Can the Free Market Provide Broadband for Everyone?


Only 2 percent of the world lives in a country where broadband penetration has exceeded 80 percent, according to a report out today from TeleGeography. The report noted that worries over broadband saturation are really only appropriate in 10 countries out of the 127 the firm tracks, and the U.S. isn’t even one of those saturated markets. There are 36 countries where broadband providers serve less than 5 percent of the population.

So while there’s concern in the U.S. cable and telecommunications industries over growth in their fixed line businesses, what we really should be pondering is whether or not the low-hanging fruit of fixed-broadband access has been plucked, and if so, how do we get broadband to the rest of the world? TeleGeography defines broadband as a fixed network service having a downlink speed of 256kbps or greater. It includes services provided via DSL, cable, fiber and fixed wireless broadband/WiMAX technologies. It excludes 3G/mobile services.

I suspect it’s not cost-effective to build out a wired infrastructure in some parts of the world, either because equipment is stolen or because the rates customers might pay don’t justify the investment required. But  given its importance in the 21st Century economy, giving up on broadband access would be wrong. There are two solutions I can see, but I welcome our readers’ thoughts.

The government can subsidize a wired infrastructure much like Australia’s government is doing today with its $31 billion investment in fiber, or providers can focus on wireless if it’s not cost-effective to build out wired broadband. In that case, their governments should consider policies that provide for available spectrum and understand how the current wired infrastructure needs to provide backhaul for wireless access. Actually, we have a similar issue in rural areas of our country, where wireless Internet service providers pay through the nose for access lines back to the Internet backbone — making it expensive to provide wireless broadband.



Christopher Mitchell

I think Broadband should exclude 3G when it comes with strict data caps that prevent the user from taking advantage of the Internet. No matter the speed, I think it hard to classify something as broadband if you get a 5GB xfer cap/month

Jordan Arroyo

More and more countries are realizing the importance of Broadband wireless Networks. I heard Wireless Guru Bobby Vassallo speak recently on the US lagging behind some other markets and the importance of cities becoming wireless without the help of the cable companies. For a dollar a month added to your water bill, broadband can be had. And, that beats $49.95 to Time Warner! Some cities are going to this approach and it is an excellent one. And, speeds are much better than having an Air Card from Sprint or someone else.

I hope more cities opt for this approach. There is always an old lady who doesn’t want the dollar added, but the greater good is served and kids without internet, suddenly have a new world opening up. Jordan Arroyo


They, well… we, the tax payers, subsided the phone and cable and power infrastructure. Then, they, the government, gave it all away to private monopolies… at least this time we could cut out the middle step and just pour our tax dollars directly into one the (probable) current monopolies… No wait… I think we are doing that now, Huh.


I agree with Christopher Mitchell that the Government should get involved in this expanding the broadband connection. People need access to information and services, irrespective of their social or economic status and high-speed access is a necessity in a global economy and a critical part of economic revival and survival for rural places. There are plenty of benefits of bringing broadband to rural areas like bringing jobs, commerce, education and health care to rural towns which are dependent on broadband.

Christopher Mitchell

This seems like a loaded question. The government has to be involved in some way – the question is how it should be involved.

Should the government give access to Rights of Way or should companies like Comcast negotiate with every home over which it needs to string cable and/or put a poll?

I think government must get much more involved. Regardless of what genius commenter #1 says, the U.S. would never have been the country we became in the 20th century without the government finding ways to get electricity and telephone lines to everyone. The private sector would not and could not have done it by itself. There are some things that should be done despite the fact they will not make a profit (building roads is one – many roads would never be built if users had to pay the full costs).

Stacey Higginbotham

Christopher and Chermin, that’s my contention and my question. Have we reached the end of profitable broadband deployment? If yes, then what role does the government play? Direct subsidy or relaxing policies that might ease some of the costs of deployment so private companies can recoup their investment?

Christopher Mitchell

Sorry Stacy, I guess I stopped writing before answering your question.

To reiterate, please note that whatever happens and what has happened, government has played a role. The idea that government may just now get involved is inaccurate – it may have to change its role.

To expand, I think government absolutely has to expand its role for the good of the country as a whole. The private sector has little incentive to bring broadband to the entire country – building these networks (especially modern ones to compete with the rest of the developed world as opposed to ancient DSL) is cost prohibitive even in moderately dense areas – the ROI takes too long compared to other areas of investment.

Deregulation, or relaxing policies has done little good in recent years – and companies historically make promises they refuse to follow through on in order to get those changes. I think the best model would be for publicly ownership of fiber networks run on an open access basis. The natural monopoly element of fast, reliable broadband (meaning wired, generally with full fiber) prevents infrastructure-based competition from succeeding. The public should own the fiber networks and allow multiple service providers to compete for customers – the road model. Just as UPS and FedEx are free to compete on the roads.

This would not preclude private companies from building fiber networks, but I think the advantages of a network with choices vs. a monopolistic model are significant.

