Thank you Neil.
It’s an honor to return to the UCSD campus this week as Regents’ Lecturer. And I appreciate all of you coming out so early this morning.
Considering the distinguished panel you have before you, as well as the assembled wisdom in this audience, I expect our exchange is going to be the most interesting part of the morning. That being the case, I’ll try to keep my own opening comments short.
Although Neil mentioned my time as FCC Commissioner, my first presidential appointment was as U.S. Maritime Administrator. I was 29 years old at the time and had not a clue what a presidential appointee was supposed to do. There was no training program. No manual.
The Maritime Administration was a part of the Department of Commerce. Former Governor Luther Hodges was Secretary. So I took him aside one day and asked him what I needed to know. “Only one thing,” he told me. “Just remember to visit the men’s room every chance you get.”
Not only do you get no training you don’t even get a job description. You have to write your own.
So by the time I got to be a FCC Commissioner I read all I could find about the role of communications in society. Not incidentally, it was a body of literature that included then, and subsequently, the insights of UCSD’s late, and very great, Herb Schiller.
It resulted in my writing a good deal myself over the next seven years, including about 400 dissenting opinions and a book in 1970 called How to Talk Back to Your Television Set. That book had a chapter entitled “Communications in the Year 2000.” It played out pretty well during the next 30 years.
I had some idea of what was coming. Both the enormous opportunities and also the potential pitfalls and challenges to our legal system and social order. I knew I was going to need help. Lots of help.
So a part of the job description I wrote for myself was to be the ambassador from the FCC to those who could do something about the future of communications in America. That included the business community, Congress, and journalists, of course. But along with the major foundations and think tanks were the communications departments in leading universities around the United States and other countries.
It paid dividends, as more and more of our best minds began to focus on the public policy problems, and the business opportunities, that lay ahead in what would be called the Information Age.
We’ve come a long way since the 1960s and ‘70s. The only thing that hasn’t changed is the fact of change. But the basic formula remains the same, in my view. In an age when all the variables are up for grabs, the business and academic communities simply have to continue to work together.
If what we in the academic community do is going to have any relevance at all to those who are paying for these educational institutions, we simply must have some notion of what business is doing in today’s Wild West – what we have come to call “The Internet.”
Willie Loman in Death of a Salesman enumerated the two primary assets of his business success as “a shoeshine and a smile.” They didn’t cut it in his day, and they damn sure won’t cut it today.
Anybody in business who thinks they can make it on hunch, golf scores and good looks, who thinks they can do it without academic research and analysis, is as delusional as the ivory tower academic who hasn’t a clue what’s going on in the real world.
This is an age in which the successful businessperson is trying to hire that kid she made fun of in high school.
We need each other. And not just the business and academic communities. We need to be talking to the so-called public interest advocates, the city planners and regulators, the K-12 educators.
San Diego’s future, America’s future, depends as never before on our understanding each other and our working together.
This breakfast meeting – which I hope will be but the first of many more such opportunities to share insights – is one example of that collaboration.
Bringing business leaders and academics together is not easy. We come from different cultures, with different experiences, different attitudes about social criticism, different long-term agendas, short-term goals, and reward systems. But with sufficient efforts at understanding and good will it can pay enormous dividends for all of us. It is the ultimate win-win undertaking.
Hundreds of millions of dollars have been lost by business trying to market services, or hardware, that were doomed to failure. The engineers and MBAs were involved in the company’s product development. But there were no anthropologists, communications professors, or sociologists, who could have pointed out why it would never work.
As I explained to one of the companies that thought “interactive TV” was on their road to riches, “You need to understand, the TV audience doesn’t want interactive TV. They don’t even want active TV. They want passive TV. That’s the whole point of TV.”
It saved them a lot of money.
That anecdote is not unrelated to why I think both free speech and profitable speech have a future together on the Internet.
Once the Internet received its honorable discharge from the Defense Department it was immediately seen by university professors and 14-year-old hackers alike as a fascinating sandbox. A great place to work and to play.
On the one hand, few users had either understanding or respect for the copyright laws. And many thought the ultimate video game was figuring out how to break into others' computer systems.
But there was a positive side as well. A great culture of sharing, creating useful software programs and giving them away as freeware or shareware, answering e-mail from strangers, taking time to help others. We were all exploring together what free speech on the Internet could mean.
Quite frankly, as much admiration as I have for America’s marketing genius, I suspect that we would have been years behind where we are today if the Internet had begun as the closed, profit-making venture of a single company. In my view, it was precisely because it was open and free, the largest nobody-in-charge innovation in the history of our species, that it also quickly became the fastest growing.
