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."

Comments

Another problem...

[amccaf1]

Another problem is that the population of the United States is much more stretched out than in those other countries (especially, duh, Japan) and therefore harder to physically reach. It's easy to reach the 50% of the population nearest the population centers, harder to reach the 50% that's farther away.

It's like the problem we had in the US of upgrading television stations to Hi-Def. In Europe, you only have to upgrade two or three transmitters per country. In the US you have hundreds of transmitters dotted throughout the country (not to mention the added trickiness of local ownership of individual local television stations)...

Re:Another problem...

[fermion]

This is used as an excuse, and in some parts it is a valid concen, but it is not the only problem. For instance,in my area there are around 3500 people per square mile. Yet DSL is not available in all areas. This means that cable has a monopoly on broadband. Even in areas where DSL is available, the quality is nowhere near what I got back in the late 90's. I suppose part of this is due to increased demand, but a lot of it is due to failing infrastructure. The Bells managed to get back an effective monpoloy on broad band over phones lines, and then made it practically unusable.

And this is the final kicker. AT&T is putting fiber in our area, but first in the neighborhoods that already have DSL. They are going to let the cable company continue to have a monopoly in the other areas. To make matters worse, AT&T will not sell you just internet access. You have to buy a package.

I tell you what our president has done. He has reduced America to third world status. INstead of being able to pay a private company to give you good access to the internet, you have pay a monopoly. And you can't pay for what you need, you have to pay for what they want you to have. BTW, this is not a new revelation. Foreign affairs did an write on this a few years back. We did not just all of the sudden lose our edge. It was a predictable part of policy,and has been obvious since before out president got reelected.

Re:Another problem...

[scoove]

This crap will never change as long as we have fools on both sides of politics that readily believe the only one party has been corrupted by money, special interest and the protection of elite, old money families. Neither party has a monopoly on the corruption of power.

I tell you what our president has done. He has reduced America to third world status.

Anyone who's spent time in third-world nations knows the falsehood of this ignorant commentary. Let's objectively criticize people for what they really have done - as Bush, Reid and Pelosi have no shortage of legitimate criticisms. Our President (and his Congressional counterparts) has exclusively represented the powerful special interests that put him in office in a manner no different than Clinton, Lyndon Johnson (Halliburton's Man, who's wife was a major shareholder of Halliburton until her recent death), FDR, Harry Truman, Nixon, and numerous others. Actually, you'd be hard pressed to find any President who didn't represent elites.

Regarding broadband and the U.S. Federal Government, the Ag bill passed by Congress ~2002/2003 set aside record funds for rural broadband. Senator Harkin (D) of our state was instrumental in its passage, and also instrumental in having the actual rules written to exclusively benefit the incumbent fat-cat monopoly local telcos. Competitors to these tired old local monopolies were written out in the details. This wasn't BushHitlerCo, this was Democrats in Congress along with a Republican administration.

Having worked for a competitor to the incumbents, covering 10 counties, we found funds dried up while tired old ILECs got tens of millions only to sit on the money. Worse yet, permissions for formerly illegal cross-subsidies were enacted, allowing monopolies like Iowa Telecom to apply $3.50 charges to every phone line and dump it into their broadband entity, driving competition out of the market. They kicked competition off of the copper, subsidized from their monopoly business and used monopoly subsidized operations and infrastructure to lower the cost of their broadband business and killed off any real threat. Both Democrats and Republicans were implicit in this gift to their fat-cat buddies.

the Bush administration put Michael Powell in charge of the FCC, the digital robber barons were basically set free to do whatever they liked.

Except the Clinton FCC already set the pace for special deals with incumbents and as mentioned, numerous persons of both parties made sure only their fat cat buddies would get new slush funds.

Read up on the infamous Representative from Bell South, Billy Tauzin, and his efforts with powerful Democratic Senator Dingell to further reinforce monopoly power in broadband. Tauzin was a Republican and Dingell a Democrat. Both are bought and paid for by the incumbents.

