Fractals of Change

FCC Extends Comment Deadline on White Space Issue

UPDATE: It happened. The FCC voted to open up the whitespaces for UNLICENSED USE (full post here).

The FCC extended the deadline until this Friday, Oct. 31, at 5:30 PM ET for comments on the proposal to open up so called TV white spaces for UNLICENSED use; the old deadline was Tuesday; so, if you missed it, you still have time.

Despite efforts by opponents to get the issue dropped from the agenda (delay with intent to kill; a post-election FCC might start all over), the issue IS on the agenda for the 11:00 AM meeting on November 4^th which the FCC published last night. The meeting itself will be broadcast live at http://www.fcc.gov/realaudio.

Unlicensed access to this valuable spectrum can help the US regain the lead in Internet innovation, strengthen all American businesses, help American students, and go a long way to solving the problem of rural access to the Internet as well as vastly improving urban access. High bandwidth at low prices is not good news either to existing TV broadcasters (who are already worried about content competition from the Internet) nor to existing duopoly providers of expensive slow access. The lobbying against this proposal is fierce but public input appears to be making a difference.

You can sign (or modify) an online petition provided by Google here or e-comment directly with the FCC at http://fjallfoss.fcc.gov/prod/ecfs/upload_v2.cgi – docket 04-186. Remember, the deadline in now Friday at 5:30 PM!

More detail:

The Other Vote on November 4th

Act Now for Better Internet Access

Gush Up vs. Trickle Down

We shouldn't try a trickle-down approach to "saving" the auto industry and especially the auto finance companies; instead, if aid is needed at all, it should be shoveled in at the bottom of the economy from which it is sure to gush up (see a sample plan below).

The New York Times has done a great job of revealing that banks are using their bailout funds not to make more loans but to buy out their competitors. Now Cerberus, the private "capital management" company which owns most of Chrysler and a majority interest in GMAC is seeking federal aid for a plan to bail out its badly timed investments in the auto industry. Cerberus and GM have been fairly frank that the aid is needed to finance massive layoffs so that combination of Chrysler and General Motors can save cash. The question is why would we want to use taxpayer money to do that?

There is no promise that more money will mean more loans to car buyers. There is no promise that a taxpayer bailout will result in cars Americans want to buy even if they can get loans. There is also no recognition that "foreign" car makers are building cars in America with American labor that Americans want to buy. Do we really want to endanger the American jobs at Toyota in order to finance layoffs at GM and Chrysler?

Trickle-down aid to an economy doesn't work because 1) a trickle is too slow to aid an economy which has seized up; 2) the money tends to stay at the top – eg. be used for buyouts and/or executive salaries rather than flowing out into the broad economy where it's needed.

A Gush Up Proposal

Suppose that, instead of bailing out Cerberus and GM, we use our bailout funds to buy any and all cars and light trucks over ten years old BY THE POUND. Prices should be set so they are higher than the small amounts these cars fetch on the resale market today. All such purchased cars will be scrapped and recycled; in fact the program should be run through the junk dealers – they have much less overhead than banks. To avoid buying already scrapped vehicles, only those cars and trucks which have been registered for the last twelve months should be eligible.

The nice thing about putting money into the bottom of the economy is that it's sure to gush up. The owners of ten year old cars aren't going to stuff the money in their mattresses or finance neighborhood buyouts.

A few will be able to get by with one less car and switch to mass transit and use the money for other necessities. That's all goodness. Most will buy another not-quite-so-used car; there's a very good chance the newer car will use less fuel than the old one, especially since that's what people know they want and because cars get inefficient as they get older; also we're paying more for heavier cars so we're getting them off the road. That's a bonus.

The people who sell the not-so-used-cars to the people who scrapped their junkers will now have more money to spend on a new car. This is true whether the used cars pass through dealer lots or not. The dealers, who are in bad shape, will benefit from a firming of used car prices. Also, the more you get for a tradin, the less financing you need for your next purchase.

Money put in at the top tends to stay at the top; money put in at the bottom flows through the whole economy. The gush-up proposal will put money into the hands of the consumers most likely to spend it instead of the bankers most likely to hoard it. Gush up will also reduce the average size and age of vehicles in the American fleet and further reduce our gas consumption. Let's do something like that if we need more bailouts.

