Subscribe[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Broadband Blindness.flv[/flv]
Toast Sacramento produced this 28-minute documentary which succinctly tells the story of North American broadband, and how commercial providers have set us up for long-term failure, especially in rural and suburban areas. Whether you live in the United States or Canada, phone and cable companies dominate the telecommunications landscape. Unlike other modern-day necessities, broadband is almost entirely in the hands of an unregulated free market that fails millions. Where competition exists, customers can get reasonably fast service, but it costs more than it should. Where competition is hard to find: slow speeds, spotty access, and out-of-sight prices predominate.
The documentary explores:
- the neglect of suburban and rural DSL from large phone companies like AT&T;
- how phony, industry-influenced broadband availability maps convince public officials there isn’t a big broadband problem;
- why the country’s broadband demands may be too great for providers to handle without major new investments, leading to usage limits and slowdowns to delay needed upgrades;
- and how the latest broadband technologies being installed overseas fall victim to Wall Street temper tantrums back home.
This is exactly what is happening in the UK too.
That is why the farmers are doing it themselves in our rural area. Wish us luck! If we can do it so can any other rural area, its the only way we are going to get a fit for purpose connection.
Does no one here understand how capitalism works? Look at cars or computers or air conditioners or washing machines or microwaves or any other piece of technology, ever.
The most cutting edge technology will be very expensive and only the rich can afford it. The rich will fund the establishment of the new technology, so that successful technologies will eventually come down in cost and spread to the masses. What this documentary is calling for is wealth redistribution, and it won’t fly in the United States.
Actually, I think your model works in a marketplace with economy of scale and robust competition. We don’t have that in broadband because it is a de facto utility, constrained by capital construction costs, limited spectrum, and a financial system that considers competition anathema. In decades past, the government would declare the duopoly most of us endure anti-trust and would break it up. Phone company and cable company networks would be forced open to wholesale resale pricing, allowing multiple providers to sell over these networks (traditional DSL and cable) that have already fully recovered their initial investment. I admit to… Read more »
You demonstrated in your last paragraph that you recognize the wealth redistribution: from cities to rural areas (or from wealthy city residents to poor ones, as implied in the video). I bet we will simply disagree on whether rural areas “deserve” service that is subsidized by people who live in cities. Your first paragraph simply recognizes the effects of the fact that the telecommunication industry in the United States is NOT a free market. It is HEAVILY regulated. In fact, there is an entire federal bureaucracy (FCC) that exists just to regulate it. In addition, telecom companies will get all… Read more »
Thanks for the quick reply John. While you may have been right about the regulatory situation if this was the 1980s, Congress has radically deregulated the telecommunications industry, particularly with the 1996 Telecom Act. Additionally, successive FCC chairmen under Pres. George W. Bush specifically adopted a hands-off position for the FCC with respect to broadband, and FCC Chairman Julius Genachowski has not directly re-asserted that authority. Some examples: 1) Telecom franchise agreements that prohibit competitors were declared null and void years ago. Many states now have cursory statewide franchising rules that would allow any new entrant to compete, but few… Read more »
So the story is thus: the government created the conditions for favored corporations to become entrenched in their regions, and scaling back those conditions has proved insufficient to reverse the damage done. I don’t see how that makes a good case to trust in government solutions, but I guess I just don’t have enough faith in politicians and bureaucrats.
I recall in the late 1970s everyone was clamoring to get cable television into their respective communities. A number of the cable companies around at the time argued that the only way they could attract investor dollars and safely spend the capital to build the systems was to win an exclusive franchise to serve each community. Many got them, along with tax abatements, favorable zoning treatment, regulated prices for pole attachment fees, and other breaks in return for agreeing to wire their respective territories. As systems were being built in the early 1980s, the industry was engaged in a merger… Read more »
The only regulatory oversight regime that will get established is the one crafted by and favorable to the subjects of regulation. You just painted a picture of that fact.
Even though I loathe rent-seeking, I can’t blame the big greedy corporations for working within the system to enhance their position as much as I can blame politicians for failing to serve the broader interests of their constituents.
Perhaps this movement should turn it’s focus toward ending corruption instead of adding regulation. Term limits and limits on the power of government will help.
The corporations are the politicians constituants, it’s all about lobbying money and how much they get in order to buy their next election or secure their cushy job when they rejoin the private sector working for one of the companies they favored with legislation. If you’ve ever run a business, even in small towns you’ll see that first hand like I have where getting things done like re-zoning often takes several thousand dollars donated to the right politician in your town. In any case, it’s rediculous for you to blame the government for this, while they can make mistakes, the… Read more »
You’re talking about commodity items will decent competition, however even those if you start talking about computer components aren’t above abuse such as price fixing by so called competitors. Broadband is not a competitive industry, the players have consistly tried to carve out and trade their way into exclusive territories so they wouldn’t have to compete with each other in order to maximize their profits by gouging consumers as much as 100-1000% on items such as reselling bandwidth per Gig. In a market like this with the huge requirements for spending on infrastructure, there is no incentive for any of… Read more »
I concur with Scott. Telecom infrastructure is a natural monopoly like roads and highways. And as Phillip points out, this natural monopoly is prone to severe market failure consequences when there is insufficient profit motive. That’s why alternative business models are needed such as cooperatives where earning a profit for investors — in this case the customers themselves — isn’t the goal but rather providing needed telecommunications services. I’m interviewed on this point in the documentary.
Fred Pilot
President
Camino Fiber Network Cooperative, Inc.