[Davisgig] WSJ - Forget Net Neutrality, Focus on Fiber

[Gary Darling]

http://www.wsj.com/articles/andy-kessler-forget-net-neut-focus-on-fiber-1423785125 <http://www.wsj.com/articles/andy-kessler-forget-net-neut-focus-on-fiber-1423785125>

Forget Net Neutrality, Focus on Fiber
Thanks to regulation, we basically have an Internet duct-taped to infrastructure from the 1970s and ’80s.
By ANDY KESSLER
Feb. 12, 2015 6:52 p.m. ET
59 COMMENTS <http://www.wsj.com/articles/andy-kessler-forget-net-neut-focus-on-fiber-1423785125#livefyre-comment>
All eyes are on the Federal Communications Commission as the agency will vote on Feb. 26 to reclassify the Internet under Title II of the 1934 Communications Act. But in a less noticed, more amusing vote on Jan. 29 the FCC declared that a “high-speed” Internet connection is defined as 25 megabits a second or faster—up from four megabits a second. What’s so funny? The commissioners are lowballing it, and they know it. 

Regulation has failed telecom; the numbers tell the story. In 1970 Intel  <http://quotes.wsj.com/INTC>sold a 64-bit chip called the 3101 for $40, setting off a revolution in computer design. Rounding down, let’s call it a bit for a buck. I just went on Amazon and bought a 64-gigabit memory card for $40, and only because I paid $6 for overnight shipping. A billion bits for a buck—a whopping one billion times improvement. Even more if you adjusted the cost for inflation.

A few years later IBM  <http://quotes.wsj.com/IBM>came out with a 200-megabit hard drive known as the IBM 3330, or Merlin. For the equivalent of $1 million, you could configure eight of them into a 1.6 GB hard drive. Today you can buy a 2-terabit hard drive the size of a paperback book for $100. In other words, a 10 million times improvement. 

ENLARGE
PHOTO: CORBIS
In 1975 Kodak  <http://quotes.wsj.com/KODK>employee Steven Sasson created a prototype of a digital camera. It boasted 0.01 megapixels, weighed 8 pounds and took 23 seconds to snap a black-and-white photo that it stored on a cassette tape. Digital cameras are now basically free with your cellphone.

Here’s where the story gets weird. In the mid-1970s AT&T  <http://quotes.wsj.com/T>offered the 212 modem, which allowed workers to sit at home and dial into their office computers at a speed of 1,200 bits per second. Very few did until AOL began offering dial-in services over rickety phone lines. Today, Comcast  <http://quotes.wsj.com/CMCSA>and others provide Internet access at an average of 11.5 megabits per second speeds. 

The FCC calls that broadband, but it is still too slow. Unlike the billion-fold or even 10-million-fold improvements of silicon or storage, communications speeds have improved merely 10,000 times. That is pretty good compared with the pace of the post office, but not with the rest of technology. 

The technology exists to deliver gigabit—a billion bits per second—speeds. There is gigabit Ethernet inside our homes. Offices are increasingly wired with 10-gigabit Ethernet. Even Wi-Fi is approaching 100-megabit speeds. Data communications are capable of extremely high speeds at extremely low costs. 

What’s gone wrong? The answer is simple: Regulation has left U.S. infrastructure stuck in the past. It is almost as if we duct-taped the Internet onto infrastructure from the 1970s and 1980s. The regulatory scheme employed by the FCC was and is geared toward phone calls. Title II has 100 pages of arcane rules including one that requires operators to identify themselves “audibly and distinctly.” Remember operators? We jam data down phone lines meant for voice calls and down coaxial cable meant for TV signals. 

Opinion Journal Video

Assistant Editorial Page Editor James Freeman on Tom Wheeler’s announcement that the Federal Communications Commission will regulate the Internet like a public utility. Photo credit: Getty Images.
This can change overnight. To get gigabit speeds, we need fiber running all over the place. Fortunately, fiber optics is glass, basically melted down sand. Plenty of that to go around. Instead of arguing about broadband speeds or invented problems like “net neutrality,” we ought to be focused on the regulations and cronyism that impede running fiber on our poles and under our roads and lawns.

It is time to adopt a Quick Dig doctrine. This is the Google  <http://quotes.wsj.com/GOOGL>Fiber approach: Google only agrees to lay fiber in cities that agree to easy access to infrastructure and a quick permitting process. Though Google has agreed to expand in 34 cities in nine metro areas, it looks like only Atlanta, Charlotte, Nashville and Raleigh-Durham will see fiber installed. Google is still haggling with the other locales over details. But Google can’t do it alone. 

The FCC can encourage the rollout by mandating that municipalities open up their infrastructure to all who wish to install fiber—instead of using access to extort money from would-be providers. New companies would show up to lay fiber. Wall Street would funnel capital to those with the best prospects. 

During the stimulus spending of the American Recovery and Reinvestment Act of 2009, we were all inconvenienced as roads were ripped to shreds under the auspices of Transportation Income Generating Economic Recovery, or so-called Tiger grants. There are still potholes. Instead, let’s get a real bang for our buck. I propose the DUMB Act: Dig Under My Block. Legions of workers will be hired to dig. The results—extremely fast, reliable Internet—will be worth the inconvenience.

Some may ask: Do we really want the federal government changing local laws? It is a scary thought, but it is necessary: Web traffic crosses state lines. The FCC should stop quibbling over “neutralizing” our slow Internet and encourage a real high-speed build out. Dig, baby, dig.

Mr. Kessler, a former hedge-fund manager, is the author, most recently, of “Eat People” (Portfolio, 2011)
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