Slashdot Mirror
Krugman On the Connectivity Power Shift
In today's NYTimes (registration required), Paul Krugman's op-ed piece lays out in simple terms the statistical power shift in the online economy among Europe, Japan, and the US. This shift has been discussed here for some time, but it's good to see it coming to the attention of a wider audience. Quoting: "As recently as 2001, the percentage of the population with high-speed access in Japan and Germany was only half that in the United States. In France it was less than a quarter. By the end of 2006, however, all three countries had more broadband subscribers per 100 people than we did... [W]hen the Bush administration put Michael Powell in charge of the FCC, the digital robber barons were basically set free to do whatever they liked. As a result, there's little competition in U.S. broadband — if you're lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there's nowhere else to go."
I live in a building where the developers contracted in a "triple-play" provider. Phone, internet and television are all provided by the one company, and poorly at that. We have zero competition to choose from, and only last week at the body corporate meeting did we (the resident owners who bothered to turn up) manage to reach an agreement that the monopoly situation was of no benefit to the residents nor the owners.
Dan. -- So what if it's spelt wrong, nobody's perfect
I think it only looks that way. First bugmenot account I tried took me right to the full article.
The US lags because we set up our telcom infrastructure the first, and thus have the most primitive last-mile connections.
Well, I don't know how old US phone lines are, but the house connection box of my parents read "Reichspost", i.e. the line was established something like 60 years ago.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Interesting point, so I pulled a few numbers off of wikipedia...
_ population_density
In the entire 50 states of the US, the population density is: 31 per square kilometer (172nd in the world).
California is 83.85 per square kilometer.
New York (state) is 155.18 per square kilometer.
Massachusetts is 312.68 per square kilometer.
Washington State is 34.20 per square kilometer.
By contrast, Montana is 2.39 per square kilometer.
Japan is 337/km per square kilometer.
Germany is 230.9/km per square kilometer.
What I can't find quickly (and what would be useful) would be to see what percentage of Americans live in or near cities versus their European counterparts. I can't say for certain, but my guess based on the above would be that the number would be significantly less in the United States...
http://en.wikipedia.org/wiki/List_of_countries_by
"Flag on the moon. How did it get there?"
Sheesh... cable "monopolies" exist on the local level. Local municipalities in a lot of states make exclusive arrangements with the cable providers. Recently, Indiana and Michigan struck down the local cable company arrangements allowing competition at the state level. Ohio has recently passed legislation, too. For too long competition meant, the cable provider vs. DSL. Hopefully real competition comes down from this legislation. Maybe someone from Michigan or Indiana could comment??
I wondered about that too. To make a guess about the answer, I had to find some maps showing US population density. Here's one (in PDF format) from the US government (I wish it had the year). Here's one from a .edu for 1990 levels. And here's one from Time magazine done in a unique fashion.
At first I thought this easily backed up my suspicion that, as you put it, the "spread out America" excuse doesn't work so well.
But then I checked out a global map of population distribution and now, after all this effort, I'm firmly back in the "not sure" category. Bring up the full-size map and compare Europe and Japan with the USA. Perhaps for New York, New Jersey, much of Florida and California there's not much excuse. Anywhere else in the USA and it's not so clear to me.
Whoever designed level 61 in Frozen Bubble is a sadistic bastard.
Except Canada, Sweden, Norway, Finland have much lower population density yet beat us handily in broadband penetration...
I looked up those figures recently from the last census, and while I don't have links right now, around 77% of the US population lives within what is termed metropolitan areas. While the definition of a metro area differs between countries, it is sufficiently similar to distinguish between inhabitants of extended conurbations versus those living out in Shitsville. The trend line looked like the 80% mark would be reached by the end of the decade. So basically around 80% of the US population lives in very similar density conditions as Europe or Japan. This means that the old argument that the US has crappy services because of the vast distances involved is getting old and tired. Within an urban area the cost of providing service is roughly the same across countries. Backbones between major metro areas are either serviced via line-of-sight wireless (e.g. microwave), or more recently fiber. Because of the massive bandwidth and shared access of the backbone it gets amortized fairly quickly and shouldn't contribute significantly to the overall cost of providing service. The real cost is the last mile stretch, and there the US doesn't have a major disadvantage anymore.
