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The $200 Billion Broadband Rip-Off
Jamie noted that Cringley has a piece about the US Broadband situation. He talks about where we were and where we are: 'not very fast, not very cheap Internet service that is hurting our ability to compete economically with the rest of the world' and about the $200B the phone companies got to make it that way.
I blame lack of competition. What's needed is laws that lower the entry barrier for ISPs.
Mainstream economic theory clearly states that free markets only work when they are both competitive and transparent, and yet, just as clearly, the profit motive drives companies to minimize both competition and transparency. Profit itself is therefore inherently at loggerheads with the two prerequisites of free markets. As competition and transparency decline, so does market efficiency, until at some point inefficiency yields to outright market failure. We already have market failure in many industries - oil, diamonds, OS and Office software, telecommunications - and now broadband too, it seems. It's funny this contradiction raises so few eyebrows...
A-Bomb
These companies can sell you an 8 meg broadband connection, they'll sell it to 100 people and the line they're selling this on is an 80meg connection (example, not right numbers but right point). Any industry that can do this legally (or just get away with it) is clearly going to screw any consumer they can.
"He who can destroy a thing, controls a thing." --Paul Atreides, Dune
Let me tell you 'bout my friend in Holland. And, no, I don't mean Holland, Michigan. I mean Holland, Holland.
He pays some ridiculous amount of money monthly, 10 or 20 Euros, and gets high speed broadband, TV (including the porn channels) and phone. His mortgage is 3.8%. Sex of any kind is not against the law and he can travel to any country in the EU without even slowing down as he drives across the border. At the risk of going off topic, do I need to add that health care and education are free.
Could it be that there's something not quite right here in America?
...about "completely unbridled market capitalism".
What we have here is the exact opposite: Central-planning. And it has gone haywire, as it usually does.
Throw in a touch of the corruption that centralized power allows, add a little protective legislation, and you get what we have today.
Methinks you tend toward Marxist-style central control.
...that gives them all those strange ideas.
Not the Netherlands - they have a +$45 billion trade balance and a budget surplus. Financially, they are golden. The only G7 country that is in similarly great financial shape is Canada.
I would happily pay double my existing taxes to get a country with effective universal health care, a modern and well-maintained infrastructure, a people-focused government, and the financial condition of the Netherlands. Instead, I get low taxes and... nothing at all to show for those low taxes, because the people are so ignorant and apathetic that the government long ago stopped bothering with trying to serve them.
In most of America, only two companies are allowed to run wires into your home, the local telco monopoly and the local cable monopoly. The existence of the cable and telco monopolies is responsible for the problem. As long as that's the case, you're just arguing about the best way to manage the ripoff. Any regulatory scheme, at best, simply minimizes the ripoff. At worst, it leads to the two companies having undue influence over regulators.... and indirectly gives the regulators vast power to regulate and monitor private communication.
My own feeling is that the very idea of regulated telecommunications is inconsistent with the First Amendment. I don't think it could be any plainer. But I'm not holding my breath waiting for the court decision.
Because in several other countries your $15 a month would get you between 20-100 Mb/s both down and up.
Over the decade from 1994-2004 the major telephone companies profited from higher phone rates paid by all of us, accelerated depreciation on their networks, and direct tax credits an average of $2,000 per subscriber for which the companies delivered precisely nothing in terms of service to customers. That's $200 billion with nothing to be shown for it.
For instance, later in TFA Cringley says that a five-year phone rate freeze was part of the deal at one point, then says that rates should have really fallen during this time and he calls this a "rate hike".
So this $200B figure sounds like some mix of a bogus number (a "higher" phone rate that is really constant), some bookkeeping shenanigans (accelerated depreciation accounting), and real cash (direct credits.)
I got ADSL In 1996 , back when it was 1.5 Mb download and 120Kb upload, today, eleven years later
I get 8 Mb download and 385 Kb upload, at about 30 percent higher pricing.
Basically broadband in the US is crap. If those various companies mentioned in the article
were forced to refund the money they got for giving us nothing, and I agree we got nothing,
they would be singing a different tune. I say send them a bill for the money they received, but did
not spend on actually providing that which they said they would, PLUS interest.
Broadband should be defined at 20Mb down and 20 Mb up. Period. Too much time has elapsed
with basically zero quality or quantity increases.
