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OK, now that everyone has accepted the need for better, faster broadband (and why not, if the government is paying for it?), the serious negotiations can begin. Today’s Wall Street Journal has an article detailing who wants what, and who will be at a disadvantage. Think […]

OK, now that everyone has accepted the need for better, faster broadband (and why not, if the government is paying for it?), the serious negotiations can begin. Today’s Wall Street Journal has an article detailing who wants what, and who will be at a disadvantage. Think of it as the telecommunications carriers fighting the cable guys, and the rural carriers begging for mercy so they don’t have to deliver 50 Mbps to every last farm in America.

There are debates over the new definition of broadband (anywhere from 1.5 Mbps from the rural DSL guys hoping to keep their existing infrastructure, all the way up to 10 Mbps from the equipment providers trying to sell more gear), and infighting over how to fund such efforts (bonds, tax incentives or handouts). There are the typical pleas for net neutrality tied to any government aid, and the also typical pleas from the industry that the government should just hand over the cash and let them move forward.

It’s frustrating to see a worthy goal like universal broadband get mired in a quest for cash by cable guys and carriers already making profits. Seriously, AT&T and Verizon are spending billions investing in upgrades, but still recorded third-quarter profits of $3.2 billion and $1.7 billion, respectively. The biggest cable companies — Comcast and Time Warner Cable — also reported profits for the period, with Comcast generating $771 million in net income and Time Warner pulling in $788 million. Both reported softening demand, yet touted that so far this year they have generated increased free cash flow as a result of their operations.

I’m glad they’re making money, especially because they’re doing so while simultaneously investing in next-generation infrastructure in their service areas. If there’s profit in a venture, a corporation can take it without picking Uncle Sam’s pocket. Look at Verizon’s FiOS deployments. It’s not spending $23 billion laying fiber out of the goodness of its heart, but in order to offer competitive services that will keep it in business.

If there’s no profit — and that’s why rural broadband and fiber deployments in poor neighborhoods aren’t happening — then the government should grease the wheels through subsidies for subscribers, or make it possible for rural municipalities to take control of their own destiny through a bond issue or cooperative, such as the people in Monticello, Minn. and Eastern Vermont are doing. Hopefully the new regime won’t be taken in by the industry’s whining — and its money.

  1. As a rural Virginia resident, I think we need a broadband solution that is robust enough to handle the technology of the coming decade (minimum 5 Mbps and as much fiber as possible). But unless the government plans on running rural broadband deployments, the long-term strategy must result in a profitable arrangement for ISPs. I am not familiar enough with the Rural Electrification Act, but there must be a lot we can learn from that example.

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  2. The Vermont Governor Jim Douglas has a official Policy where the state will ensure universal access to broadband
    Internet and cellular phone service to all Vermont residents by 2010.

    He wants VT to be the United States first e-State but the problem is as we move into to 2009 that many Vermonters
    are still on dial up and cellular phone service is spotty in many areas so i personaly dont think the e-state intitative will become a reality by 2010 .

    http://governor.vermont.gov/tools/index.php?topic=GovPressReleases&id=2324&v=Article
    http://governor.vermont.gov/priorities/e-state_Initiative_VTA_Briefing_2007.pdf

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  3. Actually all of Vermont is moving forward on a plan to improve broadband and mobile access. The legislature has approved $40,000,000 of revenue bonding for this purpose.

    If federal money were given to the states (with a requirement for a state match to assure the money is spent on needed projects), the states could and would fill in the backbone and middlemile holes and help all of the US move up from fifteenth in the world in broadband penetration to first and also to have a high bar for what constitutes broadband.

    more at http://blog.tomevslin.com/2008/12/federal-broadba.html

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  4. @BrumleyGap

    The Rural Electrification Act had nothing to do with making a profit for service providers. Basically there was a realization that some deployments could never pay for themselves in any reasonable length of time. So, the only way to get service in such areas was for the government to step in and pay for it. Hopefully, now that the Federal Government appears poised to embark on some massive infrastructure projects we can accept that things really haven’t changed that much from the REA days — there are still many areas of the country that will never receive service based on profit motive alone.

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  5. Why should an urban dweller like me have to subsidize rural dwellers broadband? They made the decision to live far away from the city. They made their bed, they should sleep in it.

    I deal with pollution, noise and crime. I do this so I can be close to tons of work opportunities, infrastructure, medical care and entertainment. If I choose to live in an ex-urban area, I should own up to the responsibility to lose access to certain things.

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  6. [...] at Om Malik’s website, blogger Stacey Higginbotham posts an article titled “Universal Broadband: The Begging Begins.”  She goes into detail about the main parties that are vying for position in what will be [...]

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  7. Stacey Higginbotham Tuesday, December 30, 2008

    Tom, I’m intrigued the plan in your post. How would such a plan handle repairs? I can’t help but think about how long it takes for my county or state to repair a road (even a relatively speedy fix generally takes a few days) and that wouldn’t work for broadband issues (and broadband equipment fails more often than my roads). I’d like to hear more details.

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  8. Thats really some news Because in India 24 Kbps/user in Cafes are being sold as broadband, ie anything which is not Dial Up is Broadband.

    Deepak

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  9. [...] profits by the way, there are segments of our society that don’t have this type of access. As Stacey Higgenbotham at GigaOM pointed out recently the rural broadband and fibre deployments in poor neighbourhoods aren’t happening because there [...]

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  10. [...] Higginbotham | Thursday, January 22, 2009 | 7:00 PM PT | 0 comments Amid the discussion of universal broadband access, those without broadband get all of the attention. But what about the 17 percent of Americans who [...]

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