“We hold these truths to be self-evident, that all men are created equal…”
Those were some pretty disruptive words in their day, words that shook the entire foundation of the ruling class. It clearly stated that there from our perspective there was no inherent right to a better life based on birth or wealth.
To a certain extent the concept of free enterprise is at odds with this idea as it becomes impossible for a for profit company to treat everyone equally. Those who have money can purchase products while those without cannot. This is a reality in our lives.
There exists a balance that needs to be maintained in order for our society to function. The medical infrastructure is an excellent example. There is no way we could provide for any kind of medical service, from ambulance to major hospitals, if only the rich had to pay the entire bill. The same holds true for our telecommunications network, our interstate highway system along with our network of secondary roads. Would our country be better off if only the wealthy communities had telephone service or paved roads? I believe that a parallel holds true for the broadband infrastructure.
In this day and age, having unfettered access to the wealth of information and the ability to collaborate on any idea is a large part of what separates the next “Bill Gates” from some guy pumping gasoline at the local service station. If we look at two examples, a teenager in Lowell, Vermont (with no adequate broadband available) and another child the same age living in Hong Kong, which child will have the necessary tools to move forward in this world economy? While the answer will never be 100% in either child’s favor I believe this example clearly illustrates the need for our nation to embrace a next generation communications infrastructure.
Does this mean government should build this network?
Not from where I sit, private enterprise is capable of doing so usually for substantially less money and with far better efficiency but there needs to be not only incentives to make universal coverage a reality but the removal of century old archaic rules and regulations allowing this move forward.
As things stand right now, our country is at a crossroads as to where we are going with this and how we are going to get there. This holds true for the rest of the world along with us. What is fair? How do we grow this system in such a way that our entire country benefits without incurring a cost that hurts our country? Even more important, how do we make this equitable?
“Is it fiber-to-the-home or fiber to the rich?”
This public comment was made to Comcast’s investors by chairman Brian Roberts. I see a massive disconnect happening from what we are actually trying to accomplish and what is currently being done. Under the category of introducing the pot to the kettle and discussing who is really black, I found this comment amusing. We have a cable company actively working to roll out telephone service to its installed base (while bypassing nonprofitable neighborhoods) calling the ILECs out for “cherry picking” only the wealthy neighborhoods for their state of the art services.
The reality is that this is also what the WISP industry is doing but to a much smaller extent. Let’s face it, we need to roll out profitable networks, ones that are sustainable and while we have a very different set of constraints most of us will only light up areas that have meet the minimum requirements for a business case. We do have the advantage of not being tied to a certain number of homes per wireline mile as we can look at any geographic region from the perspective of how many users inside the coverage zone of our WiPOP. We also have the insanity to work for less profit than any of these bigger companies – something I am not sure we should be proud of.
This still leaves us in a position where a large portion of our country will never be covered by any broadband network – both in rural locations as well as urban environments. Why? Too little revenue for too big an investment coupled with ongoing expenses that cannot justify the business model.
Great, any idiot can identify the problem but the important things is what kind of answers can we suggest?
To address this question we first need to take a look at the contributing factors that surround these issues. I am not going to pretend the following list is complete but I believe I have identified the major points.
Population Density – Simply stated, without enough people in any given area no form of broadband can be provided without some form of subsidy. Please note – this is true of telecommunications services.
Cost of connectivity – This is one of the two major expenses that every service provider much accept in providing broadband service. This holds true universally for cable companies, telephone companies, satellite providers and wireless even though the costs are expensed in different ways.
Cost of infrastructure – This is the other of the two major expenses that every service provider deals with. Whether it is the cost associated erecting the poles and stringing copper wire, coax cable or fiber along with maintaining the network, digging a trench and burying the network or even building out a wireless network the investment is enormous.
