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Network neutrality came from the telephone business.  With electronic phone switching (analog, not digital) it was possible to give phone company customers who were willing to pay more priority access to trunk lines, avoiding the dreaded “all circuits are busy, please try your call again later.” Alas, some folks almost never got a circuit, so the FCC put a halt to that practice by mandating what it called “network neutrality” – first-come, first-served access to the voice network. When the commercial Internet came along, network neutrality was extended to digital data services, lately over the objection of telcos and big ISPs like Comcast, and the FCC is now about to expand those rules a bit more, which was in this week’s news. But to give network neutrality the proper context, we really should go back to that original analog voice example, because there are more details there worth telling.

Network neutrality in the voice era took from the telephone companies the opportunity to sell priority access to trunk lines, but it didn’t remove the need for big businesses to have such priority access. So AT&T invented a leased-line business where companies could buy whole circuits that operated 24/7 and were guaranteed access to the long distance network. By being a separate product with a separate tariff and sold in a completely different way, this leased line business, which had long been used by broadcasters but was now expanded to other business customers, was WAY bigger in revenue for AT&T (more than 10X) than simple priority access ever would have been, which is why AT&T suddenly stopped complaining.  Network neutrality made more money for the old AT&T than had it not existed. People forget that part.

Now Obama’s FCC is trying to fulfill what I’m sure was a campaign promise and codify network neutrality so future more conservative Administrations will have a harder time messing with it.  Republican interests, fulfilling promises of their own, are opposing the expansion of network neutrality saying it is an imposition of government on a free market that works just fine, thanks.  Oh, except for Wall Street, and the insurance companies, and the banks, and maybe six homeowners on your street and about four million others, but otherwise the free market is perfect.

Internet network neutrality became an issue because ISPs were found to be undermining it, blocking ports and packets and using other traffic shaping techniques not just to help certain kinds of traffic like VoIP, but specifically to hurt other kinds of traffic like Bit Torrent.

What’s the beef here, really? Are we running out of bandwidth?  Remember the FCC came about to administer public airwaves, which very much are limited, but wired networks aren’t, at least not in the same sense.

Cable systems these days often run their TV service at break-even and make nearly all of their profit on Internet, voice service, and video-on-demand. I know cable bills are always rising, but so too are the payments from cable systems to cable channels, which is why cable networks are booming and broadcast networks are wilting, because that cash flow to content creators doesn’t exist (in fact it is reversed) in the commercial broadcast model.

Cable Internet and phone services, in contrast, have no content cost. They leverage the existing cable infrastructure investment, and have as their main expense Internet backbone bandwidth that has been going down in price by 50 percent per year for more than a decade with no end in sight.

Right now the typical cable operator uses one analog channel (6 MHz – usually channel 80) for Internet service. That’s ONE PERCENT of the total bandwidth on an analog cable network.  Give up a shopping channel and Internet bandwidth could be instantly doubled.

There is no Internet bandwidth shortage.

DOCSIS 3.0 cable modem technology, which is rolling-out now, can bond together up to four analog channels (I can think of a few I’d gladly give up) and in turn offer up to 100 megabit-per-second Internet service.

Taking a look 5-10 years into the future makes the existence of these new network neutrality issues even less problematic.   The future of cable TV, for example lies clearly in switched digital cable service with recording capability, where the only active channels are those actually being used on a given subnet, freeing-up huge amounts of bandwidth for other uses.

Now start to think like a cable CEO circa 2019 or even 2015. You have the same short-term mentality of nearly all U.S. CEO’s, which means you care about this quarter, this fiscal year, and that date 2.5 years in the future when you’ll pull the ripcord on your golden parachute. Nothing else matters and nothing else impacts your business decisions. You suddenly realize that 90 percent of your profit is coming from 10 percent of your business – Internet and maybe voice. Nearly all the money you care about – profit – comes from providing a switched empty pipe to customers.  So what do you do? YOU SELL OR SPIN-OFF TO SHAREHOLDERS EVERYTHING EXCEPT THE EMPTY PIPE BUSINESS, THAT’S WHAT.

And the telcos will, too, because they’ll be in a similar position.

This is the inevitable future and it makes much of the current debate, well, silly.

