Blog Post

Why Government Should Meddle in Broadband

[qi:004] With the change in administration it’s time to stop pussyfooting around the issue of broadband access in the U.S. It quite honestly sucks. Yes, some people have access to FiOS, but others have access to speeds that rank even lower than the lame 768 kbps classification of broadband adopted this year (!) by the FCC. Uneven coverage and a lack of competition mean that we in the U.S. pay more for our broadband than many other countries and that about 1 percent of the population can’t get access at all. This has got to change, and the private market isn’t going to do it because it simply isn’t profitable to string fiber, coax or even copper everywhere people have settled.

With consumer groups and industry players calling for a broadband bailout, I’m inclined to agree, even if it does mean Google (s GOOG) gets more broadband subscribers for free. The government needs to get involved, and it needs to throw some money at the problem — albeit in a highly organized way. I’ll argue later about what should be done, but first here’s a few reasons why it’s important. Broadband is like electricity and running water — every town, if not every person, needs access to it. Not to watch cats on treadmills or download porn, but because it gives people cheaper access to the world.

Educational Access

Today the New York Times ran an article about the rising costs of a college education and offered up the idea of distance learning as being one solution to rising costs. I don’t think distance learning can substitute for the entire college experience, but having participated in several distance learning classes, it can be used in conjunction with meetings online or weekly in-person meetings  to create a rich learning and discussion environment. Broadband makes that possible today, and faster speeds will only add to the interactivity of those online environments — making a college education more accessible. The kids who most benefit from this are not living in FiOS areas; they are in poorer areas where ISPs try to avoid or delay launching high speed services. I know, I live in one of those areas. The government needs to step up to improve this access divide.

Medical Care Improvements

Broadband also can save on medical costs and improve access to health care. A release issued today highlighted radiologists’ frustration with quality of care. Ninety-four percent of radiologists surveyed blamed missed or delayed diagnosis on the inability of medical imaging systems to communicate with information systems of physicians and hospitals. Delivering radiological scans via broadband requires fat pipes and rapid speeds, but the benefit to patients, insurers and doctors would be many: fewer scans, faster delivery of images where they are needed, and lower costs associated with the process.

Telecommuting Expansion

Another benefit of better broadband would be the ability for people to telecommute. This has far-reaching benefits, from fewer cars on the roads to increasing a family’s resilience in the face of economic uncertainty. As a telecommuter, when I change jobs I don’t have to sell my house, uproot my husband’s career or leave the network of friends and family who support us. The more people who have that flexibility, the less traumatizing job loss can be both for the individual family and for a particular region.

Those are a few of the reasons the government should care about broadband access. Broadband can help promote an educated citizenry, could help lower the costs of providing health care and could increase workforce flexibility and decrease traffic. So while older generations of legislators might deride the web as a series of tubes, the truth of the matter is those tubes could be the lifeblood for citizen access to education, information and services. We need policies and funding to make sure broadband reaches everyone, and we need it today. It would’t be a bailout. It would be an investment.

31 Responses to “Why Government Should Meddle in Broadband”

  1. Jesse,
    You are right-there are successful ventures handled by Government. Never the less, the private industry has it’s own mark, in the day to day highly competetive world out there. Government’s works can not be compared to a private one’s-it’s a known fact. still we can give a chance and see..

  2. Jesse Kopelman

    @Gary King

    I’ll name you 3

    1) Before government reform, food and drugs were rarely as advertised and often harmful.

    2) Without government involvement, there’d be barely any paved roads in the less populous parts of this country.

    3) Without government involvement large swaths of the country would still be without electricity.

    I could come up with at least 20 more if you want . . .

    • Jesse

      You are one of the many reasons this nation’s government and people are so week and reliant on everyone else around them. You forget that greed fuels humans with every want they can think of. unfortunatley, greed also makes people lazy and expecting of what they think they deserve just for being in this great weak country. Hand delivering everything people cry for without having them try and develope or work to get the things they want will just make things worse. If you wanted to have the perfect world of everyone works for the better of all humanity, maybe you should find a way to live in an episode of “Start Trek” or perhaps some other communist nation that doesn’t have the human instinct of greed. If people dont like the fact that they dont have broadband then too bad. Deal with it. You dont like living in areas prone to flooding? Move instead of taking yet another persons hard earned wage and rebuilding in the exact same location. Man! You got me on a soap box here. In end state you need to not worry about everyone else and start to deal with your own damn life. Stop sticking you nose into mine just so you can feel better about your pathetic little life. Go make a difference by helping clean up some parks or build a new bike path

  3. When human life is getting better day by day with broadband penetration, I don’t find a reason why government should step in to make things better for the citizens. After all government is there to help its people.

