[Reader-list] The Internet is a business??

[Monica Narula]

"The Internet is an important cultural phenomenon, but that doesn't 
excuse its failure to comply with basic economic laws," said Thomas 
Nolle, a New Jersey telecommunications consultant. "The problem is 
that it was devised by a bunch of hippie anarchists who didn't have a 
strong profit motive. But this is a business, not a 
government-sponsored network."

So now we know what they really think!! The rest of the article is 
below, from the Los Angeles Times.

cheers
Monica

Taming the Wild, Wild Web
  Corporations contend the Internet's freewheeling design kills 
moneymaking opportunities. But others fear controls would curb open 
access.

  	 By MICHAEL A. HILTZIK, Times Staff Writer

Bud Michels has given up on the Internet.

"We don't have any control over the Internet," said Michels, 
president and chief executive of Maryland-based CSP Inc., which helps 
big clients protect priceless corporate data in the event of an 
earthquake, computer network outage or other disaster. "If something 
goes down, you don't even know who's accountable. The Internet is, 
like, 'Who ya gonna call?' "

That's an example of how the Internet's leading virtue, its 
unruliness, is increasingly getting cursed by business executives and 
economists as its worst flaw. After years of fruitless efforts to 
make money selling goods and services over the Web, many 
entrepreneurs and other businesspeople are starting to blame the 
system's fundamental design for their failures.

Businesses are growing so frustrated by the unreliability of the 
public Internet--the network most commonly used for Web surfing, 
e-mail and other familiar functions--that many have moved their most 
critical applications to alternative semiprivate networks.

That's an expensive option, however, so some big corporations think 
the answer is to change the Internet's basic wiring. By adding 
"intelligent" switches and other devices, they believe, the system 
could work faster, avoid traffic jams, distinguish between 
high-priority data and other material that can wait, and generally 
live up to its promise as a worldwide communications and 
entertainment medium.

But doing so almost inevitably means bringing more of the network 
under commercial control. For consumers, the change might mean faster 
downloads of video clips and Webcasts. But it also might mean a raft 
of fees for special services and the appearance of "gatekeepers" with 
the power to keep certain Web sites or content from appearing on home 
computers, just as cable systems control which channels can be shown 
on their subscribers' TVs and at what price.

The business world's discontent has increased as the Internet economy 
has unraveled over the last year. That's not surprising, given that 
the network was first mapped out more than 30 years ago, when it was 
devised as a coast-to-coast system connecting universities working on 
projects financed by government grants.

"The Internet is an important cultural phenomenon, but that doesn't 
excuse its failure to comply with basic economic laws," said Thomas 
Nolle, a New Jersey telecommunications consultant. "The problem is 
that it was devised by a bunch of hippie anarchists who didn't have a 
strong profit motive. But this is a business, not a 
government-sponsored network."

Others detect a hidden agenda: an attempt by big business to stifle 
some of the cultural empowerment that the Internet represents.

"This is the past trying to kill the future at a time when the future 
is down," said John Perry Barlow, a former Grateful Dead lyricist who 
is co-founder of the Electronic Frontier Foundation, a defender of 
free speech online. "And it's happening in ways that are generally 
invisible to the public."

At the heart of the debate lies decades of history. Before the 
Internet, the model of a communications network was the one that 
belonged to AT&T, this country's undisputed telecom monopoly until 
its dismemberment by court order in 1984.

AT&T had built a "smart" network connecting millions of dumb devices: 
telephones. Services such as call waiting or teleconferencing were 
operated by intelligent switches embedded in AT&T's circuits, rather 
than in the phones.

Founders Purposely Built a 'Dumb' Internet

This centralized architecture had its advantages, not the least of 
which was its vaunted 99.999% reliability--the "five nines" standard 
that may have been Ma Bell's crowning technical achievement.