White Space Momentum

Many of you are leaving this blog by clicking a link to either the online petition which urges the FCC to free the TV white spaces for open unlicensed use or by going directly to the FCC e-comment page (docket 04-186). Can't see whether you actually leave a comment or what you say, of course, but assume many of you are filing and are supportive. Thank you very much; it matters a lot to the economy as a whole (see here) and to rural areas in particular (see here).

Critical to momentum are the other blogs and news sites that are also actively featuring the story. I'm sure there are many more that I don't know about. Because of the crosslinks, my post and the blogs linking to it were on the front page of Techmeme over most of the weekend. The post was also stumbled upon, which drove yet more traffic through the post and to the petition. Currently the post is the most active article listed in the Internet Marketing section of BusinessWeek's Business Exchange.

Blogs (Thanks, fellow bloggers).

Fred Wilson's A VC Open Up The TV White Spaces

Brad Feld's Feld Thoughts Encourage The FCC To Improve the Internet

The Jeff Pulver Blog Act NOW for Better Internet Access. Support Technology Innovation in America.

Vermont Tiger Free The White Space

Vermont News Sites

The Burlington Free Press Internet to replace unused TV channels?

The Rutland Herald FCC decision could help Vt.

Seven Days staff blog Blurt Will the FCC Help Vermonters Access Broadband?

Re-posts

xchange

CircleID

Momentum is great but this is no time for complacency. Lobbyists from the National Association of Broadcasters and the Telecom powers that be are working hard to delay with intent to kill. It takes lots of comments to outweigh them, The deadline for comments to the FCC is tomorrow, Tuesday, October 28!

If you haven't already done so, you can help by either e-signing an online petition (provided by Google but you can change the words) or by using the FCC's e-filing system here - be sure to enter docket number 04-186 if you do. It's actually a simple form. There's no need to say much; just let the FCC know you're in favor of a favorable vote on unlicensed use of TV white spaces and that the vote should happen as scheduled on November 4^.. The deadline for comment has just been extended to Friday, Oct. 31, 5:30PM ET.

The Other Vote on November 4th

UPDATE: It happened. The FCC voted to open up the whitespaces for UNLICENSED USE (full post here).

The vote that Federal Communications Commissioners are planning for November 4 is not as important as the voting we'll do on that day, but it does matter a lot to the future of the United States. Unless the forces opposed to progress manage to postpone FCC action (which they are trying very hard to do), the FCC could decide to set the stage for another generation of innovative products with which the US will strengthen its competitive position in global markets AND to provide long term help to the whole American economy, which might well be more important than all the short-term band aids being applied in the current crisis.

There is an easy way for you to influence the FCC and it matters so please read on.

This magic bullet which the FCC might decide to fire is regulation which will make currently unused radio frequencies known as TV white space available for open and unlicensed use. As I posted Saturday, this action would be a huge boon to rural America which has lots of white space and too little high speed Internet and mobile phone access. But the advantage to the whole country of opening up this spectrum for innovation dwarfs the substantial benefit to us country folk.

Right now almost all radio spectrum is allocated to specific uses AND specific licensees. Each radio and television station, for example, has a slice of spectrum. Various marine and aviation functions have assigned uses; some spectrum is reserved for mobile phone use and has been auctioned off to carriers. The result of all this earmarking of spectrum is that, at any given time, very little spectrum is actually in use for any purpose and we have a spectrum shortage. However, when the frequency pie was originally sliced up, this allocation was the only method known for keeping users from interfering with each other.

But that's when radios were dumb and computers hadn't yet been invented.

Thanks to the foresight of some FCC staffers, a couple of slices of spectrum – little undesirable scraps, really, that no one else wanted – were set aside for UNLICENSED use. Anyone could build a radio to use this spectrum for any legal purpose so long as the radio was certified to follow certain rules including restrictions on signal strength which gave other players a chance to use the space as well. Owners of radios which use this unlicensed spectrum don't require a license.

You indubitably own several radios which operate in unlicensed spectrum. The WiFi hub in your house is one; the WiFi card in your PC is another; the Bluetooth headset you use with your mobile phone; the Bluetooth connection in your car; even Bluetooth and WiFi in your mobile phone all use unlicensed spectrum. Somewhat to the astonishment of traditional radio engineers, all this unlicensed use of spectrum works very, very well with no formal traffic cops. The little computers in the little radios figure out how to navigate by listening (I'm oversimplifying somewhat) and they recover gracefully when they do bump into each other – come to think of it, that's something like how the Internet works.

