Is the Internet full? AT&T's dire warnings sound a too-familiar theme

In public policy, there's a concept known as the "Statue of Liberty ploy" (not to be confused with the Statue of Liberty play): Faced with any sort of budget cuts in a given area, officials say sorrowfully that they will be forced to shut down the Statue of Liberty, counting on the huge public outcry that ensues to restore funding.

We're seeing that now from AT&T, in its efforts to influence public policy.
First was its performance with the FCC at the end of the year, saying that in order to provide broadband access to everyone in the US, it would be forced to shut down the landline telephone network, regardless of the fact that millions of people still use it. We saw something similar in early December, where AT&T said that, due to its pesky iPhone users being so greedy, it would be forced to implement usage-based pricing if they didn't pace themselves.

The thing is, we've seen this Imminent Demise of the Net predicted since at least 1997. Most notably, we had the Great Exaflood Disaster of 2007. What, you don't remember it? Here's the video (by merely showing it to you, I'm may be just exacerbating the problem).

"In the year 2010," intoned narrator Will Lyman (whom you'll recognize from Nova and Frontline), with spooky futuristic music behind him, "Twenty households will use as much Internet capacity as the entire world in 1995." This is, he says, the exaflood.

Eek!

(By some estimates, the entire world used 30 terabytes per month in 1995. These days, vendors such as Comcast are putting caps of 250 gigabytes per month on usage. 20 houses using Comcast to capacity would be 5 terabytes. That said, I'm sure we all know people who would blow that limit away.)

This will all be due to the explosion in dissemination of high-bandwidth items such as music and videos, the video says. In fact, YouTube might ship 100 million videos a day, it warns.

Of course, if you check Comscore, you'll find that users downloaded videos from various Google sites -- including YouTube -- at a rate of 407 million per day.

The video was produced by the Internet Innovation Association, which also funded similar "exaflood" research in 2007 by Nemertes Research. "The findings indicate that by 2010, the Internet's capacity will not likely accommodate user demand," a press release on the study warned. "As a result, users could increasingly encounter Internet "brownouts" or interruptions to the applications they've become accustomed to using on the internet." (PDF available here).

There was only one thing that could save us: "wise public policy," such as eliminating regulatory requirements such as net neutrality. "Today there is much praise for YouTube, MySpace, blogs and all the other democratic digital technologies that are allowing you and me to transform media and commerce," said Bret Swanson in a January 20, 2007, op-ed that first appeared in The Wall Street Journal. "But these infant Internet applications are at risk, thanks to the regulatory implications of "network neutrality."

Other suggestions from IIA staff in other sources included tax credits to help broadband providers add more capacity, and lowering taxes on telecommunication services.

Swanson, by the way, was a senior fellow at the Discovery Institute. And just what is that? "The Discovery Institute (D.I.) is a think tank and conservative political, policy, economic, religious and industry lobbying organization. It is best known as the driving force behind the Intelligent design movement" -- in other words, the "scientific" basis for Creationism, or the belief to be taught in schools that a Supreme Being had created the universe.

The IIA itself is funded by a number of vendors, including AT&T. Its IRS Form 990 -- which, as a nonprofit organization, it is required to file -- reports revenue of more than $4 million, as of the most recent data available, which is for 2007.

While a number of newspapers, including USA Today and The New York Times, reported the results of the study without investigating, a number of blogs including DSL Reports ferreted out the AT&T/industry connection: "The argument being that if these companies don't get exactly what they want from lawmakers in Washington, the entire Internet collapses and we're back to using soup cans and string."

And it's been going on for a long time. "Old hats in technology reporting know that stories about the Internet running out of capacity are nearly as old as the Internet itself," remarks Crikey's Duncan Riley, citing links to stories foretelling overcapacity dating back to 1996. "The story is nearly always the same: telcos and infrastructure companies fund research that finds that the latest trend online at the time (audio, video, HD video, P2P, Skype and social networking are some previously used) is too much for the Internet to handle. The reasons behind the studies are usually variations on a theme: Government regulation or Government financial support."

Similarly, the Huffington Post cited a number of studies showing exactly the opposite of the Nemertes results.

And in addition to AT&T's direct Statue of Liberty efforts, the IIA is still at it, although more subtly. "A reduction in investment of just 2 percent by the broadband services industry would eliminate between 24,000 and 31,000 jobs. A reduction by 5 percent would eliminate between 47,000 and 78,000 jobs. A 10 percent decline could be expected to eliminate more than 100,000 jobs," said an Oct. 20, 2009, IIA press release, citing two industry studies. "Restrictive regulations or uncertain market conditions could reduce investment, and hence employment."

So what does this all mean? When studies -- particularly from vendors or funded by vendors -- say the sky is falling, don't invest in an umbrella company right away. Check the source.