But it also reinforced the AT&T monopoly. As undisputed owner of the 
phone network, the company dictated how it could be used by 
customers, who were forbidden to connect any phone to its lines 
except those that AT&T manufactured and sold. The phone company 
decided when and how to roll out new services and how much to charge. 
Innovative features had to pass muster with AT&T's engineers, who 
often rejected those they thought would encourage competition. Among 
the rejects: the Arpanet, the government-funded network that evolved 
into the Internet, which AT&T obstructed for years.

Mindful of these consequences of a centralized intelligent network, 
the founding architects of the Internet built its antithesis.

Rather than a smart network, the Internet is dumb, essentially a 
neutral pipeline ferrying digital bits from one end to another--say, 
between a computer and Amazon.com's Web site. By design it is blind 
to the nature of information it carries, be it a digital copy of a 
song, a calendar holding someone's daily meeting schedule or a 3-D 
computer game. But it can service a limitless variety of smart 
devices: PCs, hand-held computers, Internet-enabled TVs, Web cams and 
more. Almost any invention can be attached to the network as long as 
its output is digital.

Meanwhile, because the Internet is not owned by a single entity, its 
quality of service is left up to thousands of firms ranging from 
telecommunications giants such as WorldCom Inc. and Sprint Corp., 
which operate the backbone--the cross-country data highway--to 
neighborhood Internet service providers that may be run by high 
school kids with a high-powered server computer and a leased phone 
line.

A packet of data is likely to traverse several of these segments. If 
traffic backs up at the transfer points, the system either slows down 
or randomly jettisons packets of bits to clear the jam.

If these bits are part of a Web page or an e-mail message, they can 
be easily re-sent. If they are part of a more complicated 
application, such as an Internet telephone call, the conversation 
will be reduced to gibberish.

These factors also weigh on the Internet's ability to deliver speed 
and capacity, which is why during heavily promoted Webcasts most 
potential viewers get shut out.

"With bits on a dumb pipe, I can't do a major Webcast event," said 
Milo Medin, co-founder and chief technical officer of At Home Corp.'s 
Excite at Home, the leading provider of broadband Internet access over 
cable lines.

Yet, precisely because it is configured as a huge web of 
interconnecting pipelines, the Internet is almost universally 
accessible and resistant to local damage, political censorship or the 
designs of corporate landlords. In just over three decades, it has 
grown to serve more than 400 million users worldwide.

"Thanks to people who had the foresight to keep the middle stupid, 
we've been able to discover new, totally unanticipated applications 
like e-mail," David Isenberg, a telecommunications expert and former 
AT&T Laboratories network engineer, said at a recent conference at 
Stanford Law School.

Explosively popular applications such as the instant messaging system 
ICQ and the music file-sharing service Napster were developed 
privately by amateurs and allowed to find their own audiences on the 
vast World Wide Web.

Many communications executives complain, however, that as the 
Internet has evolved into a ubiquitous public utility, its 
shortcomings in service quality and reliability have lost their 
charm, which is evident to anyone who has waited a seeming eternity 
for a Web page to load or suffered through a weeklong outage in an 
e-mail account.

All that could be addressed by changes that would make the Internet 
faster, more reliable and more profitable for some companies. But 
they also would make it less universally accessible and more 
resistant to innovations that do not conform to new standards.

Whether the open model and the business model can comfortably coexist 
is debatable. As with any culture war, a wide spectrum of opinion 
lies between the two extremes.

Traditionalists Versus Business

At one end are Internet aficionados convinced that the network's 
historic openness is threatened as surely as the habitat of an 
endangered species is by the encroachment of land developers. They 
argue that the Internet is essentially a social phenomenon, the value 
of which lies in fostering free speech and breaking the historic 
stranglehold that telephone companies and other media companies have 
had on public communication.

"Some of these people, though not all, are a category of folks who 
never left the '60s," said John C. Klensin, chairman of the Internet 
Architecture Board, which oversees the network's structure.

