K.Patelis on Mon, 22 Mar 1999 19:51:44 +0100 (CET)

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<nettime> political economy of Internet [2/2]

[Beginning 2/2]

Mapping internet inequalities In 1997 Network Wizards figures showed only
15 countries in the world with more than 100.000 hosts registered under
their countries' domain name (Network Wizards 1997). All of these are in
the West, which leaves 128 countries with less than 100 computers
connected.  Similarly the OECD Communication Outlook places 92% of all
Internet hosts in the OECD area. >From Network Wizard statistics one can
deduce that at least 60% of these hosts are in the US ( Kahin 1997:156).
There were no host computers in the Honduras in 1995 and merely 400 in
1997 . Today there are 45.000 users in Jamaica (Foga 1998). There are 500
hosts in Maroco, none in some central African countries. The basic
indicators for Europe also show that Europe is far behind in cyberspace.
There were a total of 4,38 million hosts in the E.U. at the end of 1997,
an increase of 140% from the previous years, but still very low if one
considers the total amount of estimated hosts world wide. Discrepancies
between E.U. countries are dramatic. There were 2,7 hosts per 1000
habitants in Greece and only 0,2 domain names, 17,0 per 1000 in the U.K.,
both countries being far from Finland's 95 per 1000 (ESIS 1998). Such
discrepancies show the exact opposite of what Internetphilic claims: the
geo-economical periphery is not centered in the virtual world. 
 Profiles of the average user reconfirm the above inequalities.
CommerceNet Nielsen found that Internet access in the United States and
Canada was up by 50% from 23 million estimated users in August-September
1996 to 34 million by April 1997. A Find/SVP and Jupiter Communication
survey found that 14.7 million households in the US are online (a figure
that has doubled from previous years), International Data Corp estimates
that 20% of American Households are online (IDC1998). Jupiter estimates
3.7 million households are on the Net in Europe and 3.4 in the Asia
Pacific Rim. Similarly PC Meter market research estimates that 11% of the
total of 98.8 million households in the US have Internet access (up from
4.4 a year ago). Surveys estimating the number of US users vary from
Morgan Stanley's low estimate of 8 million US online users to Wirtin
Worldwide's projection of more than 35 million.  Rather than consisting of
an innocent connection of myriad branches around the world, the Internet
currently is more like a tree, out of whose trunk branches keep growing
all the time. The way this tree grows is not accidental, it is dictated by
international economico-political structures. Demand for backbone capacity
towards a country results in a more centralised network, which makes
connections to this country faster and more capacious, which in turn
increases demand; a vicious circle is thus created. There is a main
Internet backbone, a central intercontinental network to which smaller
networks are connected. The U.S is at the center of the majority of these
connections As R. Hagen director of Internet engineering at MCI notes "if
you were to squint at a map of the global Internet infrastructure, all
lines would roll into the US, that's not a good way to build a
network."(Evagoras 1997:7). So if, for example, an information packet had
to be transmitted from Buenos Aires to Lima it would have to go via
Washington or Portland (MIDS 1997). 

Internet backbones are made up of capacity owned by the world's PTO's
(OECD 1996:1); since, businesses lease lines from PTO's and users use
phone lines to establish dial up connections, the worlds PTO's are
obviously the first gate keepers of the on-line world.  This causal
relationship between telecommunications infrastructure and the online
world is of dramatic importance; it means that to a large extent telecom
capacity and infrastructure will determine Internet usage growth (thus
access) and the network's architecture. If one considers the central
features of the global telecoms infrastructure, a great deal about the
state of the Internet is revealed.  For example 68% of the world telecom
infrastructure serves the needs of 16.8% of the world's population (which
equals the percentage of the global population living in the OECD area)
(OECD 1997 :10). This could explain why 82% of Internet hosts are in the
OECD area. Furthermore the US is disproportionately significant for global
telecoms; five of the seven most important routes pass through the U.S.
(Cable & Distler 1995:10). US companies dominate the world telecom market
(Cable & Distler 1995, (Mansell 1993). 