Network operators will get out of the content business, which will be handled for the most part by Google/Hulu/whomever using shipping containers filled with servers docked at the local Network Operations Center – shipping containers for which the network (formerly cable and telco) operators will collect rent just like grocery chains now make their profit by renting out shelf space to Proctor & Gamble, not by selling things.

Where, in this new world of renting empty pipes, will the network operators come down when it comes to network neutrality? They’ll be all for it, having by then philosophically switched camps, because ONCE THEY STOP CARING WHAT BITS ARE IN THE PIPE, THAT PIPE STARTS TO MAKE MORE PROFIT.

So we’re getting all worked-up over something that is structurally destined to become a non-issue in the near future. Having said that, I remain a supporter of network neutrality simply because it’s the way I prefer my Internet to run.

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This week the U.S. Federal Communications Commission (FCC) releases its proposed new rules for Internet Service Provider (ISP) network neutrality.  I have written many times about Network Neutrality and once I have a look at the FCC proposal I am sure I’ll have comments to make here.  In general I’m in favor of rules that allow me, as a consumer, more digital freedom. It would be great to run Skype over my iPhone, for example, just as I can already run it over the cellular connection on my notebook. But right now I’m talking about a different kind of network neutrality, the kind I’m struggling to achieve in my own home.

I live in Charleston, South Carolina where my primary ISP is Comcast. I have a 16 megabit-per-second (mbps) business Internet service with five static IPs and an upstream speed that I think is supposed to be 2.0 mbps but actually measures around 2.5. On the Speakeasy Speed Test I have no problem clocking the full 16 mbps to Atlanta, either.  It’s not Verizon’s FIOS, it costs three times as much as FIOS, but my connection more than does the job.  Compared to some other places in the world of course my speeds are laughable.

So why is it that when I surf the net while speaking on my Voice-over-IP (VOIP) telephone, it breaks up?  It’s not like I don’t have enough bandwidth, both up and down. And the network in my house is 100 mbps wired Ethernet using Cat5 cable throughout.  Ah, but I’m using the hated Vonage telephone service you say, not Comcast’s VOIP offering.  That explains it: net neutrality violation!!!

Except it isn’t. Comcast and Vonage have been pretending to be friends for a while now. It’s all part of the “We don’t really need that old Net Neutrality” song Comcast and the other big ISPs have been singing, including the verse that says Vonage is okay by them.

Then why does my Vonage-connected fax machine not function reliably, either?

Maybe I need traffic shaping, you say. Let’s just adjust my router to give priority to those VOIP packets, as I am sure Comcast would do if I were using their service.

Except I already do traffic shaping. I run a rather robust firewall as a sort of Internet gateway that includes local DNS and Squid (proxy) service. VOIP Packets get first dibs on my cable modem and always have.

This problem has been driving me crazy for some time now, but I believe I know what’s happening and it has nothing to do with Comcast or net neutrality.

I’m pretty sure the problem is in the Vonage boxes that connect my phone and fax machine to the network, called Analog Telephony Adapters or ATAs. First, I don’t use my ATA’s as Vonage suggests. Vonage envisions a single-ATA network generally with a single PC, or at least they did when I got these puppies. They want me to plug my ATA into the cable modem and my PC into the ATA so the ATA automatically takes precedence. I can’t do that for three reasons: 1) my office is three floors above my cable modem; 2) my fax machine is not in the same room as my PC, and; 3) I’m pretty sure the Vonage Ethernet ports are limited to 10 mbps so hooking-in there would limit the bandwidth available to my PC. If I’m paying for 16 mbps, dag nabbit I want to use 16 mbps!

Given that I’m already doing traffic shaping in the router and have a huge excess of bandwidth for VOIP anyway, what’s the big deal using the ATA’s as I do, simply plugged into a 10/100 Ethernet switch? It shouldn’t matter.

Then I spoke with my friend Paul and came to a sudden realization. I’ve been messing with my Internet gateway, trying to convert it to a trio of $99 SheevaPlug computers that I’ll run as a tiny cluster just to see if I can do it. Paul said his testing showed each 1.2 GHz Sheeva was the equivalent of about a 10^th of his four-core AMD box. “But even that’s plenty to saturate an Ethernet connection,” he said.