Anyway, it turns out that unlicensed spectrum gets filled much more efficiently than licensed spectrum AND that the most innovative recent radio products like WiFi and Bluetooth are all squeezed into these scraps of unlicensed spectrum which they have to share with microwaves and garage door openers. Also turns out that consumers often don't have to pay for using this unlicensed spectrum once they buy the proper radios; you don't pay to use WiFi in your home or Bluetooth in your car. The radios are cheap because they have a mass market. In other cases there are commercial services, like WiFi hotspots, which can be delivered efficiently to a transient audience because people have WiFi radios and because the spectrum is available to use.

Now back to the TV white space. It is very good spectrum; that's why TV stations uses part of the range that it covers. It goes through walls and most trees. There's a huge amount of it available AND CURRENTLY UNUSED. If we got a lot of innovation from just a little unlicensed spectrum, it's reasonable to assume that we'll get a lot more innovation if there's a lot more spectrum available. We could easily get mobile Internet access with much higher bandwidth than cable currently delivers at a much lower cost and with full mobile availability (Google claims gigabyte speeds are easily possible) . Who knows what exciting applications would be built on top of that? I don't. That's what innovation is all about. We could also get much better mobile phone coverage at much lower prices – very important as the functions of phones take on more and more computer functions.

We could get much more entertainment from many more sources over unlicensed spectrum than we do over the proprietary spectrum allocated to TV stations – do you think that may be why the National Association of Broadcasters is so adamantly against the use of the so-called "TV white spaces"?

OK. On to the future of the country and our economy. The US used to dominate Internet innovation because widespread consumer use of the Internet began here. The newest equipment was developed (but not usually built) here; the newest services were developed AND hosted here; at one point most international Internet traffic passed through the US. None of this is true anymore. We lag much of the developed and some of the developing world in broadband penetration. We pay more for less bandwidth than many of our peers. Innovation happens where the early-adopter markets are. Much innovation which requires broad availability of reasonably priced very fast access is happening in Japan and Korea where that access is much more available than it is here.

If we are the first country to free a substantial portion of spectrum for innovation, we will have a huge head start in developing equipment and services which use that spectrum. The world WILL move to largely unlicensed spectrum (says I). We have a chance to lead and all the opportunities that leadership entails; or we can keep our spectrum locked up to protect broadcasters against competition and watch China or India take the lead and the benefits of leadership.

It's not only our tech industry that will benefit if the FCC votes the right way on November 4^th. All of our industry will be more competitive if we have better access to information and to each other. We can't afford NOT to have the world's best communication infrastructure. We once did; we can again. We can't afford to have our kids or us lifelong learner adults disadvantaged in access to information. We are now disadvantaged compared to many countries; the disadvantage is growing. Communication infrastructure CAN become America's competitive edge – if the FCC acts to make it happen.

The immediate push by the NAB is to postpone the vote of the FCC on the grounds that not enough time has been allowed to study the issue. In fact the docket has been opened since 2004. This has been going on longer than the current Presidential campaign; we're ready to vote for President and the FCC has enough information to make a decision on white spaces. Delay means that FCC Chair Kevin Martin, who is the main proponent of opening up the white spaces, will be gone. As the NAB well knows, a new Chair and new FCC commissioners will take a long time to familiarize themselves with this tough issue. It's not something that's come up in the presidential campaign (unfortunately) do no quick action'll come from the top.

We could easily lose a year or so by delaying this vote at the FCC. That's plenty of time to lose any chance of taking leadership in this new technology.

You can help by either e-signing an online petition (provided by Google but you can change the words) or by using the FCC's e-filing system here - be sure to enter docket number 04-186 if you do. It's actually a simple form. There's no need to say much; just let the FCC know you're in favor of a favorable vote on unlicensed use of TV white spaces and that the vote should happen as scheduled on November 4^..

Please do act quickly. The deadline for public comment is TOMORROW, Tuesday, October 28 Extended to Friday, Oct. 31, 5:30PM ET!

More on unlicensed spectrum from this blog:

Act Now for Better Internet Access

Vermont Files in Support of Using White Space for Mobile Broadband Access

Internet 2.0 is Open Spectrum

Backstory of Open Spectrum Epiphany

Spectrum Serendipity

Google's Gigabit Gambit

 

Act Now for Better Internet Access

UPDATE: It happened. The FCC voted to open up the whitespaces for UNLICENSED USE (full post here).

