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. icon
    Chargone (profile), 24 May 2012 @ 8:26pm

    NZ telephone system started off (like a number of things) as part of the NZ post office. at some point (probably in the 80s when we had some major economic problems) it was privatized along US corporate lines. (generally considered to have been a highly dubious move.)

    the exception was this: it was still considered a vital service and consequently regulated into the ground. combine that with a usage that lead to foreign technicians thinking the were running load tests when they first saw the exchanges running (they weren't) and they couldn't afford to slack of and still meet their minimum performance requirements.

    for a long time there was only one competing company, and it only existed because part of the regulation was that Telecom (the privatized ex-post office entity) had to allow it to use the pre-existing cables and such.

    cue wide spread public adoption of the internet. in the mean time the competing company has merged with another and changed names a couple of times, but is still basically the same entity. only now it has Money and there's Demand. it starts running fiber optic cables to the home, among other things, but still needs to use the main (backbone?) cables and interact with the exchanges. many retail level ISPs pop up offering different connection deals. the problem at this point became that Telecom was both a retailer in it's own right And a wholesaler so far as internet connectivity was concerned. this lead to some somewhat anti-competitive business practices. which lead to a bit of a scandle and was About to lead to a government investigation and probably forced break up.

    to avoid that the company reorganized and split itself up. (into retail, wholesale, and 'all the random crap needed to make everything actually interact and work', so far as i can tell.) it's a bit complicated, (especially as there was then a government project that many different companies got involved in to upgrade everything which rearranged who owned what Again) but solved the problem.

    meanwhile that other major competing company, somewhere along the way, went 'hey, we can run TV signals through this shiny fiber cable we've got here...' so, we actually have cable tv these days. if you sign up with them. it's just an alternate transmision medium for the standard satellite and free-to-air tower based broadcast channels you could get here Anyway, but it's slightly (read, single dollar numbers per month) cheaper to get tv and phone and internet through them than to get satellite tv and phone internet at the same performance level otherwise, and the reception's better. not enough of a difference to make people switch over, generally, but enough to make it a slightly better deal if you're setting up a New connection and want All of those things.

    anyway, point of all this: the main backbone cables and exchange are pretty much a utility which is probably best run as a highly regulated monopoly (not actually by the US government, given how That seems to work, though if it weren't so blatantly corruption prone that would be best) but with minimum performance standards which are updated regularly, and never lowered, and a very close eye kept on it's pricing. i imagine a few hundred or more ISPs are a louder voice than one 'dumb pipe' company in that regard.)

    Retail ISP services should be in free competition, and generally relatively small entities. if they run cable for themselves at All it should be only the last bit, and they shouldn't need to do That unless they want a performance advantage due to new tech or there simply Isn't such cable yet (the basic cable should be owned by the town or city or whatever, really). avoidable monopolies are bad, yo? corporations just make it worse.

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