You can't watch live video of any quality; you can't use any sort of interactive video link; you can't use any remote desktop solution with any level of fluidity; you can only participate in collaborative development with a very limited number of participants; you can't participate in e-commerce of any significant volume; you can't download software updates or revisions without tying up your connection entirely for minutes or hours; and, perhaps most significantly for the economy, you can't consume new, bandwidth-intensive applications such as sophisticated online gaming.
Rural areas don't drive the American economy, and particularly high-speed Internet at the home is not a driving economic force, mostly it's useful for pirating movies. How is lower-quality broadband out in the middle of Bumfuck, Iowa, hurting the American economy?
OK everyone in rural areas stop working, and let's see what happens when kamapuaa realizes that his food is not grown in the supermarket. Rural areas DO drive the economy - just not the part YOU think is important.
Seven puppies were harmed during the making of this post.
Search the /. archives, /.s including myself have been describing and predicting to state of telecommunications in the USA as far back as 1997.
/. whipper-snappers would remember back to 19970901 launch. CmdrTaco, Hemos, ... were all young fellers like yourselves are now ... young, but git'en older, wiser, wizen, creaking and crankier with age.
Yep, that long ago, but do you think any of you younger
Should we ask CmdrTaco and Hemos; When/What/Where are the 10th year celebration' keggers, or is it a BYOB in Death Valley?
Unaccountable leaders are masters, and unrepresented people are slaves. How do US and EU fare?
...of plant and service.
Personally, I'd rather have two bills - one for the physical layer (cables, swtiches, and maintenance) provided either by the government or pseudo-governmental corporation, and one or more for the data (of any kind - voice, video, internet). By segregating the two, you can allow local issues to be dealt with as a local problem, and offermake up funding for low-density where "the government" feels necessary (rural electric comes to mind as an example, if not the best one). For those afraid of government, realize that most areas run their own water and sewer, and do a fairly good job, on the whole. And I'm not saying it has to be government - a corporation can run the plant (under gov. supervision - any monopoly needs close oversight).
By separating the physical and the data, you can offer _real_ competition by local or national providers. Think of long distance telephone service - it's in a hell of a lot better shape (for the consumers and competitive pricing) than, say, local telephone or cell service (Verizon, anyone?). Most places don't even have the possibility of a competing high speed carrier because the physical plant operators can charge whatever they want for access, and as a result their services will always end up being more competitive.
Power would be nice this way, too. I already have the physical plant portion broken out on my bill with generation costs separate. By prohibiting the physical plant operators from having any financial interest in the service operators, there will be a more level footing - and more opportunity for competition.
Oh, in case you're curious, the incumebents know this, and would lobby to their deaths against any mandated separation.
Is it just my observation, or are there way too many stupid people in the world?
Totally OT, but still...:
The tax rate percentage is irrelevant. What is relevant is how much money a taxpayes has in his/her pocket after paying taxes, and what he/she can buy with it. In short: purchase power.
I wouldn't mind paying 90% taxes if I lived in a country where my salary was a million USD for the same job I have today.
As it happens, I live in Denmark. Our average taxes are around 46% and on top of that we have a 25% VAT (sales tax). Does that mean I am poor? No! It means my salary and the entire economy around me has been adjusted to that level. My purchasing power is equal to (and in many cases greater than) most other people in other countries with a job just like mine.
And btw... even though we have a social system which gives us free healthcare, free education and better social security that doesn't mean we are a "highly-socialist" country. In fact I think our liberal prime minister would find your comment rather funny.
- Jesper
My security clearance is so high I have to kill myself if I remember I have it...
Let's see... about 24% of my income goes to federal & state (no local) income and payroll taxes... and, my best back-of-the-envelope guess is that I pay another 1%-2% in gas taxes, my car tab, and other user fees. (I own no property.) Yes, I'd happily pay half of my income to live in a country where we really had all of that stuff. Many Americans react just like you did when I say that, because the government is so ineffective here that they can't believe it would actually work. But there are a number of countries where it does, most notably a few of those evil European welfare states.
Obviously, competent management and fiscal discipline are necessary for such a state to succeed. Ultimately, those are political problems and are the responsibility of the people. Ask yourself why certain other countries have them and the U.S. doesn't. I think you will find the answer has to do with how people are educated.
I don't think double taxes would cover it. I pay an average of 42% income tax, 19% sales tax on most things, 6% on food and such.