There's a good chance that on November 4th the FCC'll do something really good to improve Internet and mobile phone access in the US: on that day the Commission is planning on voting on regulations to open huge swatches of idle but extremely valuable radio spectrum for open UNLICENSED use. There's also a very good chance that special interests will succeed in delaying and/or killing this long overdue action. Your input to the FCC PRIOR TO TUESDAY'S FRIDAY'S [it's been extended] DEADLINE FOR PUBLIC COMMENT could make a difference (simple way to comment provided by Google here if you're already convinced).

The spectrum in question is the so-called TV white spaces: the radio frequencies between existing TV stations. Some spectrum in this band exists in every part of the country, more in rural areas. Vermont's Public Service Department and the Vermont Telecommunications Authority filed in favor of opening up the white space back in March. Here's a quote from their ex parte filing to the FCC:

"First, rural areas like Vermont have relatively fewer TV broadcasters and therefore more unused 'white spaces.' Moreover, rural communities also have the largest geographic areas without access to wireless services. Second, the ability of TV frequencies to propagate over great distances and difficult terrain provides an opportunity to reach locations too economically challenging for existing wireless services. Third, the use of TV 'white space' for the provision of rural broadband is an alternative means of accomplishing the Commission's universal service goal of deploying advanced services to all areas of the nation without requiring additional funding mechanisms. In fact, the use of TV 'white space' could actually decrease the demand for universal service funding at a time when the level of funding is facing heightened scrutiny."

So who could be against such goodness? The principal opponent to the use of these frequencies is the National Association of Broadcasters (NAB). Their ostensible reason for opposition is technical: they're afraid, they say, that use of these frequencies, particularly the open unlicensed use being proposed to the FCC by Chairman Kevin Martin will interfere with adjacent use by TV stations. In their recent filing advocating delay they propose that even more time be allocated for study despite the fact that this docket's been open since 2004 and that the FCC's Office of Engineering and Technology recently reported its technical finding that interference is an issue which can be dealt with by current technology.

It's important to remember that, although this unused a spectrum is referred to as "TV white space", none of it has been paid for by any broadcaster or will be used for any broadcast purpose after the digital cutover this February. It is also extremely unlikely that any more over the air TV stations will pop up and want to occupy this space; and, even if that did, happen, the current proposal would make room for them since it requires that all equipment used in this space avoid broadcast signal – even if the broadcast signal shows up after the equipment is in use.

So why are the broadcasters so concerned? Well now, let's suppose that much of this spectrum was used to deliver low cost, high speed Internet access. Suppose that people used this Internet access to obtain their entertainment on the Internet rather than from said broadcasters. Now wouldn't that be a fine kettle of fish?

It is, in fact, highly likely that a vast array of new services including Internet access at a lower cost and higher speeds than we've so far seen in the US (or the world) will appear if this spectrum is opened for unlicensed use (eg. not auctioned off for proprietary networks). Think of the huge innovation that's occurred in WiFi and Bluetooth which operate in unlicensed spectrum even though these technologies share just scraps of undesirable spectrum with microwave ovens and cordless phones. BTW, devices like your WiFi hub ARE licensed to assure they respect other users of the spectrum; but YOU don't need a license to use WiFi nor does a WiFi-based service provider. More on how the white spaces can make a huge difference to the whole US economy here.

Traditional carriers are also opposed to having you make unlicensed use of spectrum. They would rather that you get your mobile access and Internet access through their proprietary leased spectrum.

Anyway, suppose that opponents manage to get another delay. At the end of that delay Kevin Martin (with whom I certainly don't always agree) is no longer head of the FCC. It IS Kevin Martin, to his credit, who is the leading advocate of all this openness with the FCC. Someday an enlightened FCC or Congress will probably take this action anyway – but it's likely to be a long time from now if we miss this opportunity.

Technology companies like Google and Microsoft are in favor of unlicensed use of the white spaces. Their motives are also commercial – nothing wrong with that. They live by innovation and hope to benefit from the communication opportunities that will open up. Google's Android phone is particularly suited for an open environment. In this case we're lucky to have their lobbying muscle on the "right" side of this issue. The NAB and the telcos are fearsome lobbyists. Moreover, the broadcasters are very influential with politicians who, you may have noticed, like to be broadcast.

