SMART Letter #81
Trans-Pacific Tour -- part two
December 31, 2002

           SMART Letter #81 -- December 31, 2002
            Copyright 2002 by David S. Isenberg
 - "total information ignorance" -- -- 1-888-isen-com

>  New Zealand's Distance Problem
>  My Remarkable Day in Wellington
>  Supernova!  Most Blogged Conference Ever
   with excerpts from blogs by:
  + Cory Doctorow
  + Stuart Henshall
  + Michael Sippey
  + Ross Mayfield
  + David Weinberger
  + Doc Searls
  + Mitch Ratcliffe
>  Quote of Note: Mark Crispin Miller on Bush 'not a moron'
>  Smart Remarks from SMART People
  + Ken Katashiba on Japanese Kids' Bedrooms
  + Daniel J. Isenberg on Japanese Cable Modem Customers
>  If it's Funny, it Must be True, by Scatt Oddams
>  Conference on my Calendar
>  Copyright Notice, Administrivia


New Zealand has a problem -- distance.  It is so far from
the planet's hubs of commerce that distance is New Zealand's
biggest barrier to participation in the global economy.
For this problem, New Zealand self-medicates with jet travel
and telecommunications.

New Zealand's joins the world economy mostly through
tourism (growing at 15% per year) and perishable exports
like dairy products and seafood.  New Zealand's Fronterra
is the largest dairy coop in the world, and a major force
in the Kiwi economy.  Both tourism and perishable exports
depend on jet travel for their very existence.

New Zealand's distance problem could get a lot worse.  It
is all but certain that planetary oil production will peak
in late 2003 or perhaps early 2004, and, "nothing plausible
could postpone the peak until 2009," according to Shell
geologist and Princeton Professor Kenneth Deffeyes in his
book _Hubbert's Peak_ (Princeton, 2001).  Deffeyes pumped
data on actual oil discoveries to derive well-honed vectors
to project the future of oil production.  [I wrote about
Hubbert's Peak in SMART Letter #66 ( see -- David I]

In contrast, demand for oil shows no sign of peaking.
Consider: as China's 1.2 billion people start to gain some
disposable income, some proportion of them (is 10% a fair
guess for the next decade?) will acquire automobiles and
air conditioners.  The growth of the Western world's oil
appetite shows no sign of slacking either.

I heard Professor Deffeyes speak at an oil investment
conference last September 26.  He was wise and charming,
but not optimistic.  He reported that recent works
extending the Hubbert's Peak hypothesis to natural gas
production are "potentially even more scary" than his
original work.

What does all this have to do with New Zealand?  Answer:
Jet travel, unique among the heavy energy apps, needs oil-
based fuel.  Professor Deffeyes spent much of his September
26 talk considering energy-intensive applications like
heating, auto travel and electricity generation, and he
concluded that substitute energy sources like gas, coal,
nuclear power and greener sources could be developed.

Deffeyes held out one exception -- air travel.  Jet planes
demand high energy densities that only petroleum-based
fuels provide.  As oil production peaks and demand
continues to surge, Deffeyes concludes that air
transportation will be the hardest-hit sector of the energy

If Deffeyes is right, New Zealand's distance problem could
turn raw and ugly before the end of the decade.

In telecom, on the other hand, distance **is** dead --
except for New Zealand's network.  When I was in New
Zealand last month, I had half an hour with Paul Swain, New
Zealand's Minister of Communications and Transportation.  I
suggested that he blast open the bottlenecks between the
New Zealand economy and Southern Cross.  Southern Cross is
the undersea cable to the U.S., Australia and Asia that
could provide 11.5 continuous kilobits every second of
every day to every one of New Zealand's 3.75 million
people.  Access to that cable, half owned by incumbent New
Zealand Telecom, is not readily available to entities that
might benefit.  Most of its 40 Gbit capacity lies idle,
unconnected, unused, thanks to Telecom New Zealand's
scarcity tactics.

