditches to nowhere" without more data about where the money would actually make a difference. Quoting: "... the problem is that no one knows the best way to make the internet more resilient, accessible and secure, since there's no just no public data. The ISP and backbone internet providers don't tell anyone anything. For instance, the government doesn't know how many people actually have broadband or what they pay for it. ... In September, the FCC found that its data collection on internet broadband was incomplete and thus ruled that AT&T, Qwest and Verizon could stop filing some reports — because the requirements did not extend to cable companies, too."

Comments

Premise guarantees failure

[MSTCrow5429]

Central planning will always lead to ditches to nowhere. Without an ability to perform rationale economic calculations, an economy cannot function. Any effort by the State to manipulate or direct economic planning will lead to increasing economic irrationality and inefficiency. The only way to maximize the efficient use of resources is to remove government coercion from the marketplace, and let voluntary cooperation and aggregate individual choices locate the closet to optimally possible solution to any problem.

Re:Premise guarantees failure

[Rakshasa Taisab]

Existence of rampant corruption is is not a reason to discard economic theories... Get rid of the corruption and try again.

Re:Premise guarantees failure

[hedwards]

Right because people don't choose to pay for Windows over Linux, a more expensive carrier of cell service over a less expensive option or reward monopolist misbehavior.

Seriously though it really depends greatly upon the situation. Central planning is very important when the service needs to work coherently across myriad municipalities providing that it is done in a sane way.

Assuming that market forces are going to work all the time is what got us into the current meltdown of both the economy as well as the internet hardware.

And even without that, there's no particularly good reason to believe that infrastructure building is going to result in anything other than additional spam and larger DDOSes.

Re:Premise guarantees failure

[Timothy Brownawell]

Central planning will always lead to ditches to nowhere.

[citation needed]

Without an ability to perform rationale economic calculations, an economy cannot function. Any effort by the State to manipulate or direct economic planning will lead to increasing economic irrationality and inefficiency.

The perfect efficiency that markets try to approach is short-sighted (this also makes them unstable, with a tendency to collapse to monopoly/oligopoly). Some diversion of resources towards longer-term goals is useful, why do you think any country has a public education system?

The only way to maximize the efficient use of resources is to remove government coercion from the marketplace, and let voluntary cooperation and aggregate individual choices locate the closet to optimally possible solution to any problem.

You also have to eliminate all other forms of coercion and tying and collusion, and provide everyone with perfect information and zero transaction costs. And you still end up with that short-sightedness.

Re:Premise guarantees failure

[sjames]

Yeah, I don't know why they don't just dynamite that useless Hoover Dam and those useless interstates.

I fully agree that a centrally planned economy doesn't work well, but that doesn't mean that centrally planned projects or public works don't work. Sometimes when a market settles into a local minimum, only a swift kick from outside can get it seeking an optimal solution again.

Another case for a public project is when the market players are too localized. The telecomms will never in a bazillion years sacrifice even a fraction of a percent of their profit even if it would double the profitability of every single player in every single market but theirs. Not even if after 5 to 10 years it would probably come back and double their profitability as well (you see, a voluntary loss of .0002% profitability wouldn't look good on the quarterly report).

One of the axioms of any market based economy is that entities ALWAYS make rational economic decisions. I have my doubts. Actors in the economy mostly make knee-jerk heard mentality decisions.

It may be that a market solution IS better in this case, but 'market=good, public work=bad" is not a reason, it's an unsupported conclusion.

Re:Premise guarantees failure

[MSTCrow5429]

Assuming that market forces are going to work all the time is what got us into the current meltdown of both the economy as well as the internet hardware.

This quite simply is a canard. The main impetus of the current state of the economy is the boom and bust cycle created by the Federal Reserve, the central planner of the monetary supply in the US. The Fed greatly inflated the money supply through artificially low interest rates, reserve rates, and the direct creation of new money. Combined with Congressional pressure to lend money to noncredit worthy borrowers, an artificially high demand for goods and services was created, leading to overexpansion and overconsumption based on an illusory increase in real wealth. No illusion can mold reality forever, and the bubble popped.

