20070821

Infrastructure Cooperatives as an alternative to "natural monopolies".

One of the revolutionary elements of the Internet is the ability of different network operators to interconnect and exchange data seamlessly. This was made possible by building a systems based on layers of open standards.

Much of the information exchanged between different Internet providers flows across exchange points. Typically, exchange points are operated by neutral third parties. Many exchange points are private entities, some are cooperatives. The exchange point operator is responsible for maintenance of the physical infrastructure. A typical exchange point is a large building filled with switches, routers, servers, wire, fiber, power systems and environmental systems.

TCP/IP based (the protocol suite behind the Internet) networks have a unique technological twist in that there exists a standardized protocol for defining the policy for exchange of data between different networks. This protocol is called Border Gateway Protocol, or BGP for short.

In effect, the exchange point is a market place where network providers can sell or trade data, people negotiate the trade or sale and the mutual regulation of that exchange is highly formalized in the form of the BGP protocol.

The concept of an exchange point can be taken beyond a single building. In places like the London Internet Exchange Ltd. (LINX) the infrastructure has been extended to a cluster of network connected buildings in the heart of London.

In Wellington, New Zealand, a city initiative extended the concept of the exchange to include a city wide network. Companies in buildings on the Wellington CityLink network have the option of selecting Internet services from multiple providers. This created an open market for Internet services on a city wide basis. This was made possible through the magic of open protocols used over a common neutral network infrastructure.

Currently it is possible to provide all the combined services traditionally provided by cable TV and telephone companies over Internet. Globally, both cable TV operators and telephone companies are upgrading portions of their networks to support and use Internet protocols.

Now, what if instead of granting cable and telephone companies local monopolies, we put in a common, shared, infrastructure cooperative? As in Wellington, the local municipality could provide initial capital and organization, but operating capital and the retirement of debt would come through membership fees paid to the cooperative. What if the cooperative was open to any operator capable of providing services within the confines of the open standards? It would be bizarre ... or rather a bazaar; an open market where the consumer can choose from competing companies.

This would provide a system where we would have true open markets and true competition as opposed to the Orwellian use of the term "competition" as coined by AT&T's lobbyists.

Unfortunately, we can't have municipalities organizing open telecommunications cooperatives in Wisconsin because of laws passed in Madison that where written by AT&T lobbyists.

In the 19th Century, Wisconsin was a political cesspool. Our state was every bit as corrupt as it is today. In the mid-1800s, a railroad baron by the name of Byron Kilbourn – who today has a major street in Milwaukee named after him – paid the governor at the time (Coles Bashford) $50,000 to sign legislation giving Kilbourn a land grant to build his Milwaukee and La Crosse railroad. Kilbourn paid hundreds of thousands of dollars in bribes to members of the Legislature to pass the legislation. That was an enormous amount of money at a time when most people were earning less than a dollar a day. Only one senator – “Honest” Amasa Cobb – turned down the bribe.


Look at the money being poured on our politicians at the state level by the telecommunications companies. They are the robber barons of our era.

Do we need to grant "natural" monopolies or has computer technology and standardization given us the ability to use standard platforms for the delivery of goods and services? If you want to get radical, think about applying the same principals as outlined above to the WISDOT owned railroads and to electric power lines.

1 comment:

Matthew said...

How about Milwaukee just uses eminent domain to seize Time-Warner Cable's/AT&T's lines? It's for the public good, right?

Though really, I have some concerns with the lines being owned by the government as well, practical concerns like maintenance costs being a nice black hole of tax payer money. Other concerns such as censorship are less likely, but still a possibility. Should the government really own the utilities? They own the sewer and they've done such a spectacular job in that sector that I'm really not too enthusiastic about how well Milwaukee will do in the ISP business...