A country's existing telecommunications infrastructure is thus paramount
for the growth of Internet usage both in providing capacity to ISP's and
in providing users with domestic lines for dial-up usage (OECD 1997,
Goodman et al. 1994). Infrastructure includes connection-type (analogue,
digital, using fibre-optic wire), capacity and speed, as well as the
public or private character of telecommunications. To give an example,
Montenegro, a recently established democracy, has one telecom carrier
responsible for regulating the provision of telecommunications in
Montenegro; all telecom lines linking Montenegro with the rest of the
world have to pass through the former Yugoslavia's capital Belgrade. Owing
to limited capacity, not enough bandwidth can be leased to ISP's.  The
telecom carrier also refuses to give a mobile telecom licence to Global
System Mobile Communication, a company trying to provide Montenegro with
wire-less connections to the Internet. Thus, Montenegro remains outside
cyberspace for political and bandwidth reasons. 

In addition, connection bandwidth varies significantly across the globe
and with it the speed of transmission. Most US backbone parts are of
622-Mbits or higher (Internet World 1996), a bandwidth which places the US
at the center of the infrastructure architecture. India has 10 Mbits of
Internet capacity, Russia has 40 Mbits which in part explains the low
Internet penetration rates encountered (Evagoras 1997).  In Europe there
are few 2 Mbit bandwidths, in consequence of which such bandwidths are too
expensive to lease to business (OECD 1996), which may explain why Europe
lags in digital business ventures and why European countries are
struggling to keep up with bandwidth demand (OECD 1996). The network
stability problems caused by bottlenecks and limited bandwidth are huge . 

Dedicated connections of high speed that accommodate large information
flows (514 Kbs and higher) are not available to the average user. The most
common connection to the Internet is 28.8 kbs, available to 39.0 % of
users, followed by 14.4 Kbs - the latter being the typical speed for 25.5
percent of users (Kantor & Neubarth 1996:48). If one compares these with,
say, the 44.736 Mbps enjoyed by IBM users sending info around the IBM
network (part of the US backbone), one comprehends that bandwidth is not
infinite in cyberspace;  bandwidth is a "private good", not allocated on
an equal basis. At a very basic level, bandwidth variations mean that not
all users have the same distribution system at their disposal. For,
without bandwidth there is no distribution of content. Thus, even if one
produces online content, it is useless without the bandwidth to transmit
it. If one wanted to send an information packet of 680 MB from Atlanta to
Las Vegas it would take 53 hours more than would a packet sent by the Mr.
Hagen quoted above (even if one were an MCI subscriber). This means that
Mr. Hagen has more power in online communication since he can more
effectively and quickly transmit and receive content. Dependence on
bandwidth means that the Internet is by definition not an environment of
abundance. As usage increases, available bandwidth becomes the most
important private good online. In fact, traffic charging is becoming
customary .  Setting the bandwidth problem aside, the cost of Internet
access varies significantly with financial development and geographical
position. According to the OECD the Internet tariff basket, which
represents the price of a monthly subscription plus the pstn charge (peak
rate) for 20 hours online per month, the discrepancies in access pricing
are dramatic: a Mexican going online at peak time would have to pay four
times what a Canadian would, with a British user having to pay something
less than the Mexican but at least three times what an American would pay
(OECD 1997). 

Business Use vs. Commercial Use A further dimension of inequality in the
manner in which the Internet is developing concerns the growth of business
access and use compared to consumer access and use. Figures show that the
former is by far outgrowing the latter. This means that growth in business
use does not automatically bring growth in consumer use. ActiveMedia
estimates the growth rate in business connections to the Internet at 15%
per month and the growth rate of consumer access at 50% per year.
Similarly, according to the OECD, approximately two thirds of Internet
traffic consists of internal data transfers within corporations (OECD