I had one of the first DSL lines in my area 10 years ago. It was nearly as fast as my current cable connection because the copper was 90 years old. The phone guy said he could get a decent signal at a mile that would never have worked on on newer wires.
Krugman is actually quite the economist. His text, "Economics," written by him and Robin Wells is used in many universities in introductory courses (it's the number two text, I believe, after the venerable Samuelson), and his text "International Economics," written by him and Maurice Obstfeld is in it's ninth edition. He's a Professor of Economics and International Affairs at the Woodrow Wilson School at Princeton and has had numerous publications during his career, including 38 books. He also was the winner of the American Economics Association's John Bates Clark Medal in 1991 and is considered one of the country's foremost neo-Keynesian economists. As such, I'm fairly sure he has enough fact checkers at his disposal to make sure that his figures and conceptual grounding is much better than yours. You may not believe him or agree with his politics, but he is certainly not a "fruit".
That is all.
"At times, I wonder if the "spread out America" card gets played a bit too much."
The US has ~31 people per sq km, Australia is 1/100th the density with ~0.3 people per sq km, yet 97% of the population have a choice of service providers. The reason for this is that the copper network owners are required by law to lease their lines to competitors at "wholesale" prices, the leasing rules are a similar concept to what google is proposing for the spectrum auction.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
This is proof it's possible if those in charge have foresight, plan well, do it right, and don't give in to the pressure of the industry giants who'll try to stop them. Perhaps we should expect more from our
If I mod you up, it doesn't necessarily mean I agree with what you've said, sorry.
I think you wanted to link to this: http://en.wikipedia.org/wiki/List_of_selected_citi es_by_population_density
You can compare Tokyo's 13,000/km^2 to New Yorks 10,000/km^2, or Munich's 4,200/km^2 with Los Angele's 3,100/km^2
There really is not a large difference between European, Asian, or North American cities. They just have different monopolies and governments ripping them off.
Here you go, enjoy. And enjoy the coming take-down notice, /.!
---
There was a time when everyone thought that the Europeans and the Japanese were better at business than we were. In the early 1990s airport bookstores were full of volumes with samurai warriors on their covers, promising to teach you the secrets of Japanese business success. Lester Thurow's 1992 book, ''Head to Head: The Coming Economic Battle Among Japan, Europe and America,'' which spent more than six months on the Times best-seller list, predicted that Europe would win.
Then it all changed, and American despondency turned into triumphalism. Partly this was because the Clinton boom contrasted so sharply with Europe's slow growth and Japan's decade-long slump. Above all, however, our new confidence reflected the rise of the Internet. Jacques Chirac complained that the Internet was an ''Anglo-Saxon network,'' and he had a point -- France, like most of Europe except Scandinavia, lagged far behind the U.S. when it came to getting online.
What most Americans probably don't know is that over the last few years the situation has totally reversed. As the Internet has evolved -- in particular, as dial-up has given way to broadband connections using DSL, cable and other high-speed links -- it's the United States that has fallen behind.
The numbers are startling. As recently as 2001, the percentage of the population with high-speed access in Japan and Germany was only half that in the United States. In France it was less than a quarter. By the end of 2006, however, all three countries had more broadband subscribers per 100 people than we did.
Even more striking is the fact that our ''high speed'' connections are painfully slow by other countries' standards. According to the Information Technology and Innovation Foundation, French broadband connections are, on average, more than three times as fast as ours. Japanese connections are a dozen times faster. Oh, and access is much cheaper in both countries than it is here.
As a result, we're lagging in new applications of the Internet that depend on high speed. France leads the world in the number of subscribers to Internet TV; the United States isn't even in the top 10.