As for transportation, I picked out a lease car from my work, which had a retail price of 23k euro's, and a before-taxes price of 14k euro's (19% sales tax and 'BPM', a separate tax on new vehicles). After this, a car owner would pay road tax, several hundred a year. Then you pay the equivalent of US$7.25 per US gallon for gas, which mostly comprises tax.
Mostly I don't consider this a bad thing, but we only ever get new taxes, even when older taxes were supposed to have been *replaced* by the newer taxes. But it ain't all roses.
I can't speak for or about any place but Texas, but it seems to me that while more widely available, less expensive broadband would be a great boon to small, rural businesses all over the state - farmers and ranchers of all kinds could probably find ways to do their business better and faster if they had something more than a dedicated phone line for internet service - it seems to me to be an example of putting the cart before the horse. The state-run primary and secondary education system has been gutted by years of increasing emphasis on grade-level exit tests, so much so that the students themselves are aware of it now.
To put this post back on topic, your question seems to ignore the very real possibility that a person's place of business and place of residence are one and the same. This possibility increases as one moves out into rural areas, which are the least likely to have decent broadband availability.
A salary of $60k in Iowa is equivalent to $100k in California. $60k/year will buy you a nice family house, decent car, and a easy-going lifestyle. If the national telecom infrastructure was up to date, there would be many jobs that can be done in the middle of Iowa that are now done in California. Alternately, for a bit more than the salary you pay to an Indian programmer (well, a bit more than those who now are demanding more money...), you can get a native English speaker *in a nearby timezone*.
With low-quality or no broadband, you lose this potential workforce.
Or, at least, so goes the theory.
In all fairness, it's not really socialism - none of the countries mentioned (Netherlands, Canada, Scandinavian countries, etc.) have command economies, state ownership of property, and so forth. A lot of Americans seem to think that a national health care system automatically equals gray concrete walls and red stars, but it's not so.
On the other hand, the U.S. is still the best place to go and start a business, thanks in no small part to their labour mobility (easier to hire and fire).
Yeah, and where do you live? Because I can guarantee if you're not in a town with at least 10-12 households that would pony up for DSL service, it's not going to happen. That involves installing a DSLAM that's going to run at least a few grand, plus one or several T1 lines to supply the bandwidth back to the CO 8 miles away, not to mention T1-to-ethernet converters, etc.
If you live outside of town you can just about forget it. Go get satellite internet.
I really think you have to live in the USA to understand where we come from.
Our country was founded that government is evil. The tradeoff here is that no government is worse, so it's a lesser of 2 evils choice.
Because of the belief that government (and direct influence, like govt provided health) is evil, we should keep as much as we can away from it. Also, most have a deep distrust against government.
Nations like Denmark are not evil, or disgusting because they have socialized medicine, or they provide subsidized university degrees, but we distrust it. Quite a few people don't understand why they do "hate" it, but many do understand that government will screw it up. That's just our culture.
I'd say it probably also has to do with Randian-like beliefs within one of our ruling parties (Republicans). However, due to Bush, 2006 congressional elections swayed to strong Democrat, and we will most likely have a Democrat ruler at 2008.
USA is a 2-party election with very small 3rd parties that have little/no sway. We have an election every 2 years, changing all of the House and 1/3 of senate. The House and Senate are a bicameral Legislative body. House terms are 2 years, while Senate terms are 6. Every 4 years is a presidential election.
The band width you are not getting is because spammers are getting it...
Your bullshit call is for the most part the only thing that is bullshit. The grand parent is correct you can travel between any of the original 13 EU members without stopping. Since the Schengen agreement all interior border controls were removed and the only border and customer enforcement is around the edges. If you have an EU passport its relatively easy to move around and work in EU countries.
The grandparent slightly overstates when he said "any country in the EU" since I don't think the newer members have signed on to these open borders yet.
The EU has really become the United States of Europe. Its more like the early United States since the states still retain a lot of power, but assuming it holds together it will probably continue to become more like one nation over time.
@de_machina
They do owe, we all pay into something called the universal service fund that subsidizes the cost to connect distant and otherwise unprofitable customers.
This is exactly what I argued at the CPUC hearings for the AT&T-SBC merger. I started off by saying that a mistake was made thirty years ago, when AT&T was forced to divide itself King-Solomon-like. What should have happened, instead, is that AT&T should been forced to become a nonprofit corporation or pseudo-governmental agency, similar to the Postal Service.
