The WSJ requires that you pay them to access their articles online. For the most part that makes them irrelevant in the blogosphere. However, occaisonally a copy lands in your lap anyway.

In today's WSJ George Gilder Blames the Telecom Act of 1996 for all of the present economic problems in the US. He claims that because of the unbundling regulations, RBOCS have no profit motive to deploy advanced services. As a result, they've stopped investing, which has led to a 95% drop in the Market Capitalization of the Telecom Equipment industry, and various effects reverberating through the economy. Gilder even goes as far as to blame offshoring on this.

I don't buy it. I think his argument is over the top. In 1992 I needed more bandwidth, and my friends needed more bandwidth. I would spend all night downloading files off of BBSes. And the RBOC would show up at the PSC and argue that nobody wants ISDN. There is no market for all this digital stuff, blah, blah, blah... The telecom act of 1996 is what forced the RBOC to make ATM circuits available to my DSL provider so that my apartment can be connected to the internet. And I don't need more bandwidth. If my computer was downloading movies all night I'd be demanding better services. But its not and I'm not, and this has nothing to do with the RBOCs.

The telecom equipment market has slowed because the infrastructure was built out ahead of demand. Building more infrastructure isn't going to fix the problem. Korea has more broadband penetration because their urban social structure finds more use for it (in particular, online gaming). If we think we need more bandwidth we need to prove it with applications first. And we can't, and the reason is the content industry. The people who produce things like movies aren't shuffling them down the pipe because they are afraid, and not because there isn't a market. Of course, this isn't going to start with universal studios. Where are the independents? Why can't I download the latest Sundance winner? There ought to be a lot of pent up demand for that as good documentaries can be very hard to find IRL. Same thing for cult films. But, of course, even if this stuff was available its unlikely that it would be sufficiently cheaper then just flat out buying a DVD that it would be an attractive alternative to netflix.

So thats where we sit. I don't think the rbocs are gunning to setup fiber in my loop. I'm just not stressing the DSL that I have. People looking to generate business in the telecom industry should be focued on applications, and not policy. This isn't a constant. I've been significantly on the other side of this debate in the past. This is a reality of the present. In the future things will be different. Nortel and Lucent ought to invest in things that people use the internet for, like consumer VOIP. They ought to be working on generating the demand that will ultimately resucitate their core businesses.