I’m at The Next Web in Amsterdam, speaking in about an hour.
Yesterday two columns of mine were published online – thanks, publishers! -
Bloomberg View
When We Wage Cyberwar, the Whole Web Suffers (Apr. 26, 2012)
Wired.com
Be Very Afraid: The Cable-ization of Online Life Is Upon Us (Apr. 26, 2012)
The class is over – it was a great, fantastic, fascinating experiment. Next term it will be even better. I’ll be offline for a week starting on Sunday.
The Open Government Partnership launch last September 20 was brave and new. Now there’s another public-facing meeting, in Brasilia on April 17-18.
The basic model – encourage governments to be more transparent and use technology to empower citizens, without mandates requiring them to reach particular specific metrics – seems to be working. There are questions around the edges, but the idea has energy and continues to move along. A long list of countries has joined in. Still:
The OGP is manfully doing its best to make its operations – and this Brasilia meeting – available online. There are many ways to follow along. They’ll webcast the talks and panels; they’ll host a live chat; The Guardian is running a digital hub; they’re encouraging Meetups - lots of ways to peer in.
Whether OGP achieves the kind of traction and gravitas that its organizers hope for is still an open (and very interesting) question. But they’re doing their best to be energetic online. The more than 400 people attending from the dozens of countries joining the effort will have to tell us, later, where it’s all really going.
The cable guys in America have pretty much a monopoly when it comes to truly high-speed wired Internet access – except in areas where Verizon’s FiOS has been rolled out – but they do compete for market share when it comes to video. For must-have programming that cable subscribers want, there may not be substitutes. And so the cable guys are frequently left negotiating with a single source for a single product. When that product gets more expensive, the wholesale costs paid by the cable distributors for programming get passed on to subscribers. If cable distributors got fed up with programming costs, they’d lose market share to satellite or telephone companies who are also selling video and might be foolish enough to keep buying programming. So they’re stuck – as long as their subscribers are willing to pay incrementally higher costs.
Nowhere is this story more dramatic – nowhere are the margin squeezes and skyrocketing programming costs more colorful – than in the sports arena. Craig Moffett of Bernstein Research put out a note on this late this week that captured the moment well.
Here’s the progression: Rights to broadcast games get more expensive; people buying the team rights pay billions; to recoup their investment, the people owning the rights charge stupendous affiliate fees to the cable guys; consumers foot the cost, whether or not they’re sports fans.
ESPN is the truck rolling downhill, the monster player in this story. Moffett says, based on SNL Kagan data, that cable distributors pay almost $4.70 per month per subscriber for the right to distribute ESPN programming. Disney, owner of ESPN, has the cable distributors over a barrel: If distributors don’t put ESPN in their basic tier (the most widely distributed bundle of programming, the place you want to be if you want to make ad revenue based on wide distribution) for subscribers, the distributor will lose access to ALL Disney programming. ABC the network, the Disney Channel, everything. This bundling behavior by Disney isn’t unlawful, at least at the moment. No distributor with a Pay TV revenue stream on which it’s relying can risk losing access to the world of Disney.
The whole situation continues to get worse. Sports rights keep getting more expensive: $2 billion paid for the LA Dodgers, 4X 2011 fees sought by Fox Sports San Diego for Padres games, Lakers rumored to be getting $5 billion over 20 years from Time Warner Cable. Moffett calls all of this “ridiculous escalation.”
Non-sports fans are subsidizing sports fans, because although sports costs are climbing to nearly half the programming costs paid by cable Pay TV subscribers, only 20% of subscribers are devoted to sports. Some subscribers may get sick of paying for programming they don’t want and end their video subscriptions.
The cable guys have built in a hedge against this possibility: they can always sell high-speed wired transmission services. They can choose (on their own terms, slowly) to operate primarily in the market where they have unquestioned dominance, while gliding away from programming that their subscribers no longer want. That programming is being sold as part of a market in which they do face competition. By contrast, they can sell their high-speed wired transmission product at whatever price they like, because no one else can provide it.
So the cable guys have an exit strategy when it comes to stupendous, soaring, ridiculous, bone-crunching sports programming costs. Consumers don’t have an exit strategy from any of this.