The Sheeva installation isn’t even ready to go yet, but what came to me is that the poor Vonage ATAs just can’t keep up. I got them when I signed up for Vonage service in 2002!  Back then my computer had a single core and ran at 400 MHz. Today I have four cores and run at 3.0 GHz. While it technically isn’t supposed to work that way I’m guessing my PC is just so darned fast at grabbing and releasing bandwidth those little seven year-old Motorola ATAs from Vonage are having trouble getting a packet in edgewise. Yes, the switch should compensate for that but you know I think that switch is about seven years old, too.

That explains why VOIP clients like Skype and Gizmo that run entirely on my PC (no ATA) don’t have any problems.

Most of my hardware is replaced every three years, but these network components have been running undisturbed since they were first installed. And being digital they probably run as well as ever. They just weren’t built with the idea that one day there would be a bully in the house.

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The heyday of Artificial Intelligence (AI) was in the 1970s and 1980s.  Here was the logical evolution of office and industrial automation that would put an expert into every computer and by doing so both replace and augment employees, changing forever the world of work.  Only it turned out not to function that way because we underestimated the effort involved.  It was easy to imagine putting intelligence into a computer but very difficult to do so in practice.  There wasn’t enough processing power available for one thing, nor were there even enough experts, since it seemed to require having one on-hand to keep the machine in tune. Now IBM appears to have a plan to do it all again, though with a twist.  And this time, thanks to Moore’s Law and high costs for employee health care and pensions, it might even work.  God help us.

Today’s computers are smaller and thousands of times more powerful than the ones we worked with during the AI boom, but the problem is still one of programming — getting knowledge into the system in an efficient and usable manner.  For that matter, it is hard to envision computers other than robots performing many of these workplace functions, and robots aren’t ready. The better solution then, according to a just-published IBM patent filing (US29228426A1), might be to find a way to suck knowledge out of the experts then inject it into younger, stronger, cheaper employees, possibly even in other countries.

IBM’s proposed Platform for Capturing Knowledge describes how to use an imersive gaming environment to transfer expert knowledge held by employees “aged 50 and older” to 18-25 year-old trainees who find manuals “difficult to read and understand.”

IBM also discusses how its invention could be made available for customers’ use in return for “payment from the customer(s) under a subscription and/or fee agreement.”

What we’re talking about, then, is a possible revolution in workplace training, one where a lifetime of experience would ideally be sucked from the mind of an experienced worker to be injected into a trainee and then the older worker discarded.

There are several thoughts that came to mind as I read this patent application. Could IBM really be serious about such a plan? Then I imagined how enthusiastically the idea must have been received at IBM intergalactic HQ in Armonk.  What a great idea! Transfer knowledge from old to young, American to Argentinian, or even just hold it in machine storage for later use, disposing of the expert in the meantime.

To see it this way you have to understand one recent IBM mindset, which is that culturally IBM does not believe in job specialization.  Anyone can manage anything.  Anyone should be able to perform any job.  For a company whose motto used to be “think,” IBM is trying to reduce it to “do as instructed.”

This patent is a natural extension of that culture.  Though part of being an expert is the ability to figure out new stuff and master it.  But when you get rid of the real experts, who is going to figure out the new stuff?That doesn’t automatically fall out of this computer gaming scenario, which teaches functions and techniques, not intuition or actual experience.

Then I thought about that moment late in the tenure of IBM CEO John Opel when someone came up with the bright idea of urging companies that leased IBM mainframes to buy them, creating a huge revenue bubble that grew the company to more than 400,000 employees, setting it up for its 1990s crash.  Converting the leases was not, in itself, a bad idea. What was bad was assuming that such huge, essentially one-time, revenue would continue perpetually, which is exactly how IBM saw it.  Really.  Isn’t this the same thing, only now they are converting employees into some more disposable form? What happens when there are no more experts to convert?

IBM’s greatest threat is its ability to stifle innovation.  The way the company is off-shoring jobs and minimizing the value of its support workers demonstrates this.  The threat will be when a group of smart folks in China or India realize how things could be done better, then starts taking work away from IBM.  They will have access to an army of IBM foreign workers, too, who will bring customer contacts with them.

