From eddleman@calypso Fri Mar 5 23:06:48 1993 Date: Fri, 5 Mar 1993 23:04:56 -0500 (EST) Subject: FEDS Ponder Freenets Date: Wed, 3 Mar 1993 14:55:46 -0500 From: FINAMORE@ubvmsb.cc.buffalo.edu To: Multiple recipients of list Subject: FEDS PONDER FREE-NETS Dear Free-Net Administrators: At the request of some on the freenet-admin list, I met in Washington this week with officials of the Departments of Education and Commerce who are working on the Clinton/Gore technology initiative, and planning for the National Information Infrastructure (NII), or "information superhighway." The purpose of the meetings was to present to them the notion of local Free- Nets, discuss how community computing systems may compliment the NII, and ask about possible Federal funding of F-Ns. On Monday, I met with James A. ("Mitch") Mitchell of the Dept. of Ed.'s Office of Educational Research and Improvement, OERI. I began by showing him the tape on the Heartland F-N and giving him materials on the Buffalo Free-Net, NPTN, and Academy One. His first question was how it is that Free-Nets seem to provide free access to resources on the Internet. He said that schools keep telling him is how they would love to have access to the Internet, but cannot afford it. I responded that most F-Ns are based in universities which already have a connection to the Internet, are staffed by volunteers, and use donated equipment. I gave him my view that for educational or demonstration purposes, F-Ns have several advantages over "raw Internet" as follows: --easy interface --some things on the Internet inappropriate for K-12 kids; a F-N can serve as a filtering mechanism --a F-N provides an affordable structure to manage many seperate e-mail accounts for kids and teachers --Many Academy One projects teach the concept of Group Work via telecommunications We spent over an hour together during which Mitch asked many questions about how Free-Nets are managed, what information is provided at the community level, how they are supported, etc. He was obviously very much interested in the Free-Net model. He asked me to notify the Free-Nets that there is no real funding mechanism in DoE at present for community computing systems. He is hopeful, however, that such will be provided in legislation now moving through Congress. Senate Bill #4, introduced in January by Senator Hollings, has provisions for "pilot projects that connect primary and secondary schools to the Internet." But the Senate bill channels the funding through NSF. Mitch indicated that the House version (H.B. #89, I think) mentions DoE. I came away from the meeting with the clear feeling that Mitch is very much interested in the Free-Nets as a possible way of bringing together a whole bunch of considerations in one model. Given the climate of the times, with Clinton/Gore receptive to opening up the Internet to much broader use, it may be that Free- Nets are at the right place at the right time. The Free-Net model of a community-based computing system can easily be used to demonstrate applications of communications technology to health care, libraries, education, small business, etc. Yesterday I met with Richard Harland and Dan Davis at the Commerce Department's National Telecommunicationa and Information Administration, NTIA. Recently NTIA has been given a central role in the development of the Clinton/Gore proposal for NII. I gave them some printed materials on the Buffalo F-N and NPTN, and a basic explanation of community computing systems, including much the same info as provided to DoE. In addition I explained the basic capabilities of e-mail, conferencing, telnet connections, and file transfer, noting that these capabilities may work on both a local Free-Net and can connect to other sites through the Internet. Here again, both gentlemen seemed fascinated by the basic concept of local community computing systems connected to one another and to other resources via the Internet. And again I talked about the inherent advantages/features of a F-N over "raw" Internet access. Richard and Dan seemed especially interested in the possibility of extending Internet services to average people through such systems. They agreed with me that the public, for the most part, has little understanding of the potential power and applications of a national data highway. They asked what, if Federal funds were to be made available for Free-Nets, the money would actually be used for. I gave such examples as hardware, software, modems, telephone lines, training of users, etc. While both men agreed that it is unlikely the Feds will fund the ongoing, or operational costs of such community systems (?), intitial, they did allow that start-up funding is a possibility. Also, the following points were discussed in generalities: --A "consortium" approach, involving local universities, libraries, etc., may be appealing to Federal policy makers. --Eligible applicants for funding might include universities, libraries, K-12 schools, etc. --At the national level, things like new Free-Net software and technical assistance to local Organizing Committees might be provided by NTIA or other agencies. Overall, I came away from both meetings feeling that the Free-Net model has given some of the NII planners some food for thought. I indicated to all three gentlemen that I would relay their comments to the Free-Nets and stay in touch with them as developments warrant. I know that there have been some reservations expressed on freenet-admin about Federal funding, but I wanted at least to make sure the idea is on the table. I would be interested in thoughts from anyone on how best to move the issue forward. Jim Finamore voice: (716) 877-8165 From eddleman@calypso Wed Apr 21 05:42:16 1993 Subject: An Interesting View of Information Infrastructure from Japan Organization: Msen, Inc. -- Ann Arbor, MI (account info +1 313 998-4562) >From the author Izumi Aizu "I have written the attached article on Nihon Keizai Shinbun and it was placed on the 16th of April. Here's my own translation. Izumi also is affilated with Glocom and Nikkei is the Japanese Wall Street Journal Original Japanese article appeared in Nihon Keizai Shimbun on April 16, 1993. Izumi Aizu Research Director Institute for Hypernetwork Society Summary: The Japanese government recently announced the new economy stimulus package which include "New Social