The Tyranny of the Industrial Hub & Spoke Paradigm

Jock Gill & Dewayne Hendricks

Bandwidth wants to be free. Our goal should be to create abundant and affordable bandwidth for everyone everywhere that enables all of us to do what we want, when we want, and where we want. Of course bandwidth will not be free, but it should at least be priced at a reasonable mark-up over costs: i.e. less than about $1.50 per incoming megabit per month.

The problem is that abundant and affordable bandwidth is a disruptive innovation that threatens three of the Industrial era's fundamental value propositions.

1] The hub and spoke, or centralized broadcast, organizing principle;

2] Control of the Distribution channel;

3] Citizen as one-dimensional consumers;

The hub and spoke model, production at the center and distribution out to the edges, is key to the business models for most industrial era companies. It is especially true for cable and telephone companies with their massive investments in centralized infrastructure with long-term depreciation schedules.

The legacy communications companies, however, have devised a clever way to protect, and lock-in, their business models and infrastructure investments. It is called a closed system model which gives "me first" preferential treatment to the data packets associated with their services and content. In effect, closed systems turn all connections to the Internet backbone into private toll roads that discriminate against services and content provided by anyone but the Cable or Phone Company. In fact, the close system operators refuse to sell you any other options and refuse to allow other providers the ability to offer alternative solutions. This violates classic market mechanisms by denying consumers the power to chose the solutions that best meets their needs.

So, for example, Comcast can increase the bandwidth package it offers to it customers: Down to the consumer to support delivery of Comcast controlled content, and Up from the home to preferentially support Comcast's over-priced VoIP offerings. Comcast, however, will use its closed system to make sure VoIP offerings from competitors, such as Vonage or Lingo, only get left over scrap bandwidth. As a result, their offerings will suffer degraded performance.

The closed system will also be used by Comcast to make the downloading of content from other sources unattractive when compared to accessing sources Comcast can extract rents from. This is the anti open market, pro-monoply, and anti-democratic model that comes from NOT requiring content and bandwidth to be treated as separate and independent functions. That is, a closed system is a tool for creating unregulated monopolies within walled gardens. The closed system model will be used in an attempt to destroy the level playing field required for classic market mechanisms.

We see the same game being played out in the television and radio broadcasting markets. In this case, the walled gardens are artificially constructed by the false assertion that spectrum is scarce and must be treated as property with strict and exclusive zoning. The fact is that the spectrum's ability to transport bits is, as far as can be determined, unlimited. It actually appears to increase as the number of users increases. This innovation is being fought tooth and nail as it is clearly a disruptive threat to the exclusive walled gardens based upon property rights. But this is another story.

Another result of closed systems, wired or wireless, is to create real barriers to the distribution of new content created at the edges by we the people. All those great Podcasts, iMovies, Iphoto books, Garage Band music creations, vidcasts and so forth you want to share with family and friends will only get scrap bandwidth for distribution. After Comcast has asserted its rights to control bandwidth allocations, such that its applications get first call, we the people will only get the leftover dregs.

Is this what you want? If not, you had best let your elected officials know, from mayors to governors and on up, that you want truly abundant and affordable bandwidth, for everyone everywhere.

The closed garden, or broadcast, model for consumer connectivity has another insidious and odious consequence. By choking off bandwidth for general use, it prevents the network from becoming, in effect, one giant, shared storage and distribution solution. Consider, if the cable companies turned on the full capacity of their cable modems, we would have a lot more bandwidth to work with, both down into the home and up out of the home.

Why is this important? If the entire network is transformed into a shared storage and distribution system, very quickly CDs and DVDs become obsolete as content delivery platforms and backup devices. This, however, is an innovation that disrupts the cash flows and power of the legacy distribution system. The hub and spoke model was designed to control the flow of physical objects, such as CDs and DVDs. While this was originally a consequence of the limits of pre-digital technologies, today it is purely a business strategy with no underlying technical justification. It has the effect of minimizing the number of producers while maximizing the profits per producer. What happens, however, if there are no objects to distribute? What happens if the distribution channel is no longer controlled? What happens if distribution is just something we all do? We can expect this innovation to be resisted vigorously and the closed system model will be a principal tool used in the fight.

Clearly, the closed system model with its walled gardens is a tool that supports the creation of market killing monopolies and stifles innovation. It also thwarts the citizens in their attempt to reclaim their full humanity as producers and distributors of their own personal creative works. Further, the closed system, or broadcast model, enforces the retro concept of the passive and voiceless one-dimensional consumer who is kept in the dark and fed advertainment fertilizer. Again, is this what you want?

It is of course also true that when bandwidth is abundant and affordable, the very idea of a closed system becomes transparent as an anti-competitive and anti-democratic ploy. It is also clear that, in order to preserve the unfair monopoly advantages the broadcast model provides them, the cable and telephone companies will attempt to stifle all innovations, such as abundant bandwidth, that would make their legacy business model meaningless and irrelevant.

Lastly, if Hub and Spoke is key to the Industrial era broadcast paradigm, it is also key to the power model for money politics. If we wish to create a new metaphorical framework with which to go beyond the limits of the old metaphors, it will have to be a frame that creates a strong and positive alternative to the Hub and Spoke model.

The challenge for the America, then, is to find and embrace a new metaphorical frame for what it means to be an American in the 21st century.

Related posting: A Liberal Long March?

Posted by Jock Gill at January 19, 2005 10:35 AM | TrackBack