Rick Whitt, who is Google's Washington telecom and media counsel, writes in the Google Public Policy Blog: "Just as Wi-Fi sparked a revolution in the way we connect to the web, freeing the "white space" airwaves could help unleash a new wave of technological innovation, create jobs, and boost our economy. But it can happen only if the FCC moves forward with rules that make the best possible use of this spectrum."

He points to an online petition at freetheairwaves.com whose wording you can use or change in order to make your views known to the FCC. If you would prefer, you can also comment directly on the FCC docket by going to http://fjallfoss.fcc.gov/prod/ecfs/upload_v2.cgi and typing the docket number 04-186 in the first box. My comment should show up Monday.

Please comment right away. THE DEADLINE is TUESDAY, October 28^th[extended to Friday, Oct. 31, 5:30PM ET].

The Physics of Money

Money doesn't count unless it's in motion; that's why governments not only can but also feel that they must create great supplies of the stuff in these deflationary times. The good news is that all this new money isn't inflationary (at the moment); the bad news is that this new money so far isn't breaking the deflationary cycle because it's refusing to move.

A simplistic but not inaccurate view of inflation is that it occurs when too much money is chasing too few goods; deflation, of course, occurs when money is the scarce commodity and other goods – houses, say, or oil – are abundant. So how did we go from inflation to deflation so rapidly? Where did all the money go?

Basically, the money went into various mattresses; it stopped moving.

The definition of money is complex; it's much more than just cash. It's also the debt of governments and even private entities; it's the outstanding balance on your credit cards; it's lots of other stuff. But it only counts when it's in motion. Economists speak of the velocity of money; the number of times it changes hands (turns over) in a year. The effective money supply, the money supply which at any given moment is either too big or too small for the goods available, consists of the absolute money supply MULTIPLIED by the current velocity of money.

This is easier to think about if we pretend that money is just cash. Suppose that the 100 residents of an isolated village have a million dollars of cash in their economy. How much income, then, can each resident have? The answer depends on the velocity of that million dollars. If it turns over only once a year, then the mean income will be $10,000/resident. But, if the money turns over ten times a year, if each resident spends income almost as fast as he or she earns it, the mean income will be $100,000 since each dollar changed hands ten times and got counted as income ten times.

The faster we spend, the more money there is available in the economy. Money we put in our mattresses might as well not exist as far as the economy is concerned even though it may be very important to us. Money we put in the bank is USUALLY as good as spent economically because it gets lent to someone else who spends it. But these aren't usual times; if the bank doesn't relend the money, it might as well be in a mattress.

Banks aren't lending like they used to; we aren't spending like we used to. The velocity of our money supply has slowed to a crawl; that's how we moved from inflation to deflation; the money stopped going around.

Deflation causes (and is caused by) depressions. Governments rightly don't want depressions to happen on their watch, makes the citizens surly. So governments around the world are creating vast supplies of new money to counteract the fact that the money is moving slower. It's debatable (but not in this post) whether the money is being injected into the economies of the world at the right place to get it in motion; but there's no question that lots of new money is being deliberately created to fight deflation. Inflation isn't a concern because deflation is the problem. Governments want prices to stop falling so they're working to cheapen their currencies – backwards of what we're used to since inflation is what we usually worry about.

One danger in this deflation-fighting strategy is that it can lead to hyper-inflation. The absolute money supply is being increased; if it then goes into rapid motion, the effective money supply goes through the roof. Money will go into motion if people are afraid it's going to lose value; in that case they'd rather have goods so they start spending. Some of that is good to break the current deflationary cycle, a lot of spending with a bloated money supply ends up in a situation like Weimar Germany or Zimbabwe.

Aren't you glad you aren't running the Fed.

 

When Your Company SHOULD Spend

Cash is king. VCs like Fred Wilson are advising their portfolio companies to be in cash-preservation mode for the very good reason that more cash will be hard to come by and, if obtainable at all, may come with serious dilution as its price. But, if your company has cash, this can also be a wonderful time to spend. In the end you will succeed because of what you DO spend your money on.

Suppose you have much more cash than your main pesky competitor. Assuming that advertising or paid marketing of some sort is effective for what you sell, you can afford to spend to gain market share and be reasonably sure that your competitor won't be able to match you and cancel out the value of your marketing spend. Don't do this, though, if the spend will leave you with less than 24 months running room taking into account that new customers may well increase your operating costs immediately while revenue may take awhile.