There is also a popular misunderstanding that the alleged propensity of the Bush administration is somehow to blame for the current situation. Since 2001, there has been a 70% increase in new regulations that are "economically significant" (compliance costs per rule will cost at least $100 million per year), and the number of pages in the Federal Register listing all new regulations reached an all-time high of 78,090 in 2007, from 64,438 in 2001. From 2002 to fiscal year 2009, the federal regulatory budget increased 65% in real terms, to ~$17.2 billion. More recently, the inept SEC was unable to detect Madoff's ponzi scheme until it had collapsed, once again showing that the SEC gives investors a false sense of security, and while fully capable of distorting securities markets, is incapable of policing them. More regulation is not the answer, it is the problem.

Seriously though it really depends greatly upon the situation. Central planning is very important when the service needs to work coherently across myriad municipalities providing that it is done in a sane way.

The rise and existence of de facto standards, which are brought about by voluntary cooperation and individual choice, belie the need for any such central planning. There are many examples of such attempts to bring a service that works coherently "coherently across myriad municipalities," but as the general topic at hand is the internet, that of Minitel is sufficient. As most no doubt are aware, Minitel was an effort by the French government to create a standard and build a networking infrastructure for the use of all French citizens. Unfortunately for it, the internet then came along, and the increasing abilities of personal computers and networking hardware and software in the closer to free-market economy of the US made Minitels dumb terminal network look, well, rather dumb. One may attempt to argue that the internet was created by the US government, which is true, but it existed for decades as a small, mostly closed research network until commercialization began in the 1980s. What is being proposed by the uber-parent is taking the internet, and applying the Minitel doctrine to it. This is a very bad idea, and can do nothing but supply corporate welfare to entrenched constituencies while bleeding resources from the functioning private sector, leading to a damaged networking infrastructure being applied to the current network, and greatly retarding the emergence of newer and better networking technologies.

Re:Premise guarantees failure

[nine-times]

The only way to maximize the efficient use of resources is to remove government coercion from the marketplace

First, that assumes a real free market. Most people think that the important part of a "free market" is that there are multiple providers, and say, "Hey, there's cable and the phone company. You have 2 companies, so you have competition!" However, those two companies have a duopoly over the infrastructure, and so aren't really subject to the market forces that exist when you have a "free market".

The real important part of the "free market" is the low barrier of entry for newcomers, i.e. the ability for a new company to come along and set up their own ISP. You might be thinking right now, "What are you talking about, there are plenty of ISPs! There's not just Verizon and Comcast (or whoever your local phone and cable companies are), but there's Speakeasy and Earthlink and lots of other people!" Nope, there aren't. Those ISPs are providing rebranded service over Verizon's network. The fact is, even if you had the resources to start a company and string fiber optics everywhere, you wouldn't be allowed to do that. So if Verizon doesn't want to string fiber to an area, then you'll never get fiber connections in that area.

Now you might say, "That's what I'm talking about, remove the 'government coercion' that prevents people from stringing fiber everywhere!" Ok, great, now you'll end up with laws that allow any numnuts with a shovel to dig up the streets and other people's yards because they're "laying down cable". It'll be a mess.

Sorry, but really the Internet is "infrastructure". It's like our highway system. Is our highway system a failure, because it's nothing but "ditches to nowhere"? Should we turn over our highway system to Verizon for them to decide where they want to build roads?

Internet Question on the Census

[kabloom]

It's time to start lobbying for an internet question (or two) on the census.

What?

[canuck57]

.. the problem is that no one knows the best way to make the internet more resilient, accessible and secure, since there's no just no public data.

I dispute that. The internet is a collective effort by many technical people past and present that develop it's potential. The only hinderance is politics, useless patents, corporate monopolies and the like. It is a truly free media, unencumbered by undue influence by anyone or any special interest group.

