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North Carolina State Senator David Hoyle: Fiber Could Be Dead Within Five Years So We Shouldn’t Bother

Back in 2006, Alaska Senator Ted Stevens emphatically declared that the Internet was not a truck, but rather a series of tubes.  That’s why Net Neutrality was such a bad idea, get it?

[flv]http://www.phillipdampier.com/video/Senator Ted Stevens on Net Neutrality.mp4[/flv]

Senator Ted Stevens Infamous “Series of Tubes” Speech from 2006.  (11 minutes)

Fundamentally misunderstanding technology and the Internet is not exclusively the domain of an ex-senator from the State of Palin, however.

North Carolina State Senator David Hoyle (D-Gaston County) managed to illustrate he didn’t know what he was talking about either.

Hoyle’s pretzel-like logic, in opposing municipal fiber broadband projects in the state, is that fiber optics could be obsolete within five years, so we shouldn’t even bother with them:

“You know the technology’s changing daily. Five years, ten years from now … wireless could replace most of fiber optics of coaxial cable or, or copper even. Might become not totally obsolete, but their ability to, uh, you know, to fund the debt service from the hard assets they had to put into the ground.”

If one extends that reasoning to his good friends in the cable and telephone industry — if fiber is potentially obsolete in five years, what about the phone company’s copper wires and the cable company’s coax?  Copper wiring was used for telegraphy starting in the 1830s and is still the backbone of today’s telephone networks.  Coaxial cable was invented in 1880 and still runs into virtually every cable subscriber’s home.  The first commercial application for a fiber optic communications system came in 1977.  In fact, most experts believe fiber optics will be the platform for America’s telecommunications network for at least the next quarter century.  The cable industry promotes its own use of fiber, and forward thinking phone companies like Verizon are relying on fiber to the home networks to stay relevant for the future.

Sen. David Hoyle (D-NC)

Fiber optic has all of the advantages:

SPEED: Fiber optic networks operate at high speeds – up into the gigabits and still rising
BANDWIDTH: large carrying capacity, and growing larger as advances continue
DISTANCE: Signals can be transmitted further without needing to be “refreshed” or strengthened.
RESISTANCE: Greater resistance to electromagnetic noise such as radios, motors or other nearby cables.
MAINTENANCE: Fiber optic cables costs much less to maintain, and upgrades can occur without disturbing existing cable — just switch the laser technology used.

The costs to construct fiber networks, which used to be in the thousands of dollars per household, is now well under $1,000 for companies like Verizon.  Keeping happy customers and having the ability to market phone, broadband, and television services across an all-fiber network open new revenue streams which help defray initial expenses.  Fiber is an investment in the future.

Why isn’t wireless going to make fiber networks obsolete?

Allocating sufficient spectrum to support today’s high bandwidth applications is a practical impossibility, especially considering the politics and in-fighting from current spectrum holders to keep their allocations.  Spectrum is a limited resource, which guarantees limited competition, limited bandwidth, and higher prices.  While wireless applications will continue to be an important part of our communications future, it is unlikely they’ll be the favored method to support high bandwidth content in the near term.  Considering the implications of all of the new cell sites required to provide blanket coverage, it may never survive the inevitable howls of protest from neighborhoods who have to live with the eyesores.

Senator Hoyle opened his mouth and stupid fell out.  He’s not just wrong — his comments also carry implications for his constituents.

The City of Gastonia, along with Gaston County jointly filed an application alongside 35 others here in North Carolina seeking to get Google’s 1 Gigabit Fiber Optic to the Home Network.

How do city officials feel about their representative in the state legislature actively trashing fiber networks?  I will have that answer for you soon.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/fiber_obsolete_DS_You_Tube_HQ.mp4[/flv]

Senator David Hoyle (foreground, with back to camera) tells meeting fiber could be obsolete within five years.  (25 seconds)

Action Alert: North Carolina Legislature Considers Moratorium on Municipal Broadband – A Full Report

Report on Today’s Legislative Meeting

Sen. David Hoyle (D-NC)

As I have been reporting here, the moratorium on municipal broadband is alive and well in the legislative halls of Raleigh.  Senator David Hoyle (D-Gaston), sponsor of last year’s consumer atrocity HB1252, is back again asking Senator Daniel Clodfelter (D-Mecklenburg County) for a vote May 5th on a proposed moratorium for municipal broadband projects.  Hoyle is not running for re-election.