If they’re enthralled by programming, they’re stuck with the high rates that are being passed onto them for bundles they don’t necessarily want. If they want globally-standard wired transmission (cheap symmetric fiber transmissions), they don’t have the choice to buy it – the cable guys aren’t selling that. And whatever high-speed wired product they buy, they’ll likely be buying it from their local cable incumbent at whatever price that actor wants to charge.
Via Dave Burstein comes the news that China is adding 2-3 million people to online connections a month. I’ve heard elsewhere that China plans to have 300 million of its citizens connected to fiber (FTTH, or fiber to the home) by 2015. As one of my colleagues quipped via email, “They must have the special access problem solved.” (Jim Crowe of Level 3 has a good piece re control of backhaul/special access by AT&T and VZ, and the cable cos are also in this business.) One way the country is doing this is by bringing major antitrust actions against its dominant communications providers. Yes, actual lawsuits – even though the country owns the telcos involved.
Low-priced FTTH access, the global standard for communications, seems very far out of reach here in the US given the current political context. Tom Friedman’s column yesterday is packed with disbelief about how reasonable people are in Australia and New Zealand. Of course the state has a role in ensuring that all of its citizens have basic utility services that are necessary for its people to thrive. Democracies know this, and authoritarian states like China see opportunities for economic growth that will come from connecting its citizens.
Now, China isn’t the model for a good society, particularly as crackdowns there continue to worsen. There are plenty of other countries to point to, though: Benoit Felten’s group, Diffraction Analysis, published a World Fiber report this week (free with registration) that outlines fiber growth elsewhere.
What are we doing here in the US about ensuring that every citizen has communications access that meets the global standard? Well, soon the DC Circuit will likely rule that the FCC’s “once more with feeling” theory of jurisdiction over high-speed Internet access doesn’t hold water. That could be fixed in the future by a simple re-labeling of high-speed Internet access as a telecommunications service, but there’s a shadow on the field: The House Republicans have managed to pass a bill that would make it just about impossible for the FCC to act effectively in the future. If the DC Circuit rules as expected, and the House Rs manage to attach that same bill to a can’t-turn-down vessel next term, what are we left with? An expert agency that has something – minor – to do with spectrum policy, but whose hands otherwise are tied.
Meanwhile, “Facebook Zero,” the notion that carriers will rate certain traffic as “special” and not subject to usage caps, is gathering steam. An AT&T executive blew it by signaling that the carrier will charge content providers to reach subscribers (he was probably supposed to wait until after the DC Circuit decision); Comcast is nudging gamers and video viewers towards their own version of over-the-top online video; and no one seems to have authority to do anything about any of this.
So: we’re gutting the regulator’s power at the same time that market concentration is growing, gatekeepers are taking advantage of their unconstrained powers, and consumers are getting third-rate access. We’re buying Corollas at Mercedes prices. It’s a silent crisis, and unfortunately the best arguments against this situation come from other countries. Americans still think themselves exceptional.
Great to have @digiphile talk to my class yesterday; we have some work to do on wildly creative ideas, and we’ll be doing it over the next week or so as a class.
Today I have another column up online – this one for Bloomberg View is here.
My first official Berkman co-directors meeting this morning was enjoyable and informative. It’s quite a place and it’s attracting a great deal of attention.
This afternoon I’m talking to Alan Davidson’s Internet policy class at MIT – all PhD students. I’ll be talking about high-speed Internet access in America.
Going back and forth with my publisher on titles for the book. We have three good options, and any one of them will be fine (although I’m secretly hoping for my favorite to be chosen by the salespeople there).
I’ve been slowed down by bad health and a long to-do list, but hope to contribute a good meaty post to the conversation tomorrow. For now, I’d be delighted if you’d read the column.
Thanks to Matt Souden, I’ve gotten control over this site again. I’ve updated my publications, fixed my bio, started listing my presentations again, and linked to the course I’m teaching – it’s been about five years since I had the power to do that, and I know it’s no excuse to say I’ve been busy. But I really have been busy.
The final version of the MS for The Squeeze went in on March 9. I then went to SXSW (totally overwhelming) to talk about it and live-blog a few sessions to get back in gear, and here I am again, back at the blog screen. Spring break is over.
