Road to recovery

WIRED:Building infrastructure for new technology will help US economy and provide for the future, writes DANNY O'BRIEN

IN THE United States, much of the debate this week has been about president Obama’s $800 billion stimulus package. But here in Silicon Valley, it’s been more a passive reading of headlines than real involvement in the process.

Silicon Valley, so many miles away from where political decisions are made in Washington, has had little influence on the matter – and surprisingly little to say. Despite Obama’s promises to look forward to a high-tech future in his administration, the money doled out in that direction – $6 billion has been put aside for broadband development and $17 billion for health information technology – are dwarfed by the $250 billion of tax cuts and even the $30 billion of road improvements.

Tech companies in the Valley are reticent to go begging for payouts, although they’re happy to lobby for tax cuts, including one that would apply to outsourced Irish divisions (it failed in the Senate). Nonetheless, it’s amazing that they don’t feel prompted to give advice how the government should direct its major project money.

Does the 21st century have nothing to add to the motorway networks, housing projects and irrigation of traditional recession spending? And for other countries that are only beginning to consider their spending plans, how can they plan not only to be more efficient that the American strategy, but perhaps build to outcompete other economies in the happier times that are hopefully around the corner?

The first, and most obvious choice is the broadband roll-out.

But what should a publicly-sponsored broadband roll-out look like? It’s easy to get this wrong, especially in the highly regulated but privately owned world of telecommunications infrastructure. A case in point: in 1996, the US government committed to give $200 billion to US telecom companies to drape the country in optical fibre. The money was eaten away with very little to show for it.

Here’s a suggestion: spend the money digging up roads, but don’t restrict it to rolling out technology to rural communities. Use the money to lay empty pipes, even where there’s already DSL–ready copper or fibre.

The biggest problem innovating on network infrastructure in the US and in most European countries is the cartel ownership of conduits in public rights of way. Sure, you can try to roll out a network to compete with Eircom or British Telecom or ATT, but those companies have most of the road space sown up and the cost of digging up roads to compete with them is astronomical (just ask the cable companies).

It’s not just monopolistic control – most of the time sorting out where wires can go and how is a huge cost in itself. Far better to have a centrally-planned, national grid of space beneath our streets to be filled with competing companies, and whatever new disruptive technologies may come along.

But what if those new technologies don’t arrive down wires or fibre? What if they take place in the wireless field? That seems reasonable: there’s been an explosion in smartphone mobile internet use in the last year or so, and companies are only now beginning to roll out the 4G network that will be necessary for that expansion.

Of course, that also means that those same companies will kick up a fuss if the public sector starts stepping into their territory – especially if they’re still paying off the debt they incurred buying up radio spectrum off the government.

But that doesn’t mean the government can’t help. While we’re digging up the roads, let’s upgrade the public “street furniture”: street lamps, traffic management systems, electricity pylons and postboxes. The government can follow the same plan as digging up the road: put in public, wired, receptacles that the wireless companies can hire for pico-cell units: the short-range equivalent of cell towers for high-bandwidth telephony and data.

Neither the conduits under the ground, nor the spare space in our postboxes and streetlamps need to be completely empty, of course. If municipalities want, they can put in their own basic data system for use by public services.

Companies that want to rent space in our new physical net can either sit alongside this equipment or, better still, agree to take on the maintenance of them for a reduced rental.

By building out the space for the next broadband revolution, government does three things. First, it creates work here and now in the labour markets most hard hit by the recession. Second, it lowers the cost of investment in new technology, making the benefits of a recovery cheaper and quicker. Finally, it makes sure that when those spaces get filled, regulators will have a chance to ensure that the networks of the future stay competitive and open.

Rather than having two or three corporations that have a headstart by owning physical infrastructure, any tech company can get access to millions of homes by competing on price, not access.

By building out the empty spaces for new technology to fill, our government money will be providing a breathing space – for the economy now, and for free markets in the future.