THERE IS A CHART HERE Source: Network Wizards

Comparing domain names confirms such conclusions. Figure 2 shows Internet
hosts as registered by domain name. In December 1991 there were less than
500,000 commercial host computers , while educational hosts were leading
the way. In December 1996, at an estimated 4,000,000, commercial hosts are
by far in advance. The number of educational hosts has also grown - but
not to the same extent - to a second of 2,500,000. Should this
developmental difference not be enough, a look at the number of
organisation hosts should convince one. Moreover, there were 1.3 million
businesses online in 1996, a number that will go up to 8.0 by 2001. 82% of
Fortune 500 companies are connected to the Internet, while the remaining
have dial up connections and 100% of large companies have Internet
connection (Forrester 1996). Furthermore, the number of Web sites in large
companies will more than quadruple from an average of 2.5.today to 2.1 in
two years (Forrester 1996a). Further evidence comes from the WWW.
According to Activmedia research the number of commercial Web sites has
gone up from 600 commercial sites in September 1994 to 95,000 in July
1996. The number of commercial websites listed in Yahoo (Web business
directory) grows 19% per month.  E-commerce and e-communication Increase
in business use goes hand in hand with e-commerce, the introduction of
which essentially shifts the function of the Internet from a commodified
medium for communication to a supermarket, a shift which is celebrated
rather than questioned. There are 4,000 cybermalls today, grouping smaller
and larger firms ( Flisi 1997a). IDC surveyed 175 large companies to find
that 46 % of them are planning to install e-commerce technology on their
Web-sites (NUA 1997), 100% of companies interviewed by Forrester are
accepting orders through the Net, 41% use the Internet to confirm payment
and 38% to confirm delivery. 67% of the companies interviewed by Forrester
are engaged in Internet commerce to take the lead. Business to business
trade will reach 8 billion dollars this year, that is a 100% rise from
1996; this figure is expected to rise to 327 billion in 2002 (Forrester
1997). Anderson Consulting predicts that the online grocery shopping
market will grow to 60 billion in the next 10 years. The White House
estimates that commerce on the Internet could total ten billions of
dollars at the turn of the century (White House 1997). ActivMedia
estimates that e-commerce revenue will reach 1.2 trillion dollars by 2001
(ActivMedia 1998). According to a recent survey, 5.6 million people, that
is 15.5 % of on-line users, have used the WWW to purchase a product or
service, similarly, 73% or more than half of the WWW surfers search the
Web for product information prior purchase (Nielsen Media 1997). For
electronic commerce to be possible a number of factors have to be
safeguarded, the achievement of which requires significant changes. These
are security, speed and copyright ; in Wired's words "no privacy no trade"
(Davies 1998:135). Security is the necessary first step for electronic
commerce (Landlau 1998:48) and encryption is iron-clad security (Lewis
1994). There is also the question of how these are regulated for they have
traditionally belonged to different regulatory paradigms (Hartman 1998).
Consequently, even if one disagrees with the political objections directed
against the introduction of e-commerce, it is clear that e-commerce and
e-communication cannot easily co-exist. If one reflects upon Figure 1 on
the Internet economy and contemplate what e-commerce would mean, one
clearly comprehends that it would allow the introduction of
non-communication firms to the infrastructure of the Net and as we have
seen infrastructure determines content. 
ISP's: structuring the online experience

Internet Service Providers are the second gatekeepers of the online world.
At a very basic level their charging policy regulates online activity
economically. Thus, charging a different rate for Internet access and for
Web hosting created the notion of the online consumer and producer. Were
it not for ISP's charging extra money for putting information online, such
distinction would not have pervaded as easily. The notion of an online
audience and of online ratings was the inevitable result. Moreover, all
ISP's have codes of conduct, a set of rules that have to be adhered to for
the person in question to use the Net, and which can have detrimental
effects on content. Filtering content is also becoming popular with
academic providers. 

In addition to such direct control, ISP's also exercise control via their
promise to structure the online experience, to morph the Web, an intention
made clear in their marketing and advertising campaigns. In those, despite
the fact that the Internet is constructed as a vast frontier to be
explored, each company promises to transform the chaos into a pleasure
dome of knowledge. In short, what is being sold is structuration.
Providers promise to make the Internet a safe and structured experience;
to put it in LineOne's words, "is there a way to cut through the jungle?"
or in AOL's words, "we organise the Web for you". What is also promised is
that such structuration will be customised by taking into account the
individual user's needs. Microsoft's campaign perfectly encapsulates this
double promise: "where do you want to go today".  The myth of the Internet
as a chaotic landscape is the ultimate marketing tool, for it allows big
companies to present themselves as performing a twofold indispensable
function in the online world: structuration and customisation.  It is the
ultimate marketing technique because it portrays the online company as
performing a vital function, as an institution which aids the individual
to exercise autonomy on-line. Hyping this double function rids companies
of the need to account for synergies and vertical integration, which are
presented as beneficial for the customer, as control of ever larger
aspects of cyberspace becomes a factor adding to the company's