  4. Stacey Higginbotham

    Guys, I’m thinking on the how part of government involvement (as are much more experienced people in Washington), and I’m not advocating that we throw taxpayer dollars to the telcos and demand that they build in whatever congressman’s district controls a key committee. But the government does have a role to play here. At the very least we need to make sure the telcos and cable guys are playing by the same rules and we also need to make sure they have to report on their actual penetration rates–not based on one home in a zip code, but on the total number of homes with access to broadband in a zip code. We also need to better our definition of broadband.

    And for those of you out there quibbling with my examples, there are hundred of other ways broadband has already, and will continue, to enrich our lives. I only have to watch my younger brother learn Mandarin late at night by Skyping with a Chinese tutor to see how broadband for everyone could improve lives everywhere.

  5. Jesse Kopelman

    This is the dark legacy of Reagan and his nine scariest words, “I’m from the government and I’m here to help.” It was good marketing, but the truth of the matter is a hell of a lot different.

    Without government intervention, we wouldn’t have safe food, child labor laws, workplace safety laws, universal access to electricity, interstate highways, or the Internet.

    Can private industry produce better quality products and services? No doubt. However, they can’t do so on a universal basis. The profit motive is the strongest possible disincentive to offering universal access.

    Those who think there can be competition without regulation, you guys are just crackpots. That’s like arguing that if everyone was armed, there’d never be any crime due to fear of reprisal. Just as the history of frontier America is rife with tales of lawlessness, the history of unregulated markets is nothing but tales of speculation and malfeasance leading to collapse of a market sector.

    As for the argument that people should just move to gain access to broadband — this is just isolationism. Investment in infrastructure in underserved areas creates better availability to sources of income and hings to spend that income on, both of which improve the overall economy. Instead of playing with how you are going to divvy it up, isn’t it better to just make a bigger pie?

  6. 1. Agree with Russ above: “More competition is the solution.”

    2. Good discussions. I’m not a fan of Gov’t intervention as “the solution” to “everything.” We do enjoy benefits of capitalism and free markets for a reason. Key US Gov’t role is consumer protection (not filtering, bailouts).

    3. There is some, umm, “dark” fiber buried in the US, just waiting to be lit (and used).


  7. anonymous

    stacy, i have to agree with your comments. people complain about government, but they forget that in a market like telecoms there can be monopolies. and they may have to be pushed. verizon at least seems to be doing the right things. no first hand experience, at least investing in uverse…

    at&t on the other hand is *extremely lazy*. they are just riding on the coat tails of the iphone exclusivity for the past 2 years. look at their announcement today, cut costs by laying off people, reduce investments etc. instead of investing in new technologies and efficiencies these guys just want to keep playing regulatory games. let me give a personal example, it is just one user, but am sure there are other people out there…

    their left hand does not know what the other is doing, i have uverse, yet they spend money on heavily marketing the service and none on fixing problems related to the service. when i cancel (which will be soon) they will tell wall street people are canceling and they are doing layoffs..i am sure it is good to motivate their employees…when i move to watching video on the internet, they will be the first to complain…

    take their wireless coverage, my experience is that even with their 850 MHz spectrum etc. 3G coverage even in an area like silicon valley is nowhere close to other parts of the world. someone please explain how the “free and unregulated” is delivering the best results..

    it is time for americans to take a deep breath and really think if the model of capitalism which america has been preaching to the world is really working in *todays* world. thankfully i have sense that obama gets what i am talking about…

  8. Off topic.

    I think we can categorize or problems into 3 areas:

    1. Bureaucracy breads Bureaucracy.
    Bigger companies correlate to bigger Government and visa via.
    Or the bureaucracy death spiral, we haven’t come up with a way out of it.