Three meshing stories for today:
You may have noticed a front-page story in the NYT a few days ago about the relationship between Bain Capital and Chinese surveillance. (From my perspective, it’s a bit of a stretch to connect that story to Mitt Romney himself, but I see the need for a news hook.) Bain’s ownership of Uniview puts it in the multi-billion-dollar stream of spending in China for ubiquitous surveillance. “For the legion of Chinese intellectuals, democracy advocates and religious figures who have tangled with the government, surveillance cameras have become inescapable,” the article reports.
In that same edition of the paper, spring break is reported to be less of a wild time than it used to be. “Spring Break Gets Tamer as World Watches Online,” blares the headline. It’s an odd story, congratulating cameras (in a sense) for having done what parents have been incapable of doing. Students are freaked out by being visible, and so they constrain themselves. “‘At the beach yesterday, I would put my beer can down, out of the picture every time,’ [a student] said. ‘I do worry about Facebook. I just know I need a job eventually.’”
It’s the same story. The mere presence of cameras shapes behavior in ways we don’t yet understand. Observer changes the observed – it’s not a new story, but it’s striking to have it presented in a playful lifestyle piece as well as a gotcha political profile. Talk about cookies all you want; it seems as if the unchosen intrusion of cameras (combined with geolocation, cameras in cellphones, the capacity to process large amounts of data, and advances in biometric identification) is a much more important social development.
The third story, the one that ties all of this together, comes from Michael Sandel in The Atlantic: “What Isn’t for Sale?” He’s hoping that someday we’ll have the courage to talk about where markets belong and where they don’t. If money bought just fancy vacations and enormous houses, we might not care as much; but because money now buys fire services, ambulances, a basic education, and commodity communications, inequality looms larger. Putting a price on a good life – the things that make up a good life – can corrode them, Sandel suggests. Market society can crowd out nonmarket values that are worth talking about.
I can easily imagine companies finding ways to sell protection from the view of a camera. At that point, if the only way to avoid ubiquitous surveillance is to (somehow) buy your way out by paying more for a life that isn’t followed by others, that may crowd out the idea that anyone has a right to be unobserved. Spring break, in the largest sense, will be over.
Byrd: We’d like to see every American voter get involved. We’re seeing early adopters now. As candidates go forward we’re seeing inspiring moments.
Levine: We’ve seen 2.5 million people sign petition to get the ballot lines.
Byrd: We have 30 states and we’re going after the next 20 states. We have had 1K people on the street every week gathering signatures. We’ve got anticompetitive ballot rules in the states. When we say “are you looking for an alternative,” people are really interested. 66% of American voters are looking for another choice at this point and are looking for a mixed ticket. Those numbers have gotten higher as we’ve gone through the primary process. SuperPACs are creating negative advertising, which makes people select out or get frustrated. Polling shows people are open to the process and are looking for an alternative in 2012.
Q: Nature of asking questions in survey instrument is top-down. Who wrote the questions on your site?
Levine: Ipsos public affairs – designed to get a spectrum of views. Did a national poll offline (50-50 breakdown achieved) and so we used those questions. Whole idea is for you to match to candidates. We’re looking for issues that match up to candidates.
Byrd: Platform of questions is designed to be something that each declared candidate has to do. What’s been interesting is that as delegates are proposing questions, most popular are not social issues – they’re about jobs, economy, deficit, immigration. Even though we’ve had a bunch of debates, people aren’t satisfied with the answers they’ve been getting.
Q: You’ve misframed what you’re doing to the point I don’t trust you any more. Campaigns cost a lot to run. That’s a useful thing as a filter. How is your system different than existing primaries?
Byrd: System we have is rusty. So New Hampshire and Iowa are the biggest filters. Bottom line is that states like CA and TX in primaries and generally have no weight. This is a national caucus which makes everyone’s vote equal on the day they vote. Also, system is designed now to make candidates pull to the extremes, both for fundraising and getting votes. It’s so severe now that the candidate can’t find his/her way back to the middle. So this system lets candidates say what they want to say from the beginning. And having to choose someone from across the aisle – all of this allows American people to have more choice and for candidates to be more authentic throughout. 80% dissatisfied, 90% want to throw Congress out – so system clearly isn’t working.
