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Summary:

History demonstrates that in order to build world-class infrastructure, be it railroads or electricity, a mutually beneficial commitment between communities and the providers of that infrastructure is, and has always been, essential. It is no different for communications.

google_fiber_truck

For a century, our country has benefited from a communications social contract in telephone, broadcast, and multi-channel video in which through law, regulation, and franchise agreements, providers obtain public benefits in exchange for providing certain, limited public obligations. But how will we write the terms of the social contract between communities and communications providers in building the next infrastructure of world-class IP communications for the 21st century?

The question regarding how to build it has become increasingly important as Internet communications begin to supplant 20th Century methods of delivering voice and video, but it remains unanswered. When we developed the National Broadband Plan, we expressed our concern that the current social contracts governing communications would not create a critical mass of communities with world-leading bandwidth, without which the United States might lose its international leadership in developing the next generation of broadband applications.

The Google experiment.

Google, to its credit, stepped up and offered to build such a network, and a whopping 1,100 communities volunteered to host it. Google chose Kansas City and negotiated a deal in which the governments in that area agreed to numerous actions to improve the economics of the new deployment. Now, the search giant is building out a network that will provide Kansas City a strategic bandwidth advantage and giving its residents new options, involving both speed and price, which they did not have before.

To its credit, Time-Warner Cable, one of the two incumbent providers in Kansas City, responded in the marketplace, offering consumers higher speeds and ramping up its local staff. But now Time-Warner Cable and AT&T, the other incumbent, are responding with lawyers, petitioning the city to receive the same benefits accorded Google. This response could signal a start of a race to the bandwidth top. Or it might be the beginning a race to the bottom. So this is where things get interesting.

Get better or get out of the way.

While it is understandable that incumbent providers have not embraced the opportunity to create test-beds for world-leading connectivity, their reluctance should not slow down others who are willing to take that leap.

The only way American consumers are going to get the same level of connectivity that residents of Korea, Japan, Stockholm and other places around the world already enjoy is if we pursue local experimentation of next generation deployment solutions like Google has done in Kansas City, and others are beginning to test.

Just this week, for example, the State of Illinois, the University of Chicago, and Gigabit Squared, a private company, announced a multi-million-dollar partnership to bring new levels of connectivity to a number of Chicago communities. If our country wants to lead in the 21st Century Information economy, this is exactly the kind of effort we need to encourage.

While state and local law will control the exact response to the incumbents, Time-Warner and AT&T are, and remain, beneficiaries of arrangements that provided them preferred access to public property. Google wasn’t the first private communications company getting deals from the government. Those legacy arrangements enjoyed by incumbents like AT&T and Time Warner granted them monopolies in their respective markets, something Google will not receive.

How governments respond to the incumbents shapes the future

The current situation provides an opportunity to consider what response would actually best improve options for broadband consumers, using Kansas City as the test-bed. For example, one response would be to offer the incumbents the same deal but require the same obligations that they required from Google, such as higher speeds and free connections to public institutions. I suspect the incumbents would not agree to those terms but if they did, Kansas City would enjoy the benefits of the most competitive broadband market in the world.

There is no more monopoly advantage.

Another potential response would be to provide Time-Warner and AT&T what they want without requiring anything in return. This would create a precedent that raises the cost for other communities trying to catalyze an upgrade, and thus discourages local efforts to build the kind of networks that FCC Chairman Julius Genachowski recently underscored that our country needs to be competitive. Even worse, providing such benefits without requiring any reciprocal obligations could put pressure on other communities to engage in a race to the bottom, in which local communities lose traditional benefits without gaining any better options.

It takes two to tango

The Google/Kansas City agreement only happened because the city believed the existing arrangements were not providing what it needed. In fairness to the incumbents, however, we have to recognize that the move to an all-IP world requires all levels of government to reconsider existing arrangements.

As we reconsider those arrangements, we should acknowledge that the current arithmetic of deployment does not justify an upgrade. The math, however, runs both ways. Today, private investments in a next generation network without Kansas City-like agreements are unlikely, but it’s unrealistic and unfair to ask communities to offer such terms unless a private party is willing to make a Google-like investment. We need two to tango in order to drive the next generation of upgrades.

And therein lies the opportunity. The best outcome for the country would be if Time-Warner, AT&T and others seized this moment to offer to deploy the kind of network Google deployed in other communities if those communities would provide the kind of inducements Kansas City offered. If they did so, they would find willing partners. And those partnerships would spark a race to the top that would catalyze new investments, new economic growth, and a new generation of American leadership in delivering the benefits of broadband.

Blair Levin became a communications & sciety fellow with the Aspen Institute after serving as Executive Director of the National Broadband Planning effort. He is currently Executive Director of Gig.U, a project within the Institute that seeks to accelerate the deployment of next generation networks and services by using university communities as test-beds.

Chicago image courtesy of Flickr user Bert Kaufmann

  1. The U of C deployment is especially interesting, in part because the communities to which they’re going to be deploying broadband (other than Hyde Park) are by-and-large poorer, underserved communities. Google’s taking a stab at that in Kansas city, but their deployment plan can’t really help but favor more affluent areas first. It will be interesting to see if the Chicago experiment leads to any real economic development in these areas that suddenly have access to unparalleled speeds.

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  2. > one response would be to offer the incumbents the same deal but require the same obligations that they required from Google, such as higher speeds and free connections to public institutions. I suspect the incumbents would not agree to those terms

    More important than free service to public institutions is the incumbent telecoms should lose their monopoly status if they want the same deal from local governments. I am sure that they will press for government-supported monopoly and present it as being necessary and ‘fair’ for them to recoup the cost of capital in building out new networks. If that happens, we will be back to square one a few years from now. Any kind of monopoly or duopoly is the bane of telecom progress.