Return on investment – No matter how you analyze the problem it only makes sense that whatever money is spent is used in such a way as to maximize efficiency. This holds true regardless of whether private enterprise is employed or government. In a private enterprise we have the investors (or our own wallets) to answer to and losing money is a self-correcting problem. If the government tackles the situation we seem to be more accepting of enormous amounts of money being spent with little more being done than token whining. This does not exempt either of the mechanisms from needing to be paid for, one way or another.
Allocation of resources – Whether we define resources as RF spectrum, right of way for land use, public funds or simply the ability to provide service in a given area, the necessity to maximize the return of this investment has to be considered foremost. At this point it should be clear to everyone that no one type of network is going to be perfect for every area or deployment. The reality is that cable and telephone are only different shades of the same wireline technology applied to the problem. Satellite and wireless are two similar technologies trying to compete for the same service arena but to date are not even showing up on the pie chart in any meaningful way. The battle between satellite and wireless will be fought out when the total cost vs performance is added up.
Monopoly management – One of the techniques that has been used with some success is the awarding of a monopoly status to a company (with legislative oversight) in an attempt to “jumpstart” an industry. This technique was used with both the telecommunications industry and the cable industry. I think it can also be stated that the results were mixed with the end effect being that the public that was being served was upset at how the service was provided and worked to overturn the monopoly.
Where does this leave us?
From all of the above we can clearly see that by forcing the telecommunications industry to provide service uniformly to all areas of the country we have managed to get service to just about everywhere but at a huge cost. This cost is largely borne by the USF (Universal Service Fund) along with tax breaks and outright grants. The question is, should we be doing things this way?
Let’s face it, in areas where there isn’t a specific density of customers per wireline mile using either the telephone company or the cable company to deliver service is quite simply not the most cost effective way of providing service. As proof we can see the huge areas of the country that the cable companies have left with no infrastructure in place leaving these customers instead to the satellite TV providers. If telephone service wasn’t mandated and subsidized there wouldn’t be telephone service there either.
Even with the subsidization the telephone companies are crying poverty at having to provide service into many of these sparsely populated areas. Verizon recently sold off Hawaii and part of their upstate New York territory in an effort to divest of areas that lose them money. Considering that all of us make up the huge amount of money that Verizon loses in these areas I believe we can all breathe a collective sigh of relief whenever Verizon manages to become more efficient.
In an effort to deal with this problem we are now seeing a large push by the telecommunications industry to build out cell phone service into many areas but this strategy also has the limitation of being very expensive and needing a set number of customers per mile or there will never be any form of payback.
At this point, we need to look at what the best technology (best as defined by most cost effective) to provide for each segment of our nation. To that end I need to ask, what would happen if instead of us requiring Verizon (and the rest of the ILECs) to only bring bulk connectivity to these locations at very reasonable prices?
What would happen if Verizon brought a DS3 into Lowell, Vermont and then only had to provide a couple of dozen T1s to different neighborhoods? Verizon would have a fraction of the cost for these services and Lowell, Vermont could have ubiquitous service provided by an independent company at reasonable rates. Everybody wins – Verizon spends loses money providing service and might even break even by charging only what this connectivity and transport costs, Lowell gets not only broadband but also a local company to be their provider and the US taxpayers no longer have to provide money for some town they have never heard of to have telecommunications services.
This very same infrastructure could also deliver television/Video on Demand, distance learning, videophone and a variety of other services that Lowell, Vermont might never otherwise see.
What we are talking about here is maximizing efficiency. The best network technology needs to be utilized to provide services. Unfortunately, the current system is making this impossible. As long as there is a Universal Service Fund coupled with a monopoly to spend the money we will never see any meaningful change.
It is time we take a look at how we do things paying close attention to what works and what doesn’t. It is the programs we instituted long ago that are now preventing us from moving forward employing the recent technologies that weren’t even conceived of when these programs were put in place.
The thing is, we need to do this now. If we don’t we will have broadband for the rich, high speed internet for the rich and dialup for the poorer caste in our societies, if they can even afford it. Without doubt, we as a society will all pay for this shortsightedness – even the rich.
Can I cut anyone a slice of cake?