Infrastructure" program that will support new installation of supercomputers in universities, personal computers in schools and optical fiber networks to the home. But the proposed budget package based on construction bonds and raising the local telephone tariffs alone are not enough or appropriate. In U.S. they have years of accumulated experience and expertise of the Internet. The Internet has increased its usage on the exponential growth rate recently. The aggressive use by the new Clinton administration staffs represents the tip of the iceberg of the wider use of the Net. And the new administration's emphasis on the information infrastructure as part of technology policy should be interpreted as the reflection of this explosion. We in Japan should reposition the ISDN, lower the tariffs of leased line services which is at least five times as much higher in Japan compared with U.S., and build telephone-oriented networks and computer-oriented networks in fundamentally different ways. It is critically important to create new demand and new market for the networking business that will leverage 'increasing returns' from technological innovation. As an alternative to the national treasury bond or raising the telephone bill, a new 'Digital Network Bond' is proposed. * * * Japan's "New Social Infrastructure" scheme "free-rides" the information policy of Clinton administration Just recently from February to March, as a part of new budget program to stimulate Japan's sluggish economy, a "New Social Infrastructure" initiative in telecommunications and information field has been proposed by a number of leading politicians and government officials of MITI and MPT. The Japanese Government officially announced the additional budget package deal on 13th of April of some 13 trillion yen which includes this "new social infrastructure" in a rather vague, very Japanese fashion that adds up to a little less than 10 % of the total. This sudden proposal of "new social infrastructure" is aimed to financially support the computer installations to universities and research institutions as well as schools, and the construction of optical fiber networks (ultimately to the home), taking advantage of the sluggish economy that requires any kind of government initiative to be stimulated. As Mr. Hayashi, President of NTT (Nippon Telegraph and Telephone) U.S., in his article on Nihon Keizai Shimbun (equivalent of The Wall Street Journal) on March 10 clearly articulated that new U.S. administration's information policy is spurred, at least in part, by Vice President Gore's "Information Superhighway" proposal pursued at least for a couple of years. Japan's government officials and LDP party leaders look like they are trying to 'free-ride' this external factor to introduce a new policy set in Japan. It is a kind of "Gaiatsu" technique often used to 'change' conventional structure by introducing foreign threat or pressure to suppress any opposition. One of the focuses of this 'New Social Infrastructure' is the "Fiber-to-the-home (FTTH)" project. Under new budget proposal, MPT is planning to start a 'pilot project' as a test bed to the nationwide FTTH under their own initiative. In my observation, MPT intentionally 'misunderstood" that during the election campaign the Clinton/Gore team officially committed to build the FTTH, and therefore required that Japan should also start a similar project in order not to be left out. As I understand from the other side of the Pacific, the new administration has not committed to lay the FTTH by the government, but they have committed the high-speed computer networks to link research and education community under NREN and NII(National Information Infrastructure) initiatives. It looks like rather than having the government money pouring directly into the FTTH, even if they have such money at all, the new administration is planning to stimulate the private sector's investment by the telephone companies as well as cable TV and computer companies. There are strong opinions that new digital wireless technology will require far less money than laying the fibers. In March Japan's MPT submitted a proposal for FTTH policy to be discussed by the "Telecommunication Council", an official committee composed by selected industry representatives and scholars as well as other opinion leaders. MPT's underlying thinking is that "new information infrastructure should be built by the government, not by NTT which is suffering from decreasing profit". That means that MPT wants to reposition its leadership in the telecommunication field, not losing its control as happened after the deregulation in 1985. NTT on the other hand was reported that they counter-argued against MPT by claiming that "NTT alone can invest the FTTH all by itself, yet to do so we first need to 're-balance' the telephone tariff structure, ie raising the unprofitable local charges". Ministry of Finance (MOF) joined the debate to support NTT to some extent so that they can 'raise' the once hopeless stock price of NTT, which certainly gained by more than 60% of its price within less than a month, which then vastly contributed to activate the entire stock market of Japan. For MOF, the scheduled opening sale of JR(Japan Railways) East's share which is owned by MOF is the foremost concern and unless the stock market is improved their fate is gloomy. Who should bear the cost of information network of the future? National bond or taxpayers or users of local telephone? None of them seemed to be enough or proper. Reposition ISDN first, before talking about "FTTH" Let's look at the down to earth reality. The main player of the next generation networks used to be ISDN(Integrated Service Digital Network). Where are they now? In Japan the commercial ISDN started in 1984, one of the first in the world. Despite the vast investment already made, the usage of ISDN in Japan is not as promising as once expected. ISDN was positioned as an alternative to existing analog telephony, yet in reality actual uses have been centering around the computer-to-computer communication. It's a matter of fundamental concept of a service. A very important issue by itself. First of all, we should reposition this ISDN. Whether we will position ISDN as part of computer digital network service or digital alternative to existing telephony should be the question