Klensin is equally critical of executives irked by the difficulty of 
making money from the Internet the old-fashioned way by controlling 
the customer's access to scarce resources and services. These people, 
Klensin contends, need to look harder for novel ways to exploit the 
new medium.

"We haven't fully explored the range of business models and 
opportunities here," he said. "That process will be significantly 
other than painless."

But instead of contriving new businesses that make do with the 
Internet as it is, many new business plans involve tampering with the 
network's electronic innards. Some of these changes would permanently 
alter the way people use the Web by allowing private companies to set 
themselves up as gatekeepers to the Internet, charging users for new 
features and services or for those that have been customarily free.

For example, Excite at Home has made numerous deals allowing information 
and entertainment content from such providers as Fox News, Bloomberg 
and cable channel Comedy Central to be transmitted to @Home 
subscribers at especially high speed. This is done by placing the 
premium material on @Home's computers--which have relatively direct 
connections to subscribers' homes--so the material does not have to 
traverse the clog-prone public Internet to reach subscribers.

Critics say that system in effect allows Excite at Home to control what 
content reaches its subscribers, a perversion of the Internet's 
democratic principles.

The Internet service provider, however, argues that its subscribers 
remain free to surf the rest of the Web without interference, and 
that @Home is merely improving access to material that might prove 
especially popular.

"By [the critics'] logic," Medin said, "I can't make one thing better 
without making everything else worse. The fact is, I'm creating added 
capability on my part of the Net." Giving Walt Disney Co. material 
preferential treatment, for example, would not mean @Home would block 
its users' access to Disney rivals, he said.

"If I were to block all access to Time Warner, that would be a 
different story. But if we did, our subscribers would scream bloody 
murder," he said.

Telecom executives say that without a major redesign of the Internet, 
such eagerly anticipated applications as video-on-demand, Internet 
telephony and Webcasts of live entertainment events will never be 
economical.

"The potential of many new technologies has not been realized because 
the Internet hasn't delivered the necessary performance," said Greg 
Davis, vice president for marketing and product management at Core 
Express, a company that leases fiber-optic lines to provide 
high-quality Internet service to business clients. "A lot of 
opportunities have been left on the table."

Others say that the Internet's architecture can be improved without 
destroying its traditional values, and that some upgrading is 
essential to improve the network's fit with the demands of modern 
media and commerce.

Companies Are Having to Pay for Reliability

The changes Nolle envisions would give more users better service at a 
reasonable cost, he said. Today, businesses needing absolutely 
reliable service must bypass much of the Internet by routing digital 
traffic over their own private lines, a solution that can cost 
$500,000 or more a month. Others buy hybrid services from such 
companies as Michels' CSP, to which customers pay varying rates 
depending on the grade of reliability they need.

"We use the Internet today only for customers who don't need 
up-to-the-second data recovery," Michels said. These are clients who 
can survive a temporary network glitch that sends their transmissions 
on an error-prone cross-country detour. "If something happens [to the 
network] in Philly and all of a sudden you're being routed through 
Kansas City, that's a huge number of hops" during which data may be 
lost.

Many network experts believe that the Internet will have to change to 
accommodate enhanced services such as @Home's. The question is 
whether this means the traditional network will become a victim of 
its own success.

"The existing open Net is so firmly implanted in education and 
research that it will continue there as an open Net indefinitely," 
said Michael Roberts, former chairman of the Internet Corp. for 
Assigned Names and Numbers, a public body that oversees the 
distribution of Internet addresses. But he added, "It's too big, too 
important, too political to be treated as something for only a band 
of talented engineers to preside over."

But any changes in the network's basic structure will face numerous 
obstacles, including resistance from traditionalists who believe that 
the Internet is popular precisely because it cannot be controlled by 
big companies.

"The [Internet] is in trouble because it threatens so much of the 
establishment that it's provoked a backlash," Isenberg said.
-- 
Monica Narula
Sarai:The New Media Initiative
29 Rajpur Road, Delhi 110 054
www.sarai.net