This story appeared on Network World at

http://www.networkworld.com/columnists/2006/080706bradner.html

How to shrink a wide digital divide?

'Net Insider

By Scott Bradner, Network World, 08/07/06

The core problem in the network-neutrality debate is an economic one. Once upon a time, ISPs thought they could make money by offering connections to the Internet. Most of the larger ISPs also made some money offering extra services, including e-mail and Web hosting, but their basic revenue plan was based on plain Internet connectivity.

This turned out to be a hard way to make a living. Over the past few years telephone and cable companies have become the largest ISPs. In general, these companies say that being a pure ISP is a good way to lose a lot of money - particularly if they need to spend a lot to upgrade their infrastructures - thus, they hunger to make extra money from the value of the bits flowing over their networks. Competition has not yielded the kind of benefits to the ISP business that it has in other areas, such as cell phone service, perhaps because there is little real competition but also maybe because the cost of the new infrastructure is very high.

One approach being tried in a number of places to reduce the cost of new infrastructure is to have government pay for it and make it available at low cost to multiple ISPs. The hope is that ISPs will use the infrastructure and compete for customers, and will see that a neutral network is a competitive advantage. This is a different approach from having governments become or bless ISPs.

The United States is not the only place where competition has not brought about the deployment of good, neutral Internet infrastructures. The U.N. Conference on Trade and Development (UNCTAD) has just issued a report on the digital divide between developing and developed countries, which shows how out of balance the Internet world is. For example, the report's highlights note that "a person living in a high-income country is over 22 times more likely to be an Internet user than one in a low-income country."

It also shows that even with increasing privatization, competition and independent regulation - three key factors in the development of vibrant telecommunications in much of the world - Internet deployment in the poorer countries is very limited. The report examines the possibility of government-funded, neutral Internet backbones bringing connectivity to villages in poor countries. Local ISPs and providers of local services, such as schools, small phone companies, health clinics or Internet cafes, could connect to these backbones at their own expense.

The UNCTAD report cites the importance of the NSFNet in the creation of the current, widely deployed U.S. Internet. It also points out that the money the U.S. government put into the NSFNet and other research networks was small potatoes compared with the benefits the Internet has brought.

My continuing great worry is that total reliance on individual ISPs - in the United States or elsewhere - to fund the backbone networks necessary for advanced Internet applications is leading us down a path to an Internet without freedom to innovate or select an application service provider of one's choice - all because the infrastructure cost is so high, and there is so little foreseeable competition. Maybe it is time to take a very serious look at alternate ways to fund the backbones. The UNCTAD report provides one suggestion; another might be privately funded but regulated common-carrier backbones that multiple ISPs could use. In any case, I find it hard to see today's mostly open Internet in the future if we keep muddling along the path we are on.

Disclaimer: At its best, Harvard is a muddle-reducer, but the university has not expressed an opinion on this particular muddle.