On the other hand, this application is also typical of an IBM patent.  There are many aspects to implementing such a training process — data gathering, information management, software, hardware, etc. — and IBM has patented every part.  So if anyone makes a something similar, IBM could sue.  If you create gaming software to teach almost anything to almost anyone, this patent may trump you.

In the end it may not matter then whether IBM runs out of experts or not.  Just so long as they don’t run out of lawyers.

I, Cringely readers from the Boston area who want to see if I reflect light in person can run that controlled experiment next Thursday, September 17th, when I speak to the Society for Information Management’s Boston Chapter.  Here’s the link. My topic is Consumerization of IT: Is Corporate IT about to Lose Control Again? The answer of course is “yes,” but the devil is in the details. Please attend if you can.

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I was hanging the other day with some ex-Google folks.  There are more and more of these as the search company matures and the fact that I’m running across a few is, in itself, meaningless.  But without giving away any trade secrets (which the ex-Googlers absolutely refused to do) these chance encounters have opened my eyes a bit to how things actually function inside the Googleplex.  It’s different, really different.

Google isn’t organized like any tech company I’ve ever worked in, that’s for sure.  Peer review seems to be at the heart of nearly everything.  Yes, there are executives doing whatever it is that executives do up in the Eric/Larry/Sergeysphere, but down where the bits meet the bus most decisions seem to be reached through a combination of peer review-driven concensus and literal popularity polls.

The heart of Google is code and all code there is peer reviewed TO DEATH.  The result is absolutely the cleanest code in the digital world, forced into that condition by what can be a torturous process of line-by-comment-by punctuation mark analysis sometimes over-driven by people who take their work WAY too seriously.  You know the type. Peer review wars have apparently been known to break out at Google, though rarely. Usually the pedants are accommodated and, in fact, they for the most part win.  The code is clean as a result, but the process is s-l-o-w, or so I’ve been told.

And the code had better be clean, because at Google developers outnumber testers by 50-to-1.

But peer review at Google goes way beyond looking at the code.  Hiring requires peer review.  Promotion requires peer review.  Presumably even firing requires peer review, though I didn’t have anyone actually tell me that.  All the technical workers at Google are involved in peer review activities a LOT of the time — up to 20 percent, in fact.

Which brings us to the vaunted 20 percent time Google engineers are supposed to get to work on anything they like.  Most of them apparently use that time for corporate housekeeping — for doing all that peer reviewing.  It makes sense: if you want to appear productive in your main job yet are still required to do all this work that would normally be handled by managers, when else can you do it but during time you don’t have to account for?

This may be part of the reason that the Google 20 percent time hasn’t spawned as many new products as I expected it would.

But wait, if all the developers are effectively making management decisions through a peer review process, what are the managers doing? They are going to meetings, I’m told.  The typical Google manager has 50-60 direct reports and has time for nothing but meeting after meeting.  In a typical nerds-versus-suits scenario, the ex-Google developers I spoke with had no idea exactly WHAT their managers actually did.

Someone at Google is buying companies, I’m sure, and those decisions have to take place at an upper management level where checks are written, even at Google. What I find really interesting is what happens after the products are acquired.  Who works on them and what features get changed or modified? That, too, is apparently up to the engineers.

At Google I am told developers bid for what they want to do with their time.  If there’s a big job to be done people commit to parts of it.  And the parts nobody commits to do?  They don’t get done.  Really.  So when we wonder exactly how a JotSpot, which I really liked, turns into a Google Sites, which I really don’t like, that morphology apparently comes from people changing what they want to change.

There is no marketing input.

Effectively, there is no marketing.

I am not making this up.

This approach isn’t without precedent.  I saw much the same thing during the early days at Apple where new products were entirely driven by engineering.  Engineers built whatever they wanted to build and it was up to the company then to sell it.  Google apparently operates in much the same fashion.

All of this helps explain the Google tendency to have almost eternal betas, because there are no marketing-driven deadlines… ever.  And why should there be? Given that most Google products aren’t intended to directly produce revenue, it may not matter.

This explains, too, how Google products — even those popular with their users — sometimes just fade away.  Nobody wants to continue to support it, so the product dies.

Google is not your father’s software company, that’s for sure.  The fact that it works so well (makes so much money) comes down to the realization I had that Google isn’t a software company at all.  It’s an advertising company.