While no new legislation has surfaced yet, several legislators continue to hint that a new bill is forthcoming.  Be assured any such legislation will be designed to protect today’s monopoly/duopoly marketplace for broadband service in North Carolina.

Senator David Hoyle calls on the legislative committee to introduce and vote for a moratorium on municipal broadband projects in North Carolina. (April 21, 2010) (1 minute, 30 seconds)
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Meeting Highlights:

Senator Daniel Clodfelter (D-NC)

• Senator Clodfelter opened the meeting stating that he “wants to focus on revenue issues/financing, not whether or not high speed Internet is a good thing.”

• Heather Fennell, from the research division at the General Assembly gave a presentation citing laws that govern cities, the original lawsuit that established precedent for cities to construct municipal fiber networks, what cities have them, and who pays the taxes on different systems.

• Vance Holloman, Deputy Treasurer-State and Local Finance Division spoke next.  He assured the committee and attending audience that North Carolina’s existing municipal systems are in good standing and he expected they would be able to pay down debts incurred from initial construction and deployment costs.  Holloman added the Local Government Commission, which has to approve the financing of these systems, believed these projects represent “solid economic development investments.”  Holloman’s strong presentation should have encouraged legislators to favor economic development from fiber optic broadband, but we had a strong sense several members had already made up their minds made up to oppose these projects.  You will have to convince them to reconsider.

• The next part of this session divided 50 minutes between private commercial providers and municipalities to share their views.

The commercial providers went first, beginning with attorney Marcus Trathen from the law firm Brooks/Pierce.  Today, he was representing the North Carolina Cable Communications Association (NCCCA).  Trathen has also appeared at prior meetings representing the interests of Time Warner Cable.

Trathen’s presentation was about as expected – talking points loaded with misrepresentations and misinformation.  Trathen told the committee the industry does not object if cities build private networks for internal communications (how generous), but doesn’t want those networks competing with NCCCA members.

Kelli Kukura, NC League of Municipalities

Suddenlink Communications’ Bill Paramore and AT&T lobbyist Herb Crenshaw also spoke, speaking in glowing terms about investments already made to improve service in the state.  Crenshaw claimed AT&T is providing U-verse service in North Carolina after spending $1.2 billion dollars on system upgrades, an amount some have questioned (a 2007 press release pegged it at $350 million.)  Of course, North Carolina’s cable and broadband customers who were promised savings from all this “robust competition” have instead been stuck paying annual rate increases that more often than not exceed the rate of inflation.

Next up were the municipalities.

Kelli Kukura from the North Carolina League of Municipalities started by challenging industry propaganda designed to downplay the benefits of municipal broadband.  Kukura noted at least 30 North Carolina communities enthusiastically applied for Google’s proposed 1 gigabit fiber to the home network, illustrating intense interest in fiber networks.  Google has also been an active proponent of municipal broadband, Kukura noted, reminding legislators the search engine giant defended the rights of municipalities seeking to deploy next generation broadband networks.

Among the communities that have their own municipal systems, job growth grew by an average of 6.4 percent.  Kukura cited broadband success stories in Bristol, Virginia and Wilson, North Carolina.

Salisbury small businessman Brad Walser, owner of Walser Technology Group testified that North Carolina community’s new municipal broadband network Fibrant would meet his company’s needs for broadband capacity not available from commercial providers.  Walser noted Salisbury is suffering from an unemployment rate exceeding 14 percent.  Advanced broadband, he believes, could help the city attract new businesses that will help create new, high paying jobs.  Fibrant is expected to launch later this year.

EPB provides broadband service for residents in Chattanooga, Tenn.

Some of the strongest testimony came from Colman Keane, senior strategic planner for municipally-owned EPB Telecom. Keane traveled all the way from EPB’s home in Chattanooga, Tennessee to share his experiences confronting a telecommunications industry hostile to the prospect of facing a new competitor.  Keane has seen and heard the industry arguments all before, noting Chattanooga heard the exact same scare stories legislators in Raleigh were hearing today.  Chattanooga also faced a proposed one year moratorium and a blizzard of industry-backed lawsuits, all which were won by the city.

