> I view the broadband industry as a fascinating example of what happens when an infrastructure industry meets the technology industry.
I don't disagree with your comment, but your argument would seem to apply to the rest of the world, whereas in fact the US is in a fairly unique situation among developed countries.
Most of the current situation can be explained by the fact that broadband is currently the only unregulated public utility.
In NYC, I don't really pay much attention to electricity, gas, and water. ConEd kind of sucks, and I wish they were better, but really, they work well enough most of the time, and I'm not sure that I could name anybody else who would do it better.
The problem is that we sold off monopoly rights to broadband without attaching any strings of regulation, etc. Why should they bother to upgrade their infrastructure? Heck, we literally paid the cable companies billions of dollars of government money to do exactly that, and because we failed to enforce that with any real teeth, they just took the money and ran. Of course they're not going to listen when consumers say they "want gigabit". It would make no business sense to do otherwise, especially when 80% of your customers are unable to vote with their wallet and use a competing service[0].
There's a case to be made for either a free-market approach to broadband, or a more "socialized", regulated monopoly. Unfortunately, what we currently have is a hybrid of both, and it happens to hit upon the worst of both worlds.
[0] There's a South Park clip that does a great job of describing this relationship. I won't link to it here, because it's rather crude and possibly (?) a bit NSFW, but searching "south park cable" on Youtube should lead you to it if you want to laugh, sigh, and cry all at the same time.
I disagree in terms of regulation: there is plenty of regulation on broadband internet, except it tends to discourage competition against broadband providers.
This isn't a problem that is going to be solved by placing regulations on the industry. Your example of past subsidies provides an excellent argument for this: given the political clout these entities hold and have in the past used to stilt legislation in their favor, what leads us to believe we're going to do any better with new regulations?
At the end of the day, the market is demanding better internet service. While telecommunications providers are certain to wage war against the injection against honest competition into their sector, things are actually looking pretty good in my mind. The FCC sees market demand and is working to tear down anti-competitive legislative barriers [1]. Smaller efforts such as Google Fiber are doing the hard work of convincing the public that better service is within reach.
> I disagree in terms of regulation: there is plenty of regulation on broadband internet, except it tends to discourage competition against broadband providers.
Well, yes - when I use the word "regulation", I'm implying the sort of regulation that we see with respect to Con Edison. They can't so much as change the way they itemize fees on my bill (!) without regulatory approval.
That certainly creates problems of another sort, but on the other hand, the actual service provided[0] and the pricing is pretty much a solved problem (as much as one can expect)[1].
I'm sure ConEd would like the sort of legislative protectionism that cable companies receive, with no requirements surrounding price or quality, but thankfully, they don't have that (and altering the status quo is always tough in general - in this case, inertia is on consumers' side).
Obviously regulation could be established to make things worse, but I think it's clear what kind of regulation we're looking for for the purposes of this discussion. And I'm intentionally deferring the question of how any of these policies would be enacted - I'm just comparing two alternatives states to the status quo.
[0] excluding customer service, which is going to be mediocre at best no matter what.
[1] Interestingly, pricing is partly "solved" due to the introduction of ESCOs, which are a way to privatize the supply chain (at the consumer's choice). "Free market" and "regulation" are not mutually exclusive - we could easily establish a regulated monopoly on last-mile copper wire while allowing multiple competing upstream providers.[2]
It's highly unlikely that the FCC will accomplish much in the way of enforcing net nutrality given that the agency has basically been captured by special interest.
Tom Wheeler, the new FCC Chairman, was a lobbyist and head of the NCTA for 5 years[1]. The idea that he will do anything to hurt the cable companies his old organization represents is ludicrous.
South Korea's internet censorship has very little to do with their internet speeds. Saying "Well, if you want fast internet, it'll have to be censored" (as if our internet isn't fully monitored) is a false equivalence of the highest order.
Well perhaps this may be the case in some scenarios, but that doesn't mean that the internet can't be censored when internet infrastructure is private, either.
p = internet is public infrastructure
q = censorship
for some (but not all) p -> q
for some (but not all) ¬p -> q
q -> irrelevant
It's irrelevant to the question of fast internet.
To reiterate, you're saying that censorship and fast internet are a package deal, and if we want fast internet, we have to deal with censorship, amirite?
I'm saying that the political process which leads to things like gov't required fast internet may also lead to greater encroachment upon said internet.
It's an interesting way of thinking of things.
Yesterday I listened to a discussion comparing the less regulated and more stable banking system of Canada to the heavily regulated and crash prone US banking system. Everyone in the US says that they want Canada's banking system, it's a common refrain.
But do Americans want the political system which leads to such a banking system being implemented properly? As soon as you get to the Queen of England appointing US Senators, Americans tend to want to forget about the whole banking system thing.
I suppose the point is this: If you tell the US political system to implement Korea style fast and cheap internet, what you're going to end up with is something much different from what you wanted. The same political forces which got you to your current location will filter this legislation as well. And you may end up with something far worse than the status quo.
