The Consumers Union and the Consumer Federation of America recently released a report that really tears into the Bush Administration’s policy concerning the Telecommunications industry and broadband deployment. I was directed to this report by an article on CNET ( and I was suspicious that I was reading a politically motivated hack job. (Perhaps, I am a little suspicious of everything I read based in the partisan politics that seemingly taints everything in this election cycle.)

However, as I read the report I started to realize that there were many carefully researched insights being brought to light that seemed to ring true.

As quoted from the report,

“The policy of relying solely on the market to make communications services affordable to all Americans represents a radical shift. The deployment of the telecommunications network over the 20th century was accomplished under a policy that embraced the availability of service at prices that ensured affordable access to a basic level of service. Local connectivity was the basic launching point for network access and the costs of the network were recovered from all of the services that used it.

Under the Bush Administration, the FCC has turned this approach on its head. The basic connectivity costs for advanced services are set by commercial interests and remain extremely high, undermining the affordability of access. Add on services are relatively inexpensive and make little contribution to the costs of the network.

The claim that broadband will solve the universal service problem by delivering services like Voice over Internet Protocol (VoIP) ignores the fact that in order to get VoIP the consumer must have a broadband connection, which costs more than basic telephone service, itself. Broadband-based alternatives are two to three times as expensive as narrowband Internet service.”

Okay, I have heard everything from the USF is the devil himself all the way to it is a necessary tool to make sure we ALL have decent and affordable communication services. However, as the three paragraphs above describe, what has happened in the last few years? Have all Americans seen the same quality of service deployed to them? In fact, haven’t the wealthiest communities been the benefactors of these deployments while the poorer communities have been left to substandard dialup service? Doesn’t this create a real problem from the standpoint that the wealthier communities can now take advantage of such services as VoIP and the poorer communities will continue to pay the more expensive rates that POTS provides?

Here’s what the paper has to say about that,

“The impact of being disconnected is readily apparent. Those without the Internet at home are much less able engage in information gathering, communications and political activities than those with the Internet at home. Narrowband users engage in about 1.5 times as much of these activities and broadband users are about twice as likely to engage in these activities as those without Internet access at home. In physical space, there are only minor differences between households in these activities, suggesting that if the disconnected had access to the Internet they would engage in a similar level of activity as the connected.

To summarize: about 55 to 60 percent of the population has access at home and uses it for many purposes. Another 10 percent does not have it at home but uses it much less often for these purposes in public places. The households that can afford broadband are overwhelmingly upper-income and make much more intensive use of the Internet at home. In this sense, the needs of the Mercedes Benz class are being well-served by the current system, at the expense of the low- and moderate-income Americans who, if they have access to the Internet at home at all, have access through the much-slower, but more affordable, narrowband connection.”

So, everybody pays an equal share to the Universal Service Fund but the wealthier neighborhoods get almost all of the return?

We have a lot of work to do. If this country is to keep its cutting edge reputation a solid, reliable and inexpensive communications infrastructure must be put in place for every American.

I see this as an opportunity, a business opportunity, in fact, if we choose to take this on. In order for a ubiquitous broadband deployment to occur we need to make a few changes that I believe will be good business for us all. First, the price of large upstream pipes needs to be dramatically reduced. I believe we need to mandate that DS3s need to be priced at $100/month everywhere. In exchange, we will relieve the ILECs from having to supply service to all the places that their business model doesn’t make financial sense. Give us the connection – we’ll take it from there. They no longer have to supply service to every last building in the US and lose money.

Will they do it?
Not in your life.

Why? Probably because, to put it simply, they can’t seem to let go of their monopoly mindset. And, we as Americans are paying for their shortsightedness – and paying dearly.

This is not a problem with the political system as much as one of educational. I do not believe one party is for ubiquitous broadband deployment and the other is not. Rather, we need to explain to these people there is a far better way of answering this need.


Ken DiPietro

The CNET article can be found here:

The full report from the Consumers Union and the Consumer Federation of America can be found here:

Leave a Reply

You must be logged in to post a comment.