Levine: If you look at Ds, they’re an aggregator. They aggregate leaders based on their philosophy. I don’t know how many leaders are in the pipeline, but just a few comes out. So this is a gigantic Internet platform to aggregate. We’ve got 320 candidates, real people, going through the process. I’m saying that there’s a large platform that allows the American people to do their own aggregation. Without brands or labels Americans can match up to people. I would be shocked if one or both of the parties runs an online primary. Why should the leading primaries and the media define who we get. I want to do my own research, unemotional, and see candidates answer basic questions.
Q: I’m the third-most supported candidate on the site. I like that we are forced to answer the questions. Michaelene Risley (sp). Only female candidate in the top candidates. You have to know what the budget issues are. I’m so grateful for what you’re doing. We can start working and stop complaining. (Applause)
Q: What is the genetic makeup of delegates? Are they left, right, rural, urban, female? Who are the most active delegates? What % of 400,000 has been back to the site a second, third, fourth time?
Levine: We get a lot of return engagement – people are always interested in finding candidates. We’re growing faster than Twitter in some ways. That means people are engaged. We don’t have a way of saying D or R. We have a lot of participation, starting at 0 and then Friedman wrote about us, so we got NYT readers but then it quickly spread across the country. Demographics are older, tilting towards female rather than male.
Q: Unity 08 didn’t succeed. How is this different as a platform process?
Byrd: Unity08 is predecessor to this organization. We are here because we fought with FEC – they wanted us to take only small donations and be a party. We won that case in 2010 and that made it possible for Americans Elect to be born. In Unity08 they didn’t get a definition for people to come forward and do a unified draft. Also, they had tech challenges thay couldn’t overcome, and couldn’t get on the ballot. We’re moving ahead on all these fronts. This is real, it’s happening, and candidates are trying to build their support. We think seed for this will be state level in 2013 and 2014, and we also see other orgs using matching function to make their communities sharper and more focused. We don’t support candidates or issues. It hasn’t been difficult to keep the organization out of partisan fights and sliver issues.
Levine: Other learning from Unity08 is that their technology was really about debating. And we know that if you let two people debate online, they start calling each other names. (Invokes Godwin’s Law.) We’re looking for our political leaders to have wisdom. We’re looking for people to ask the questions. We’ve turned it all around. So by doing that we don’t have the vitriol, the online arguing. People have asked nearly 15K questions, unmoderated, and these are powerful and very civil questions. And they’ve answered nearly 19 million.
Q: You’ve tapped into something that’s really frustrating for people. If you’ve seen the inner workings of DC, you see that it’s not about personality, or single person – it’s really institutional problems with how the government is set up. Obama ran into things like filibuster, campaign finance, makes things really hard. So I’d argue it doesn’t matter how inspiring the person is. This system won’t fix the deepest problems like campaign finance.
Byrd: We were asked by McKinnon to reimagine. This allows us to find an extraordinary person, talking about issues people care about. A candidate that wins through this process will hire the best and most qualified people. Like Mike Bloomberg. Then they’re on the stage and they can articulare these things. The presidency is special. Obama tried; this president would have the same chance. People will be inspired, and they’ll run for governor, senate, house, and they’ll run completely authentically. We do big things as Americans.
Levine: At every step of initial innovation, people are skeptical. When I joined ETrade, people said why aren’t big companies doing this? It’s very scary to do something in a startup mode. If you look at things that won’t succeed, you won’t succeed. There’s a seed here that’s really good – mass participation, access – and hopefully with this it produces the kind of ticket we expect to see. Plenty of shepherding will be needed, but we should start. If leadership gets it right the rest of the country will change too.
Byrd: There will be an exciting moment when people say I want to reduce cost and increase participation in elections. Internet makes this possible. For a nominating process, this is a perfect vehicle to make that leap forward. I worked on TV in Africa – while we were trying to move content in that world, almost every African got a cell phone. We leapt over the problem. This whole space is primed and ready for a reimagination.
Q: is there a threshold for success or not, or are you definitely in for the long haul?