Ah, now THAT makes sense.

I, Cringely readers from the Boston area who want to see if I reflect light in person can run that controlled experiment next Thursday, September 17th, when I speak to the Society for Information Management’s Boston Chapter.  Here’s the link. My topic is Consumerization of IT: Is Corporate IT about to Lose Control Again? The answer of course is “yes,” but the devil is in the details. Please attend if you can.

Today is the Labor Day holiday in the USA, so to honor the more vulnerable parts of our society and economy I’m engaging in this fantasy rethinking of our current economic crisis.  If only……

When the “unsinkable” ship Titanic hit an iceberg and sank on its maiden voyage in 1911, as any teenage girl will tell you, the rich people got nearly all the lifeboats (except for John Jacob Astor IV who ordered another drink, giving up his seat), dooming the lower-class passengers including, of course, poor Leonardo DiCaprio. Much the same thing seems to be happening in the case of the current economic crisis, where the people who are hurting the most seem to be getting the least.  I’m beginning to believe the crisis could have been fixed quicker and cheaper simply by helping the women and children instead of the bankers.

This began as a mortgage crisis.  Lenders dropped their standards on loans, giving them to people who shouldn’t have qualified (yes, they applied for those loans so are also culpable), driving housing prices up in a bubble that eventually popped and here we are with eight percent of all mortgaged houses in foreclosure and home prices down 30-40 percent from two years ago.  The technique our government used to deal with this was to prop-up the bankers, not the borrowers.

Why?

That’s a question I have been asking all over and the smart money answer generally comes down to: 1) that’s the way the system is set-up; 2) that’s the way we’ve always done it, and; 3) it would be too complex to deal with individuals — better to deal, instead, with a few dozen banks.

Why?

The system was widely perverted to deal with the current crisis; it wasn’t “business as usual” at all.  Companies that weren’t (and still aren’t) bank holding companies were declared to be so and got money from the Fed and Treasury as a result.  Same for insurance companies and brokerage firms and car companies that remained as they were but got money still from the Congress or through sleight-of-hand by Fed chairman Bernanke.

Doing things “the way we’ve always done it” is what got us into this mess.

And the miracle of information technology makes it just as easy to send money to people as it is to take it from them in the form of taxes.  Saying that a bank has to be in the middle makes no sense at all. PayPal would gladly assume that function, if it is truly needed.

I’m beginning to realize we could have taken a completely different approach to the problem and simply treated the symptom, inserting what computer jocks call a “wait state” into the mortgage system so panic could subside, rational adjustments could be made, and life could be eased back to normal.

Remember that economies are cyclical and a lot of good financial planning is simply having enough reserves to survive until things get better.  That could have been our major economic tactic in dealing with the crisis in 2008. Instead of pumping $700 billion to $1.3 trillion (nobody knows the real number) into economic stimulus and bail-outs, the U.S. government could have simply paid everyone’s mortgage — EVERYONE’S — for six months.

There are 51 million mortgages in America and the average mortgage payment in 2006 was $1686, so paying everyone’s mortgage for six months would have cost $516 billion — hundreds of billions less than the Bush/Paulson/Obama/Geithner/Bernanke plan, and quicker, too.

The money that people would otherwise have used to make their mortgage payments could have gone in part for other things, making it effectively a huge economic stimulus in its own right.  With mortgages paid in full there would have been no foreclosures OR bank failures during that six month period.  Yes, there would still have been problems with the banking system that needed  correction, but there would have been six months to do the correcting.

Lehman Brothers would still be in business, Bear Stearns, too.  Merrill Lynch would be independent. AIG would not have failed. Even Bernie Madoff would probably still be in business — at least for awhile.

So why didn’t we do it that way?  Because it would have been putting women and children first.

I need a drink.

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Note there is additional new material at the end of this column — Bob

I am old — so old that when I was a college freshman there were dormitories filled with men and others filled with women but no dormitories at all filled with both men and women, at least not where I went to school.  The women had it so bad that there was literally a time clock for signing-in and -out under the stern gaze of an old biddy tending the front desk — a desk she was determined that I, in particular, would NEVER get past.

And yet I did.