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  3. I say nonsense. AT&T has existing Rights Of Way (ROW) that it can use to put FTTP in to every single business, house, and government building in existence in both KCKS and KCMO. They do not need new incentives or discounts. They already got BILLIONS of tax deductions, tax credits, and wireline rate increases to do exactly that. They spent most of it on executive compensation and cellular. They got laws changed to exclude local franchise agreements. They said they needed this to quickly deploy top of the line, not the low or middle tiers, of Uverse throughout many states. They have not done that in one single state. They keep telling poor abused is me stories and too many analysts, “journalists”, politicians, and don’t you dare build a public utility FTTP system puppets believe them. The telephone companies keep abusing their relationship with the public and various government agencies and few in authority are willing to call their bluff. I want government mandated local loop unbundling with mandatory line sharing imposed within 4 years in every state in the USA. Get some competition in the system and a lot of our being behind the leaders in high speed internet service would go away.

    The cable companies are a different story. The physical plant for cable television was never designed for internet access, it just worked out that it could be used as such. The physical plant deployments were based on television viewing issues. The cable companies never got the tax cuts, tax deductions, tax credits, rate increases, and law changes regarding physical deployment that AT&T did. They did not make the promises AT&T did about providing better service to ALL areas of the states. The line sharing concept may not be possible in some cases for cable systems.

    AT&T needs a stick. TWC may need a carrot. But AT&T has been good at getting the entire garden to do nothing and will tell a tale of why it needs to do so again.

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  4. Well put Blair. However I’m sure I don’t have to point out that providing bandwidth is simply the first step to bringing real value to citizens. Gigabit Squared has borrowed from my new company – Digital City Mechanics – playbook and is promising “digital economy ecosystem” efforts to create new kinds of jobs and show citizens the value they can reap from stable broadband.

    RIGHT ON!

    After years of working in this area – its truly the stability and reliability of broadband which proves its value. Researchers, workers, government officials and entrepreneurs are still effectively getting 10Mbps bandwidth, but at least it won’t GO DOWN (as my T-W cable modem constantly does here in Shaker Heights, OH.)

    I live down the street from Mark Ansboury, do seder with Lev Gonick and have been trying to get Cleveland to think of broadband as something more than remote surgery or sexy video phone calls. Unfortunately the example we have here in Cleveland – OneCommunity – has over promised, and under delivered – for years.

    I applaud your and Gigabit Squared’s efforts and I PLEAD with you to focus on workforce training for a new breed of workers – who will make their living on-line. I’m NOT talking about programming or the digital salt mines of call centers and BPOs.

    What I’m talking about is a freelance nation of independents, working in that zone in the middle between hi-end coding and lo-end drone thinking. It’s out future – and coincidentally it looks like it’s getting built in the neighborhood I was raised in!

    Make sure to run fiber to the Miriam G. Canter middle school. It’s named after my mother.

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  5. Christopher William Crawley Sunday, October 21, 2012

    Well a decent editorial actually and I personally think that if we allow the government to restructure its policies and rules based on the changes in commerce,and of course we will attempt to help with our unique business model which will most likely change the very structure of global markets after we launch the Apollios,why because our prospective users will be the guides to how we AS A PEOPLE deal with the current issues of integration,segregation and communication tech mergers etc…
    So bet on the Apollios.com and watch the world evolve as the status quo markets dictate the direction we ALL will go in, because that’s the only future this entrepreneur envisions!

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  6. Thank you Blair for this cohesive summary of the key challenges and potential benefits for communities of creating mutually beneficial arrangements for next gen telcom infrastructure deployment.

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  7. Richard Bennett Tuesday, October 23, 2012

    Blair makes an interesting argument, but a couple of things aren’t clear.

    He says: “The only way American consumers are going to get the same level of connectivity that residents of Korea, Japan, Stockholm and other places around the world already enjoy is if we pursue local experimentation of next generation deployment solutions like Google has done in Kansas City, and others are beginning to test.”

    It’s not clear that American consumers want or need gigabit networks at any price, so I remain unconvinced about their value. Perhaps it’s a matter of building for the future, but it’s generally more economical to to that in the future. America lacks superhighways as fast at the German autobahns, but it’s unclear we’re suffering because of it.

    He also says: “Those legacy arrangements enjoyed by incumbents like AT&T and Time Warner granted them monopolies in their respective markets, something Google will not receive.”

    Once upon a time, AT&T and TWC had monopolies for POTS and cable TV, but they’ve never had a broadband monopoly. One could point out that Google enjoys a monopoly in Internet search just as easily, but I’m not sure that’s significant except as it supplies a revenue stream to partially defray the costs of the fiber net, as they legacy POTS and cable businesses do.

    It will be interesting to see how the KC market reacts to three players in the wired broadband market, but it’s not something we haven’t seen before. We have multiple players in places like San Francisco and Boston, for example, and the world hasn’t changed.

    The notion of picking winners and losers by subsidizing a new entrant is actually kind of disturbing when we play out the potential futures in just about any policy direction. What happens to broadband investment in other communities when the specter of a subsidized third pipe appears on the horizon (or wherever specters appear?) Will Google have the tenacity to stick to an ISP business that’s far outside its core competency when the blush is off the rose and the headaches of customer support supplant the high fives about sticking it to the man?

    It’s going to be interesting to watch the scenario unfold. One thing I’d like to see is broadband takeup reach the same level as cable TV subscriber-ship, as that would be a huge step toward the all-IP world. But it’s a way off yet.

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  8. This was ridiculous it didnt help me on my school work at all you should delete this page

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