It is reassuring to see, in this context, the levels of agreement that exist today among the Wild West cyber-anarchists, public interest advocates, government regulators and the business community.
I think we need to bring it back.
Business wants to farm the Internet. To turn it to something economically productive. To make a profit. Watch the stock price go up. That requires a few fences to keep the cattle in and the wild animals out.
Cowboys don’t like fences.
But it turns out that it’s no easier to farm this Wild West than it is to grow corn in western Nebraska.
The Internet has turned into the ultimate example of the old line, “We lose money on every sale but we make it up on the volume.”
Those promoting their e-commerce Web sites last December were spending far more on TV advertising than they ever expected to make in sales. During the Superbowl game last Sunday [January 30, 2000] 30-second spots were going for $2 million. One dot-com startup, with $3 million in venture capital, spent two-thirds of its entire net worth on one of those spots.
It turns out the greatest profits to be made from the Internet are in sitting back and watching the stock price go up – or down. Sometimes enormous profits.
In the early days the so-called information utilities, like CompuServe and Prodigy, thought the answer was to amass a chunk of the world’s knowledge, own it, and sell access to it by the hour, or month.
Then along came the Internet and its World Wide Web. It offered those subscribers access to orders of magnitude more information – for free – than any company could gather, control and sell on its own. Internet service providers sprang up in thousands of towns across the country.
The big boys had to either adapt or go out of business. They adapted. They added Internet access to their service.
Given the stock market’s fascination with all of this, one of those companies, without all that much by way of profits, found itself with sufficient stock value to go out and buy one of the world’s largest global, multi-media conglomerates. So now we have AOL owning Time-Warner.
But a funny thing happened on the way to that merger. A number of companies decided to test the idea that they could make more money by providing Internet access for free than by charging for it. How is AOL supposed to respond to that competitive innovation?
Of course, the word “free” in this context takes on a new meaning as well. It’s free in the old sense that no cash, check or credit card transaction is involved.
But the Internet has come up with a new monetary system – and it’s not the once-predicted exchange of dollar bills for Bill’s dollars.
The new coin of this realm is your privacy. That’s right.
Dialpad-dot-com says, “Tell me enough about you and I’ll let you use my facilities to make long distance phone calls for free.”
Excite-dot-com says, “You give me some information about yourself and let me track all your movements and preferences on the Web. In exchange, I’ll give you a list of thousands of local phone numbers around the U.S., and a password, that will let you use your laptop to get access to the Internet for free.”
It turns out that enough of us think this a fair exchange that until excite-dot-com adds some more lines the only time I can get access from San Diego is at 2:30 in the morning. Dialpad-dot-com is equally overloaded.
Meanwhile, they’re putting together databases to make any advertiser drool. Talk about free speech becoming profitable speech!
Of course, the privacy concerns coming out of Internet architecture are serious and troublesome. Industry self-regulation, such as with TRUSTe, and similar agreements, helps. Whether it will be enough remains to be seen.
My primary concern is that our commitment to Internet freedom does not result in our permitting commerce to choke off the lifeblood of the Internet. To kill the goose that laid the golden egg. Or perhaps, in this land where the Taj Mahal of university libraries bears the name of Dr. Seuss, we should use the analogy of the Lorax.
We must come together to be ever vigilant and fight for the end that consumer choice and Internet access remain a reality, not just some lawyer’s or lobbyist’s legal theory.
A lot of rhetoric has been passed off regarding consumer choice, diversity of outlets, and how that eliminates any concern about monopolies, mergers, barriers to entry and the need for regulation.
Take cable television, for example. For many subscribers it is the only feasible way to view TV. They can’t put up an antenna, or get poor quality off-the-air signals if they do. Their apartment faces the wrong direction to use a satellite dish, or there are covenants that forbid the installation. There are no wireless distribution systems in their community. And the cable company is a monopoly.
We let the holding company that owns the cable company provide its own programming over that cable. We let it exclude the programming of its competitors. We let it censor any commercial messages it doesn’t like. We permit it to limit the number of available channels, notwithstanding program suppliers’ demand for more.
As if that’s not bad enough, we then have to listen to cable apologists justify this with a straight face on the theory that there is customer choice.
The Internet may or may not end up being the wired road to riches that today’s investors seem to think it will be. That remains to be seen.
But if a few are ever going to find it a source of profitable speech, the business and academic communities are going to have to continue to work together to insure that it remains a forum for free speech for the rest of us as well.