What happened to America's Internet lead? Bad policy. Specifically, the United States made the same mistake in Internet policy that California made in energy policy: it forgot -- or was persuaded by special interests to ignore -- the reality that sometimes you can't have effective market competition without effective regulation.
You see, the world may look flat once you're in cyberspace -- but to get there you need to go through a narrow passageway, down your phone line or down your TV cable. And if the companies controlling these passageways can behave like the robber barons of yore, levying whatever tolls they like on those who pass by, commerce suffers.
America's Internet flourished in the dial-up era because federal regulators didn't let that happen -- they forced local phone companies to act as common carriers, allowing competing service providers to use their lines. Clinton administration officials, including Al Gore and Reed Hundt, the chairman of the Federal Communications Commission, tried to ensure that this open competition would continue -- but the telecommunications giants sabotaged their efforts, while The Wall Street Journal's editorial page ridiculed them as people with the minds of French bureaucrats.
And when the Bush administration put Michael Powell in charge of the F.C.C., the digital robber barons were basically set free to do whatever they liked. As a result, there's little competition in U.S. broadband -- if you're lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there's nowhere else to go.
Meanwhile, as a recent article in Business Week explains, the real French bureaucrats used judicious regulation to promote competiti
New York (state) is 155.18 per square kilometer.
Massachusetts is 312.68 per square kilometer.
Washington State is 34.20 per square kilometer.
By contrast, Montana is 2.39 per square kilometer. Sweden has 20.0
Finland has 15.5
Countries which tend to rank among the highest in this regard. If California has four times the population density as well as a much larger population in absolute numbers, I don't really see how this would be a factor against the infrastructure.
Trust the Computer. The Computer is your friend.
In Europe, telco monopolies has been the norm rather than the exception. However, some countries and later the EU has required this to change resulting - in many countries - in a much more competitive market including telephony, cell phone and broadband. In Sweden, the former telco monopolist Telia was forced to spin off it's network/copper & fiber infrastructure into a separate company, Skanova. Skanova is a "wholesale" telephony and adsl connectivity provider to all broadband and telephony companies, that in turns retails this to consumers and businesses. This has created sufficient steam in the market for some suppliers to build their own infrastructure hoping to realise a lower unit cost. In order for this to work price-regulation(!) has been reinstated on the wholesale price. An alternative model is to force Telia to sell Skanova. Today, I pay about 55 USD for 24 Mbps downstream/1 Mbps upstream adsl with five IP's, e-mail, five web hosting accounts, etc. For 8 Mbps adsl you can find deals at 28 USD per month; 100Mbps fiber - where available - would cost around 50 USD. There are some 20 different suppliers, including adsl, fiber, 3G and wireless to choose from where I live; out of those 7-8 own at least part of their own infrastructure. Not sure how this compares to the US?
I used to think I could change the system but the 'military-industrial complex' has a firm grip on the good old USA and that will be its downfall.
Who modded this nitwit informative? Libertarians most certainly do not believe in a government which can't stop people from blowing up their competitors factories. Those are anarchists, not libertarians. Libertarians fully believe in government that exists to prevent coercion, of which the blowing up factories would fall.
You obviously fail to grasp the ideas behind libertarianism, so you're hardly qualified to criticize them.
Do you know why Standard Oil became a monopoly? It became a monopoly because it was vastly more efficient than its competitors (It found a market for products that its competitors were throwing away). In addition, it lowered the price of its primary products for the consumer. Standard Oil wasn't broken up because the people rose up against it. It was broken up because other businesses rose up against it. On another point, Paul Krugman has a well deserved reputation as being fast and loose with the facts. Just Google "Krugman Watch".
The truth is that all men having power ought to be mistrusted. James Madison
No. Not true. Sweden is only *sligthly* more urbanized than USA (81% versus 77%) and Norway, for example, is actually *less* urbanized than USA at 74%. Urbanization explains something, for some countries. But not the difference between USA and the Nordic countries. (which have similar urbanization, and *lower* population-density)
Down here (Latvia, East Europe), it has been a boost in the past couple years. In major towns you can typically get access to 10Mbit+ Ethernet for around $20/month - there are plenty of tiny ISPs who lease access to fiberoptic lines or radiolinks from the couple of major carriers and then get their area connected one by one.