New Zealand needs to kill the last vestiges of distance (a)
for economic growth in any scenario and (b) to hedge
against the economic catastrophe scenario that a severe,
prolonged oil crisis would bring.


I arrived in Wellington, New Zealand fifteen minutes before
November 29 began.  Prashanta Mukherjee, my fellow
Prosultant(sm -- Prosultant is a service mark of,
LLC) had arranged a driver to take me to my hotel.  He was
there, "suited and booted," as Prashanta had promised.

If you ever need something done proactively, professionally
and (yes!) provocatively in New Zealand, I suggest that you
contact Prashanta Mukherjee first.  With nothing up front
but my assent, he created my remarkable day from start to
finish, scared up money, coordinated schedules, arranged
press, lobbied the right politicians, aligned the geek
community and made sure that everything flowed together in
one swift stream.  What an organizer!  [See his stuff at]

I was in bed by 1:00 AM.  My first appointment was at 6:20;
a TV interview with the national morning business show.
There is only one morning business show on Kiwi TV -- New
Zealand is small.

I hate TV interviews.  (Even blogging is too spontaneous
for this re-re-revisionist.)  But this interview felt good.
The anchorman asked just the right level of question.  I
could lean into each answer.  My 2.5 minute message was
that telcos were buggy whip boys.

The sponsor of the show is TelstraClear, New Zealand's
second carrier.  One of the Kiwi SMART People who saw the
interview wrote:
  "I thought that Michael [the anchorman] cut the interview
   very short, probably because you scared him telling him
   that broadcast television was going to disappear . . .
   my guess is it was all a bit too radical for him."

The next stop was the eVision Center, a Wellington
storefront that serves as a geographical locus for
cyberspace activities.  The 25 well-connected folks who
showed up for this "Interactive Breakfast" were my kind of

Then Prashanta took me to the Honorable Paul Swain, New
Zealand's (elected, not appointed) Minister of Transport,
Information Technology and Communications.  We entered the
Beehive, the inner sanctum of Kiwi government, simply by
announcing ourselves at the front desk.  Swain listened
attentively.  I delivered the message; blow the bottlenecks
open, connect New Zealand's info economy to the world's.
He heard.

Our next stop was the prime motive for my New Zealand visit
-- CityLink's launch of its new 802.11 hotspot service,
called CafeNet.  CityLink is a little company with one
modest ambition -- to give Wellington the competitive
advantage of plain stupid connectivity.  CityLink started
in 1995 on a small grant from the City Council.  Its first
network was fiber hung on the city's trolley stanchions.
Today it is still a small company with 13 owners, 500
customers and a handful of employees.

CityLink's entry-level fiber connectivity starts at about
NZ$250 per month for 10 Mbit/s symmetrical Ethernet
service.  (The Kiwi dollar is worth US$0.50.)  This covers
one GByte of throughput a month; heavier users pay more.
This is in large part because CityLink's cost of connecting
to the rest of the world is high, thanks to Telecom New
Zealand's heavy hand on Southern Cross.  The full CityLink
product line is at, and there's a
good story about CityLink's history and stupid, open
philosophy at

The CafeNet launch was in a big white tent next to the
Wellington Library.  The plan is for CafeNet to install
hotspots around town (I used two of them, at the library
and my hotel) and charge NZ$20 for 120 MB.  I met CityLink
CEO Neil DeWit and CafeNet's prime mover, Hamish MacEwan.
I spoke to the crowd.  I answered reporters' questions.  I
sat for a newspaper photographer.  I gave a dyspraxic radio
interview in the library anteroom while a baby bawled in
the background.  Every so often Prashanta would introduce
me to an Important Person.  I found a moment to log onto
CafeNet too.

Lunch was a swirl, then Prashanta's delegation descended
upon New Zealand's (appointed, not elected)
Telecommunications Commissioner, Douglas Webb, and his
staff.  I did not grasp his organizational relationship to
Swain -- the Telecommunications Commissioner is part of the
Commerce Commission, which seems unrelated to the Ministry
of Communications.  [Prashanta writes, "The Commerce
Commission is the "competition watch dog" of New Zealand.
It is financially responsible to the Minister of Commerce
but independent, i.e. not a government policy
implementation organization. Their job is to ensure that
fair trade and competition are alive and well.]