number 1. My opinion is, at least for the time being, the former. Even though they say it's the same 'digital', telephone and computer networks require different optimum economic set of solutions and too simple integration/mixture is questionable. The distribution of demand or traffic on telephone and computer network cannot be one and the same at all. In Japan, there have been too many 'regional informatization programs' which created much confusion. Although quite a few 'third sectors' which provide CAPTAIN (Japanese version of videotext service) or CATV business were established, few made the balance sheet meet the original expectations if any. The Hi-Vision (Japan's HDTV) project initiated by NHK and supported by MPT and MITI was late to catchup the digitalization and their proposal submitted to U.S. FCC was finally turned down this March. Direct Satellite Broadcast business as well as Satellite Communication business are both suffering and facing a very critical moment. Their demand forecast was far less than original hopes and there are little expectation that their capital investment will be paid off in near or far future. Why are there so many failures? One answer is that they did not really discuss the relationship between 'contents' and economy of services, that is, to objectively analyze the simple demand and supply dynamics of rather 'unknown' kind. There have been one successful case. PC communications service, such as NIFTY Serve or PC-VAN, similar to Compuserve or Prodigy in U.S., made a significant growth despite low expectation or predictions. For the Japanese, a humble, open and objective retrospect is essential. If not we may follow the trouble of JR, which constructed too many local tracks where economically effective demand was non-existent and defeated by the increase of automobiles and the road. Understanding the dynamics of the Internet is the key. Even the White House is now using it! The situation in U.S. gives a good contrast. There is massive amount of experience of using the computer networks in U.S. Learning from the history and current situation of Internet, which developed mainly in U.S., make a big difference in understanding the information policy strategy of the new administration. Even from Japan we can now obtain the raw and rich information related to the information policy of new Clinton administration by using Internet. For example, when Mr. Clinton announced the economic policy for the first time in February from a 'town meeting' in Silicon Valley, only a couple of hours after its closing we could obtain the full transcription of questions and answers of the President and Vice President with the participants at the Silicon Graphics via Internet. We learned that the new administration's staff are seriously using the network extensively so that they could 'feel' the power and the potential of the Net, thus making full effort to implement the information policy. As far as I know our government along with the party leaders are far behind with the rest of the world. Now, for the Japanese to learn, let us go back the history a while. The Internet has its roots from the ARPANET which was started in early 1970s to link research organizations that were working on military contracts. In the 1980s CSNET was built with initial funding from National Science Foundation, then NSFNET was started in order to, as officially stated, link supercomputer centers nationwide which become the core of the vast 'network of networks' that interlink research centers, private companies as well as libraries and schools. All of these were mostly done by the open and voluntary collaboration of users who interact each other, exchange information and share the resources and results of research activities. This is the Internet today. And the new administration's information policy is also built around the Internet. The Internet has increased its users exponentially over the past few years. Now there are more than 120 countries interconnected with estimated number of more than a million host computers and more than 10 million users. It is by far the largest computer network on earth. It used to be rather science oriented, or computer engineering dominated, but recently the coverage and contents of the services as well as user communities underwent a significant change. Use of humanity or social science community, education, private business or ordinary citizens are all increasing by leaps and bounds. Not only the advanced countries of the North, but developing countries of the South from Africa to Asia as well as former Eastern socialist countries are all entering into the Net community. Where to begin for the Japanese? First, lower the price of the leased line services In this massive explosion of the Internet, Japan was left behind. Almost 10 years after the U.S., Japanese version of Internet was started to link universities, national as well as private companies' research centers. The core of this effort was done mostly by a pure private, voluntary research program named WIDE (Widely Distributed Environment) with Japan's networking guru Jun Murai of Keio University. WIDE has its own leased line trunk, but the speed of this 'backbone' is only 192K bit per second, almost 1/200th of American backbone of 45Mega bit per second, and the capacity is far less than that. Why is that? The biggest factor is the expensive leased line service cost in Japan. Internet has developed by linking computers directly via leased line services. However, in Japan, the leased line services cost prohibitively expensive thus offering the bottleneck for the computer to computer networkings. One example shows that the price of 1.5 Megabit line costs 5 time or more in Japan compared with U.S. counterpart (see table). There may be some difference in market competition or quality of the lines, as Japanese service providers try to defend, but this difference is far from understandable. The leased line services in Japan is making huge profits. If we take NTT for example, the leased line division at NTT accounts only 7 % of the total sales revenue last year, but contribute to some 15% of the whole profit of the entire telco business. The gross profit as well as profit ratio of leased line service are second to long distance telephone service. NTT is asking for 'rebalancing' the telephone price