Entropy Economics

See our RealClearMarkets commentary contrasting mounting Washington liabilities versus America’s key strategic assets. We also outline a new Internet paradigm for cloud-based video and software streaming that will create new digital content models, boost Web traffic, and require an ever more broadband Internet.

the graphics chip revolution will have a deep impact on the network. High-definition video requires big bandwidth, and real-time applications tolerate very little delay. UC-San Diego estimates that 55% of total American information consumption, or 1,991 exabytes per year, is (brace yourself) video games. If just 10% of these games moved online, they would generate twice the worldwide Internet traffic of 2008. Video is not always the most important content on the Web, but it defines the architecture and capacity of (and often pays for) the networks, data centers, and software that make all the Web’s wonders possible.

Read the whole article »

Later this week the FCC will accept the first round of comments in its “Open Internet” rule making, commonly known as Net Neutrality. Never mind that the Internet is already open and it was never strictly neutral. Openness and neutrality are two appealing buzzwords that serve as the basis for potentially far reaching new regulation of our most dynamic economic and cultural sector — the Internet.

I’ll comment on Net Neutrality from several angles over the coming days. But a terrific essay by Berkeley’s Jaron Lanier impelled me to begin by summarizing some of the big meta-arguments that have been swirling the last few years and which now broadly define the opposing sides in the Net Neutrality debate. See the first in a new series of posts on Internet innovation and possible Net Neutrality regulations »

In Monday’s Wall Street Journal, I address the once-again raging topic of “net neutrality” regulation of the Web. On September 21, new FCC chair Julius Genachowski proposed more formal neutrality regulations. Then on September 25, AT&T accused Google of violating the very neutrality rules the search company has sought for others. The gist of the complaint was that the new Google Voice service does not connect all phone calls the way other phone companies are required to do. Not an earthshaking matter in itself, but a good example of the perils of neutrality regulation. Continue reading this entry »