We talked with Webb and his team for over an hour.  I
presented the basic Stupid idea.  Webb's staff raised all
the standard telco FUD issues. (FUD == Fear, Uncertainty &
Doubt, as in, "what if Telecom NZ can't afford to invest in
its network anymore," "what if you're having a heart
attack" (and [implied] the Internet is unreliable),"
"whadaya mean 'unmanaged,'" and stuff like that.)  I don't
know if we made any progress with Webb and his team --
after all, Webb and company spend most of their time
listening to Telecom NZ define the issues.

Commissioner Webb asked me what I would do if I were in
charge -- I told him that, "If I had a country," I'd go for
structural separation of rights-of-way and maybe facilities
from services and applications.  The tricky issue is where
that separation occurs.  Should the layer 0-1 entity offer
just access to conduits and poles?  Or should it sell dark
fiber?  Or should it sell wavelengths?  Or managed
connectivity?  Where should common carrier obligations end
and competition begin?  This would be a great topic for an
Econ Ph.D. thesis.

Next, Prashanta walked me to a meeting with Blair McRae,
the CEO of the Wellington Regional Economic Development
Agency (which was the other sponsor of my visit).  McRae
served up some wine, cheese and a surprise.  The surprise
was that Her Worship, Kerry Prendergast, Mayor of
Wellington arrived and appointed me Inaugural Digital
Ambassador of Wellington.  What this means is that I have a
piece of paper that says so.  And I have an Official
Position from which to tell you that Wellington's network
is really stupid, and that thanks to a few dedicated,
patient, tenacious and visionary individuals, Wellington is
becoming one of the smartest, most info-enabled cities on
the planet.

Mercifully, dinner was the last item on the agenda.  I
vaguely remember the delightful New Zealand wine, the
convivial company (including long-time SMART Person Roger
DeSalis, who has started FX, a VoIP company that runs on
top of CityLink's network), and my strenuous efforts to
keep from falling face first into my excellent rack of New
Zealand lamb.  Neil DeWit recognized my exhaustion and
graciously drove me home early.  Thus ended my remarkable
day in Wellington.

As I traveled around New Zealand in the ensuing days, I
learned that United Networks, the fiber Municipal Area
Networking company that hosted my visit in early 2001 had
largely failed, thanks to overly high pricing (and other
mistakes?), and that United Utilities, its parent, had been
sold.  One lesson here is that fiber alone is not enough;
there must also be a grasp of the larger value proposition.
Further, even that grasp might not be enough -- 90% of all
restaurants fail in their first year even though we
understand the restaurant business model thoroughly.

In addition, I learned that two U.S. incumbents, Ameritech
(now SBC) and Bell Atlantic (now Verizon), which had been
investors in Telecom NZ, had pulled out over the last year
or so, making hundreds of millions of dollars in stock
appreciation.  Or, as the Kiwis see it, they drained
hundreds of millions of dollars from from the Kiwi economy.
If we do nothing, "clever" telco investments like these
will destroy telephony from within.

Perhaps, it seemed, my visit had had an impact.  Several
people remembered the media swirl that Prashanta had
stirred up.  One day, my hitchhiker's eyes got wide when my
interview came on my rent-a-car's radio.  Another time, a
woman said that she had seen on TV about the impending
demise of the telcos -- and then looked at me startled and
exclaimed, "You said that!"  Others I met had read about my
stupid ideas in the papers or heard me on the radio.
Perhaps New Zealand is small enough, educated enough and
open enough to be the first nation in the world to
transcend telephony.

