Friday, November 18, 2005

For U.S. Consumers, Broadband is Slow and Expensive

In France, $36 per month can buy you 20 Mbps download speeds, 100 channels of TV, and unlimited domestic Internet telephony. In S Korea and Japan over 90% of the population had Broadband. The US is like, number 20 in connectivity per capita. Drucker states—in what is sure to provoke an Opinion Page response—that strict rules to allow carriers to open up their lines to competitors is the reason. Incumbent telcos and cable firms operate 93 percent of the U.S. broadband, which the FCC defines as 200 Kbps or higher in one direction. Ha! There’s no mention of George Gilder, massive telco fraud, and horrible investments in this column, but that might take entire books. The failure of broadband can be tied to the obsession in overbuilding fiber under the assumption that it would carry only slightly more data over time, and the telephone and cable companies terrible, sometimes allegedly illegal decisionmaking processes in the late 90s and early 2000s. They got distracted from their core businesses. Drucker gives a zinger near the end of this column to anyone who wants to complain about the municipal networks being funded by taxpayer dollars, although few have any taxpayer money going towards buildout or operation: “Phone companies, for example, get billions of dollars in federal and state subsidies for rural service; they also have teams of lobbyists and attorneys to influence policy. As cities try to introduce competing wireless networks, traditional telecom providers lobby to restrict such plans.” Let’s not forget those billions which extend far beyond rural service—that’s just one piece of it. Folks who believe in not having competition from municipalities with incumbents forget that municipalities are directly and indirectly funding (through subsidies and tax breaks) those very entities. The removal of tax revenue from entities is the same as spending taxpayer money—it goes to the entities’ shareholders instead of into the pockets of local residents. Read the Wall Street Journal article here


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