The benefits of fiber optic broadband in Chattanooga include dramatically-improved broadband speeds as well as a more efficient power grid made possible from smart meters that help Chattanoogans reduce their peak power usage, saving money.  I want to thank Colman for making the long journey on behalf of consumers in North Carolina.

• Finally, Raleigh community activist and former city council candidate Octavia Rainey spoke out against municipal broadband, which concerned me.  Rainey spent her time seated with the telecom lobbyists, and her presentation illustrated the impact of astroturf efforts to co-opt good-hearted consumers into the industry cause. I hope to establish a dialogue with Ms. Rainey to share our information with her and learn more about how she reached her views on this subject.  More to come.

The complete hearing of the Revenue & Laws Committee of the North Carolina Legislature on the issue of the financial implications of municipal broadband, chaired by Senator Daniel Clodfelter (D-Mecklenburg County) (April 21, 2010) (2 hours, 8 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

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[Octavia has a long history of community involvement in Raleigh, trying hard to improve her neighborhoods and life in general for area residents, something she is to be applauded for doing.  I suspect Ms. Rainey has formed her views on municipal broadband in part from her close working relationship with AT&T, who has a long history trying to make friends with various community groups in part to win favor for their corporate agenda.  In this case, Octavia admits AT&T’s Cynthia Mitchell and her have become “great partners.”  AT&T provided support in building an area playground and also paid for lunch for volunteers working on the project, adding the company wanted to be a part of the Raleigh community.  There is nothing wrong with that, of course, but one wonders if the conversation also drifted into AT&T’s talking points along the way.

Ms. Rainey also praised AT&T for delivering free Internet service to 290 Raleigh-area families last fall, which would make it ironic if she didn’t support municipal broadband, which has a proven track record of erasing the digital divide and lowering prices for hard-pressed consumers.  These are the people that need some fact-based information about the true benefits of municipal broadband.  — Phillip Dampier]

Today was expected, but disappointing nonetheless.  Hoyle actually suggested that fiber networks may be obsolete in five years and we may be moving to wireless.  If that were true, why is he hellbent on a moratorium and the banning of such networks at the industry’s behest?  Why would the telecommunications industry be concerned about “obsolete fiber networks?”  The only thing obsolete here are the broadband networks owned by big cable and phone companies Hoyle wants to preserve and protect.

Rep. Pryor Gibson (D-NC)

Rep. Pryor Gibson, who we noted is a manager for Time Warner Cable Construction agreed to recuse himself from this issue after it became a point of contention and sat in the back corner of the room.

All of your e-mails and calls have been getting through to the legislators.  This kind of attention makes them nervous and I ask you to continue.  I can assure you that we here at Stop the Cap!, along with Communities United for Broadband, Broadband for Everyone NC, and Save North Carolina Broadband are going to ratchet up attention on this issue.

WHAT YOU CAN DO TO HELP

Continue writing and calling the legislators below and asking them to oppose a moratorium on municipal broadband.  Make plans on May 5th to come to Raleigh and be part of the crowd that opposes the moratorium.  I will post meeting details as they develop.

Please thank the legislators we have identified on this committee as friends of our cause:

  • Sen. Daniel T. Blue, Jr. Wake [email protected] (919) 733-5752 Democrat (919) 833-1931 Attorney
  • Sen. Fletcher Lee Hartsell, Jr. Cabarrus, Iredell [email protected] (919) 733-7223 Republican (704) 786-5161 Attorney
  • Sen. Josh Stein Wake [email protected] (919)715-6400 Democrat (919)715-6400 Lawyer
  • Rep. Paul Luebke (Co-Chair) Durham [email protected] 919-733-7663 Democrat 919-286-0269 College Teacher
  • Rep. Jennifer Weiss Wake [email protected] 919-715-3010 Democrat 919-715-3010 Lawyer-Mom

The rest of the lot either doesn’t support North Carolina consumers or have not yet made their views known on this issue.  We must pin them down and identify those elected legislators that represent the people versus those representing big cable and phone interests.  Be sure to tell them you will interpret any support for a moratorium on municipal broadband to mean they are opposed to competition, opposed to lower prices for consumers, opposed to job creation and economic growth, and obviously for the cable and phone interests that will stop at nothing to keep these systems from being built.