Portal sites are a perfect example of how this ethos extends from ISP's to
content providers. Portal sites are sites who's task is not solely to
provide new content but to organise existing content pointing the user to
useful resources. They are, thus, the gateway to the Internet experience,
particularly for new users, since switching can prove costly (Forrester
1998:3). Those in favor of a commercialised Internet portray the function
of portal sites as merely operational, in the words of M.Pareth, a Goldman
Sachs analyst, " portals very broadly as service that aggregate
reoccurring amounts of traffic and provide different sets of functionality
to that traffic" (Goldman Sachs 1998:3). By mobilising the marketing
ideology presented above it is maintained that portal sites, by providing
users with the mediation that is necessary for the Internet to function at
all, provide a service that is vital to the user. However, what they are
in fact doing is performing a function vital for the further
commercialisation of the Internet by customising content and categorising
Web pages - which is not to the user's but to the companies' benefit. In
this way they channel attention, for channeling attention and aggregating
traffic is what they are supposed to achieve. They are the starting point
for many consumers and accordingly knowingly structure what the user can
do online. 

Software and Navigation Tools

The importance of software in structuring and forming information cannot
be exhausted within the constraints of this article. It is enough to state
that software is value laden and as such can contribute to structures
which project certain contents over others. Search engines too are
acquiring increasing power in cyberspace. They mediate the online
experience by pointing to available content. Yahoo alone mediates
approximately 30 million experiences a month. Such mediation should not be
taken lightly, because as a result of it all content does not get equal
exposure. It is now becoming customary to pay search engines to promote
certain material, while search engines are also increasingly suggesting
content to be accessed. 


The above analysis neatly separates Internet related industries, masking
the fact that it is in the interplay of infrastructure and content that a
more comprehensive perception of power online can be found:  It is in the
manner in which the industries and inequalities described above
intertwine, overlap and mix that the most important formation of online
power is constituted: sign-posting. Understanding consumption or use on
the Internet as occurring when the user views/uses a Web page is wrong,
because it ignores that it is the totality of and interaction between the
different parts which define and form the online world that structures and
shapes the online experience (consumption). And it is in the ability to
determine such intersection and interaction that online power lies. In
brief, it is through the interplay between the five industries that
constitute the Internet experience - Telecommunications, Internet Service
Providers, Software, Search Engines and On-line Broadcasters - that users'
attention is structured; users are singposted to use the Internet in
certain ways. 


The above rather gloomy picture of the Internet is not meant to evoke more
Marxist cynicism, but to provide the basis for a radical
re-conceptualisation of the Internet, to posit questions concerning social
equality, the public good and cultural sovereignty back into the research
agenda . The Internet could be more than a delivery platform. It could
also be more then a digital vehicle for individual use and gratification.
But for this to occur at all, the current naive paradigm of pseudo-liberal
individualism has to be replaced by a vision of what the Internet ought to
be. The environment in which the Internet is developing constitutes an
urgent reason for the revitalisation of public service media arguments. It
posits abandoned justifications for public intervention and the funding of
communication back into the center of debate. It brings questions
concerning the public interest back into the heat of the discussion
agenda. A public service Net is needed to reverse the current
commercialisation trends. It is only if we are not scared to utter the
word "public" that we can start debating a way out of the neoliberal
agenda. The Internet can provide the base for a renewal of the public
service tradition. The objective of this article is not to sketch what
such a public service Internet would be but to open up the debate,
shifting questions away from market determinism. 

Korinna Patelis
Department of Media and Communications
Goldsmiths College-London-SE14 6NW
DIRECT LINE 0171-9197243

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