Keep the internet free, and it will serve mankind very well. The interent does not need stimulus, it needs net equality of access not dominated by any one.

Any solutions for reliability, useability will be provided as needed. Very efficient model too. For example, it does not depend on any one operation system for it's existance, even though some would have it otherwise. Maybe even open up some of that TV channel bandwidth for the internet without the ownership and licensing issues, allowing any company to provide WAN access.

The internet is truly a democratic collective. Work with it and don't let secular forces pervert it. Doesn't cost much either to do this.

Stop Telecoms and Cable Cos from Squandering it.

[Zombie Ryushu]

Right now, we have a serious problem with Telephone companies and cable companies attempting to squander and rip apart the Internet. The Internet would only continue to expand and new innovations would take root. But the problem is that local monopolies are standing in the way of that. There are entrenched intrests on many sides that want to fragment and censor the Internet, and people are too lazy and stupid to stand up and protest these actions. Its not government regulation thats the problem, and its not the "free market libertarians" that are the solutions. Its a couple of very corrupt, very ARROGANT shareholders that need to go to PRISON for what they are doing.

The Internet like Water, like Electricity, is becoming a public utility, it should be transparent in an transparent manner like one. And to the Cable Cos and the Telcos, no its not your network anymore.

Re:Look CEOs

[burnin1965]

(you seem to be a confused AC, here I fixed your comment for you)

The internet is like a night market in a third world country. It sprang from a government funded project and, contrary to short sighted corporations, individuals discovered and utilized the value in it. You'll be damned if you try to regulate it. You guys all bitch about the new corporate kid on the block who is making huge profits providing value customers want and the loss of your birth-right to over charge for sub par services on a monopolistic network governed by price fixing schemes. For the last 8 years. But guess what, the net is still neutral and individuals are still finding value in the internet all the while paying you for the service you market to connect them to the businesses and other individuals that provide that value. Just let it be and go with the flow. The net is to nebulous and decentralized to be regulated. You'll still be able to rake in reasonable profits as long as you maintain a marketable service offering for years to come. When a new content provider starts up and makes a profit by delivering the content over the network for which you've already been paid to provide, don't worry - the free market is always there to supply you with your investment ROI fix, that is if you still remember what investment is.

Re:The best way to help...

[isdnip]

Then, when the Second Great Depression leaves a 40% unemployment rate, you and your few remaining rich friends with their inherited cash and other still-liquid assets will have a really easy time getting lots of servants to work for you for a pittance!

Peace dividend

[michaelmalak]

The best thing that happened to the Internet was when Clinton exploited the Peace Dividend and starved the military, and thereby the defense contractors, and they (and their employees who sometimes left to form their own companies) had to figure out how to produce for civilians rather than for the military. Without government interference and malinvestment, the people will figure out the most useful and profitable businesses.

Re:Look CEOs

[cdrguru]

You miss the point - delivering the Internet to conumers is only profitable for a company if they are a near-monopoly. Having a couple of customers here, a couple there doesn't work - there are labor-intensive resources that are tied to geography. Like fixing wires when they break.

So what we have been seeing for the last 10 years or so is just a pure market penetration play. If AT&T gets to take people away from Comcast they "win" and Comcast will pretty much cease operations in that area. And so the battle goes on and on. Each side offering better numbers (speeds, etc.) and lower prices - utterly unsustainable prices that make no sense but designed to capture market share. Once the competition is eliminated prices can return to that which actually pays for the service, but not until.

Trying to fight that mindset is impossible and it is the way anyone with substantial physical resource requirements operate from WalMart to Verizon.

Another side effect of this is the consumer isn't paying for access - they are paying some token amount that is less than their competition. Price fixing? I suppose you could call it that because if someone drops their price to gain more market share it is immediately matched by everyone else. Pricing has nothing to do with reality - especially when you can get a DSL connection for $14.95 a month. This sort of silliness leaves the providers in a quandry - can they afford to take such big losses or do they look for revenue elsewhere?