Ask them how they could possibly support keeping North Carolina 41st in the country in broadband rankings, why they are against reducing the 11.2 percent unemployment rate (10th worst in the country) in North Carolina, and how they can justify a vote that guarantees exactly more of the same.  If you are from a city that applied for Google Fiber, remind your legislator passing this kind of hostile moratorium delivers a strong message this state is not serious about the next generation of broadband, and Google should look elsewhere.

Above all, note now that they understand the true implications this moratorium will have on constituents, you are confident there is no way they could ever support such a bad idea.  Their delivery of a strong “no” vote reminds you why you supported them in the last election and will consider doing so again in the next.

Always be polite, professional, and persuasive in your correspondence, but deliver a clear and firm message that supporting a moratorium is completely unacceptable.  Finally, be sure to ask them to get back in touch with you regarding their position on this issue as soon as possible.  Then let us know!

  • Sen. Daniel Gray Clodfelter (Co-Chair) Mecklenberg [email protected] (919) 715-8331 Democrat (704) 331-1041 Attorney
  • Sen. Peter Samuel Brunstetter Forsyth [email protected] (919) 733-7850 Republican (336) 747-6604 Attorney
  • Sen. David W. Hoyle Gaston [email protected] (919) 733-5734 Democrat (704) 867-0822 Real Estate Developer/Investor
  • Sen. Samuel Clark Jenkins Edgecomb, Martin, Pitt [email protected] (919) 715-3040 Democrat (252) 823-7029 W.S. Clark Farms
  • Sen. Jerry W. Tillman Montgomery, Randolph [email protected] (919) 733-5870 Republican (336) 431-5325 Ret’d school teacher
  • Rep. Harold J. Brubaker Randolph [email protected] 919-715-4946 Republican 336-629-5128 Real Estate Appraiser
  • Rep. Becky Carney Mecklenberg [email protected] 919-733-5827 Democrat 919-733-5827 Homemaker
  • Rep. Pryor Allan Gibson, III Anson, Union [email protected] 919-715-3007 Democrat 704-694-5957 Builder/TWC contractor
  • Rep. Dewey Lewis Hill Brunswick, Columbus [email protected] 919-733-5830 Democrat 910-642-6044 Business Exec (Navy)
  • Rep. Julia Craven Howard Davie, Iredell [email protected] 919-733-5904 Republican 336-751-3538 Appraiser, Realtor
  • Rep. Daniel Francis McComas New Hanover [email protected] 919-733-5786 Republican 910-343-8372 Business Executive
  • Rep. William C. McGee Forsyth [email protected] 919-733-5747 Republican 336-766-4481 Retired (Army)
  • Rep. William L. Wainwright Craven, Lenoir [email protected] 919-733-5995 Democrat 252-447-7379 Presiding Elder

The future of North Carolina’s economic growth is at stake here.

