Broadband In Crisis: Does The US Need Regulation To Force Meaningful Competition?

from the two-internets dept

Susan Crawford believes telecommunications in America are going through the biggest crisis ever, and this is just as bad as the banking crisis was. Monday, at the Freedom 2 Connect conference, the Internet law scholar and former Special Assistant for Science, Technology and Innovation Policy at the White House, laid out what's wrong with broadband in America, hinting and what needs to be done to fix it. It's not going to be easy.

"The stakes are extraordinarily high, this has been an incremental crisis for a long time but now it's an actual crisis," said Crawford, whose book analyzing these issues, Captive Audience, will be published in November. The central issue is the so-called digital divide and what Crawford refers to as the "looming cable monopoly." Due to deregulation, which was predicated on the premise that the free market and competition would protect consumers, cable companies have found themselves with an inordinate amount of power to control the Internet and broadband access while, at the same time, traditional phone companies like AT&T are struggling to keep up and veering towards wireless services.

To support her thesis, Crawford presented some stunning numbers. In the last two years, Comcast market share has grown from 16.3 million subscribers to 18.5, a 14 percent growth. Time Warner Cable has grown 10 percent, from 9.2 to 10.7 million customers. Meanwhile, DSL subscribers have plummeted: AT&T and Verizon market share is down 22 and 21 percent respectively.

So, while it's good to be Comcast, it's not good to be an American citizen. Without competition, there's no drive to improve the service. The average speed of an Internet connection in the United States is around 5Mbit/s. An astoundingly low number if you look at other western countries. South Korea, for example, has an average of 50Mbit/s. And faster connections are starting to be implemented around the world. One gigabit connections are available in countries like Japan, Portugal or Sweden and at much better prices than in the U.S. – in Hong Kong, connecting at one gigabit per second costs $26 a month while in Chattanooga, TN, it costs $350.

What does this mean to the average citizen? It means the United States are giving up their leadership. Crawrford said this means “the next Google won't come from America.” And, even within U.S. borders, there's a fundamental problem: you either pay premium for a mediocre service or you are left behind.

“We end up with two Internets, two societies in America,” Crawford said to me in an interview.

One America does some tweeting and Facebook on their inferior, slower wireless devices. The other America not only gets to enjoy video online, but they can also apply for jobs, do video-conferencing, get an education online and, ultimately, live in the 21st century. Crawford argues that this digital divide ends up creating inequality between the haves and have-nots in America.

The only solution, Crawford argues, is for the government to intervene and regulate. Internet access, particularly high-speed access, should be treated “as a utility, just as electricity, gas and water.” Doing so would make the Internet a natural monopoly in which the government would provide the pipe and guarantee equal opportunity of access to everybody.

It might not happen immediately, but Crawford hopes that, with her influence and that of other thinkers like her, this will come to the forefront of the public discussion. She believes that, eventually, in every district, there will be elected officials who understand and care about these issues. That will be when we'll be able to look for a solution. "We make this a voting issue, that's how we fight back."

Filed Under: competition, freedom 2 connect, hong kong, internet law, japan, portugal, south korea, susan crawford, sweden
Companies: comcast

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  1. identicon
    Brian Littlefield, 25 May 2012 @ 2:43pm

    what we need is...

    a separation of infrastructure and service providers. the competition that spawned the internet boom in the mid- to late-90s was due to the fact that services like AOL, Earthlink, Prodigy, and others had to keep offering more service for less money. and you could pick ANY of them or switch anytime you wanted (with the minor inconvenience of switching your email addresses) because they had no ties to the phone companies. Cable modem and DSL providers started taking over when they started offering faster service (for more than marginally higher prices) and that not only drove out the independent ISPs, but it intrinsically tied service to infrastructure. And the problem with infrastructure is that every single region in the US (at least that I'm aware of) has local monopolies on cable and phone service. None of the areas I've lived in for the past twenty years have given you a choice of cable provider. if you get cable, you only get Time Warner (or comcast or cox or cablevision or...), and if you get phone/dsl service, you only get AT&T or Verizon (or Bell South or whatever). the only choice you get is between coax or two-wire. and since the infrastructure for these is not coupled together in any way, and one will often lag behind the other in local upgrades, the companies can basically ACT like monopolies. AT&T is a major player in all of this, and does ANYONE remember when they were hit with an antitrust lawsuit by the federal government and forced to break up into several smaller, independently held companies, as well as allow long distance service providers access to their lines? That's part of the reason that Verizon even exists today: it was one of the break-up companies (Bell Atlantic) and combined with GTE to grab marketshare. They have monopoly DNA in their blood!

    I guarantee one thing: if the current trend toward data caps, contracts with ETFs and higher rates is not reversed, it will have a significant impact on the economy in terms of limiting access to subscription-based and single-purchase based digital content, as well as surfing, shopping and social networking. And since all of those are clearly economic growth areas, well....

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