4. Verizon, AT&T, Progress and Freedom Foundation
Issue: Broadband Penetration
Just as railroads and highways did in the past, broadband and mobile communications can dramatically increase the productivity and efficiency of the economy. The U.S. government has taken a largely deregulatory approach to the broadband ISP market, based on a belief that competition will compel large ISPs like AT&T, Verizon, and Comcast to sell broadband at the speeds and price points that consumers want.
But this hands-off approach is being called into question. The reason is this: Back in the 1990s the U.S. led the world in broadband penetration and speeds, but today the U.S. has fallen to 15th among the world's developed countries in terms of broadband penetration, according to data collected by the Organization for Economic Cooperation and Development (OECD).
A study by the Communication Workers of America finds that the average download speed of Internet connections in the U.S. is 1.9 megabits per second. The cost of DSL or cable connections in the U.S. ranges from $15 to $40 per month. Meanwhile, Tokyo residents can buy a 100-mbps connection for the equivalent of $10 per month.
The phone companies and their allies didn't much like the news from the OECD, and have for months engaged in a campaign to discredit the OECD report. The phone companies also get help from a vocal little spin house called the Progress and Freedom Foundation, which holds seminars, puts out position papers on various telecommunications issues, and lobbies on these issues as well. One of the main jobs of PFF's commentators has been to espouse the efforts of the phone companies to spread broadband access, while discrediting the OECD report. My sources in Washington tell me that it's common knowledge that a sizable part of PFF's roughly $3 million annual budget comes from the big phone companies. The Supporters page at the PFF Website is a Who's Who of large telco and cable interests.
No Incentive for Growth
The OECD data notwithstanding, the phone and cable companies have had little real incentive to improve the speeds, prices, and reach of their broadband services. Today most Americans, if they have any choice of broadband providers at all, can choose service only from a cable or a telephone company ISP. Meanwhile, the FCC and the courts have consistently ruled that the cable and telephone companies are under no legal obligation to share their broadband lines with would-be competitors. Some argue that federally collected monies and tax incentives helped pay for those lines in the first place, and that the current owners of those facilities have an obligation to share them. Only real competition, not the short-term interests of shareholders, can compel ISPs in the U.S. to boost broadband speeds and lower costs to world-class levels.
The FCC doesn't help the situation by defining broadband as anything above a decidedly slow 200 kilobits per second. That low threshold allows the FCC and phone and cable companies to make some rosy claims about the state of broadband in the U.S., such as this one, proudly posted at the USTelecom site: "The total number of new high-speed lines (200 kbps in at least one direction) increased by 61% from 51.2 million at the end of 2005, to 82.5 million at the end of 2006."
The effect of slow broadband speeds and poor availability on tech is obvious. A whole generation of innovative businesses that depend on real broadband is still waiting to come into existence. For now, consumers will have to wait for new, lightning-fast information, media, and telecommunications services that could change the way we work and play.