  • Sen. Daniel Gray Clodfelter (Co-Chair) Mecklenberg [email protected] (919) 715-8331 Democrat (704) 331-1041 Attorney
  • Sen. Daniel T. Blue, Jr. Wake [email protected] (919) 733-5752 Democrat (919) 833-1931 Attorney
  • Sen. Peter Samuel Brunstetter Forsyth [email protected] (919) 733-7850 Republican (336) 747-6604 Attorney
  • Sen. Fletcher Lee Hartsell, Jr. Cabarrus, Iredell [email protected] (919) 733-7223 Republican (704) 786-5161 Attorney
  • Sen. David W. Hoyle Gaston [email protected] (919) 733-5734 Democrat (704) 867-0822 Real Estate Developer/Investor
  • Sen. Samuel Clark Jenkins Edgecomb, Martin, Pitt [email protected] (919) 715-3040 Democrat (252) 823-7029 W.S. Clark Farms
  • Sen. Josh Stein Wake [email protected] (919)715-6400 Democrat (919)715-6400 Lawyer
  • Sen. Jerry W. Tillman Montgomery, Randolph [email protected] (919) 733-5870 Republican (336) 431-5325 Ret’d school teacher
  • Rep. Paul Luebke (Co-Chair) Durham [email protected] 919-733-7663 Democrat 919-286-0269 College Teacher
  • Rep. Harold J. Brubaker Randolph [email protected] 919-715-4946 Republican 336-629-5128 Real Estate Appraiser
  • Rep. Becky Carney Mecklenberg [email protected] 919-733-5827 Democrat 919-733-5827 Homemaker
  • Rep. Pryor Allan Gibson, III Anson, Union [email protected] 919-715-3007 Democrat 704-694-5957 Builder/TWC contractor
  • Rep. Dewey Lewis Hill Brunswick, Columbus [email protected] 919-733-5830 Democrat 910-642-6044 Business Exec (Navy)
  • Rep. Julia Craven Howard Davie, Iredell [email protected] 919-733-5904 Republican 336-751-3538 Appraiser, Realtor
  • Rep. Daniel Francis McComas New Hanover [email protected] 919-733-5786 Republican 910-343-8372 Business Executive
  • Rep. William C. McGee Forsyth [email protected] 919-733-5747 Republican 336-766-4481 Retired (Army)
  • Rep. William L. Wainwright Craven, Lenoir [email protected] 919-733-5995 Democrat 252-447-7379 Presiding Elder
  • Rep. Jennifer Weiss Wake [email protected] 919-715-3010 Democrat 919-715-3010 Lawyer-Mom

Let’s Play Follow the Money – Part 3

Jay Ovittore June 22, 2009 Community Networks, Public Policy & Gov't 1 Comment

welcomencIn the last two installments I covered the North Carolina legislators that had a hand in HB1252/S1004, legislation that would have severely curtailed municipal broadband projects in this state, and how they were involved in bringing the bills to the floor. I am now going to focus on some powerful, long term state senators, who have a very influential vote on the Senate floor.

R.C. Soles (D-Brunswick, Pender & Columbus Counties) has served for 17 terms. Soles, as he is not a co-sponsor or sponsor, does carry great influence in the Senate and can gather votes. Soles took a lot of money from the cable/telecom industry in 2008, $7500 in total. From Embarq he took $2000, Time Warner $1000, AT&T PAC $4000, and from the Sprint/Nextel PAC he took $500.

Senator Tom Apodaca (R-Buncombe, Henderson and Polk Counties) is a four term senator who also took a bundle of money from the cable/telecom industry in 2008. In total he received $12500 in contributions. Embarq gave $3000, Time Warner $2500, AT&T PAC $4000, Sprint/Nextel PAC $1000, and AT&T Mobility Employees PAC $2000. There was also a suspicious contribution from one “Jasie Barringer.Barringer is listed as a housewife and self employed, but in reality she is more likely the chairman of RH Barringer Beverage Distributors (Anheuser-Busch), which is well known to me as it’s here in Greensboro. They also appear to have used a business address for the contribution, which is illegal in North Carolina. I will be filing a complaint with the State Board of Elections.

Senator Dan Clodfelter (D-Mecklenburg County/City of Charlotte), is the six term senator who sits with with Sen. Hoyle of the Revenue Laws Joint Sub-Committee, where they are trying to direct HB1252/S1004. Clodfelter also took a lot of money from the cable/telecom industry, $10250 in total. Embarq contributed $1500, Time Warner $2250, AT&T $2000, NC Cable PAC $2500, Sprint/Nextel PAC $500, NC Association of Broadcasters $500 and NC Broadcast PAC gave $1000.

There are a few other influential legislators in the House and Senate, but they are a little harder to track because of their positions of power. Speaker of the House, Rep. Joe Hackney and President Pro Tempore of the Senate Marc Basnight hold a considerable amount of power and influence, and receive a lot of money from everyone. This makes it a little harder to track. Basnight received $18500 in contributions from the cable/telecom industry and Speaker Hackney received $21000 in contributions.  While this is a lot of industry money, it’s not out of proportion from what they receive from every industry PAC that contributes to their campaign coffers.

If you have not read the first two installments here at Stop the Cap!, they can be found here and here. I will follow up when the first quarter reports become available for 2009.