Levine: We’re successful because 400,000 are already using it. Going forward, people always stand on your shoulders. So you want to be the first and set a benchmark, a way of thinking. Innovation will multiply quickly in this space. We’ll go through this cycle, others will innovate on top. We’d like to continue on and do governors, senators – it just takes a little money.
Q: How do we move states from paper to online systems?
Levine: For the general election, the Internet is not ready. We need to keep it solemn; don’t want to muck with it just yet; not a big fan of electronic voting systems. But for primary nomination, this is just the perfect tool. Like a caucus – research, social, thoughtful – that’s perfect. Should be in living room, understanding what candidates are.
Q: How does your winnowing process work? How do you avoid capture by edge candidates.
Byrd: We opened to delegates and candidates and kept everything open. Automatic qualification was set by credentials. We’ve had more than 300 people drafted by delegates. Lot of familiar and new names. We will open to three rounds of voting in May. We’ll winnow down as a result of those votes. The six people left in June will have to pick a running mate from across the aisle. Then another three rounds of voting in June. Person has to reach across the aisle so that will avoid edge candidates – has the effect of balancing out and making the ticket more representative.
Then you’ll need to raise between 200 and 300 million. Don’t have to have a billion dollar campaign – you can do a lot through earned media. TV is expensive, but a candidate can get coverage very quickly.
Q: How do make sure that you’re really reaching across the aisle?
Levine: There are rules. The upshot is that it has to be bipartisan and bipartisan in spirit. You have to be in your party for four years.
Byrd: Ron Paul would be automatically be qualified as a candidate.
Americans Elect CTO Josh Levine and CEO Kalil Byrd – session title: Isn’t It Time for an Online Presidential Primary? #OnlinePrim
Levine: We can all agree that there’s something wrong with politics. Stagnation and fighting is all it’s about. Nothing is getting done – jobs, the deficit – all we get is disagreement. This sucks.
If I were to ask you – do you think it sucks? Almost 90% of Americans agree that the government does not do the right thing.
Byrd: People don’t feel like they have choices. Issues are chosen for you, and the more contentious – the better. The way we look at it, party bosses choose candidates, or small states at the beginning of the process organize your choices for you. We are seeing that negativity (ideas and commercials) is coming down on people. 90% of Florida commercials were negative.
So we asked a philospher, Stan, to give us an idea of what all of this looks like. [South Park video clip] “I learned that I’d better get used to choosing between a douche and a turd-sandwich when I voted.”
Levine: It’s time for a reboot. Internet has leveled financial services (ETrade) and entertainment (Netflix) and research (Google). And when we look at politics and candidate picking, this is how we did it in 1891 and we’re still doing it the same way. Just a big board with names. No chance to explore who/why.
Internet has helped campaigns with social media, but really fundamentally the same as forever.
Byrd: We’re holding the first online primary, crowdsourcing a third choice for President in 2012. We’re putting the power back where it belongs, in the hands of the people. GWashington said parties would crowd out the people. So we’re asking people to work together.
At the end, R will have to run with D – reach across the aisle – and bring a bipartisan spirit to election.
All our money has been spent on getting on the ballot or on technology. This is the first-ever online primary. So instead of a few small states making the choice, every American can participate at americanselect.org. Your vote will mean something. And the winner of the process will be on the ballot in all 50 states. This is the first time in the history of the US that this has happened.
Levine: Game on! Site can handle tens of thousands of people. It’s secure, we verify identity and who can vote, but it’s easy enough that anyone can use it. We can get the primary system into the hands of many people.
And we’re bringing the first direct democracy application ever in our history. We’re using what’s uniquely ours – American innovation – to get this into everyone’s hands. From zero users in July to 400,000 users. By June, we’re hoping for millions. We think we’ll get there, because we’re the only alternative.
You answer questions, get to research, get to match up to candidates. Close to 19 million questions have been answered so far. That’s the most ever. When we look at our own delegates, we see economy, education, and energy as the most mportant issues. That’s not the national conversation.
There are some interesting candidates – Ds, Rs, independents, ordinary citizens (Buffett and Colbert get a laugh). Everyone’s welcome in the process. We have some candidates who have declared and drafting process is on. We expect a lot of candidates to show up in June.
