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Shovels and original concepts

By Scott Bradner

Fortune Magazine is trying to internalize the Internet and seems to almost get it. But in spite of the hype, after reading through more than 300 pages of the fall 2000 special issue dedicated to the Internet it's clear that the basic question about the Internet still is: Aside from the shovel-sellers, who is going to make money at it and how?

As one would expect from Fortune the issue is full of tidbits about the many Internet quazillionaires, both people and companies, particularly venture capitol firms. It also dances through the landscape of new technologies that, in their view, will shape the future of the Internet which they quaintly say was "the biggest business story of the last five years." But I was disappointed that in all those pages it does not have a good analysis of the economics of that future 'Net. They talk about the relative costs of broadband technologies, from a low of $400 per customer for cable-based systems to as much as a projected $1,500 per customer for fiber-to-the-home (which is only $100 or so more per home than DSL now costs) but they don’t try to figure out what that means Internet connectivity will actually cost. Since they estimate that over a trillion dollars will be spent on "fast online access" infrastructure it seems to me that the question of getting some money back for the investors would be of some interest.

In their infinite semi-wisdom the Fortune writers have come up with "four technologies that will shape the Net" and, they predict, might have as big an impact as the world wide web and the web browser. The fab four technologies are voice browsers, Bluetooth, XML and peer-to-peer networking. Voice browsers because then you can surf the web while driving -- a great idea to push just when communities are beginning to ban the use of cell phones in moving cars because drivers get too easily distracted. Their description of the Bluetooth local area wireless technology makes the term "ubiquitous" seem wholly inadequate. They call XNL the future lingua franca of the Internet -- making the all too common leap over the problem of getting agreement on the dictionary. Fortune seems to think that peer-to-peer networking is some sort of new idea with the first mass-market incarnation being Napster. In thinking that they demonstrate their deep understanding of the Internet since peer-to-peer networking was one of the original Internet enablers. The web, far from being an example of a "centralized model" as Fortune claims, grew up in a peer-to-peer environment with thousands of individuals putting up their own web sites long before Fortune even knew how to spell Internet.

It has been said that the only people who made money during the California gold rush were those who sold supplies and tools like food and shovels to the miners. At this point in time the only thing that is clear about the economics of the Internet is that building electronics and optics and thus being on the receiving end of that trillion dollars of investment is better than trying to figure out how to pay it back.

disclaimer: Harvard's biggest push for investment was only for 0.2% of a trillion dollars so the above is out of their league and must be my observation.