6% of U.S. Land Mass is Where Most of the People Are

One oft-ignored facet of communication network economics is that the business model is helped when population density is high, and generally suffers when population density is low. Also, it is far easier to build a whole new network in a small area, compared to a continental land mass. 

About six percent of the U.S. land mass is “developed” and relatively highly populated. About 94 percent is unsettled or lightly populated, including mountains, rangeland, cropland and forests. 

source: USDA

Pastures are located largely east of the hundredth meridian. 

source: USDA

Croplands, at least at the moment, stretch a bit further west. 

source: USDA

Rangelands mostly are found in the West.

source: USDA

But even the higher-population areas east of the Mississippi River contain huge tracts of forest land. 

source: USDA

All those facts have implications for networks. Most of the population or potential users can be covered by a smaller amount of network infrastructure, at first. But network coverage is another matter, as 94 percent of the land surface is lightly populated, consisting of forests, mountains or range land. 

In just about any instance, in any market, though, 80 percent of the revenue might be generated by 20 percent of the accounts, locations or use cases. Ericsson studies show that just 30 percent of cell sites support 75 percent of all traffic on the network. 

So it should come as no surprise that the cost of rural infrastructure can be an order of magnitude higher than for denser urban infrastructure.

Does "Free Speech" Right Belong to the Speaker or the Public?

 Section 203 of the Telecommunications Act of 1996 makes clear that platforms are not responsible for the content posted by users of the platforms. That quite arguably has allowed platforms to build on third party expression without fear of legal action. If a user of a platform engages in “unprotected speech,” such as defamation, obscenity or speech in pursuit of a crime, the platform is not considered legally liable. 

On the other hand, potential users are not protected from decisions made by platform owners not to publish user content, either, and section 203 prevents legal action by users who feel aggrieved by the content moderation practices, whatever they happen to be. The issue in that case is a breach of acceptable community standards, platforms have argued. Others say it is censorship, a violation of free speech norms, and possibly rights. 

It’s a huge minefield, to be sure, but the protection of political free speech has--since the advent of electronic media--had to answer the question of “whose rights are protected?” In some ways it is a zero-sum game: every winner has to be compensated by a loser.

If it is the “speaker” who has the right, the “listener, viewer or reader” (the public at large) does not have the protected right. If it is the “listener, viewer or reader” (the public) who has the right, it is the speaker whose rights are circumscribed. 

The argument might be that if and when social media sites threaten the use of the medium for political speech, courts might approve of content-neutral regulations intended to solve those problems.”

As always, the issue also includes “what is political speech?” In the modern era, that is understood more broadly than it once was. The Supreme Court has extended the First Amendment’s protections to individual and collective speech “in pursuit of a wide variety of political, social, economic, educational, religious, and cultural ends.

There also are some narrow areas where First Amendment protections have been held not to hold. Obscenity, defamation, fraud, incitement, fighting words, true threats, child pornography and speech integral to criminal content are not protected. The problem is that people of good will can disagree about when those conditions exist. 

Courts also have upheld  “time, place and manner” restrictions that are content-neutral limitations imposed by the government on expressive activity. 

Such restrictions come in many forms, such as imposing limits on the noise level of speech, capping the number of protesters who may occupy a given forum, barring early-morning or late-evening demonstrations, and restricting the size or placement of signs on government property.

There are at least three possible frameworks for analyzing governmental restrictions on social media sites’ ability to moderate user content. First, social media sites could be treated as state actors who are themselves bound to follow the First Amendment when they regulate protected speech https://fas.org/sgp/crs/misc/R45650.pdf. 

If social media sites were treated as state actors under the First Amendment, then the Constitution itself would constrain their conduct, even in the absence of specific legislative action. In this framework, the public essentially has the protected right. 

The second possible framework would view social media sites as analogous to special industries like common carriers or broadcast media. Likewise, in this framework the public has the protected right. 

Past applications of political content fairness have sometimes been shaped by the concept of preserving freedom “for the listener or viewer,” even when shaping or restricting the freedom of the speaker. 

That has been most clear, in the United States, in television or radio  broadcasting, based on the idea that private firms are using public resources. The same idea was extended to cable TV operators, who use public rights of way. 

On the other hand, social media sites could be considered to function as do news editors. In that case, the publisher has the protected right. 

If social media sites were considered to be equivalent to newspaper editors when they make decisions about whether and how to present users’ content, then those editorial decisions would receive the broadest protections under the First Amendment. 

As a practical matter, speakers also can exercise prudence, manners, judgment or courtesy in their political speech. Speakers have the right to be rude, wrong, loud or boorish, but might choose not to do so. We call that civility. 

Does Facebook Shift on Regulation Also Lead to Change of Free Speech Rights?

For those of you not communications “regulatory geeks,” this headline from Facebook might not seem especially unusual: “Four Ideas to Regulate the Internet,” published under Mark Zuckerberg’s name. 