Obviously they can't raise prices to the consumer - they would lose market share and therefore in the end just lose completely. Hence the ISP approach to Google which does nothing, makes nothing and has nothing but is utterly dependent on the ISP to deliver the customer to them. And Google is raking in billions because of it. Neutrality? Ha. The only way you get "neutrality" out of this is for the customers to be paying for access. That means parity with "business rates" where they aren't fighting for market share. Your $14.95 DSL line goes to $149.95 in that case.

And for the most part, people aren't interested in the ISP as a "service". It is a vehicle to access services. Sort of a necessary evil for which there is no justification other than it seems to be necessary. I don't see any marketing campaign for the ISP which will gain them anything. All then can hope for is possibility of 70-80% market share and driving out all others because of it. Until then, they offer a service at a loss because they have to - the alternative is to just give up.

Think people are comfortable with the idea that the current ISPs are running at a loss and just hanging on with the hope of driving everyone else out? This isn't a long-term business strategy and only works if you have some other business to make payroll with. This is why there are no "independent" ISPs left and why all the ones that tried either got bought or failed. Answering the question of what comes next is why people talk about regulation because it alone holds the possibility of not having the country carved up into ISP fifedoms.

Re:Lay fibre

[isdnip]

What good is fiber to the home if it's closed?

The Bush FCC (Powell/Martin) deregulated fiber to the home, even if the incumbent Bell pulled it and cut the old copper wire. So the telephone company is the sole ISP, the sole content provider, and the sole telephone service provider. They have (for various legal and political reasons) not exercised their full rights yet, but they are studying ways to make fiber to the home about as useful and free as the WAP browser on your wireless handset, just with better resolution on the movies they sell you.

The fiber has to be open (not "network neutrality" of ISPs, but open to multiple ISPs) or it will be less useful than old copper. Freedom of the press with black-and-white pamphlets is better than a full-color broadsheet (with comics!) monopoly of Izvestia.

Re:The best way to help...

[jwiegley]

So you suggest that instead I be punished for managing my affairs well?

For saving my money, for doing my investment research, for planning my retirement, for getting good grades, for sticking with jobs, being competent and all the other items that I put personal effort into making my finances secure I should pay for other people's mistakes? That I should shoulder a larger tax burden than another man? I should be legally coerced to support and fund organizations and corporate strategies that I fundamentally disagree with? Is that it?

People that think that's better is why we're in this problem in the first place.

See my sig and learn a lesson.

Then you propose extermination

[SuperKendall]

Existence of rampant corruption is is not a reason to discard economic theories... Get rid of the corruption and try again.

So your proposal is to eliminate all human life, for as long as you have humans by any definition of "human" we have now, you will have corruption.

If you want to eliminate rampant corruption, you should try compartmentalizing the potential damage from the corruption of one person, and that means elimination of central planning where power naturally coaleses into the hands of a few.

Any other notion of merely "eliminating corruption" by pretending any group of humans can be trained to not be corrupt - well that's just a fantasy that ignores all of human history and observation.

Re: A lot more research, dood

[sgt_doom]

Talking points, talking points, talking points. Blah...blah...blah...yada...yada...yada!!

Cut the crapola, already, you don't sound even moderately educated when you repeat the mindless corporate blather. The list of colossal financial fraud is most obvious: Commodity Futures Modernization Act, InterContinentalExchange (And Ice Futures, formerly International Petroleum Exchange), SwapsWire, Markit (which later purchased SwapsWire, renaming it MarkitWire, collusion of Standard and Poor with the Bush Administration's lackeys at the Office of the Comptroller for the Currency, etc., etc., etc.

Read the Air Transport Association's excellent report on the oil/energy speculation.

Study the uses of offshore finance centers in the area of "money laundering" and why fewer and fewer taxes paid by the corpations in America and Europe have corrosive effects everywhere. Read, study and learn. Ignorance can be cured, stupidity....doubtful.