Suppose you're in development mode. Good developers are more available at better prices than they have been in a long time. Perhaps you can both shorten your time to market (and revenue) and reduce costs by more hiring or contracting. Remember, though, that many projects go SLOWER the more developers are working on them. You need excellent technical product management to execute this strategy.

This is a great time to acquire a cash-starved competitor or possibly the owner of a related product you can sell to your existing customers; but a few caveats:

• Don't let an acquiree's cash problem become yours. Be sure any synergies you count on are adequately researched and discounted. Murphy has a law about never achieving the synergies you plan, especially in the time you planned to achieve them.
• In almost no circumstances use your precious cash for acquisition. Your stock is especially valuable for acquisitions if you have cash and the target doesn't.
• Acquisitions are very hard and can be fatally distracting. Almost never worth doing unless strategic AND you have executive resources and experience to dedicate to them.
• Don't pay much for a competitor who is going to fail anyway, especially if it's your only competitor. Better to use your cash to make sure you pick up the customers directly.

Something you may have to spend cash on is making sure your product or service and the pitch for it are relevant to your prospects and customers in these tough times. Obviously, people are looking more for an opportunity to save than to spend. Can you help them do that?

Like all times, this is a time of opportunity. If you're lucky enough to have cash, you're extremely well-positioned. Maybe just hoarding and survival is the best strategy – but maybe you can be more creative. It's worth looking for opportunities.

Too Big to Fail

There's an excellent article in this morning's New York Times which begins:

"The financial crisis is forcing regulators to encourage the creation of bigger, more interconnected institutions. In the short term, this may serve a useful purpose by allowing healthier, well-capitalized banks like Wells Fargo, Bank of America and JPMorgan Chase to shore up weaker ones.

"But it also presents a serious threat to the financial system by fostering financial behemoths that are, to use Federal Reserve Chairman Ben S. Bernanke's euphemism, 'systemically critical.' Policy makers need to start thinking about how to downsize institutions that are becoming 'too big to fail' before the situation comes to that."

"Systemically critical" is a good phrase even though it sounds like jargon. Those of us who have built complex interactive systems know that nodes which are significantly large compared to the network as a whole pose an outsized risk. The Internet is a triumph of decentralized relatively small nodes, none of which is "too big to fail". There are always nodes failing on the Internet; this is the normal state. A brilliantly simple architecture allows the network as a whole to remain functioning despite constant failure of nodes. Because the nodes themselves don't have to be made failure-proof (which is impossible anyway), the nodes are so cheap that redundant nodes are easily affordable.

The current crisis began with the failure of mammoth nodes – blaming it on improvident home-buyers is simply absurd. These mammoth nodes – especially Fannie Mae and Freddie Mac - accumulated risk in a way that would have been impossible in a more decentralized time. Some community banks would certainly have been imprudent even if they'd had to keep the mortgages they wrote on their own books (remember the S&L crisis); but the system could much more easily have tolerated the failure of a few of these small nodes AND their failure would have encouraged others to be more prudent.

Until the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 branch banking across state lines was forbidden in the US; that was a significant barrier to horizontal concentration. Bank holding companies were not allowed to own non-financial institutions until the passage of the Gramm-Leach-Bliley Act in 1999, a barrier to vertical concentration. Both acts were passed not only because of huge lobbying efforts by financial institutions which wanted to grow but also because there was a perceived (and quite possibly real) need to allow US banks to grow large enough to compete with less-constrained foreign entities.

With the limits gone, the monster banks grew albeit with some regulation, especially around their FDIC-insured deposits. However, this regulation did not include institutions like Merrill Lynch, Morgan Stanley or Lehman Brothers which were non-bank holding companies and could neither own banks nor offer FDIC insurance to "depositors". These institutions had the advantage of light regulation but the disadvantage that competitors like Bank of America and Citicorp could offer a full range of bank and non-bank services and had a base of insured deposits which wouldn't flee in a crisis. In recent months all of these either failed (Lehman), merged into bank holding companies (Merrill), or converted and became "banks" subject to regulation (Morgan Stanley). But we got even more concentration.

