Anthony J. Pennings, PhD

WRITINGS ON DIGITAL ECONOMICS, ENERGY STRATEGIES, AND GLOBAL COMMUNICATIONS

US INTERNET POLICY, PART 2: THE SHIFT TO BROADBAND

Posted on | March 24, 2020 | No Comments

This post is second in a series that I am producing during the COVID-19 pandemic about the importance of telecommunications policy in ensuring the widespread availability of affordable high-speed Internet access. Teaching online and working from home have gone from fringe activities to be central components of life. As we move to a Smart New Deal to transform American life, how we structure our digital environments will be central. This post discusses the transition from dial-up modems in the early days of the Internet to high-speed broadband connections. With that technical transition and the FCC’s 2005 decision, the competitive environment that the Clinton-Gore administration built, collapsed into the cable-telco duopoly we see today and made “net neutrality” an issue.

The Internet Service Providers (ISPs) mentioned in US Internet Policy, Part 1 facilitated the process of getting individuals, businesses and government “online” by linking to the Internet backbone and going “retail” with dial-up modems and then high-speed broadband connections. The term “online” emerged as way to distinguish data communications from telephony, which was highly regulated by the Communications Act of 1934. ISPs offered businesses and consumers high-speed data services for accessing the World Wide Web, hosting websites, and providing large file transfers (FTP). The key was accessing the rapidly expanding Internet packet-switching backbone network that had been developed by the National Science Foundation (NSF).

The National Science Foundation’s backbone network (NSFNET) began data transmissions at 56 kilobits per second (Kbit/s) but was upgraded to T1 lines in 1988, sending at 1.544 megabits per second (Mbit/s). It eventually consisted of some 170 smaller networks connecting research centers and universities. In 1991, the NSFNET backbone was upgraded to T3 lines sending data at 45 Mbit/s. From 1993, NSFNET was privatized, and a new backbone architecture was solicited, that incorporated the private sector.

The next-generation very-high-performance Backbone Network Service (vBNS) was developed as the successor to the NSFNet. vBNS began operation in April 1995 and was developed with MCI Communications, now a part of Verizon. The new backbone consisted primarily of glass Optical Carrier (OC) lines, each of which had several fiber-optic cables banded together to increase the total amount of capacity of the line. The interconnected Optical Carrier (OCx) lines operated at 155 Mbit/s and higher. These high-speed trunk lines soon multiplied their capabilities from OC-3 operating at 155 Mbit/s, to OC-12 (622 Mbit/s), OC-24 (1244 Mbit/s), and OC-48 (2488 Mbit/s). By 2005, OC-48 was surpassed by OC-192 (9953.28 Mbit/s) and 10 Gigabit Ethernet.

As part of NSFNET decommission in 1995, these backbone links connected to the four national network access points (NAPs) in California, Chicago, New Jersey, and Washington D.C. The backbone expanded to multiple carriers that coordinated with ISPs to provide high-speed connections for homes and businesses.

At first consumers used analog dial-up modems over the telephone lines at speeds that increased to 14.4 kilobits per second (Kbit/s or just k) by 1991 to 28.8 kbit/s in 1994. Soon the 33.6 Kbit/s was invented that many thought to be the upper limit for phone line transmissions. But the 56K modem was soon available and a new set of standards continue to push speeds of data over the telephone system. The 56K modem was invented by Dr. Brent Townshend for an early music streaming service. This new system avoided the analog to digital conversion that seriously hampered data speeds and allow content to be switched digitally to the consumer’s terminal device, usually a PC.

Also, during the 1990s, the telcos were conducting tests using a new technology called ADSL (Asynchronous Digital Subscriber Line). It was initially designed to provide video over copper lines to the home. Baby Bells, in particular, wanted to offer television services to compete with cable television. It was called asynchronous because it could send data downstream to the subscriber faster (256 kbit/s-9 Mbit/s) than upstream (64 Kbit/s-1.54 Kbit/s) to the provider.

ADSL was able to utilize electromagnetic frequencies that telephone wires carry, but don’t use. ADSL services separated the telephone signals into three bands of frequencies-one for telephone calls and the other two bands for uploading and downloading Internet activities. Different versions and speeds emerged based on the local telco’s ability and willingness to get an optical fiber link close to the neighborhood or “to the curb” next to a household or business location.

They were soon called Digital Subscriber Lines (DSL), and they began to replace dial-up modems. High demand and competition from cable companies with high-speed coaxial lines pressured ISPs and telcos to adapt DSL technologies. DSL and new cable technologies that carried Internet traffic, as well as television, came to be collectively called “broadband” communications.

Internet traffic grew at a fantastic rate during the late 1990s as individuals and corporations rushed to “get on the web.” The rhetoric of the “new economy” circulated and fueled investments in web-based companies and telecommunications providers.

A temporary investment bubble emerged as many companies lacked the technology or business expertise to obtain profits. Dot.coms such as Drkoop.com, eToys.com, Flooz.com, GeoCities, Go.com, Kozmo.com, Pets.com, theGlobe.com, and Webvan.com failed for a variety of reasons but mainly flawed business plans and the premature expenditure of investment capital.

Similarly, many carriers such as Global Crossing, WorldCom, and ISPs overestimated web traffic and built excess capacity. In the wake of the dot.com crash in 2000 and the telecom crash in 2002, many ISPs filed for bankruptcy, including Wall Street darlings like Covad, Excite@home, NorthPoint, PSINet, Rhythms NetConnections, and Winstar Communications.

The broadband industry changed significantly after the 2000 election. The technological infrastructure was significantly devastated by the dot.com crash of 2000 and the telecom crash of 2002.

Furthermore, Internet policy changed when the Bush administration was reelected in 2004. The FCC revoked Computer II in 2005 when it redefined carrier-based broadband as an information service.

This meant that broadband was effectively not regulated and telcos could go on to compete with the ISPs. Instead of offering backbone services and being required to interconnect with the ISPs, they became ISPs and were no longer required to provide ISPs their connection to the Internet. The competitive environment that nurtured Internet growth was effectively decimated.

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AnthonybwAnthony J. Pennings, PhD is Professor of the Department of Technology and Society, State University of New York, Korea. Before joining SUNY, he taught at Hannam University in South Korea and from 2002-2012 was on the faculty of New York University. Previously, he taught at St. Edwards University in Austin, Texas, Marist College in New York, and Victoria University in New Zealand. He has also spent time as a Fellow at the East-West Center in Honolulu, Hawaii.

Category: democratic political economies, digital media economics, smart new deal, telecom policy and net neutrality

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    Professor at State University of New York (SUNY) Korea since 2016. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, digital economics, and strategic communications.

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