Some media links from my NZ visit:
Good article on the CityLink CafeNet launch:
Pretty good New Zealand Herald article:
Embarrassingly dysfluent interview on Radio NZ:
My appointment as Digital Ambassador (with some words I'd
never use in polite company and a few inaccuracies too):


Kevin Werbach put on a great conference in Palo Alto.  He
pulled together a delightful assortment of people,
including a plurality of Earth's most famous Web loggers,
for Supernova2002.  When Kevin said, "Welcome to
Supernova," the other sound was keyboards clicking like
hail on a well-insulated roof as two dozen bloggers tucked
in behind their laptops.  It was a nodal moment.  It made
the hair on my arms stand up.

I used my Supernova talk to pull together many of the
themes I cover piecemeal in The SMART Letter.  Here I seize
the opportunity to present coverage of my talk from seven

The rest of the meeting was great, too, but having read
many, many other accounts, I'm too intimidated, and way too
late, to add anything new.  See blogs from Dave W and David
W and Doc and Dan and Sippey and Sifrey and meg and Mitch
and Kevin and Glenn and . . . if you've never entered the
blogiverse before you might find yourself tumbling down
Wonderland's tunnel . . .

Cory Doctorow [] wrote:

  "David Isenberg just gave an amazing, stirring address
   on the Stupid Network at Supernova. My notes:

  "Sure you can do Internet on the phone network -- you can
   do Internet on smoke signals, too. Its yesterday's
   news. The best network is a stupid network, which
   supplies simple connections, but no 'services.' Instead,
   'services' are created by smart, network-enabled
   products, designed for any networked application. Bring
   them home and plug them in.

  "[He holds up a slim cable containing 864 fibers that can
   be run down your street or under it.] Two of these
   fibers could handle the peak load of the entire United
   States.  You can light this up at a gigabit, just for
   your home -- that's the capacity of a telephone office
   of a city of 100,000 people. In two or three years, you
   can have an entire telephone company's worth of
   bandwidth in your house for $2,000.

  "The phone companies value artificial scarcity. The most
   malleable of all laws (Moore's Law, Gilder's Law) is
   accounting law -- depreciation (as we saw with Enron).
   Bean counters assume the net will be replaced in five
   years -- but with the rate of growth in Gilder's Law,
   it's like replacing the paperboy's bicycle with a
   rocket-ship. The paper-boy can't deliver papers on a
   rocket-ship. [Cory: yay! obsolete paper-boys!]

  "Engineering effort doesn't scale like Moore or Gilder --
   one engineer can only do one engineer's worth of work.
   If we increase the amount of engineering required for
   our rocket-ship net, we'll run out of engineers. So keep
   it simple, stupid. All the smarts in the network should
   be at the ends, in PCs or devices, not in routers or
   other network pieces.

  "Internetworking shifts control and value-creation from
   the network owner to the end-user. A conventional
   telephone call touches every node in every network, and
   every node's owner can add features -- call waiting,
   etc. The Internet's job is to ignore network-specific
   differences, like call waiting. Call-waiting is defined
   at the end-points between both parties on the

  "Networks that add cool features break the stupidity

  "The Internet makes telephony into just another
   application. Traditionally, you need telephone wires,
   poles, network and service. You pay for the service,
   though, not all the hardware. The telephone company does
   business this way, it's the only way they know.

  "In a stupid network, telephony is just an application.
   The telcos know how to string wires and put up poles,
   but not how to make money on 'em. That's why all the
   winning apps weren't built by telcos: email, ecommerce,
   the Web, blogging, etc.

  "Most of the important future communications applications
   haven't been discovered yet. This is the green-screen,
   command-line era of telephony.

  "In the telco world, they charge money for providing this
   voice application and spend the money to support the
   network and physical plant.

  "In the stupid network, the physical layer is designed
   for anything digital. The network layer is Internet
   protocol. The applications are anything: data, video,
   voice, whatever.

  "MSFT may have a monopoly, but it doesn't have the poles-
   and-wires monopolistic advantage that the telcos have.
   The potential for a marketplace in stupidnet
   applications exists.

  "So in the stupidnet world, who pays for the physical
   layer: poles, wires and so on? The wires are usually an
   expense subsidized by the voice service. When voice is
   free, who will keep putting poles up?