There was a public room for meeting visitors at the entrance of the women’s dorm, there was the front desk, and behind it the hated time clock with about a hundred paper cards — one for each resident — for punching in and out.  Women had to be in their dorms (I am not making this up) by 10PM, after which the front desk closed and anyone coming-in later than that presumably went straight to jail — or to Hell — it was never made clear which.

Then one night I stole all the time cards.  The biddy was gone from her post for just a moment, I vaulted the swinging gate, gathered-up all the time cards, and ran outside with my haul, which I later burned.

The cards were never replaced.

Sometimes change requires a catalyst and 39 years ago at a little college in Ohio I was that catalyst.  Social mores were changing, even in Amish country, and it was only a matter of time before these same-sex barriers would fall.  But still something has to happen to MAKE them fall.

I sense something similar coming for higher education in America, but this time it is likely to be the embrace of virtuality and what will go away could be the school, itself.

MIT has all its lectures available for viewing for free over the Internet.  Why hasn’t some entrepreneur yet leveraged this amazing act of generosity?  Some little school could outsource its entire physics department, for example, using MIT lectures and a single professor in-house.  My physics department had only 2.5 professors (the .5 was the department chair who drove a cab on the side) and we didn’t have the benefit of MIT video.

There is enough good material available for free online right now that it would be easy to create a virtual university (WikiVersity?) with the only thing missing being the granting of degrees.  It’s that whole “degree from MIT” thing that allows that school not to worry about sharing its lecture bounty, because in the education system lectures are viewed as worthless unless they lead to a degree.

Why is that?

My friend Richard Miller (he designed the Atari Jaguar video game console eons ago) is one of the smartest engineers I’ve ever met yet he doesn’t have a degree in engineering.  Apple II designer Steve Wozniak got his degree from UC Berkeley only after leaving Apple in the early 1980s.  In both cases their employers couldn’t have cared less.

What drives the education industry is producing degrees while what drives the computer industry is producing products and services.

When was the last time any employer asked to see your academic transcript?  Have they ever?

What’s missing here is the higher education equivalent of a GED.  Someone will come up with one, or they should, because all the other parts of the system are ready to go.

Cushing Academy, a tony prep school in western Massachusetts, is right now replacing its 20,000-volume library with a “learning center” containing 18 eBook readers, three giant TV screens, and a $12,000 espresso machine.  I wonder why they need a building or even a room at all; wouldn’t it be cheaper just to give each kid an eBook reader and a Starbuck’s gift card?

We’re on the cusp of a new era where the marginal cost of insight is low enough to create new kinds of virtual education institutions.  The important concept here is insight, which means more than fact, more than knowledge.  It is the link between facts and knowledge, a true act of understanding that enables thinking people to create something completely new.  Without insight you don’t know jack. But insight generally comes through personal connections — connections that to this point we’ve typically had to create campuses and pay $50,000 per year to enjoy.

That no longer makes sense.

Education, which — along with health care — seems to exist in an alternate economic universe, ought to be subject to the same economic realities as anything else.  We should have a marketplace for insight.  Take a variety of experts (both professors and lay specialists) and make them available over the Internet by video conference.  Each expert charges by the minute with those charges adjusting over time until a real market value is reached.  The whole setup would run like iTunes and sessions would be recorded for later review.

Remember, all lectures are also available online for free. What costs is the personal touch.

Say a particularly good professor wants to make $200,000 per year by working no more than 20 hours per week or about 1000 hours per year.  That gives them a billing rate of $200 per hour.

Now look back at your university career.  How much one-on-one time did you actually get with the professors who really influenced your life?  I did the calculation and came up with about two hours per week, max.  Imagine a four-year undergraduate career running 30 weeks per year — 120 total weeks of school — times two hours of insight per week for a total of 240 hours.  At $200 per hour the cost comes to $48,000 or $12,000 per year.

That’s a huge savings compared to the $200,000+ an MIT-level education would cost today (remember the MIT online degree — there is one — costs the same as if you were attending in Cambridge).  And ideally the pool of insightful experts would be far greater than any one university could ever employ.  And that’s the point of this exercise; it can’t be an emulation of a traditional university, because that would inevitably disappoint — it has to be in at least one way clearly, obviously, stupendously BETTER than what’s available now.