Good central planning worked during WWII with FDR, and had he passed all his programs it would have worked even better. Had JFK not been assassinated by Dulles/Bush/Harriman gang, things would definitely be different today.

Re:The best way to help...

[Anonymous Coward]

Yes. You either want to help your fellow man in time of need, without asking for anything in return, or you're a selfish asshole. I know this sounds sarcastic as it's 2 extremes, but that's pretty much what it boils down to. You didn't pick yourself up off your bootstraps as you self righteously claim. You used the public funds and taxes of people from every class from every generation before yours. The money and blood and sweat that was used to make the roads you've traveled on, the hospitals you've been to, the schools you've attended, the police services which have kept you safe, and on and on. You're not an island. You were born with a silver spoon in your mouth just by being born in the United States or by being born in a position where you could come to the US and not in some starving third world town, and it is that silver spoon that gave you your education and your means of living. Do you work harder than the common farmer struggling - not because he's lazy but because of a recession he fell into through the poor choices of others? Probably not. And as such, you should have some sympathy for your fellow man. And I'm not saying this as a poor student who wants a handout. I also studied hard, did better in school than most of my classmates and now have a good paying career. I don't need any handouts, but I'm willing to pay more in taxes than those who are more in need so that I could help them. What I don't like the government doing is taking money from me and giving it to those who are even in less need than I so it could finance their poor decisions and let them ride off into the sunset with their golden parachutes. That just pisses me off.

Re:The best way to help...

[An Onerous Coward]

It's very lazy or stupid of you to assume that the poor are poor because they are lazy or stupid.

It's also lazy or stupid of you to attribute these fishy statistics to the New York Times. What you linked to was actually a book excerpt that the Times merely reprinted. They would be more appropriately attributed thusly: According to "The Millionaire Next Door: The Surprising Secrets of American's Wealthy" authors Thomas J. Stanley, Ph.D and William D. Danko Ph.D...

But two random doctorates who wrote a book congratulating millionaires for being millionaires just doesn't have the same ring of progressive credibility as "according to the New York Times," does it?

Regardless of the statistics you cite (which are cherry-picked, and may or may not be properly collected), it doesn't change the fact that sociologists cannot find a better predictor of a person's socioeconomic future than their parents' socioeconomic background. It's a stronger predictor than race, gender, IQ, or scholastic achievement (individual or parental).

It's also true that the highest performing children of poor people graduate from college at approximately the same rate as the lowest-performing children of the wealthy. I don't remember exactly how the statistics broke down, but it was something like being in the most talented 20% of all children in the lowest income quartile gave you about the same graduation rate as being in the least talented 20% of children in the highest income quartile.

Being the idiot child of a rich person is a more secure route to success than being a bright and talented child of a poor person. In such a society, chalking your own success up to hard work and everyone else's failures up to stupidity is a cruel and narcissistic sort of stupidity.

Re:The best way to help...

[An Onerous Coward]

I'll see your sig, and raise you a "then you're a hypocritical bastard":

"When someone works for less pay than she can live on - when, for example, she goes hungry so that you can eat more cheaply and conveniently - then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life.

The 'working poor,' as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high.

To be a member of the working poor is to be an anonymous donor, a nameless benefactor, to everyone else. As Gail, one of my restaurant coworkers put it, 'you give and you give'" (Barbara Ehrenreich, Nickel and Dimed, New York: Metropolitan Books, 2001, p. 221).

You claim that nobody lives for you. Tell that to the guy who made way less than minimum wage picking the fruit you eat, or the woman who cleans your office, or the guy who bags your groceries, or the sweatshop worker who made your shirt. Each of them makes a tiny contribution to your own happiness, success, and comfort, and each is rewarded with a lifestyle that ranges from boring and degrading to borderline slavery. You take their contributions without hesitation or thought, while whining and sniveling about how unfair it is that you should be asked to give back in a small measure.

If that isn't asking somebody else to live for you, then what is?