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Summary:

We have a broadband problem in the U.S. There’s not enough real competition to drive either innovations or price reductions. This is also true of cable television, was true for landline phone service and will likely be true for wireless broadband service for a few more […]

We have a broadband problem in the U.S. There’s not enough real competition to drive either innovations or price reductions. This is also true of cable television, was true for landline phone service and will likely be true for wireless broadband service for a few more years. Most consumers have the choice of a cable provider or a telecommunications provider for their ISP, with each spurring the other to incremental changes where they compete and utterly abandoning areas where building out the infrastructure may not be profitable.

These are rational decisions in a capitalistic market, but given how important broadband is, I believe the government has a duty to meddle in it. So far, the Obama administration appears to be ready to do just that. Three distinct plans have been offered up as a way to reach President-elect Obama’s goal of 100 percent broadband coverage; below is a brief look at each of them.

The Wireless Plan: This plan involves the FCC auctioning off the AWS-3 spectrum in the 2.1 Ghz band and allocating 25 percent of that spectrum to provide free 768 kbps broadband to all of America wirelessly (a second, faster tier would cost $30 a month). A startup called M2Z would like to bid on this spectrum and build out the network, which will cost $3 billion to $5 billion. The pros of this plan are: The cost to taxpayers is nothing, except the loss of whatever revenue the spectrum might have fetched; there’s no cost to subscribers of the slow network; and the plan is supposed to cover 50 percent of the population in four years and the rest in 10. The cons: This network would be as slow as molasses, it could only realistically cover 95 percent of the population, and the web would be filtered.

The Watchdog’s Plan: The FreePress proposed a $44 billion plan that offers some tasty inducements to the incumbent broadband providers and would subsidize broadband access for those who cannot afford it. The goal is an all-fiber, 100 Mbps nationwide network. The idea here is if you build it, (and for some, subsidize it) they will come. The pros of this plan are the fast speeds and funding allocated for Congress to assess the true state of broadband access in America, but the cons include the price tag and the likelihood that the incumbents could warp this plan into something that sounds as good, but delivers far less.

The University Plan: EDUCAUSE, a group of more than 2,200 university IT managers who aim to promote higher education through access to technology, offered up a $100 million billion plan in January that also envisions symmetrical 100 Mbps pipes. The positives here are fat pipes, but the con is the fat price tag shared between the federal and state governments. Also there’s no clear indication as to how or who would manage the network.

  1. We have a broadband problem in the U.S. There’s not enough real competition to drive either innovations or price reductions.


    We have a solution in entrepreneurial america to this problem – start a company that takes advantage of the situation and make a ton of money by providing cheaper service and/or more innovation. We do this in lots of markets – Apple, Dell, cisco, Microsoft were all companies that started on a shoestring to compete with the big boys. The gov’t didn’t meddle in any of those markets.

    I think your view that there isn’t enough competition and prices are too high is incorrect. There have been a lot of companies that thought they could deliver broadband to consumers at a much lower price than the incumbents. It turns out that is incorrect – it is expensive to provide fast broadband to consumers and the incumbents do a good enough job that repeated competitors can’t displace them. It is expensive to wire fiber to every home and we shouldn’t be doing that unless people are willing to pay for it. and if they are not, we shouldn’t take tax dollars from other programs to subsidize fiber everywhere.

    Most people in this country can get broadband access for less cost than getting cableTV. Or for less cost than the difference in their monthly gasoline bill if they purchase a fuel efficient car instead of a huge gas guzzler. I am uninterested in spending tax dollars to subsidize people to get broadband when they have decided to spend their money on something else.

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  2. None of those plans are mutually exclusive.

    And “Free 768 kbps broadband to all of America” sounds pretty darn good – not “slow as molasses” to me. I’m paying $29 / mo for DSL which doesn’t get much faster than that anyway and it certainly isn’t wireless. And think about the benefit for all those poor souls still trapped on dial up.

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  3. Jacob Varghese Sunday, December 21, 2008

    I support the EDUCAUSE symmetrical 100 Mbps pipe plan. This is a game changer for the country. It would spur the development and advancement of new technologies and industries. It would go a long way to decrease the wide gap in education in this country between rich and poor communities. I’m willing to pay more in taxes for this plan. Instead of my $30-50 a month going to cable and telecom companies for the internet services, take it from my taxes. There is more than enough money for this plan if the cable fees paid by consumers were moved to taxes:
    1,000,000 users x $30 a month x 12 months = $360,000,000.

