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 (s T) and Verizon (s VZ) 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 (s CMCSA) and Time Warner Cable (s TWC) — 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.