As long as we have fools who believe one side is good and the other evil, we'll have a government exclusively representing fat-cat special interests while us fools get screwed. Get your head out of the sand if you don't like being screwed.

Re:Really?

[ScrewMaster]

Knowledgeable masses are scary to politicians of any stripe. Period. Liberals are just as afraid of an educated, emancipated population as the conservatives, and for the same reason: it's harder to get elected/re-elected on a platform of unadulterated bullshit when the people have the mental tools to see right through you. Twisted statistics don't work well on people who can handle numbers, for one, and citizens with a broad knowledge of world history don't get taken in as easily either.

Not this old lame excuse again

[symbolset]

Every time somebody trots out this lame excuse I will persist in pointing out that in bucolic Ephrata, Washinton - the middle of nowhere on the road to nowhere - they have gigabit broadband. That's fiber to the premises and gigabit Ethernet to the house, a symmetrical unmetered gigabit link to each subscriber, for less than I pay to Comcast each month.

They get it through their power company and they're grandfathered in but I can't get that deal because the big players bought legislation prohibiting municipal broadband.

So stop already with the story that the last mile is expensive, bandwidth is costly, density is the key lies already. It's about the incumbent monopolies maintaining their profits at the cost of depriving the average citizen of necessary infrastructure full stop.

Re:Krugman's a fruit

[burnin1965]

The US lags because we set up our telcom infrastructure the first, and thus have the most primitive last-mile connections.

That seems like a reasonable arguement but if that were the case then with the massive housing boom we have been in for the past 10 years we should have a significant number of homes with the latest fiber optic last mile technology, but guess what, we dont.

I've watched thousands of houses go up and hundreds of new neighborhoods, and whats going in the ground you ask, the same coax and twisted pair copper they've been using for the past 30+ years.

And when people get fed up and try to band together to build there own fiber optic network because the digital robber barons refuse to invest in the latest technology do we finally get the latest technology, no we get lawyers and lobbying to turn citizens into criminals and outlaws.

And now with our pathetic outdated infrastructure that provides limited broadband at high prices what are the robber barons trying to do, drop their requirements for network neutrality and charge us and content providers even more for what we've already paid for.

Its not distance or age, its plain and simple greed and governmental complicity with illegal monpolization of markets. This country is getting passed by in the name of capitalism for the few and screw the other half.

Simple reason in germany

[Casandro]

The reason why germany got so many broadband connections is rather simple. It's way cheaper to have broadband here than dial-up.

Traditionally you had to pay for every single phonecall, even local ones. So dialing-in into an ISP _really_ cost you a lot of money. In fact back then most ISPs didn't charge you for their services so you only had to pay to your local phone company.
Then with DSL and cable modems you suddenly got a flat-rate for a moderately low price.

Currently the costs are about this: (all in Euro)
dial-up 0.1 cents/minute => 43.2 Euro a month (wow, this suddenly even became affordable)
DSL is about 50 Euros a month including an ISDN phone-line with flat-rate service for data-calls for all of germany.

Dial-up used to be even more expensive, costing as much as 3 cents per minute.

Re:well,

[Vicissidude]

...we would vote with the wallet if we could. The article implies that one cannot go to another vendor because there is an oligopoly like in other industries. That's typical to US. Not a real competitive market but one that "seems" to be competitive from 10000 feet. Get a clue.

Exactly. Libertarians will hate this idea, but the free market can not fix everything. That is because the free market has a weakness: monopolies. Over time, companies purchase and consume one another until one, dominant entity takes over a section of the market. Copyright, patent, and trademark law protect the monopoly and prevent competitors from establishing themselves. At that point, all innovation stops. The evidence is out there in industry after industry from telephones to software.

And again, libertarians will hate this, but the government must step in for cases like this. The government needs to shake these companies up and break up their monopolies. Only once we get some actual competition will we get good service.