October 08, 2010
Backing into the Internet Age

Hey, gang, Team USA is Number 15! Here’s yet another infrastructure outrage for you:

Since 1991, the telecom companies have pocketed an estimated $320 billion — that’s about $3,000 per household.

This is a conservative estimate of the wide-scale plunder that includes monies garnered from hidden rate hikes, depreciation allowances, write-offs and other schemes. Ironically, in 2009, the FCC’s National Broadband plan claimed it will cost about $350 billion to fully upgrade America’s infrastructure.

The principal consequence of the great broadband con is not only that Americans are stuck with an inferior and overpriced communications system, but the nation’s global economic competitiveness has been undermined.

In a June 2010 report, Organization for Economic Co-operation and Development (OECD) ranked the U.S. 15th on broadband subscribers with 24.6 percent penetration; the consulting group, Strategy Analytics, is even more pessimistic, ranking the U.S. 20th with a “broadband” penetration rate of 67 percent compared to South Korea (95 percent), Netherlands (85 percent) and Canada (76 percent). Making matters worse, Strategy Analytics projects the U.S. ranking falling to 23rd by year-end 2010…

I know as much about broadband as I do about the Emperor Hadrian, but I have a mole planted deep within a giant telecom company. She reports as follows:

Well, the news that we are way behind much of the world in connect speeds is right, but I don’t understand many of the other claims. The telcos definitely grab whatever they can get from deals with the PUCs, but from what I can see, that usually does not amount to that much.

What a lot of confusion and inefficiency arises from is that the PUCs will require the telco (in exchange for some rate break or something) to build out their infrastructure such that some number of folks are *able* to order a broadband connection. There is never a requirement to actually *sell* the service.

The telco will then plow in fiber, deploy equipment, etc., to fulfill their obligation to offer service to some god-forsaken county in the middle of New Mexico with 10,000 people in it. Then, 83 of them actually sign up for service. So, assuming that the rate break or other incentive actually did result in more telco revenue, a lot of it has to be spent on the buildout to service those 83 people.

Nobody walks away a winner. The PUC is mad that the hicks are still not online, the telco is shaking their heads saying “I told you nobody would buy it! We’re gonna have to keep that crap running for years!”, the 9,917 folks that still have no broadband still can’t see their YouTube, and everyone is sad that we are another step behind in the race to connect everyone.

So, it really is not some gift to the telcos. Neither is it money well spent in connecting folks to broadband. It is the worst of both worlds — little extra broadband penetration, no telco windfall, and only a bunch of aging equipment deployed with little chance of ever being used. It is really just an inefficient regulatory effort to accomplish something with not enough information or control.

Probably the only way to fully connect the boonies is to re-regulate and force the issue that way. It is just too expensive to do it otherwise.


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Posted by Jerome Doolittle at October 08, 2010 04:12 PM
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OK, let's shine a little intelligence on the subject. That ranking of broadband coverage compared to other nations? Take a look a the freekin' size of the countries and population density! Of course in raw area covered, we are down there. You know who else is behind Korea or Japan? Australia, Canada, and every other country with huge tracks of barely populated land.

Anyone who wants broadband can get it now as long as they have electricity, by buying a satellite broadband setup. That's how the military stays on the internet in battlefields, you know. But it's hugely expensive. And someone has to pay to run cable out to those dozen homes in the middle of nowhere. Or pay for a bunch of towers to get wireless out there.

Either way, it's expensive and when's the last time you heard someone complain that their internet or cable bill was too cheap already? However, technology is catching up.

Posted by: Jerry C on October 9, 2010 8:25 AM

The problem with satellite internet is the time it takes to travel from those satellites up in the sky to transmit their signals down to the earth. If we had set the system up initially as Roosevelt did with the Rural Electrification Associations, we would not likely be facing this problem. As the REA electrified rural America when the public power companies thought it was too expensive. Some small government subsidies for the RIE's (Rural Internet Associations) would allow them to be able to compete with the public internet companies by a healthy division between the public and private internet associations. But instead we get whole swaths of the country which don't have internet. And that area is largely conservative. I lived in Seattle Washington for a while and the city owned its own power dam. And I became worried when I didn't get an electric bill for about four months. And low and behold the bill was 1/4 of what I had been paying in the Southeast.

But because we are dominated by conservative thinking on this subject, the solution to the problem is out of reach. But we could have solved it years ago. But we failed by electing majority conservative governments. Which have abandoned the rural voters who vote for them, leaving their party without providing for their voters the tools to enter into the 21st century (and the end of the 20th). Unless we change, those living in low rural population density areas will continue to not have rural system for cell phone and internet. No wonder the Republicans are moaning that they have little internet penetration. Their ideology has left their voters in the dark. And in many ways this is good for the liberals (except the few that live in those rural, largely conservative areas of the county).

And that will continue to serve liberals more than conservatives as I often hear conservatives moaning that their voters are not engaged on the internet. But they did it to themselves as their ideology trumped common sense for their party by leaving many conservatives without internet. As a liberal, I hope they continue, with apologies to my liberal friends who live in the boondocks.

Posted by: Buck on October 9, 2010 11:14 AM

I live in the "boonies" and have tried the so called "satellite broadband setup" and it is lousy, expensive and not worthy of being called "broadband". It was very slow, so slow that working from home was impossible and they would cut the service if I exceeded what they considered too many bits and bytes downloaded, like if you were downloading a movie or song you might find yourself disconnected for 24 hours because you had exceeded some arbitrary number of bits downloaded in a day. Serviced might be out for days due to technical difficulties, but the bill did not reflect the loss of service.

I bought a couple of antennae and got a cable connection on a friends property in town and used the antennas to get the signal out to the "Boonies" where I live. I now have real broadband at the same cost as those in town plus the small cost of a couple of antennas.

The idea that there are huge costs involved in providing broadband service to rural areas is just pure crap. I could share my connection with my neighbors except for the legal consequences that ensure that the internet service providers have a monopoly and want to perserve their right to reap enormous profits from providing internet access which is, in todays world, about as necessary as elecrtricity if you want to compete. I think it should be treated like the providers of electricity with the PSC regulation and oversight. There is no excuse for not making broadband available to all citizens at a reasonable price. The internet was not created or developed to be a cash cow for internet serviced providers but was developed with taxpayer money and there should be a right of access for all the citizens at a reasonable cost, imho.

Posted by: knowdoubt on October 10, 2010 9:11 AM

For a good look at how much we are getting ripped off, try this website: http://www.teletruth.com/
Or for a shorter version, try this: http://www.alternet.org/media/148397/how_the_phone_companies_are_screwing_america%3A_the_%24320_billion_broadband_rip-off/?page=1

Posted by: Buck on October 10, 2010 8:58 PM

I looked at a house for sale that was not in the boonies out in the middle of nowhere; it was maybe 10 miles from the state capitol dome, surrounded by many other houses on quarter-acre lots. However, it was on the bad side of some arbitrary divide, with only satellite Internet available. Like knowdoubt, I saw that I couldn't possibly run a home business from that setup, and I crossed it off my list of potentials.

I can remember, way back when, having satellite cable TV. It was useless on rainy days, and snowy days required rooftop athletics that I am no longer nimble enough to perform. I suspect satellite Internet would present similar problems, but I have no personal knowledge.

Posted by: JoyfulA on October 13, 2010 11:25 PM
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