Key to staying viable in the face of competition

Dionisia Tabureguci

Dr. Vinton Cerf

Dr Vinton Cerf, one of the world's leading technologists, made a first trip to the Pacific region in August when he was a special guest at the PacINET (Pacific Internet Networking) 2005 conference in Kiribati.

Cerf was instrumental in the development of the Internet and Internet-related data packet and security technologies, including co-designing the TCP/IP protocol.

He is chairman of the Internet Corporation for Assigned Names and Numbers (ICAAN), the organisation that manages all domain names.

Cerf joined Google Inc. as 'chief Internet evangelist' in September this year after serving as senior vice president of Internet Architecture at MCI Digital Information Services between 1982 and 1986 and 1994 and 2005.

Cerf was in Suva on his way back to the United States after the Tarawa conference and spoke with ISLANDS BUSINESS.

Here's an edited version of the interview:

How does it feel coming to one of the most bandwidth-impoverished regions in the world?

“I have just been experiencing some tough problems with connectivity (laughs). Most of our discussions here (Fiji) and in Kiribati have been related to better Internet connectivity and how to get it. The big challenge is that the economics are very difficult, especially if we do this country by country, because each country has a certain limited amount of requirement or is limited in its ability to pay for capacity. So we have been speculating about trying to aggregate all of the intra-country and inter-country demands of the Pacific islands and asking whether a technology is there which could aggregate all of that. We can then collectively buy much higher capacity service and then share it rather than buying bits by bits, which is more expensive. Technically, that is a big challenge but I am interested in at least analysing that.”


How would you do that? Have a centre of distribution?

“We have explored several things. For instance, we know that some of these islands have fibre capacity that terminate here in Fiji, some in Guam and some in other places. Those could be used as downlinks to hubs for shared communication requirements. We could be taking things off the satellite from other islands and dropping down to the place that has fibre access, then using the fibre to get access to the rest of the Internet. That is one possibility. And you would want to do that in more than one place, so that you have resilience. Another element in this idea is to have a broadband satellite channel and to actually share it compartmentally among the various ground stations. This is a technology which we experimented with in my research 12 years ago.”


Wireless technologies are obviously the most effective way to put the people of the isolated Pacific islands region in touch with the world. What policy and technology advise would you offer governments to achieve this quickly?

“This falls on what we have been talking about. What we need to do is to start working together to aggregate requirements. In the past, I don't think that's been easy to do, but the rest of the Internet works that way. Two people are very collaborative in their approach to the Internet. Now if you know anything about how it's built, you know there's a quarter of a million network that are all interconnected and they all connect together all on a cooperative basis. Sometimes the interconnection costs money, other times, they don't but that's up to the parties that are involved. But the fact that they interconnect, even when they compete with each other, is because if they don't interconnect, they don't have a system that everybody can use because it's not fully connected. So learning to work together for the benefit of everybody sounds a bit altruistic, but in fact if you don't do that, you won't get economic benefit.”


What basic steps should the world take to close the seemingly widening digital divide?

“The first thing I will observe is that digital divide is a very peculiar thing. A huge misunderstanding, in my opinion. First of all, that divide is starting to close on its own for the following reasons: the cost of communications services, costs of the equipment needed to run parts of the Internet are dropping. OK, so that means whatever the GDP happens to be in a given country, the facility that allows you to run the Internet are getting less and less expensive, which means they are getting more and more affordable. This is just like any other new technologies. When television first came along, it cost US$1000 in 1954 for a TV set. That was a lot of money. And of course as time goes on, as we scale the learning curve for implementing these things, the cost comes down. So the digital divide problem is not just equipment and communication costs. Some of them have to do with training. Some have to do with experience. Some have to do with opportunity to use these systems. I watch Internet cafes pop up all over the place. That is a way of sharing costs and it also reduces the digital divide because you and I don't have to buy a computer or pay for dedicated communication services if we can have it on a user pay basis. So if I get off the airplane at Nadi, I can just go into one of those cafés, sit down, and pay F$12 to make use of the system for an hour and that is perfectly useful for me because I don't need it for more than an hour. I'm not saying there is no digital divide.”


You made a point about new technologies making communication cheaper. The different services traditionally offered by telecommunication companies may now be integrated and offered using just an IP-based network. How would this change the way major carriers do their business?