“I believe we need a more active role for governments and regulators,” Zuckerberg says. “By updating the rules for the internet, we can preserve what’s best about it--the freedom for people to express themselves and for entrepreneurs to build new things--while also protecting society from broader harms.”

For some of us who need to understand the role of regulation in shaping any industry’s profit potential, this position  is important.

For others who watch the development of U.S. regulatory models related to “freedom of speech,” it is perhaps shocking. We can debate the role of content platforms in shaping news and content with enormous political implications. But almost nobody would argue with the notion that Facebook, Google, Twitter and others now have more power or influence than traditional media.

And while most might agree that government censorship is not a good thing, platforms are private firms not traditionally covered by the First Amendment. Yet some might argue the danger of free speech suppression is not a political danger primarily or exclusively from “the federal government” but also “from the platforms.”

It is complicated, to be sure. Democracy is a means, not an end. Tyrannical behavior can be freely exercised by citizens using democratic means. Companies and mobs can restrict freedom of speech just as much as the federal government. 

Still, there is an important possible new shift here. Facebook has the right of free speech, “as a speaker.” But Zuckerberg also now says it is willing to live with regulations of various sorts that somewhat extend the right of free speech to “listeners, viewers and readers.”

Those two ways of looking at “who” has the right of free speech has changed over the centuries. Originally, the right was held only by speakers. In the era of electronic communications, a different attribution has happened.

The “right” was deemed to be possessed by “listeners or viewers.” That is the logic behind “equal time rules” for political speech on TV or radio broadcasts, for example. Over the last couple of decades, such rules have been peeled away, returning to the original sense of rights belonging to speakers.

What Facebook now proposes, at least in principle, is that some amount of rights now shift back to protecting the political speech rights of listeners, viewers and readers. 

It is possibly the sign of an important key philosophical shift. Almost all arguments about “fairness” for political speech on platforms are based on the idea that it is the audience which must be protected, not the platform as “speaker.”

It is possible we could see the beginnings of a long-term shift back to the concept that it is the listener, viewer or reader whose political rights are to be protected, a notion that arose only with the advent of electronic content. 

First, let us be clear, the U.S. constitution bars censorship or fettering of clearly political speech by the federal government. 

What has never been clear is whether regulation can be, or ought to be, applied to private actors in the economy, especially giant platform companies in the content business. In the past, that has been reason enough for the federal government to impose some restrictions on private actor content freedom.

In the past, the justification has been “use of public spectrum.” Something like that was applied to cable TV companies, which were held to have public interest obligations because they used public rights of way.

Irrespective of the logic and soundness of such reasoning, the matter of ”who has the free speech right” was changed. 

“Lawmakers often tell me we have too much power over speech, and frankly I agree,” says Zuckerberg. Right now the issues are privacy, harmful content, election integrity and data portability. Those are, some might argue, relatively peripheral to the matter of protecting free political speech. 

The biggest potential shift, though, is the longer term balancing of the rights of speakers and audiences. In principle, the First Amendment to the U.S. constitution protects citizens from suppression of free speech only by the government. 

When TV and radio broadcasting and cable TV developed, some amount of shift occurred. The rights were partially seen as being held by viewers and listeners. With the advent of huge and dominant content platforms, that might expand to include readers. 

Such changes take time, but have happened before. And that is why Facebook’s position matters. Perhaps it is the first of many changes that could affect and change platform roles in protecting free speech. 

Virtually all moves in the direction of platform regulation would be based on the rights of audiences, not speakers. It has happened before. And it always is quite tricky.

Advanced Technology Takes Longer Than You Think to Become Mainstream

Advanced technology often does not get adopted as rapidly as the hype would have you believe. In fact, most useful advanced technologies tend not to go mainstream until adoption reaches about 10 percent. That is where the inflection point tends to occur. That essentially represents adoption by innovators and early adopters. 

source: LikeFolio

One often sees charts that suggest popular and important technology innovations are adopted quite quickly. That is almost always an exaggeration. The issue is where to start the clock running: at the point of invention or at the point of commercial introduction? Starting from invention, adoption takes quite some time to reach 10 percent adoption, even if it later seems as though it happened faster. 

source: Researchgate

Consider mobile phone use. On a global basis, it took more than 20 years for usage to reach close to 10 percent of people. 

source: Quora

That is worth keeping in mind when thinking about, or trying to predict, advanced technology adoption. It usually takes longer than one believes for any important and useful innovation to reach 10-percent adoption. 

source: MIT Technology Review

That is why some might argue 5G will hit an inflection point when about 10 percent of customers in any market have adopted it.

U.S. Business Advanced Technology Adoption Still Very Low

No matter how sexy industry observers might find advanced information technology to be, most businesses, and most business managers and owners, rarely report, at least at the moment, actually using advanced technologies, with the exception of personnel at very-large firms, a study sponsored by the U.S. Census Bureau finds. 