    2. The illusion of more data equals better information equals better decision. If I see in an article that Google hires a CFO “trained” in six sigma to prioritize decision making. I just wonder if they understand the difference between a product and running a company. How do you use six sigma to identify a strategy for future leading products if you have no reliable data. You don’t, you end up with bureaucracy and the next me 2 very short term prioritization, see Microsoft, Oracle, Intel, Cisco, oh and Motorola. You just have to reach a level of incompetence of to big to fail. My guess is, the big 3 all have six sigma programs in place to show where the profits are, so do the telcos and cable companies.

    3. No understanding of the correlation of the above 2.

  9. I don’t know which is worse here, the hidden hand of Reed Hundt (Former FCC chair, Obama contributor, and longtime advocate of $25-50-100 billion “investment” in broadband) or the sad state of affairs that since Washington is appears to be (almost literally) printing money these days.

    We’re talking about throwing up to $25 billion just at GM, so it’s OK to talk about throwing money at all of our other problems these days. Hey, what’s over a trillion dollars in debt between friends, eh?

    Someone (yes, Mr. Obama, I do not envy you) is going to have to play triage between 1) Rebuilding existing but worn-out infrastructure, 2) Investing in clean tech/non-fossil fuel energy job creation, 3) Reforming health care, and about 4-8 other priorities.

    Maybe more money for broadband builds will make its way through the eye of the needle. But the ugliness involved in handing/rewarding AT&T for not investing in fiber to the home is not funny.

    What do you tell Verizon? “Here’s some more cash, let’s build faster?” Verizon estimates it will take about 7-10 years to put FiOS covering Washington D.C. Does more cash get them into other places faster?

    Forgive me, I am now running away screaming… .AHHHHHH!!!!! AHHHH!!!!! AHHH!!!

  10. The financial mess we are in today is the long term outcome of actions our government made back in the 1990’s. The mess we are in did not start a few short years ago.

    The Communications Act of 1996, after 12-years has produced what outcome? ILECs are still share dominate, cable companies still dominate video and the “largest of the large” were allowed to merge to create even greater market power. (Too big to fail? Setting off any alarms!) Competition has been reduced to “technology modes” and customer choice of true facility based carrier options are few.

    The best thing government can do is get out of regulating telecom. They are not good at it. Based upon the Real Smart Guy lawyers and lobbyists that wrote the CA 1996, the proof is in the pudding.

    Government needs to place a sunset provision on various elements of CA 1996 and regulate clarity that would encourage private sector investment into ILEC/Cable Co competition. The Government should not and needs not to provide any tax incentives, loans, etc. that the “largest of the large” should have access. This would make matters worse. Any such program should be scale and needs based around a set of objectives to promote rational deployment of more local fiber infrastructure in direct competition to the ILEC and cable Companies. Don’t whine about wireless — fiber is the global platform for economic engine growth. Wireless has its place but it is not even close to the advantages and staying power of fiber optics … a fact of physics.

  11. Adding more government is never the solution. Russ is correct. Things aren’t perfect, but the current problems in broadband can all be related to the current state of too much government intervention (the FCC etc).

    There’s no reason my taxes should increase so I can provide Internet access to some remote pocket of the country. The people that truly want broadband will move to the places with the best services if it’s important. Next we’ll be providing every citizen with a computer and an iPhone.

    Anyone that thinks having a government run or sponsored internet would have to be out of their mind. The first thing they’ll want to do is filter the traffic, which is nearly impossible to do without hampering legitimate services. It would simply become a money pit with various companies and government organizations bidding for a government check.

  12. This article is more than a little disingenuous. While there are some inner city areas where telcos and cable companies have lagged going into (primarily because customer adoption rates are lower), most areas with existing services have seen upgrades to broadband. The real issue is rural areas, which are extremely expensive to run cable and especially fiber into. Try getting a quote from your local provider on a line just a few hundred yards off of the main lines and you’ll see what I mean.

    In many other countries though, primarily Western Europe and Japan, companies aren’t faced with the massive distances and space that you see in the US. It’s apples and oranges to compare, say Britain or Holland with the US. It’s hard to tell just who the author means by “many other countries” but I suspect the challenges posed are those of distance or the natural reluctance of Americans to heavily subsidize a very profitable industry.