An alternative is to encourage munis and coops to form as we did with phones and electricity. This would mean less federal involvement, but they would probably have to help with low-interest financing in rural areas.

Please note: none of this suggests that deploying broadband in rural areas is not profitable. It just does not generate sufficient profits for many in the private sector. These networks can still pay for themselves (unlike, say the roads) but over a long period of time … which is another reason they must be built to last a long time and now some cheapo DSL solution that is slowly becoming indistinguishable from dialup.

Jesse Kopelman

You forgot the third solution — Mandated Universal Service. This is what was done for landline telephony. If a carrier wanted access to the lucrative customers it also had to serve all the other customers in the region, including the ones that would result in an operational loss. If you want to serve the best part of San Fransisco, you’ve also got to serve the worst part of Oakland — and both with equal level of services. Universal Service doesn’t currently apply to any data service (including IP telephony from incumbent landline carriers — one of the advantages of FIOS to Verizon) — Maybe it should?


It will only provide broadband for those who can pay for it. That’s what the free market IS.


Broadband access in rural areas is a big problem, and it deserves a big solution.

Fiber-to-the-home is too expensive, mobile networks are too slow for the future of packet data.

Something I’ve been thinking about for a couple of years is stratallites, autonomous airships that hold station in the stratosphere relaying data to remote areas. Cheaper and more accessible than satellites, these airships act like mobile phone towers 12 miles high, except they relay high speed Internet connections.

It’s not my idea but I’d be happy to discus it with anyone who’s interested.

A.B. Dada

Keep your dirty government’s hands off the Internet.

They’ve made health care unaffordable, not the market.

They’ve made higher education a fraudulent program.

They’ve turned strong financial rule into a regulated mess.

Broadband? What are you talking about. Who the heck needs it?

60% of my web use is on my G1 by T-Mobile. 20% is through my Cradlepoint router using AT&T and Sprint data cards. None are broadband by any means.

Apps are getting SMALLER: look at the iPhone app market, or the Android market. Broadband, huh?

If I need something big, file-wise, I consider why it has to be so big. Right now, most big files are for useless lazy entertainment. Few are for business, and I own a number of wide format print shops. Even they do just fine with 500K PDFs that I can download over narrowband.

Broadband is a useless term. If you want governent pandering to people who decided to live in the boonies, pay for it yourself. Should we subsidize their hospitals, their grocery stores, their airfare and band concert tours because they decided to live 200 miles from infrastructure?

Hokie pokie terms like “broadband for the masses” make me ill.

Call me, interview me, let’s clear the air on this once and for all.

(Posted via T-Mobile G1)


Broadband is necessary for many people to do their work. I work from home and provide on call support for hundreds of web and database servers. The file sizes I deal with are way too big for a slow dial up connection. Just the files I upload to vendors to diagnose a problem can be several MB to over 1GB in size. Sometimes I have to download patches and then upload them to a server. Dial up or low speed connections will not handle that amount of data fast enough. We are expected to keep the apps and servers running 24 hours a day. Money is lost if they are down. The alternative would be to drive to the office almost every time there is an outage not during regular office hours like in the old days. That could cause lengthy delays in getting the apps back working again.

Do you ever shop online? Try downloading a web page at 56KB vs 5MB DSL. The amount of data being pushed is growing all the time. Do you check the weather online? Do you read news online? Have you renewed your drivers license online? There is a wealth of information avialable online. There are many things we do that were not possible at the slower dial up speeds.

I support servers all over the country. I am able to work from home and do pretty much anything on the servers I can at the office with the exception of physically touching the hardware. When gas hit above $4 a gallon, I started working from home as much as possible. I save gas, time, and money using broadband to keep from driving.

Where do I live? In what you might call the boonies, miles from most infrastructure (over 10 miles from a stop light). I am fortunate to have good stable DSL service. I choose to live here, becausue I enjoy not being in the traffic and overcrowded big cities.

I have more choices for employment and where to live because of broadband. It’s less expensive to live where I do, and I can go outside without nosy neighbors staring at me to see what I am doing. I also don’t have a homeowner’s association telling me what I can park in my driveway. I live here by choice. Broadband makes it possible to do my job from a remote location.

As far as wireless access goes. In this area the infrastructure doesn’t support a good enough signal for me to use it.

Broadband opens up opportunities. It allows flexibility in employment and work hours. People can work from home instead of wasting so much time and gas commuting every day.

I agree that not everyone “needs” broadband, but there are a lot of us that are much more productive because of it.


I forgot to mention. I used to commute every day and had no problem with the long drive until fuel prices went up. I asked about DSL service and was told they would intall it if I could get 20 subscribers. I had to wait a while for that to happen. I have saved thousands not spent on gas since I was able to get DSL.

I agree with some things you say about governement making things more expensive and messing things up. Keep in mind at one time a tax was enacted to provide phone service to rural customers. The same could be done for broadband. It would be a very small charge to expand the infrastructure.

Maybe you don’t need high speed data tansfer rates, but I do.

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