There's no question anymore that institutions which are too big to fail are also too big to leave unregulated. There is significant question whether any degree of regulation will be sufficient to prevent failure. Nodes fail for unexpected reasons – usually not the ones you're watching for. Fannie Mae and Freddie Mac were regulated; that didn't help much. The problem of adequate regulation grows even worse when government owns a stake in what it regulates and, of course, that's exactly what's happening with the banks.

Perhaps, immediately after the immediate crisis we need a form of antitrust which limits the size of financial institutions. Part of this might be accomplished by reducing the amount of federal deposit insurance on each account (this was just raised) to force investors in search of the safety of such insurance to spread their wealth among banks. Maybe the total amount of insured deposits any institution can offer should be limited; this step would eliminate the risk of having institutions big enough to bring down the FDIC itself. In a global economy, such limits will be very hard without similar steps being taken worldwide. But it's a better problem for world financial leaders to work on than weekly rounds of "coordinated" bailouts.

Nothing should be too big to fail because nothing can be made failure-safe.

Bad Connectivity

The only serious drag on an otherwise great vacation is the ten pound bag with computer, batteries, adapter etc. that I'm lugging around on my back. The other day we walked the literal length and breadth of Venice with it. There is no straight footpath through Venice; it's a long way to anywhere unless you're a boat.

It wasn't meant to be this way. Last time Mary was in Italy her host had a USB GSM data modem from TIM (Telecom Italia Mobile). When Mary put it in her laptop it worked fine and she became Skype central in return for the use of the USB device. Since we're staying on a canal boat we rented; we knew we wouldn't have any Internet access from a hotel; but I figured I'd just get one of those modems which Mary said we're on short-duration plans, probably just pick one up in the airport; mobile coverage is great so I'll be online everywhere.

But in the airport I got caught up in immigration, slow luggage, hidden ATMs, and local transportation and forgot.

In Casier there was no Internet access I could find.

In Treviso we found a TIM store but closed on Sunday which is when we were there. On Monday, as we went down the River Sile, we found some open WiFi when we had lunch and got the first connectivity fix since coming to Italy. The computer took a ten mile bike ride on my back.

No WiFi in the marina we stayed at in Portagrande.

Asked if there was a TIM store or any Internet Cafés on Burano; told no. There were some locked networks which looked commercial if I'd only known how to get the WEP credentials (legitimately) to access them; certainly you wouldn't name a network Venice>Connect unless you meant for someone to do that. Also a couple of open signals but too weak – which brings up mistake #2: I have my highpowered WiFi card and antenna with; almost surely could find something with that; but the drivers aren't installed on this computer and I didn't bring the driver CD. Looking for them online not much of an option.

Found the TIM store in Venice! It's open. Through a language barrier, the sales person explains that they are out of (or no longer make, I'm not sure which) the USB modem. But they have a PCMCIA card. Great and a 25 Euro twentyfour connect hour plan. Great! Doesn't work with a Mac, though. No problem. Only works with Widows XP. Vista? Only XP.

The sticker on the box says compatible with the Mac and Windows Vista. Not, insists the sales person; coming in two weeks. Would cost $300 non-refundable dollars to call his bluff and I'd be trying to debug problems in Italian. But he says a computer store may have a solution; points me to one down an uncertain street; turn at the optometrist (I assume that's what he means when he makes glasses with his fingers); make a left somewhere. Somehow we find it.

They do have a USB modem; claim 7meg download. Wow. Only available with a two year subscription. No other way to buy it.

So we find an Internet café for an hour.

But now it's a day and a half later. Signal everywhere here in Stra but nothing I can connect to.

Looks like the computer'll have to go to Padua for the day. Yuk.

Has the Financial System Disconnected?

Before finding any Internet access – and so before we had any news in English – we found an ATM. Tried Mary's card and it failed authorization; tried mine – Oh oh: same problem.

Our first thought was that the world financial system had simply disconnected at the retail level! Maybe I should'nta been so antibailout. Now there's personal panic; conserve cash at all costs. Eat only at restaurants that take Visa. But is Visa working?

Tried our Visa and it still worked for purchases. Not a complete disaster yet.

Tried another ATM machine and it took both cards fine. Panic over.

But we do depend on a lot of stuff working. Hope when the banking system is put back together (if it doesn't become a government agency) that it is much less concentrated and centralized – sort of like the Internet. Not what's happening now at all with consolidation despite the fact that "too big to fail" entities caused the current problems.