    I’m willing to pay an extra $360 in taxes if it would mean that I would no longer have to pay the cable/phone company for broadband and that every american household/business would have access to high-speed broadband.

    This is a win-win for the whole country in my eyes.

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  4. Jacob Varghese Sunday, December 21, 2008

    They should have used the 700mhz spectrum for LTE national wireless broadband instead of selling it off.

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  5. Scobleizer — Tech geek blogger » Blog Archive The tale of 20 likes and its impact on news « Sunday, December 21, 2008

    [...] [...]

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  6. if we can get free universal service out there i think that the problem of slowness can be resolved later. most people i know would cancel their current subscriptions in a second if there was a free option; even if they had to take a speed hit. i know quite a few people who have moved into apartment buildings with ‘free WiFi’ although they com[plain about the slow speeds they do not subscribe to cable or DSL; they just live with it. the pressure on the telcos and cable companies as people start dropping there subscription will pressure them to become more completive.

    the first step should be a nationwide free network no matter how slow.

    also although i am usually a huge advocate of net neutrality i would support the idea of a completely free to users network that sold access to the web hosting firms as their source of revenue; even though it may mean users would only have access to those sites. of course anyone would be able to offer a proxy service to the entire internet after buying wholesale access to the back end of the network. we would conceivably have competition between these proxy services. the question would be whether any peer2peer use could fit this model. i would only support this if it was totally free for end users. it would seem agianst the intersts of whoever would run such a network to limit speeds since they would get paid by the web hosting firms for the amount of data that transverses the network.

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  7. There ain’t no such thing as a free lunch. Or broadband. Somebody — i.e., taxpayers — will be paying thru the nose for govt “meddling.” Obama will offer anything, as long as we have to pay for it.

    Government interference is always a bad idea. I can’t believe the whining welfare mentality shown in most of these comments.

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  8. Sooo… we turn to renationalizing/remonopolizing the phone company after how many years? And adding nationalization of all the cable companies? US.GOV BBAND, Inc.? I don’t think so.

    Quoting EDUCAUSE’s wishlist is equally frightening, since it requires about 2-3x more money than Reed Hundt wanted in his last “Broadband for everyone” comments prior to the presidential election… I mean that whole phrase “Of those who can’t do, teach” comes in pretty sharp.

    Let’s play a thought problem that *ahem* one phone company will not touch at this point in time — If a Fi ber Optical Service build in a metro area currently takes a 7 to 10 year build — say, the times given for builds in three Northeastern cities linked together by Amtrack — could adding more money to the buildouts accelerate the deployment timeframe? If so, by how much? Or is this one of this mythical-man-month problems and the time is the time unless you want to declare a national emergency state?

    Does this accelerated timescale require more ditch-diggers? Are those ditch-diggers available? Do you have to train more ditch-diggers (laid-off auto workers)? Will there be an increased demand for fiber? Do you ignore Corning’s desire to put in the latest-greatest high-quality fiber or do you gold-plate the network?

    Oops, wait, the cable companies think it’s unfair that the Fi Optical Service carrier has received money from the government. Do you now provide money to the cable company for it to upgrade plant?

    What strings do you attach to that money? Net neutrality strings? What if the operator refuses to take the money to accelerate the build with the strings attached, what then?

    Look to the auto industry. Ford is not taking government money, and its executives will be keeping their independence and their perks.

    This is all pipe dreams.

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  9. All these plans will fail, because all of these plans are State-regulated and manipulated.

    If it isn’t the FCC wringing new competition out of the picture, it’s local governments giving monopoly status to one or two providers. This needs to end.

    I don’t want one red cent of MY money put towards faster broadband for anyone. You “it’s too slow” folks are stealing from me enough for your other causes, stay out of my broadband.

    For me, and for a VAST majority of users, latency is far more important than overall speed. 20mbit/s? Who needs it? Give me 60 second ping times from popular servers, and I’d happily take 512kbps.

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  10. I think you mean:

    “EDUCAUSE … offered up a $100 billion plan”.

    Billion, with a B. Big difference…

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