    The comment about the radiologist press release was similarly spun. Nowhere in the release does it mention the unavailability of broadband as the problem. While the release refers to real-time interaction, it goes on to talk about the different systems and suggests that the main problem is a lack of interaction between them. This leads a careful reader to surmize that even with widespread broadband radiologists would still have technology issues. Bad form on that one.

    Of course, I’m always suspicious of people who are eager to “throw money” at an issue. However, when the facts are presented in such a self-servingly ambiguous way as this, the alarms go to eleven.

  13. Check out Level 3’s long term stock price for a look at how a boom in broadband infrastructure spending can be followed by a painful and longlasting bust. Sure as shooting this will be the story if the government steps in with centrally planned investments:;range=my;indicator=volume;charttype=ohlc;crosshair=cross;ohlcvalues=0;logscale=on;source=undefined

    Where the government should step in on the internet is in the area of consumer protection. That’s what we pay them for. Stop the vigilante crap from the ISPs for a start. Force the cable companies to publicly announce bandwidth caps and application or protocol throttling.

  14. It seems to me increased government involvement with the existing monopolies will result in a massively expensive and slow broadband. We need to deregulate and create incentives with strickly defined results. More government is not the solution. More competition is the solution.

  15. I really would recommend that we keep gov’t out of broadband. They may help in the short term with some extra funding – the long term pain would be enormous. The market may not be perfect, but it is a lot better than a gov’t run system.

    Do you want the broadband world to be like the bricks and mortar infrastructure? Do you feel that our roads are really best in class? Do you feel that you are getting the speed you need when you sit in traffic? Do you feel safe because there are only ten’s of thousands of deaths on the highways each year? The gov’t has been in charge of our physical infrastructure for decades and has ruined it, even though they did a great job jumpstarting it decades ago.

    When I read this blog, I see a constant “let the gov’t lower prices by investing tons of other people’s money into the system” and “the US broadband sucks because some country has higher speeds or lower prices”. Getting our gov’t involved doesn’t automatically give us the lowest cost/highest speed solution. I can point to plenty of physical infrastructure that is better in other countries, even though our gov’t is funding it in the US.

    You are encouraging the intervention by an entity that long term will kill broadband in this country, even if there are short term benefits. Don’t impose the US physical infrastructure weaknesses into our children’s broadband world.

    PS: Are you excited about the censorship our gov’t chooses to impose? Did you see the “free slow broadband with heavy censorship” proposal from the FCC recently?

  16. Here is a company that I believe has the best “mouse trap” for a mobile Payment Gateway:

    The payment gateway that the Company TreasureCom is offering is one based on a mobile platform tied to the online shopping cart.

    The basic advantages for a Merchant:
    • Payment are in real time
    • Relatively very small cost to implement and for merchants that already uses online payment gateways such as PayPal the implementation may take as little as 1 hour.
    • It will cost the merchant less, given that the interchange rate would be 1% instead of the current interchange rate most merchant pays (which I would be willing to guess is much more than 1%, I would guess between 2%-3.5%). This 1% interchange rate would no doubt provide the merchant with a lot of savings and in an economy like this and based on what is happening with credit cards at the moment this is an area where the merchants may save money and any savings today I am sure would be welcomed by the Merchant.
    • The funds would be credited directly to Merchant’s bank account within 3 banking days by way of the ACH network very much the same as the current methods.

    For the customers there are at least a few advantages.

    • The customer will not need to provide either the payment processor (TreasureCom) or the Merchant his/her banking/credit/debit card information. The customer would “push” funds directly from his her online banking facilities hence negating the need to provide banking/credit/debit card information. We are aware that a lot of customers are a bit concern about online security. This method would greatly address that concern.
    • The payment transaction is generated by the customer from his/her mobile phone using text messaging and the member then may go online to complete the transaction not dissimilar to the experience of shopping with a credit/debit card.
    • It would cost the customer approximately $0.55 ($0.30 by the company and approximately $0.25 by the mobile carrier to process).

    Initially only customers that use AT&T or T-Mobile are be able to participate but within a three month period the company expect that all mobile carrier networks within the USA would be supported.