It’s important to note that in all three articles, acceptance of political contributions in no way implies criminal activity.  It does imply that money from big donors can create a climate of influence with legislators.  This is the culture of politics, whether it is in North Carolina, Washington, or your local city council. Until we can remove the influence of industry PAC money on elected officials, the lobbies for these industries can continue to have the upper hand on the common citizen and what is good for us, unless we stand up and make our voices heard.

The information gleaned from here in North Carolina underlines this point, and I encourage you to review campaign finance reports to investigate why an elected official would be so insistent on standing against consumer and constituent interests.  Not every legislator that accepts contributions automatically means they will not stand with their constituents.  Many will.  But for those who do not, this can help explain why.  Should you require assistance locating, searching, or investigating the tricks of the campaign finance trade, feel free to contact me.

Coalition of the ‘Willing to Cap’ Complains About Monopolistic Behavior by Big Phone Companies

Phillip Dampier June 22, 2009 AT&T, Data Caps, Editorial & Site News, Public Policy & Gov't, Verizon Comments Off on Coalition of the ‘Willing to Cap’ Complains About Monopolistic Behavior by Big Phone Companies

nochokeThe NoChokePoints Coalition has a point.  They are a coalition of public interest groups and providers like British Telecom and Sprint-Nextel that are upset with monopolistic pricing for high speed broadband lines.  Verizon and AT&T “control the broadband lines of almost every business in the United States” the coalition states, and “generates a profit margin of more than 100% for the controlling phone companies.”

“Releasing the broadband economy from the chokehold these huge phone companies have on the special access market will be a catalyst for innovation and investment in the broadband marketplace, something we desperately need,” said Maura Corbett, spokeswoman for the NoChokePoints coalition.

“Every time you send an email, withdraw money from an ATM, or use your wireless phone, your information travels on these high-capacity lines. Excessive pricing and other market abuses by these companies have long been an issue of concern at the Federal Communications Commission (FCC). Nearly five years ago, after many complaints by broadband customers in several FCC proceedings, the Commission began a review of the high-capacity broadband market to determine the changes needed to ensure reasonable prices. Despite ample evidence of excessive pricing, the Commission inexplicably has yet to take any action.”

“The Obama administration, Congress, and the FCC repeatedly emphasize the importance of broadband to our economic recovery and, frankly, it defies explanation that we are still fighting this market abuse,” Corbett continued. “Huge companies like Verizon and AT&T control the broadband lines of almost every business in the United States. The virtually unchallenged, exclusive control of these lines costs businesses and consumers more than $10 billion annually and generates a profit margin of more than 100 percent for the controlling phone companies, according to their own data provided to the FCC. This hidden broadband tax results in enormous losses for consumers and the economy, and this country cannot afford it; especially now.”

NoChokePoints cited four central principles of its campaign to reform the special access market: (1) the special access market is broken; (2) the outgoing Federal Communications Commission made a bad situation worse by failing to address obvious market abuse by these huge phone companies; (3) this unchecked market control continues to slow broadband deployment, compromise innovation and harm our national information economy; and (4) the resulting market failure must be corrected now.

Yes, when one or two providers get together and establish pricing for a product that is way out of line for what it costs to provide, and uses that control to further squeeze every last penny they can from customers, something should be done.

As consumers, we should agree to join the NoChokePoints coalition struggle.  There are several very credible pro-consumer organizations that support the Coalition and its goals.  And consumers like myself shall, mere seconds after:

Member BT (British Telecom) stops throttling UK customer’s broadband connections, and imposing Internet Overcharging schemes on customers through limits on their data consumption.

Member Sprint-Nextel agrees that consumers should be able to request temporary suspension of their wireless data account, currently limited to 5GB of consumption per month, the moment the limit is reached to avoid the potential of paying overlimit fees, if/when applicable.

TW Telecom gets a pass here as they are entirely independent from Time Warner Cable.

Internet Overcharging schemes, monopolistic control, abuse of market pricing, and other anti-competitive behavior should be confronted.  But companies engaged in problematic behavior themselves should not anticipate a great deal of consumer compassion towards their plight, when those consumers often are on the receiving end of that problematic behavior themselves.