In the rest of the country where you aren't so lucky, you can for the most part get access to 512k to 2Mbit DSL by the local telco, which strangely enough seems to work better now than before. The coverage isn't full, but it is improving. If everything else fails, you should be able to get access nearly everywhere in the country via GPRS, EDGE(up to 236Kbps) or HSDPA(3,6Mbps) if you've got the mobile.
The concept of "foreign" traffic (ie. accessing anything outside your country), which you had to pay for by megabyte trasferred, is now almost completely gone.
All in all, major steps in getting connected and getting broadband, all in the past 2 years or so.
Of course, it was all paid for by the manipulations that Enron was creating in California. Grant County sits on one side of the Columbia River which has more hydro dams than any other river. Most of the dams are owned by non-profit co-ops, that have sold power to California for years. When power prices went nuts in the summer of 2001, the co-op was minting money. So they had to plow that money into something, so they started stringing up fiber everywhere in the county. Sweet deal for the residents of Grant County though.
Since the measurement was taken as subscriptions per 100 people, I am curious if there are differences in household size between the US and other nations that could skew the results.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
Krugman is on the receiving end of character assassination because he's stood in opposition to the Bush presidency even when it was popular, based entirely on their policy position. He's been characterized as "shrill" due to his consistency in holding this position. Some would call this intellectual honesty in a pundit, but those who dislike his conclusions can't admit that.
Has he made a few errors? Yes, even a few doozies, which have been corrected, ad nauseum. I do believe that he's more vulnerable to fact-checking based errors because he actually works to base his columns on facts, vs. working through baseless assertion and anecdote - paging David Brooks, Maureen Dowd, and many, many others who pretend to be working in fact but instead focus on rhetoric. These "colleagues" (i.e pundits at the NYT and other top-circulated newspapers) are rarely held to the same standard that he is. It's much easier to "let them off the hook" for far more sweeping assertions because their reflecting CW, and not challenging it.
Read the Wikipedia article http://en.wikipedia.org/wiki/Standard_Oil "Standard Oil's market position had been established through an emphasis on efficiency and responsibility. While most companies dumped gasoline (this being before the automobile) in rivers, Standard used it to fuel the company's own machines. Where gigantic mountains of heavy waste grew by other companies' refineries, Rockefeller found ways to market and sell these waste products, creating the first synthetic competitor for beeswax, as well as acquiring the company that invented and produced Vaseline, the Chesebrough Manufacturing Company, which was a Standard company only from 1908 until 1911." Yes they also used very aggressive business tactics. Tactics that are certainly unethical and probably appropriately illegal (now, not illegal then). However, I suspect that if the government didn't act either to prop up their monopoly or to bust it that it would have come apart anyway. Monopolies are not a sustainable business model in a free market system without government support. The explanation of why this is so was a five page paper that I am not going to try and reporduce here.
The truth is that all men having power ought to be mistrusted. James Madison
There are two kinds of monopolies, artificial and natural. Artificial monopolies exist due to government regulation backed up by the threat of force, or by collusion between ostensible competitors. Natural monopolies exist where two or more competing firms in an industry would be less efficient than one. Like roads, electricity, or piped water. Who wants to be the second guy to lay water pipes in a suburb?
In libertarian theory, there is a cap on these monopolies ability to overprice goods. People will start finding alternatives if the price gets too high. And collusion between companies simply allows another company to enter the market and undercut the entrenched players.
In reality, there is still inefficiency when monopolies exist. The monopoly could be happy selling for much less, instead, they are taking nearly all the extra value created in the trade. This is not in the best interests of the largest number of people. Collusion is possible due to economic coercion. Not all force comes from a gun, entrenched players can buy up all supplies, or agree to all undercut a competitor until they are out of business. Or they can bribe a competitor to join their oligopoly.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton