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Summary:

Solving the lack of broadband competition isn’t just an intellectual exercise, it’s an issue that has to be solved. Otherwise some people will be living in the 21st century while great chunks of the country will be subsisting on the 2010 version of dial-up.

If you live in New York City or in any of the heavily populated and wealthy areas of the Northeast, you likely have access to some of the fastest broadband speeds available in the country. If you live in a suburb of Austin, Texas, however, you’re offered speeds some six times slower for about half the price. And as the technologies race ahead for network access, ISPs with fiber to the home and cable-provided Docsis 3.0 service are going to surpass the speeds that providers using old-school copper and even wireless can offer.

Which means that while some people will be living in the 21st century, great chunks of the country will be subsisting on the 2010 version of dial-up. Don’t believe me? Verizon has tested a tech that requires software upgrades to deliver a 10 Gbps connection that’s shared among 32 homes. Meanwhile, technologies such as the next generation from AT&T are going to require swapping out gear at the node and inside your home so the companies still using copper can squeak up to speeds that most analysts doubt will even reach 100 Mbps. That means a hundred-fold disparity in connection speeds. Holy cow.

We’ve addressed this in stories, when FCC chairman Julius Genchowski came to visit our offices and even in conversations with service providers. It’s the key reason the U.S. isn’t competitive with other countries when it comes to the rapid deployment of next-generation networking technology. So we think it’s a big issue. The FCC even thinks it’s a big issue. Google thinks it’s a big enough issue that’s it’s going to spend hundreds of millions of dollars to build a shared, experimental fiber-to-the-home network — and embarrass the ISPs and the government in the process.

To quote the Google blog: “After all, you shouldn’t have to jump into frozen lakes and shark tanks to get ultra high-speed broadband.” Oh, but that’s what people are willing to do because the ISPs are so focused on the short-term bottom line to spend billions (yes billions) on big pipes. When I talk to many ISPs, the No. 1 reason they give me for the lack of investment in faster infrastructure is that users don’t want it. There’s no killer app driving demand.

I’d buy that if ISPs were investing in research to find those killer apps, or weren’t actively seeking to whittle down connection speeds with tiered pricing plans or caps. But consumers are finding killer apps of a sort — only those killer apps interfere with the pay-TV side of the equation for cable guys and telcos that have invested in IPTV infrastructures. But even if the idea of another we-have-more-HD-channels-fight thrills you, the truth of the matter is that competition in broadband speeds will bring about the connected home.

No longer will just your computer always be on; your thermostat, your television, your appliances and your links to loved ones will be, too — and possibly throughout every room of your home. But that’s not going to happen for those without fat pipes. Which is why I and others found the National Broadband plan so disappointing. While it gets a lot of things right when it comes to boosting broadband adoption, it doesn’t really help drive innovation or ensure competition.

And the plan’s authors are aware of this. They offer the salve of data as a means to possibly protect consumers from overcharging and to shame providers into offering better service, but that’s going to require an activist FCC like the current commissioners are, and in a few years, who knows if that will be the case. And I am as excited about faster mobile broadband as anyone (maybe more), but mobile data isn’t going to replace wireline broadband — nor should we be content with those speeds.

I understand that having spent $19 billion building out a fiber network, Verizon would be justifiably upset over sharing its fiber with competitors. We also currently have a huge variety in our network providers that makes sharing lines difficult from both a technical and regulatory perspective. However, the type of open-shared network that Google is proposing is the fastest ways to get the U.S. big broadband quickly.

Since the FCC can’t get it done through the Broadband Plan (it isn’t even trying) and Congress decided not to get it done with the stimulus money (a few fiber projects were approved), then it’s up to the FCC and Congress to make it easier for cities to deploy their own fiber networks which can then be opened up to competition.  That means making it possible to change the laws in the 18 states that make it difficult for municipalities to own fiber networks or offer competitive communications services, but will likely evolve as a states rights battle.

Right now, Google and consumer demand is our best hope for better broadband, which isn’t making me feel too great about the future. Anyone have a freezing lake I can dive into?

Related GigaOM Pro Content: Who Will Profit From Broadband Innovation? (sub. req’d)

Image courtesy of Flickr user Tycho Moon

  1. Diving into a freezing lake will get me faster broadband? Sign me up. In fact, just let me know what I have to do. Anything, as long as I can get away with it.

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  2. Ok, this is getting out of hand.

    According to the FCC’s opening bid to regulate broadband (otherwise known as the National Broadband Plan), 95 percent of Americans have access to broadband, and 85 percent of those people can chose from multiple suppliers. The FCC pegs broadband adoption at over two-thirds. Research firm broadbandtrends.com figures this to be over 70 percent. According to Pew Internet, the average price of broadband in 2009 was $39, or one-fortieth as much as dial-up on a per-bit basis only a decade ago. Finally, the FCC estimates that the average actual downstream broadband speed is about 4Mbps which, according to Akamai, is a shade higher than the average for European countries, all of which are smaller and denser than the US and have more intrusive regulatory regimes.

    Do these facts really paint a picture of a “broadband ghetto”? A “digital divide”? Apparently the FCC thinks so and is quietly setting that stage to get its regulatory mitts around broadband operators (that’s essentially what the USF shift is all about) so that it can fix this massive problem.

    Keep in mind that the strides made in broadband deployment during the last decade (and for those that weren’t taking notes, broadband adoption was less than 5 percent in 2000) occurred precisely because broadband was largely unregulated. In fact most progress was made subsequent to the FCC’s 2003 Triennial Review which largely undid the failed experiment embodied in the 1997 Telecom Reform Act. All of this was done with private capital and with private innovation.

    Yes, it would be nice to have broadband available to 100 percent of Americans. And yes, we’d all love 100Mbps broadband connections. But we should be instinctively wary when government steps in to regulate or reform industries which heretofore have operated fairly well.

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    1. Kevin, broadband adoption increased by so much in such a short period of time because the mainstream found a use for faster speeds in services such as iTunes downloads and more graphically intensive web pages, but the investment in DSL and cable broadband was already made. So the speeds capable for delivering those services were there in many areas of the country. Today people are finding they need faster speeds for video streaming, HD downloads and video uploads, but they are running into issues with those things taking a lot of time of being of inferior quality. The speeds aren’t here today.

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      1. Stacey, fair points although it might also be argued that capacity and demand inch up in tandem with each other, much like computer memory and applications software. Demand drives capacity increases, but capacity increases also enable whole new sources of demand.

        Also, streaming applications will always encounter challenges in best-effort networks, almost irrespective of the speed of the last mile connection. When everyone has 100Mbps fiber to the home they’ll all be watching multiple HD streams and the aggregation (“middle mile”) network will still be heavily congested. Streaming applications operate best when the network can provide some level of QOS, something that many broadband critics strangely view as evil.

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    2. I assume you are a rep. and think that company’s should be allowed to run there company any way they want with no regulation what so ever, well if that’s the case then you can keep on paying more than double for half the speed.

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  3. Stacey, before you whine that “Ooooooh, I can’t get the absolutely fastest possible broadband,” you need to answer two questions. Firstly, what do you want to do that really requires that much capacity — and isn’t simply wasteful? And, since bandwidth costs money (especially way out there in the middle of Texas), are you willing to PAY for all that expensive bandwidth? Put up or shut up: unless you can answer both of these questions, you have no right to bellyache.

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    1. Brett, this is the USofA. Everyone has the right to bellyache, even as you have just demonstrated.

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  4. I’ve followed GigaOM for years, but I can pick out Stacey’s pieces from a mile away these days. They will have an intently Texas slant (as far as I can remember, she’s the only writer who sees the need to push a local agenda), and they will probably be re-iterating for the thousandth time that broadband in the US is slower than other countries (a falsehood), and calling for the FCC to regulate it harder. The difference between blogs and published magazines is the editing. There’s no way an editor would allow a writer of a published newspaper or magazine to keep re-iterating the same topic over and over and over again.

    On the actual subject, businesses routinely have gigabit to every desktop with tens if not hundreds of megabits between locations, higher than the average consumer has. They have the funding to procure technologies out of reach of the average consumer, yet they have not found a need for larger bandwidth aside from video. Where’s the killer app? If there’s a demand for increased bandwidth, there’s enough competition that someone will do it. I don’t buy the oligopoly argument here, given the process we’ve made in broadband penetration and speeds in the last 10 years.

    There’s no reason to re-invent digital cable using IP, the distribution system we have in place works. There was a compelling reason to re-invent voice, as TDM networks were inefficient relative to packet networks for individual to individual communications, but broadcast networks are at least as efficient, if not more efficient, as IP (given that multicast is not implemented Internet-wide and is a confusing technology to implement even on an enterprise or metro network) at delivering video to thousands of subscribers. I’m OK with the FCC’s plan, I don’t get the calls for additional regulation on top of the proposals. This blog is starting to carry more opinion than fact these days.

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    1. A fine comment. If I may pile on, how can Texas broadband speeds be 6 times slower than NY? If they were one time slower they’d be stopped. Oh, yeah, dramatic license trumps accuracy.

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  5. “The Digital Divide Will Ensure a Broadband Ghetto”
    Also known as AT&T and the rest of the dsl light providers.

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  6. Hmmmm…
    Do you suppose a community willing to pay for and install fiber through-out its’ citizens abodes would induce a quid-pro-quo from local providers ? A stray thought only.

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  7. We don’t need the government to invest in commercial goods. They are bankrupt and make bad investment decisions.

    The fact that Google and Verizon are invest Billions in Broadband simply reinforces this notion in my mind.

    Cut government spending, and cut government involvement.
    Save the money for Social Security and Medicare.

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  8. it’s articles like this that make me question our grit as a country. stop complaining. if there is a REAL business case, prove it, get funding, and build the darn thing yourself.

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  9. Judith Nappe Monday, March 29, 2010

    The mess of broadband availability in rural areas in the Pacific Northwest is never going to get good, it seems. I have a fast computer and cannot afford the outrageous price for hi-speed broadband so have to settle for the lowest speed the monopoly phone company offers: 768 kbps. Very slow. They have copper wire out to my little town, and as a monopoly, have no competition because they keep local providers from reaching us. It is sickening when I remember there was better telecommunication service in the 1950’s. Century Link is not doing any upgrading and probably never will. What a backward country America is.

    Hint: when commenters are talking about speeds of broadband, you’d do yourself a favor to state the kilo bits/sec or gigabits or whatever you have is called. Gives readers a base to compare.

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  10. I have to agree with Kevin’s comments. The growth of Internet connectivity in the US has been mind-bogglingly fast, and it shows no signs of stopping. The “2010 version of dialup,” as Stacey put it, is dozens of MB/s — far more than anything that was available just a decade ago.

    Scott Wallsten has done some excellent research (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1434570) on the validity of international comparisons, and he points out serious flaws in the metrics that claim to show the US falling behind our peers. One of his most compelling points is that, no matter what you think about speeds and prices, Americans are getting much better use out of their Internet infrastructure in terms of music and video downloaded.

    But all that aside, I want to specifically object to Stacey’s conclusion. “Right now…consumer demand is our best hope for better broadband, which isn’t making me feel too great about the future.” Really? Internet connectivity is continuing to skyrocket under anyone’s projections. More importantly, consumer demand is precisely what’s driven all this growth so far. What in the world could have driven it, if the demand weren’t there? Moore’s law hasn’t kept up for so long because of any FCC plan; it’s kept up because Intel and AMD have customers who’ll pay for speed and who still want more. The law of supply and demand has been building our networks just like it’s been building our processors, and there’s no reason to expect it to quit.

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