Department of Duh: Pew Study Finds Prices Lower for Broadband Where Competition Exists

Phillip Dampier June 19, 2009 Editorial & Site News, Issues, Public Policy & Gov't Comments Off on Department of Duh: Pew Study Finds Prices Lower for Broadband Where Competition Exists

competitionpricesThis week’s finding from the Pew Internet & American Life Project:

Where competition exists in broadband, prices are significantly lower than in areas where competition does not exist or is limited.

This is, of course, common sense.  But it underlines the importance of broadband competition to control pricing and overcharging schemes.  Broadband prices have been increasing in the United States, along with the number of customers, the revenues earned from those customers, and the loyalty customers to their broadband service.

What has decreased, despite the growth in broadband pricing, revenues, and customers, is some providers’ investments in their own networks to keep up with that growth.  In 2008, Time Warner Cable’s annual report showed interesting results:

“In 2007, TW made $3,730 Million, on high speed data alone, and then had to turn around and spend $164 Million to support the cost of the network. 2007 total profit on high speed data: $3.566 Billion”

“In 2008, TW made $4,159 Million, on high speed data alone, and then had to turn around and spend $146 Million to support the cost of the network. 2008 total profit on high speed data: $4.013 Billion”

“It cost TW 11% less money in 2008, to keep their network running, than in 2007.”

These numbers illustrate the folly of crying poverty when asked why network upgrades aren’t being performed to support evolving growth in usage.  Instead, the meme of “heavy downloaders are costing light users money and slowdowns” is part of the Re-education campaign to justify Internet Overcharging.

Yet broadband prices are continuing to climb even with reduced investments by many providers.  Pew found pricing up across all classes of broadband service, significantly so between 2008 and 2009.  Pressure on revenues from the video side of the cable business are partly responsible as investor demands for profits demand results.  Consumers, responding to a poor economy, have been cutting back on their cable TV package, especially premium channels, pay-per-view, and add-ons of extra channels.  A few are abandoning cable/satellite TV altogether, relying on their broadband connection and online video, a prospect that terrifies those providing traditional cable-like programming packages.

utilitySome 84% of home broadband users see their fast connection as “somewhat important” or “very important.” This increasing reliance on broadband is turning a convenience into a necessary utility.  Yet the industry that provides it is under very little scrutiny and has largely been deregulated, with only limited oversight possible.

The results have been mixed.  Americans living in areas lucky enough to experience robust competition have fast, reliable service at low prices, with only limited efforts to impose Internet Overcharging schemes.

In areas with more limited competition, particularly when those competitors do not provide an equivalent level of service consistently across their service area (fast consistent cable modem service vs. variable, speed-challenged DSL), mischief by the dominant provider is increasingly common.  “Experiments” to increase prices, limit use, require customers to purchase or rent equipment, or impose annual or bi-annual service contracts, and/or  limited advancements in speed are not atypical.

cutbackRural communities, in particular, remain exposed to many challenges — high prices for installation and service, slow/uneven speeds, contracts, and usage allowances are all commonplace.

The Obama Administration intends to spend tens of millions of dollars to improve broadband in the United States.  Unfortunately, many worthwhile projects and ideas are up against schemes from less worthy providers and groups that have teams of lobbyists and connected “interest groups” proposing spending that carries few limitations, little oversight, and loads of loopholes.  In some cases, needed project funds could even be diverted away from new projects altogether.

The Pew Study summarized its findings:

Home broadband adoption stood at 63% of adult Americans as of April 2009, up from 55% in May, 2008.

The latest findings of the Pew Research Center’s Internet & American Life Project mark a departure from the stagnation in home high-speed adoption rates that had prevailed from December, 2007 through December, 2008. During that period, Project surveys found that home broadband penetration remained in a narrow range between 54% and 57%.

The greatest growth in broadband adoption in the past year has taken place among population subgroups which have below average usage rates. Among them:

  • Senior citizens: Broadband usage among adults ages 65 or older grew from 19% in May, 2008 to 30% in April, 2009.
  • Low-income Americans: Two groups of low-income Americans saw strong broadband growth from 2008 to 2009.
    • Respondents living in households whose annual household income is $20,000 or less, saw broadband adoption grow from 25% in 2008 to 35% in 2009.
    • Respondents living in households whose annual incomes are between $20,000 and $30,000 annually experienced a growth in broadband penetration from 42% to 53%.

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