structure by raising the local telephone tariffs, but if that is allowed then this highly profitable leased line service should also be significantly rebalanced. By doing so, many regional universities, research institutions or private companies of small sizes can also utilize high speed network circuits so that Internetworking in Japan could also enjoy the rapid expansion. This should be the information infrastructure today. NTT and other carriers can expect a vast new demand creation. This will spur the R&D efforts and innovation of technology with significant increase of revenue and profit of leased line services at the same time. It will be a healthy win-win game for sure. Innovation that leads 'increasing return' will boost dramatic lowering of communication costs That is not enough, however. It is of critical importance to learn from semiconductors innovations or recent price revolution of PCs based on these chip innovations. Technological innovations made it possible the 3 to 5 times increase in capacity and performance with significant reduction of the prices, thus creating new products, new services, new demands and new industries in a 'chain-reaction' manner. The consumers of course welcome this kind of competition that is based on "Increasing return and decreasing cost", a new economic principle expanding the existing paradigm of conventional economic theories. That is so far what happened to the chip industry and micro electronics industry including computers and consumer electronics. But not as far as I know of telecommunications industry, at least in Japan. The Network Industry of both telephone and computer networks should learn and realize the same lesson. By the innovation and evolution of chips, inevitable 'downsizing' of switching machines and routers or other communication equipments, breakthroughs in light wave communication technology, the 'density' of networking will exponentially increase. It will result sharp drop of cost of transmission, switch or any other type of carriages of electronic signals in mostly digital format. We may not need many trillions of yens to invest for the new infrastructure. So called 'information appliances' and Digital mobile telephones (Personal Communications Systems) will accelerate this trend. Just like what happened to the CPUs and memories in chip industry, all sorts of telecommunication or networking prices may be easily dropped by new comers, that lead the creation of brand new demand not existed before, pay off the investment within reasonable timeframe for further expansion. We can expect emergence of 'network publishing' that will provide revolutionary low price of ample information all in digital format. The cost of information today mostly does not consist of creation of contents, which should be the real value, but of storage and efficient delivery of information, that is in essence the cost of paper, printing, truck, warehouse and other physical distribution mechanism plus the cost of personnel that is attached to these 'extra' services. But if what is demonstrated by Internet is the case, then the cost of constructing electronic networks will allow net reduction of delivery cost by orders of magnitudes while giving ample volume of paths to reach information the way users want direct. The real significance of the explosion of Internet is that it demonstrated the ability to allow anybody to tap into the vast supply of information in a very very inexpensive way. That is what our government and industry people in Japan should learn from U.S. Put the priorities to the users, invest the future with new kind of 'Digital Network Bond' We must come to think of the users first, how and what kind of intellectual infrastructure for citizens can be built, before laying the fibers as hardware driven, lower the leased line services today to facilitate the 'network of networks' openly just like the Internet. We must do everything possible to lead this direction both in prices and technological or even social and political environments. In doing so, like in U.S., new experimentation that may dissolve the barriers between broadcasting and telecommunication will be tried with users in mind, new networking technologies will be created one after another, new demands are created by lowering price and raising performance. These new movements will reveal, in more natural ways, what role the government should (not) take and what role NTT and other communication vendors should take. As for the resources of new information infrastructures, I would like to propose the introduction of new "Digital Network Bond". In Japan, after the total destruction of telephone network during the World War II, 56 million subscriber lines were built in just 30 years. How? "Telephone Bonds" were sold to the new customers and that financed the most portion of building the network . This bond will allow direct borrowing from the new users of the new services, not indirect subsidization from local telephone users. We must note that these user clusters are awfully different, at least during the long early stages. If they can issue a long term bond, then it will be far more stable investment than speculating the stocks and be paid off in the long run. Nobody will lose the game. In Japan, the public investment often goes through the special interest groups of the limited corporations or industries, along with some ministries or politicians. These are the sources of most of the recent political scandals. We do not need this kind of investment in communications business. If we want to really learn from U.S., we must learn much more deeply instead of making a free-ride on the surface. Our ministries should, like the White House, use the open network to provide direct information exchange with the people, make available the information that the bureaucrats and large corporations tend to monopolize, create open and frank debate by all parties concerned in front of the public. It will also be very important to promote more geographically distributed design of networks. Do not centralize the power around Tokyo, but base in regional economies. Realizing an autonomous distributed network society, which is the real essence of the Internet, will be the most critical issue for the success of the information and communication revolution of the coming century or millennium.