from the do-not-pass-go,-do-not-collect-$200 dept
During the crypto, NFT, and “web3” era there’s been no limit of hype regarding the (largely money making) potential of the ever-evolving internet. Less cared about during the metaverse hype era has been foundational but less sexy policy issues like anti-monopolization, or affordable and even broadband coverage.
That’s once again evident by the news that freshly elected New York City Mayor Eric Adams has “paused” the city’s major new affordable broadband plan. I wrote about the massive, long-researched plan in 2020 for Protocol, noting how it hoped to spend about $2.1 billion to ensure broad, competitive access to fiber and wireless networks, boosting competition, expanding access, and lowering consumer costs.
I’d been hearing for the last year that the plan was facing efforts to water it down thanks to the relentless lobbying of regional incumbents like Verizon, who weren’t keen on this whole “significantly more competition” thing. Monopolist lobbying absolutely played a role in scuttling this plan, leaving a bunch of eager competitors standing around with a dumb look on their faces:
“At a City Council technology committee hearing in mid-May, the city’s new Chief Technology Officer Matthew Fraser said the program is being re-evaluated.
And the next phase of the project — a $157 million effort that would build out public broadband infrastructure — is yet to launch. That’s despite the city drawing up contracts with internet service providers, according to officials at the Office of Technology and Innovation.
“Eleven service providers, many minority-owned, are ready and waiting to lay the necessary fiber optic cables for major broadband expansion,” said Danny Fuchs, managing partner at HR&A Advisors, which worked on the Internet Master Plan.
Despite being one of the wealthiest cities in America, New York suffers from all of the same problems as the rest of America when it comes to broadband. Namely, the market has been carved up and dominated by a handful of giant regional monopolists and duopolists, resulting in crap customer service, spotty availability, inconsistent speeds, and high prices.
Bipartisan federal, state, and local corruption ensures nothing really dramatically changes.
As a result, much like the broader country, NYC policymakers have taken to throwing subsidies, tax breaks, and endless regulatory favors at companies like Verizon in exchange for uniform broadband availability that somehow, mysteriously, never seems to arrive. The city sued Verizon in 2017, claiming it failed to live up to a cozy deal struck with the Bloomberg administration in 2008 that promised uniform fiber to all five boroughs by 2014. It’s now 2022, and huge availability and affordability gaps remain.
So New York City tried to do something new. Namely, a big investment in a centralized, fairly open fiber network that invited multiple competitors, something the planners hoped would expand access to 1.2 million additional households and save every New Yorker around $40 a month. The plan took years of collaborative planning to develop, and backers are pissed it’s being tossed in the trash:
Greta Byrum said the plan was “years in the making” and included exhaustive research on New Yorkers’ internet habits as well as detailed economic and technical calculations.
“A lot of careful thought and time and effort — and funding, frankly — has gone into the project,” she said. “I don’t know why we would go back to the drawing board before we try and do something designed with equity at its center.”
That this was scuttled by lobbyists and corruption is being obfuscated by a lot of blame-game finger pointing and pretense that the plan is only “on hold” or “being reconsidered.” The tell in this case is that city leaders are now parroting the telecom industry’s argument that you shouldn’t fund any broadband projects that are “duplicative.” As in, you shouldn’t fund any projects that would pose a competitive threat to existing, dominant providers:
At the May budget hearing, Fraser said the plan was “under review” to ensure it didn’t call for new broadband infrastructure in places where it was already present. He chalked the delay up to the “fractured nature” of the city’s technology agencies prior to the reorganization.
There’s an absolutely historic amount of money being thrown at broadband right now thanks to COVID home schooling anger, COVID relief, and the infrastructure bill. Failing to stop this momentum on the federal level, monopoly lobbyists are working overtime on the state and local level to ensure this unprecedented flood of new taxpayer money goes to them, and not competitors and new-market entrants.
They’re doing this by convincing policymakers that all new money should go exclusively toward their bottomless quest to deliver access to completely unserved locations. But our broadband maps dramatically overstate broadband availability due to… corruption. And most of our state and city systems to ensure monopolies are actually using this money to improve access are also broken due to… corruption.
Big ISPs like AT&T, Verizon, and Comcast want this broken, profitable mess to continue in perpetuity. They want us to continue throwing money at their empty promises to finally finish a job they were already paid to finish a decade ago. They most assuredly don’t want any of the billions in new broadband funding going to things like open access fiber networks or widespread competition (a core focus of the NYC plan).
U.S. state and federal telecom policy is so broken that doing absolutely anything other than gutting regulatory oversight while throwing countless billions at coddled telecom monopolies is considered extreme and radical.
The dominant U.S. telecom policy paradigm involves literally doing everything regional monopolies want (approving mergers, gutting consumer protection laws, doling out tax cuts, slathering them with subsidies), then coughing loudly and walking away with a wave of your hand when some under-funded academic or research group points out (with decades of hard data) this approach isn’t working.
Adams is of course the same mayor who has gone to comical lengths to hype and support crypto, so it’s very on brand for 2022 for broadband affordability to be relegated to the backseat as an irrelevant afterthought under the din of crypto hype. After all, the “free market” will fix any remaining issues with U.S. broadband, despite the fact this hasn’t worked at any point during the last thirty years.
Having covered this sector for most of that time, I’d wager that New York City’s broadband plan re-emerges sometime in the next few years as a faint shadow of its former self. This new version will have been ghost written by Verizon lobbyists with an eye on giving Verizon millions in additional funds to complete fiber builds a decade overdue, with healthy competition a distant afterthought.
In the interim, cryptocurrency scams and web3 bluster will continue to take media and policymaker priority over foundational issues like broadband affordability and monopoly reform.
Filed Under: 5g, broadband, competition, digital divide, duopolies, eric adams, high speed internet, monopolies, new york city, regulatory capture