“Some of these carriers will have to change their models because they may not be able to sustain their previous business models with high prices if comparable services come along and use the Internet to provide the same services. We have had to change our business model at MCI to recognise things like Voice over Internet Protocol (VoIP), which has a completely different economic structure than traditional telephony. The first thing these carriers need to understand is what the Internet technology actually does to their business. There is an old expression that says 'if somebody is going to eat your lunch, it might as well be you.' What that really means is that if other people could implement a service that will compete with yours at a lower cost, then maybe it would be smart to do something like that before they do and make it available to your customers. On the other hand, if you understand the economics of these new technologies and you grasp that, then you have a chance to stay in business because you're already ahead. That is what we are going to do at MCI. We are already into VoIP. We have already introduced a lot of Internet backbone services. Some of it is wholesale, some of it is retail and we're having a whole lot of other services on top of that, like firewall services or security services, hosting services, etc. So our business is changing. Five years from now, most of our revenue will come from services that didn't exist five years ago. May be that didn't even exist last year. That's what you have to do to stay viable in a dynamically changing environment. If you try to stop that change, you just become irrelevant after a while.”


With all the developments in new technologies, what aspects of the industry would you recommend to be legislated?

“First of all, I think they should not regulate these kinds of specific technologies. That's just a big mistake. The Internet absorbs new technologies and turns them into new communications capabilities on a regular basis. So whatever the regulatory structure is, it should be very insensitive to specific technologies. Second, you should look at communications now differently than you have in the past. Think of it as a layer of cake. The basic underlying transmission system, whether over wire or satellite or optical fibre, is one layer in the system. Certain people supply those services. I think it's an important principle to create each one of those layers as relatively independent and also to insist on a particular kind of behaviour by the suppliers of these services. We call this network neutrality. So if I am the guy supplying a digital subscriber service or cable service, I should be oblivious to the applications that are being supported by that transmission system. That's the first of the networks should be independent and be essentially neutral to what is being put on the top.”


What else should we be expecting with Internet revolution?

“I had I mentioned the new interplanetary Internet protocol, which is an extension of the existing Internet design so as to support the exploration of the solar system. Another thing that you can anticipate is the launching of Internet devices, home appliances, office appliances, things in the car, things you carry around with you, will be Internet enabled and so they will be manageable through the Internet. That's another opportunity for people to offer services managing various kinds of appliances that are on the network. So rather than doing it on a device by device basis with an infrared remote control that you can't figure out how to use, you instead have a nice friendly web-page on your machine that is run by a service provider which says which TV channel you want to record and watch later on. And what's nice is you don't even have to be at home to do that. You can be anywhere and on the Internet and have that interaction. The same thing is true for managing the air-conditioning, heating system, ventilation, etc. This may not be as relevant here as it would be in some other places in the world. The same thing can be true of a variety of pieces of equipment not just the ones in the house but the ones in the office, in the car. The other thing that you're going to see is a lot more emphasis on geographically indexed database. These are systems that know something about what's going on in a given geographical area...what stores are available, what restaurants are available, where the hospitals are, where the ATM machines are.”


In the Pacific, we still have monopolies, protected by exclusivities. Yet, the world scenario is different. How do you see our ability to keep up with these changes while we still protect ourselves with exclusivities?

“One of the problems with exclusivities is that it creates monopolies and monopolies often behave abusively. And the usual solution to that is to recommend competition. I want to be careful about that because competition only works when you have a big enough market to sustain more than one player. There could be cases where it just isn't a big enough market to sustain more than one party. If that happens, and you have to end up with a monopoly service provider, then the one thing that you don't want is for that monopoly service provider behaving in a way that actually inhibits the utility of the Internet in this case.

“And so you don't want people charging whatever it is they get from the public if they're going to be abusive about their monopoly position. That's why you have regulators to look after the public interest to make sure the monopolies are not abusing the public interest by charging too much or by preventing other people from competing at higher layers of protocol.

“We have lots of ISPs in places where there are monopoly underlying transmission providers like cable companies or digital subscriber line services. That does not stop other Internet service providers using those underlying facilities to compete with each other. And that's another example of network neutrality.”