Sessions

It took a little longer than we would have liked but the transcript of our June 15th Sessions event is now up on the Sessions Wiki. Scroll down to the bottom of the page to find it. Or if you’d rather, this is a direct link to the transcript.

Jonathan Taplin took me to task early on for suggesting that ubiquitous connectivity was a given.

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” I’d just like to kind of object in a friendly way to your initial supposition, which was that we’re living a world of commoditized infrastructure, and ubiquitous connectivity, and I quite frankly think that’s not a given. I think we do live in an — at least in the United States, we live in a telecom duopoly, and clearly the notion that for me a lot of the great business stories in venture capital in the last five years were built on that basis, i.e. obviously Google could never have existed without Linux. If they obtained server licenses on 800,000 processors, their business model would look very different than it does now. And if they hadn’t had access to all this dark fiber and all that… ubiquitous connectivity.
But the day when AT & T or Comcast starts changing different levels of prices for different access to a network to a company like Google, their business will change overnight, and that could completely screw the model, and could screw the model of any new start-up that wants to start serving content or any other application into these networks.”

Jon’s comment launched us into a long and healthy debate on the Net Neutrality proposals before Congress.

Tom Evslin pointed out that this is not just about whether or not Google pays an RBOC more that Yahoo for better service, it changes the very nature of the net.

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” if you have to examine every packet on the internet, then you don’t have the internet anymore. Not only because you slow the packets down but also, because now the networks become application aware, and we get back to that wasteland that’s the telephone network where you can’t introduce a new innovation unless the network becomes aware of it”.

Tom also shed some light on why the RBOCs and Cable Operators are likely to try to reach up into the applications layer to extract a tax for carraige across their networks. “they’ve [the RBOCS] made an enormous investment in replicating the cable model as a new revenue source, since VOIP is hollowing out the profits on their voice model. But they converged with an obsolete model. The cable model’s about to fall apart. The content providers are bypassing the fixed distribution system and going directly to the web. So if you don’t want to face another hundred million dollars in write-offs – if you’re those companies, how do you slow that down? You break the internet, that would slow that down”.

Larry Lessig brought the conversation home by describing how the duopoly that controls the local loop is likely to dampen innovation.

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“there’s dynamic here that I think we need to focus on, and that dynamic happens inside a venture capitalist’s board room, and the venture capitalists sit there and they say, “Well, we know in five years when this product is done, there’s going to be an infrastructure where one or two people call the shots about what runs on the network. And in that world, do we think that our product is going to have a shot?”
“Now some products will because they won’t threaten the business model of the one or two entities that control the network, but the whole point is that the extent that you got business models that aren’t really in the interest of the network, the venture capitalist I would think would say, “No, the risk is too high, so, therefore, we’re not going to be investing in these products,” and therefore, when you point at things that will be the competitors of the network, they won’t exist because they won’t have had the investment to actually make them exist”.

Gigi Sohn wondered why, given what was at stake, the tech community was so under represented in the lobbying circles in Washington

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“But I think the bigger question is this, you have the incumbent regulated companies, the Bells, Cable, Hollywood, the recording industry investing unbelievable amounts of money in Washington. I think I read somewhere that the Bells are spending like $1,000,000 a day on advertising and lobbyists. They have bought up the Republicans and the Democrats. The tech community, which is our ally I would say on almost 100 percent of everything we do, I don’t know if they invest a 10th of that”

We went on to have a spirited debate on the risk to innovation posed by a loss of net neutrality. We talked at length about why entrepreneurs and venture capitalists have not historically invested money or energy to influence the debate in Washington.

Later in the day we tackled other policy issues that impact the pace of innovation including Patents, Copyrights, the Digital Millenium Copyright Act and The Broadcast Flag. There were a lot of great insights. We will try to pull a few out over the next couple of weeks, but if these are areas that interest you, I’d encourage you to read through the transcript yourself.