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Major Carriers Shun Broadband Stimulus
jmcharry sends word that as the deadline looms for requesting broadband grants from the $4.7 billion available in stimulus funding, Comcast, Verizon, and AT&T are conspicuously absent from the list of applicants. Quoting the Washington Post: "Their reasons are varied. All three say they are flush with cash, enough to upgrade and expand their broadband networks on their own. Some say taking money could draw unwanted scrutiny of business practices and compensation, as seen with automakers and banks that have taken government bailouts. And privately, some companies are griping about conditions attached to the money, including a net-neutrality rule that they say would prevent them from managing traffic on their networks in the way they want. ... Yet those firms might be the best positioned to achieve the goal of spreading Internet access to underserved areas, some experts say." Reader Michael_Curator notes that while the major carriers may be holding back, there were still enough applications to slow government servers to a crawl, resulting in a deadline extension.
"All three say they are flush with cash, enough to upgrade and expand their broadband networks on their own."
I don't know what their real reasoning is, but you can be assured that it is not because they want to be responsible and expand with their own money.
No. Among other things they don't like the idea of Net Neutrality which is one stipulation of taking the money.
I think they meant to say "we already scam consumers enough to not need the cash" . I hope to see some disruptive technology to circumvent the stranglehold these dinosaurs have.
they don't want real broadband... they only want to offer crappy 256kbps, and pander it off as broadband. which btw isn't broadband anywhere outside the US. time for the US government to start their own broadband service.
This has a simple explaination.
Money is power; simple as that. If you have money, you can get people to do things- it's power. There are other forms of power but money's the most common (and, in many but not all cases, the most powerful).
Restrictions on how you can spend your money devales that money. $1,000 is a nice sum of money for (almost) anyone to receive, but if it can only be spent on peanuts only you can eat? Can you eat a grand's worth of peanuts? What if you're allergic? In this case the money is basically worthless, because it has no power.
Almost all ISPs want the power to restrict the usage of their clientbase. In some cases this is benign- stopping spammers from throwing out millions of spam e-mails a day, for example. In other cases, not so (blocking/disconnecting high usage users then dramatically overselling their network). But want of power isn't a problem; everyone wants power. Everyone. Every individual, every corporation... everyone. So that's okay.
The reason why they are rejecting the money is because it has external factors. It has a stigma of being 'government bailout money'. It can only be used for certain things, and it has strings (a'la net neutrality). The ISPs have evaluated their money, decided that the restrictions limit its power too greatly and that it would be a net power loss for them.
It's as simple as that.
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The big carriers will ignore the stimulus.
Small Start-ups will take the money and build into new markets.
the start-ups will then sell out to the big ISP's
the start ups get rich from tax money
the big ISP get expansion paid for by the government with no regulations attached.
We get screwed and pay for the privilege
Telecom companies are regulated monopolies. Regulations can changed with a change in law. You don't need to entice them to change with a big gob of money as a carrot. The truth of the matter is that it is easier politically and procedurally to do these changes with telecom cooperation.
It's all about the regional monopolies. With regional monopolies, they are able to control prices within certain regions since there are no other options. Why would they want to spend money expanding/improving service in regional markets where they have no competition?
Those net neutrality rules would possibly threaten those regional monopolies... so they're like "F THAT! I want my control!"
For example, consider the recent obscenely low bandwidth caps in rural areas where there is no other option. That's a prime example of the power regional monopoly gives these companies.
Also as a side note, I find it hilarious that they think they can justify instating bandwidth caps when they apparently have more then enough capital. Wow, where did the argument that they were losing money due to excessive users go?
Remember when the telcos claimed that net-neutrality would harm the industry by preventing them from collecting enough money to upgrade the infrastructure in the US?
This proves their previous anti-net-neutrality arguments were BS.
From http://news.zdnet.com/2100-9588_22-148385.html
"Republican backers, along with broadband providers such as Verizon and AT&T, say it has sufficient Net neutrality protections for consumers, and more extensive rules would discourage investment in wiring American homes with higher-speed connections."
From http://www.freedomworks.org/publications/the-problem-with-network-neutrality
"By contrast, mandatory network neutrality is bad for business. Unlike the narrowband phone lines of the twentieth century, broadband pipes are being built with billions of dollars of unsubsidized investment in a competitive environment. ISPs make this investment on the assumption they can recover the costs and profit. As such, broadband lines are not the "public resource" that monopoly networks were in the past. Companies that own high-speed lines have a right to recover the costs that other parties impose when they wish to use those lines to transmit high-bandwidth, revenue-rich services of their own. If network neutrality is enacted, ISPs will have no incentive to build new pipes. Consumers will therefore get less choice."
They looked at what happened to the banks that took money and wanted no parts of it. Taking the money won't protect them against net neutrality being enshrined into law. This Administration has shown a tendency to spring new conditions on recipients of government largess after they have it (not that this is an unusual tendency for politicians, just that most are more subtle).
The truth is that all men having power ought to be mistrusted. James Madison
Does it even matter why they aren't taking the money?
I fear it might.
If the application system is being flooded, that means that the market will potentially be flooded with companies that are required to respect net neutrality. Since they will by default provide a service that is better than the incumbent monopoly, then assuming that it is not a true natural monopoly the market place will become competitive.
There are two types of companies taking this money. The first are companies trying to compete in municipal areas where there is already competition. These companies, however, are still dependent upon the big boys who are not participating for backbone. That means the net neutrality can be castrated by those few. The second type of companies are trying to expand into unserved, rural areas. They are, again, wholly dependent upon one large company per area for access to the backbone. This provides the same problem as before. Anytime the big companies want they can move into these areas and undercut the little company that did all the hard work and all that government stimulus goes away, providing only the advantage that they sped up getting broadband to an area, not in making it any cheaper or more competitive in the long run.
Theoretically, small companies taking this money could grow and build their own backbone and compete with the big ones, but realistically we gave the big companies so many billions in subsidies in the first place that the playing field could only be leveled by addition monies given for this purpose as at a later date. Basically, we dug ourselves into an uncompetitive hole with government money and it will take either more money or serious legislation to undo the damage. Given how much the incumbents have to lobby with, it seems unlikely.