Byrd: We’ve had more than 7K work on this project – do polling, etc. We’ve talked to more than 100 potential candidates. Running for president is a serious thing, and they’re thinking about it right now, polling, evaluating political environment. And it’s up to SXSW, absorbed in innovation (you discovered FourSquare) and AmericansElect is up for an award this year here.
People at AmericansElect aren’t fighting – they’re working – trying to make a little bit of history. This innovation will be offered in 2012 with third ticket, and we’ll take it to the state and local level in 2014. Our technology can be used in elections going beyond this year, and into presidential elections going forward.
We’ve had extraordinary reception from people who cover politics and regular Americans – there’s a lot of hunger for dealing with issues in a new way.
[clips of presidents speaking]
Byrd: People in parties are good people, but trapped in system that is not inspiring. Presidency is an inspiring office. The reaction we’ve gotten from regular Americans has been a universal desire to be inspired by leaders. They want to see solutions, moving agenda forward. That’s what we’re all about, that’s what we’re inspiring.
Levine: We’re asking you to go to americanselect.org, become a user, participate, answer questions, support candidates. Doesn’t stop you from supporting party candidates. It’s about selecting leaders.. We have an iPhone and Android app, great app, ask the politician and you’ll get answers.
We have live by satellite one of these politicians.
Question: how do you create more jobs. Faux funny politician avoids questions and answers with platitudes.
Levine: Politicians will say anything to get elected until we do something about it. With this, you participate and the result will actually be on the ballot. This is crowdsourcing in a solemn event to get someone elected. This ticket is built by the people and conforms to bipartisanship right from the start.
Kelsey: There is pushback, both departmentally and public servants, but we sit with people and do our best. If you can show your own colleagues the benefits, that helps.
Power: One of our biggest challenges is that this is new. It’s a new set of tools in the toolkit. Foreign service officers aren’t themselves trained in openness. (I had to download Skype to do this presentation!) These people already have very challenging tasks in their jobs; to then move to making their books transparent is difficult because they don’t have the team to do it. We have to equip people with technical knowhow and a sense of what’s possible – or – getting them to be quicker to reach out to civil society organizations and other groups. That learning about how to rely on people who don’t wear badges with pictures of themselves around their necks – that’s also hard. So we need to train people to be better at this, to understand practices that can be put in place at modest or zero cost. Some of the resistance is just lack of familiarity.
Q: How would I implement some of these ideas in the state of Texas? There’s a big tech gap. We’re trying to bring our group into the 1990s.. how do I do this? and get Rick Perry’s attention and endorsement?
Q. This is very encouraging for me; can you get more competitions going, our universities should compete to show better ways to put pressure on government. Need to build an audience for all this.
Q. Part of transparency should be seeing what people do as well as what they say. Obama administration is going after whistleblowers in a big way. How can we promote open government abroad if we don’t do it here? Are you protecting journalists etc.? Are we actually implementing? (Alex Howard)
Power: National action plans has a set of commitments related to whistleblower protection. It’s important to look at this across a range of issue areas. It would be a mistake to define the President’s record as narrowly as the questioner does.
Rajani: OGP is exciting because it’s a nudge. The tide is turning. Citizens are no longer willing to accept secrecy. In that climate leaders have to come through. And OGP is very helpful for this. Nudges the whole needle forward in direction of transparency.
Mauldin: Re states – talk to Chris Vein.
Kelsey: Join the OGP.
Caroline has been leading the OGP effort and provides a timeline. paraphrase:
The work becomes harder; we continue to work on awareness, on what the resources are, and on recruitment to the cause. The crucial linchpin is consultation with civil society. And then we’ll be looking for assessment. Ultimately, though, we’re looking for cultural change, changing the way that diplomats and governments work with citizens.
Cultural change in a bureaucracy doesn’t happen overnight. We’re trying to mashup energy and interest in openness with capacity for openness by matching people up with groups and entities who can help them.
Here’s a list of countries – take a look at letters of intent and country action plans. www.opengovpartnership.org
This is a call to action; we would love your ideas re how to make this most effective around the world.