This could happen tomorrow, the pieces are all there ready to be put together.  Ironically it leverages one of the great red herrings of the Internet era — micropayments.  So much could happen, we’ve all said, if only we could build a micropayment system that would actually work.  Well we can, and what makes it work is that the payments at $200 per hour aren’t so micro.  But they are micro enough.

It’s time to vault the gate and burn those cards… again.

Here’s an update as of Sunday night, September 6th — Bob

A number of readers have cited a feature story from Washington Monthly about an online university they see as very similar to the one I proposed above, charging only $99 per month.  The story is here and the school in question is called Straighterline and I found something of a critique of the program here in the Chronicle of Higher Education, which may have an axe of its own to grind.

Straighterline is interesting and cost-effective, but it isn’t exactly what I proposed.  Straighterline is more like online junior college with mainly introductory courses.  this is not to say that it couldn’t become more in time and I hope it does.  But to do so the company will have to take a somewhat different approach.

Straighterline has a problem with accreditation — they can’t get it.  So they cut deals with no-name schools to effectively launder their credits, passing them on to third-party schools.  I see nothing wrong with this but in time Straighterline or schools like it will have to take a more direct approach to the problem of gaining acceptance.  The University of Phoenix did that through the simple expedient of offering real classes all over the place AND charging a lot more than $99 per month for all-you-can-learn.  Exciting as that price is, it is precisely what scares the crap out of many established colleges.

If I were running Straighterline, then, I’d get ready to file a big restraint of trade lawsuit against some big vulnerable school caught up in, say, an NCAA athletic recruiting scandal.  ”Pick your targets carefully,” Pa Cringely always said.

The other thing I would strongly recommend is that Straighterline put some big bucks into recruiting its own stellar faculty.  Spend whatever it takes to get the top people in some discipline to start.  Hire academics if you can and lay practitioners if you can’t.  Most academic contracts don’t prohibit teaching part-time elsewhere and if they do try to stop the practice, well that’s just a further example of restraint of trade.

As for the traditional schools with their red brick overhead, they remind me of a crowd I spoke to years ago in Minneapolis when I tried to explain the Internet to the people who run America’s many state lotteries.

Lotteries, it turns out, are actually run by folks who used to be at the Department of Motor Vehicles.  They have a monopoly in their states on gambling and are determined to pursue it as a form of sin tax.  The idea that I presented in 1998 that Internet gambling could eventually hurt them was laughable: didn’t those Internet folks know the lotteries had a monopoly in their states?

Yeah, right.

My recommendation was to take their games to the Internet and appeal to potential customers outside of Illinois or Iowa, maybe grab some of that easy money from Abu Dhabi.  They looked at me like I had two heads, but history has shown I was correct.

And it will be the same way with my proposed online university or with Straighterline Pro, if that ever comes to be.  Education is a talent business and anyone who can gather the best talent will offer the best service and have the greatest success.  This doesn’t mean that Stanford and MIT will die, far from it.  But it means that some lesser institutions WILL die, while hybrid operations that are entirely new and different may well thrive.

Imagine the various higher education equivalents of drivers schools for people working-off their traffic tickets (remember Comedy Traffic School?).  With a solid curriculum available online to any institution, one point of differentiation can become location (Hawaii, California, France, on ship, etc.) or ambiance (health spa, sports, luxury, religious, etc.).  The classes are identical, but where do you want to drink beer, and with whom?

Maybe this seems silly, but it is also one likely future of higher education.

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What happened to Second Life?  The 3-D virtual world from Linden Lab is still very much around but I don’t spend much time there, do you? Second Life has peaked.  And there is something to be learned from this transition.

Facebook is hot right now and Second Life is not, and some of that comes down to the difference between fantasy and reality.  Second Life is a fantasy environment  — an EverQuest without the quest — and that’s the problem.  It has the heavy processing requirements of a game without the rich textural depth of a Tolkein or even of real life.

Facebook, being tied to the real lives of the people involved in it, never runs out of anything, whether it is server power (minimal requirements there. at least in comparison to Second Life) or stuff to talk about.  Second Life is barren in comparison.  By attempting to imitate life, it pales beside the real thing.

Take dancing, for example.  In Second Life dancing performs the social function that in real life is performed by eating.  You can’t eat in Second Life, yet most of the time when people hang out together in real life eating is what they do.  So in Second Life, if they aren’t fighting or making-out, the avatars dance. But it just isn’t very satisfying.