  "The telco won't make the transition. They're too
   addicted to their business. The cable-companies may have
   a better shot, but they're addicted to video
   entertainment business. They don't want to put in a net
   that will let anyone get any video signal they want from
   anywhere. Municipalities: there are 125 cities in the US
   that are actively investigating their own fiber nets.
   Utilities have wire and pipes in our homes. New kinds of
   companies may do it. Customers and corporations own
   their own networks.

  "Stupidnet has its own values: First Amendment,
   decentralization, not any-color-you-like-so-long-as-its-

  "Remember: Goliath lost! It takes smart people to build
   the stupid network!"

Stuart Henshall [], a New Zealander,

  "[David has] just returned from New Zealand where he was
   working with CityLink in Wellington, a small broadband
   wireless provider . . . I'm looking forward to his
   update 'Why Stupid is Still Smart'. Many moons ago we
   had a great conversation around his paper 'Stupid
   Networks'. My argument then as it would be now; Can't we
   apply this same logic to companies?  'Stupid Companies
   are really Smart'.
[The Stupid Company is like the 'Soccer Ball' hypothesis
advanced by Francis McInerney of North River Ventures.'  I
take no credit -- David I]

  "This turned out to be one of the best talks of the day
   . . . David had his screensaver playing pictures of NZ
   as we walked in after lunch. Finally we were looking at
   something tangible."

Michael Sippey, the official conference blogger,
[] wrote

  "David begins with a reality check: infrastructure is the
   physical stuff. Conduit in the ground is infrastructure.
   Telephone poles are infrastructure.

  " . . . 'Have some humility and take some functionality
   out of the middle of the network so you don't have to do
   forklift upgrades later.' (Lessig devotes much of his
   book _The Future of Ideas_ to the end-to-end principle.)

  "The big question: what's the business and operating
   model for the physical layer? Who builds and runs the
   new network? The telephone company? The cable company?
   Municipalities? Utilities? New kinds of companies?
   Customers themselves?"

  "SIP: what HTTP did for documents, SIP will do for
   communications. The intelligent network (today's phone
   network) gives way to a stupid network.

  "'Most of the important communications applications
   haven't been discovered yet.' Jonathan Rosenberg, co-
   creator of SIP"

Ross Mayfield [] wrote:

  "Kevin [Werbach]: 'In my dreams I would come up with a
   simple idea like David's that is so powerful and
   everyone gets.'

  "[David Isenberg:]  I'm shocked [that we] have never
   gotten below layer 7 in the discussion today and . . .
   still [people] call it infrastructure.  That's not
   infrastructure.  Infrastructure [conduits, poles,
   rights of    way, etc., are] important and uncertain.

  "Q&A:  I posed the utility model question and he says I'm
   right, but there are [other] alternative[s besides
   the utility model] (he is right too)."

David Weinberger [] wrote:

  "David Isenberg is just back (two nights ago) from
   several weeks in Japan, Australia and New Zealand so
   he's full of wide-eyed news of a world where broadband
   flows like milk and is as sweet as honey. Now he's
   talking about a vanilla 802.11b system that provides
   better quality sound than 'real' telephones."

  "'What HTTP did for documents, SIP (Session Initiation
   Protocol) will do for communications.'

  "'The best network is a stupid network.' That is, the
   best network provides nothing but connection. The
   services are provided by applications running on the
   network. (David and I wrote about this at The Paradox of
   the Best Network. All content came from David.) 'Each of
   us in 2-3 years can have the bandwidth of a telephone
   company for a few thousand bucks. But the telephone
   companies believe in scarcity and are forcing it on us.'

  "The End-to-End principle, which is the same as The
   Stupid Network, says that you should keep the network
   simple because that preserves your options for
   innovating on its edges. Phone companies like to add
   value to [the middle of] their networks, for competitive
   reasons, which makes their networks smart. That's fine
   for telephone calls, but the Internet is not
   specifically for phone calls or for anything else.

  "There are, he notes, important political implications
   and obstacles. But he's out of time.  Smart presentation
   on the virtues of stupid networks. But, then, I'm
   partial to David . . ."