Our postal network and roads and highways are generally recognized as common shared infrastructure; we don't allow the construction companies that build and maintain them to OWN the sections upon which they work, do we? Given that telecom and data networks are every bit as much shared public infrastructure, why then have we allowed the corporations that built those to own the pieces?
We fucked up many decades ago, perhaps as far back as the first telegraph lines, when we failed to recognize that the components that make up electronic (and now digital) public networks are common infrastructure, of the same sort as highways, and thus infrastructure which should be publicly owned. This is one instance where MORE socialism, not less, would be an enormously good thing.
The cell phone networks compete. WiMAX (802.16e) is currently being built out by several companies with up/down rates of 70Mbps over short distances and 10Mbps at 10km. The fastest HSDPA already runs at 14.4Mpbs. In Japan, DOCOMO is currently working on deploying their Super 3G network, which runs at 300Mbps downstream, 80Mps upstream. We don't need complicated laws to fix this industry -- just laws that allow competition. If the current monopolies that own the wires and cable can't solve the last mile problem, others will.
An AC mentioned this but it bears repeating by someone less likely to be ignored.
You've neglected to account for sales taxes (local taxation) and property taxes. Property taxes aren't avoided by not owning property. If you rent, I guarantee you pay property taxes. Do you think your landlord pays those out of pocket?
Property tax paid by renters and the employer "contribution" of payroll tax that could have been paid to employees had it not been taken by the government are great examples of hidden taxation. Sales tax is also frequently ignored because it's not accounted for on every check stub. Start tracking every penny you pay the government and you'd end up much closer to 40% or 50% than you think.
You know the thing about UDP jokes? I don't care if you get it or not.
There is a partial solution. Thanks to the telephone investment earlier, you can get a T1 anywhere, and pay from $300 to $600 / month for 1.5Mb service. Get the neighbors together for a coop, add some WLAN, and you have almost broadband in the sticks that doesn't have multi-second latency like satellite. Get enough neighbors together with a lily pad WLAN, and you can upgrade to T3. (I know people who have done this. Don't use consumer WAPs designed for indoor use. Use outdoor models for a few $100 more that have lightning protection.)
If you can get line of sight to a friend/business partner in a nearby city, you can get 54Mb via a point to point wireless connection. With parabolic antenna, you can go quite a ways. The current record is 237 miles from a city to the side of a mountain in Venezuela (the mountain is critical to this setup as otherwise the horizon would block line of sight at this distance).
Finally, cell phone service goes many more places than broadband, and cell carriers offer broadband plans via their network. (So long, and thanks for all the honey...)
I see this situation as even more precarious than you do, because the minute a major power decides they don't need to keep funding the homes, SUV's and Big Macs in the United States, it's all going to go down the tubes. The USA is an incredible drain on the world economy. I'm terrified of the day that dries up, because it is not going to be pretty. What exactly happens when the USA's economy grinds to a screeching halt, with the only thing the USA has to its name is a few hundred ICBMs, with China being the major industrial superpower? I'm not really convinced anything has changed to keep such volatilities from erupting in the same way they did in the first half of the 20th century.
You're quibbling over trivial crap and missing the Big Picture: we wouldn't now be having huge battles over 'Net neutrality if disparate pieces of the infrastructure weren't privately owned. The same goes for cable companies: we wouldn't have had to endure channel "bundling" and other evil tactics if we hadn't allowed them little monopolistic fiefdoms of privately owned infrastructure.
Back to the Big Telecoms, need I remind you that cities and counties can't even manage to create their own publicly owned wireless infrastructure, because every single time they try they get sued by the local telecom, claiming "anti-competitive practices"?
Big Telecom wants to keep the infrastructure private, because that is their means of control of their fiefdoms, in the same way that drug and genetics patents enable Big Pharma to maintain control of their fiefdoms. That right there is the strongest argument in favor of making all such public infrastructures publicly owned.
arrest and convict Kevin Delay (Enron)
You mean Kenneth Lay? Kenny Boy was convicted because he *personally* broke the law. Corporate personhood won't shield anyone from taking responsibility for their criminal actions. It provides for establishing a financial collective that has some rights and responsibilities of a human person.
O lord, bless this thy holy hand grenade, that with it thou mayest blow thine enemies to tiny bits, in thy mercy.