Canada's banks were still under the equivalent of Glass-Steagall restrictions at the time, and the government had kept them on a very short leash in many other respects. Your analysis is 180 degrees removed fom reality.
I don't know where the heck you're getting the nonsense about the Queen from either, the Canadian Prime Minister selects senators at his own discretion and the royal involvment in the process is just ceremonial.
Some things never change. I remember a article on South Korean broadband in Businessweek 15 years ago that ranted on about Seoul's paucity of elevators.
I'm guessing that package deal means we'll also be having to eat pickled cabbage and end our sentences with verbs if we want decent Internet speeds? I just hope we won't have to drink bubble tea, that stuff is gross.
Your whole post is based on a false premise, which is that customers have a problem with the status quo. I think internet companies have a problem with the status quo. They want somebody else to build the fat pipes crucial to their business. That's why Google fiber is a marketing and lobbying tool and not a real business.[1] But I don't think consumers here are any less happy than in other places. According to Akamai's state of the internet, the U.S. ranks #8 in average connection speed, ahead of places like Sweden. They have no reason to be. I've never heard someone outside my engineer friends complain about the lack of gigabit or even 50 Mbps+ connections. As long as its enough for Hulu, people are happy.
There are also other problems with your post. For example, we didn't sell off monopoly rights. Its been illegal for municipalities to grant exclusive franchises since 1992. Also, franchises don't come without strings attached. Here in Phila, Comcast has to run cable to a bunch of poor neighborhoods and charge $13 per month for service. Distribution requirements and regulated rates exist in the cable world.
[1] At the end if the day, if Google bought TWC instead, Google's average profit margin would go down.
"Your whole post is based on a false premise, which is that customers have a problem with the status quo. I think internet companies have a problem with the status quo. "
I recently had Google Fiber installed. Every single person I've talked to about it has responded with something similar to "Oh man, I wish I had that!" (That includes my tech-illiterate mom and the guy who came to install it who lives in a different city.) Of course consumers want faster, cheaper Internet connectivity.
"They want somebody else to build the fat pipes crucial to their business. That's why Google fiber is a marketing and lobbying tool and not a real business."
So, Google actually does the thing you said they don't want to do, and your response is, "well sure, but they don't really mean it?"
Engineers are lead users for internet usage, they predict what others will want in several years.
And even average users would become upset if they found out how much more they are paying than Swedes.
The US allegedly beats Sweden in average broadband speed which is a poor measure for most purposes. I don't think you will find any Swedes telling you that the US has better broadband.
From the FCC:
"The United States is 26th out of 32 countries in the 15-25 Mbps speed tier (advertised) with an average stand-alone broadband plan price of $56.50. The lowest advertised price for stand-alone services is in Slovakia at $18, while the highest charges are found in Switzerland at $180"
Although they don't summarize the findings above 25 Mbps the story looks much worse.
Why do you rely on a study that uses advertised speed instead of actual speed like Akamai's? Akamai also has a category for 10 Mbps+ availability, and the U.S. ranks very well there too.
Because there aren't many international broadband studies that incorporate cost and I don't see any Mbps/cost breakdown in the Akamai study. The FCC report incorporates Ookla data (Speedtest.net) which uses actual broadband speed and costs submitted by users. It corroborates the conclusions of the FCC study.
With respect to availability: There is a world of difference between 1Gps@$1000/mth and 1Gps@$50/mth though both qualify as 1Gbps availability.
Finally >10Mbps is pretty broad bin today and fails to meaningfully differentiate "very" high speed services.
Us and Sweden are in the same ballpark, users everywhere are missing an order of magnitude or three. Gigabit is old and cheap, and after 10 gig last mile tech development stalled due to lack of interest. We should be running 10 gig on the fiber to apartments and 100 gig on the uplinks from buildings by now.
Instead, wired net connectivity has been overtaken by puny LTE...
I don't disagree with your comment, but your argument would seem to apply to the rest of the world, whereas in fact the US is in a fairly unique situation among developed countries.
Most of the current situation can be explained by the fact that broadband is currently the only unregulated public utility.
In NYC, I don't really pay much attention to electricity, gas, and water. ConEd kind of sucks, and I wish they were better, but really, they work well enough most of the time, and I'm not sure that I could name anybody else who would do it better.
The problem is that we sold off monopoly rights to broadband without attaching any strings of regulation, etc. Why should they bother to upgrade their infrastructure? Heck, we literally paid the cable companies billions of dollars of government money to do exactly that, and because we failed to enforce that with any real teeth, they just took the money and ran. Of course they're not going to listen when consumers say they "want gigabit". It would make no business sense to do otherwise, especially when 80% of your customers are unable to vote with their wallet and use a competing service[0].
There's a case to be made for either a free-market approach to broadband, or a more "socialized", regulated monopoly. Unfortunately, what we currently have is a hybrid of both, and it happens to hit upon the worst of both worlds.
[0] There's a South Park clip that does a great job of describing this relationship. I won't link to it here, because it's rather crude and possibly (?) a bit NSFW, but searching "south park cable" on Youtube should lead you to it if you want to laugh, sigh, and cry all at the same time.