“We find that adoption of advanced technologies is relatively low and skewed, with heavy concentration among older and larger firms,” the study finds.

At least one reason for muted current adoption seems to be that applying advanced technology requires significant investments in other technologies and the ability to change business processes to take advantage of those technologies. “

We also find that technology adoption displays features of a hierarchical pattern, with stages of technology adoption of increased sophistication that appear to build on one another,” study authors say. In other words, most advanced technology is not “rip and replace.” To take advantage of new technologies, lots of other things must also change. 

In fact, the percentage of firm respondents--from a sample of about 850,000 firms--suggests adoption of most advanced technologies, ranging from touchscreens to machine learning; voice recognition to machine vision; natural language processing to automated vehicles, is quite low, mostly in the low single digits. 

source: U.S. Census Bureau, Wired

Maybe Covid-19 Will Wind up Changing Very Little

It seems to be conventional wisdom that the Covid-19 pandemic “changes everything.” Consider other recent major disruptions, ranging from the internet bubble and crash of 2001 of the global Great Recession of 2008. The SARS epidemic, for example, crashed tourism in several Asian countries in 2003. Before the end of the year, tourism levels were back to pre-epidemic levels. 

source: Deloitte

Likewise, consumer spending in several Asian countries fell during the SARS epidemic of 2003, but again recovered to pre-epidemic levels quickly. The point is that disruptive events have proven not to change behavior all that much, once the issue has passed. 

source: Deloitte

The point is that people, businesses and industries have shown high ability to bounce back from severe disruptions, and perhaps much more quickly than you might expect.

Frictionless Business is Partly about Productivity

Business friction is anything that prevents a potential customer from buying your product or service. In a broad sense, friction applies to every part of a business: strategy, product development, technology, distribution channels, marketing, customer service, governance, human resources, capital resources, information technology, customer segmentation and supply chains. 

The immediate thought is that frictionless business involves only “efficiency,” with the least resource input for any given level of output. Frictionless business actually also applies to “effectiveness,” the ability of a business or organization to achieve results that matter. 

According to the U.S. Bureau of Labor Statistics, for example, the productivity (efficiency) of industries including fixed networks, computers and peripherals, communications equipment, semiconductors and non-farm businesses actually saw increased friction (lower productivity) between 2000 and 2017, compared to the 1997 to 2000 period.

source: U.S. Bureau of Labor Statistics

Only the mobile service provider business saw higher productivity over the same time frames. Keep in mind that “productivity” is a combination of output and input--goods and services volume produced compared to the hours required to create those products--along with end user demand. 

Friction can result from any combination of changes in either supply or demand. In the case of fixed network services, much of the fall in productivity comes from reduced demand for the products, and hence lower sales volumes. Even as inputs have been trimmed over time, the lower capital investment or operating costs have not fallen equally fast. 

There is a greater amount of stranded assets, for example, as the percentage of homes or businesses buying legacy services drops. That means the overhead cost of the network has to be borne by fewer paying customers. 

Adoption (percentage of potential customers who actually do buy) also matters. These days, “everybody” uses a mobile service. Less than half of households buy even a single fixed network service from any supplier. 

Frictionless business is the sum total of all actions any business can take to overcome friction, creating and keeping customers, increasing the volume of products sold to those customers with acceptable profit margins, maintaining or increasing market share with superior return on investment. 

Frictionless business reduces every barrier to business success, allowing firms to operate more effectively--doing the right things--as well as efficiently, with minimal waste and maximum productivity. 

Companies that operate with less friction are able to achieve superior results with less resource intensity. To the extent that cloud computing represents a more effective way to deliver internet-based apps and services, as well as providing cost savings and flexibility, it represents a move in the direction of frictionless business. 

To the extent that hyperscale and other data centers are required to support cloud-based apps, and to the extent that cloud apps represent higher value for customers and users, higher revenues and profits for suppliers, featuring new products available at lower costs and with different business models, data centers represent a move in the direction of frictionless business. 

source: Wall Street Journal, Synergy Research

Friction matters for employees and workers as much as it does for companies. One sometimes hears it said that income inequality or wealth inequality is the result of “greedy” people. But worker compensation is directly related to productivity, itself an indicator of friction.

Where friction is least, compensation is highest; where friction is greatest, compensation arguably is lowest. In food services and accommodation, for example, compensation change is directly--one for one--related to changes in productivity. Mining has negative productivity. In the short run, compensation outstrips gains in produced goods. 

Information technology nearly always has the highest improvements in productivity, with comparably lower changes in compensation. That is partly because production is “asset light.” Digital goods are easy to create and reproduce, compared to physical goods. 

Higher usage (demand) is not related in a linear way to the costs of producing the next incremental units. 

source: Bureau of Labor Statistics