Doc Searls [] wrote:

  "David wrote a famous (or infamous, depending on your
   point of view) 1997 paper titled 'The Rise of the Stupid
   Network.'  He was at AT&T at the time, and the paper so
   insulted his employer that he left shortly thereafter
   and immediately made a career of pointing out--often to
   great effect--how stupid great networks need to be.

  "'Why Stupid is Still Smart' was the title of his
   Supernova talk, and 'Distance is dead' was his opening
   point. He went on to explain the need to keep making the
   End-to-End Argument first made by David Reed and others
   in the landmark 1982 paper by the same name
   [].  This argument was so
   persuasive that it served as the conceptual blueprint
   for the Net. Yet in spite of its success, the same
   argument remains opaque to vast populations who aren't
   hip to the Net's profoundly decentralized nature. This
   list includes Congress, Hollywood and Microsoft."

Mitch Ratcliffe wrote:

  "The really important idea that David talks about, after
   the notion of a dumb network that can be the foundation
   of any IP-based networked application, is the Session
   Initiation Protocol.  It will allow any device to find
   another device and begin to communicate.

  "The end-to-end principle: If you can do something at the
   ends of the network or in the middle, do it at the ends
   to preserve your options, because we don't know what the
   network will be used for later. Thus, internetworking
   shifts control from network owner to end-user of the

QUOTE OF NOTE: Mark Crispin Miller

  "[U.S. President George W. Bush] has no trouble speaking
   off the cuff when he's speaking punitively, when he's
   talking about violence, when he's talking about revenge.
   When he struts and thumps his chest, his syntax and
   grammar are fine.  It's only when he leaps into the wild
   blue yonder of compassion, or idealism, or altruism,
   that he makes these hilarious mistakes."

Mark Crispin Miller author of _The Bush Dyslexicon:
Observations on a National Disorder_, quoted in "Bush
Anything But Moronic," by Murray Whyte, Toronto Star,
November 28, 2002.


Ken Katashiba [] writes:

  "I disagree your comment that Japanese kids don't have
   private rooms. I believe most of them have their private
   room, perhaps, not as big as the one US kids would have.
   I agree about the degree of privacy they have at home as
   much as U.S. but there are just more fun being outsides
   their homes since homes are not located close to
   downtown and only way they can be in downtown is on
   their way back home from school."

Daniel J. Isenberg [] writes:

  "Triangle Technologies
   has been predicting the broadband boom in Japan for
   18 months. By the way, you missed the fact that there
   are around 1.9 million cable modems in Japan, with an
   annual growth of about 50% compared with 2001.  (Note
   that CATV penetration is over 20% in Japan.)  Here's an
   English-friendly site with the latest numbers:"

[Dan I is my brother and the CEO of Triangle Technologies.
According to Dan's source above, in Japan in November 2002
there are 5.1 million DSL customers, 1.9 million cable
modem customers and 0.17 million fiber-to-the-home
customers for a total of 7.2 million.]


The world's baddest actors in the world's worst movie:  Don't worry about a sequel.
Gotta go,


February 4, 2003, Santa Barbara CA.  Center for
Entrepreneurship and Engineering Management (CEEM) at UC
Santa Barbara.

March 31 through April 3, 2003, San Jose CA.  VON.  I have
a general session TBD on April 1 that I promise will be
interesting.  April 1 is one of my favorite holidays.  You
will believe EVERYTHING my panel presents.

April 22-25, 2003, Santa Clara CA.  O'Reilly Emerging
Technology Conference.  Undefined, but it'll be something
about why do The Stupid Network at all if you can't make
money from it.

COPYRIGHT NOTICE: Redistribution of this document, or any
part of it, is permitted for non-commercial purposes,
provided that the two lines below are reproduced with it:
Copyright 2002 by David S. Isenberg -- -- 1-888-isen-com

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David S. Isenberg            , inc.                         888-isen-com                       203-661-4798
     -- The brains behind the Stupid Network --