Facebook doesn’t have a dancing/eating problem because it doesn’t purport to be anything like a 3-D virtual world — just a wacked-out representation of our individual lives for the benefit of our friends.

Another problem with Second Life is real estate.  As many companies have done, you can buy 3-D virtual social prominence, whether you deserve it or not.  What Second Life is actually selling isn’t real estate or even server capacity — what they are selling is us, or at least access to us by people who want something.  I don’t like that. Facebook is not immune to this, either, as we see in stories this week about how to buy Facebook friends. But for the most part the way to get lots of friends in Facebook is by being interesting.  Now there’s a concept.

The best purpose I’ve seen for Second Life is for showing videos to your friends.  Everyone meets at a particular spot, watches an mp4 video (thanks to the iPhone nearly every YouTube video is now available in the H.264 mp4 format), commenting back and forth like Mystery Science Theater 3000. But now DeskTube offers a very similar capability with real faces, not avatars, and in Facebook, too.

There’s less and less drawing me to Second Life, though as long as its around I’ll never leave completely.

Where else would I do my 13 hours of aerobics and 90 miles of running per week?

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Sales of video game consoles and video game software are down this year as are sales of DVDs, none of which are supposed to happen in a recession.  Hollywood thrived during the Great Depression, remember?  And now the U.S. Centers for Disease Control drops a bomb on us that the average U.S. video game player is 35 years old, overweight, and somewhat depressed.  This is news?  Apparently it is, and looking behind these numbers helps make some sense of the economic picture.

In the entertainment industry video games have provided really significant revenue for more than a decade.  If we start with the base movie business the sole revenue source used to be theatrical releases, then in the 1960s came broadcast television distribution of movies. The 1970s brought cable TV distribution and toy merchandising (action figures). The 1980s brought home video distribution through VHS tape sales and rentals, and the 1990s converted those VHS businesses to DVD. In the 2000s the incremental revenue bump was different, coming largely from a new synergy between video games, comic books, and movies augmented by an exploding international market.  Many new movies were based on video games and comic books, while many video games were based, in turn, on movies. Simultaneous global releases became the norm.

To a movie producer, then, the decision to invest an average $100 million in making and marketing a major motion picture comes down to planning for all these different lines of businesses right down to and including Happy Meal toys at McDonald’s.  With enough lines of ancillary income it didn’t matter so much if the film was a critical or even a box office success: eventually it would make a profit.

Then along came 2009.

The film box office is slightly bigger than in 2008, thanks in large part to higher ticket prices, but most of the other sources of income are lower, some of them dramatically so.  DVD sales, for example, are down by 25 percent.  Is this the effect of Red Box $1 movie rentals or maybe video piracy?  Nope. The $60+ billion domestic entertainment industry we thought was based on teenage boys is in trouble because it was actually based on middle-age men pretending to be teenage boys.  And those middle-age men need to support themselves.

That’s what’s going on here: the guys stopped buying games so they could make their car payments, instead.  It took an unprecedented recession — the worst in 70 years — to coax-out this effect but it is clear that if things get bad enough even Hollywood hurts.

Economies are cyclical things and a lot of economic recovery is just surviving to play another day.  We see that in the game console price cuts that just came from Sony and Microsoft and will surely come shortly from Nintendo, too.  These price cuts are intended both to keep the factories running until natural demand can recover and they are supposed to stimulate game sales which in turn pay royalties back to the console makers. And it will work, though at a cost to the companies not just in dollars but also in market positioning.  Just as we’ve seen in PCs, there is a downward trend in product price points for games, too.  Sony is very unlikely to introduce another $399 game console ever, just as the $2000 PC is pretty much an artifact of history.

This is good, right?  Cheaper is better.

It is VERY good for game players and other consumers, I think, for two reasons: 1) in game software there will be an inevitable flight to quality as crappy new titles are killed before they get to market and the game companies put their marketing dollars behind their better games, and; 2) this may be a fantasy on my part, but now that we know the market sweet spot is actually 35, fat, and depressed, maybe the game designers will start to write for their real audience.

We could be about to enter a video game renaissance.

Nah.