WSJ Says Gov't Money Injection Won't Help Broadband 647
olddotter writes "According to the WSJ, The US government is about to spend $10 Billion to make little difference in US broadband services: 'More fundamentally, nothing in the legislation would address the key reason that the US lags so far behind other countries. This is that there is an effective broadband duopoly in the US, with most communities able to choose only between one cable company and one telecom carrier. It's this lack of competition, blessed by national, state and local politicians, that keeps prices up and services down.' Get ready for USDA certified Grade A broadband."
Actually? (Score:5, Interesting)
The problem is that local governments (municipalities, primarily) have signed exclusive agreements with these companies. Because laying wires requires approval of each municipality, installing new infrastructure literally requires tens of thousands of permits, applications, meetings, etc., to get anything worthwhile installed. Our "marble cake" form of government, creates a tangled mess of conflicting rules and legislation that create such a high cost to enter the market that $10 billion could easily be spent just negotiating. That money will largely dissipate the same way it vanished in Iraq -- because everyone believes they deserve part of the pie.
If you want options, two things need to happen. First, the infrastructure -- that is, the wires that carry the data, need to be owned and operated by an entity separate from the users of that system, and that exclusive contracts be ended immediately. Secondly, we need to eliminate municipality-level and move it to at least the county level. The fewer people that have a voice in the process, the less resources wasted dealing with them. Because city-level employees are amongst the most petty, corrupt, and difficult to work with of any class of government official in the Union.
Re:Right Wing Nuts (Score:5, Interesting)
What, they have a point. If companies were competing freely, instead of this messed up system of little fiefdoms we have now, you can bet that you'd see Comcast and Time Warner trying to outdo each other, while AT&T and Verizon raced to shove fiber everywhere. Remember - competition is good for the consumer. It forces companies to innovate or die, while keeping prices low.
But as it stands now, you basically have "The cable company" or "The phone company". Even independent DSL providers are still using the copper run by The Phone Company, and often costs more than if you got DSL from them directly.
Even the Economist points out that this stimulus package probably won't have the effect Obama is hoping for because the companies will simply sit back and wait for the government to pay them for the upgrades they would have had to pay for themselves.
The way I see it, the only way things will change is through good old capitalist competition. Someone needs to really step in with a reliable WiMAX solution for about $25/mo, and seriously start sucking business away from the DSL/Cable duopolies. In fact I'm rather surprised the cell phone companies aren't trying to jump into the residential data market. They already have the little notebook dongles, just shove that into an antenna you set on your roof (for better reception) and plug it into your router. Better yet, offer residential phone service over this as well, and really put a dent in the landline and cable telephony companies.
These "other countries" should start to lag behind (Score:4, Interesting)
I wish Australia would "lag behind" like the US, maybe then we could get almost unlimited download quotas too.
Sure compared to technology heaven like Japan it might seem like you're lagging behind, most of the world is probably lagging right there with you.
But you're far from the worst off.
Re:Right Wing Nuts (Score:2, Interesting)
Right, left, what the fuck ever. There simply is no problem for which more government is not likely to be the worst solution.
Oh, and Krugman is an idiot, along with nearly everyone who seems to have a voice in 'fixing' the economic mess that they themselves created. AFAICT, Krugman's whole take so far is that we haven't pumped enough money at the problem of pumping too much money.
http://globaleconomicanalysis.blogspot.com/2008/12/krugman-still-wrong-after-all-these.html [blogspot.com]
Savings (Score:3, Interesting)
Re:Big Surprise (Score:3, Interesting)
Do not engage the ism. Do not feed the ism. Starve the ism-ite the food of attention, and it will wither away.
Because there is no saw dust in my bread because of regulation. Because regulation prevents 100's of women from burning up in locked textile factories.
Because our liberties are protected better because they are not on the market.
Re:So we've got a duopoly (Score:3, Interesting)
The tax breaks and other incentives given to the telcos by Congress in the 90s for network build-out never actually mandated the construction of residential high-speed fiber networks. (Read the 1996 Telecom Act if you don't believe me).
The telephone companies were never legally bound to deploy 50mbps symmetric FTTH. What actually happened was that some telco execs testified to Congress that incentives would hasten FTTH deployment. There were some extremely bold predictions made--predictions that turned out to be wildly optimistic--but if you look at the legislative history of the 200 billion, there is simply no basis for jailing anybody.
Re:We need broadband regulation! (Score:2, Interesting)
You mean the government which was deregulating banking since George I, allowing "investors" to buy up subprime mortgages given to people that really couldn't afformd them? And then the ponzi scheme collapsed?
It was a failure of captialize; let it run wild, and this is what we reap.
Of course the real solution to the mortgage problem would be 1) tell the investors "tough shit, you made a bad investment, you lose your shirt" and 2) tell the homeowners "you lucked out; you own your home free and clear."
Re:I used to read the WSJ (Score:2, Interesting)
"The West Wing" said it best:
"Liberals got women the right to vote. Liberals got African-Americans the right to vote. Liberals created Social Security and lifted millions of elderly people out of poverty. Liberals ended segregation. Liberals passed the Civil Rights Act, the Voting Rights Act. Liberals created Medicare. Liberals passed the Clean Air Act, the Clean Water Act. What did Conservatives do? They opposed them on every one of those things, every one. So when you try to hurl that label at my feet, 'Liberal,' as if it were something to be ashamed of, something dirty, something to run away from, it won't work, Senator, because I will pick up that label and I will wear it as a badge of honor."
Re:It won't help fix the core issues. (Score:3, Interesting)
The so-called "Fair Tax" isn't, and it is a regressive tax, far more so than a simple flat rate income tax. What makes the unfair is that it shifts the tax burden down on to the lower earning populace, while rewarding the highest income people with lower taxes. One can only spend so much; just look at the bank accounts of the multi-millionaires for proof. In the end, people who make less will end up paying a greater amount of their earning in taxes because they will end up paying out more of said earning just to live.
A better system would be a flat rate income tax combined with a luxury tax and an excess income tax which would be based on multiples of the average worker income. This would encourage lower executive salaries, higher worker salaries, would encourage saving and more reasonable spending.
That US$13 trillion, if it exist, will be worth about what the paper it is printed on is worth if foreign investors decide to dump their U.S. securities and notes.
gov't intervention could be good (Score:3, Interesting)
To beat the dead horse of the 'Information Superhighway' analogy, let us compare the Internet as infrastructure to our roads as infrastructure. The Interstate Highway system was planned and funded by the federal government and has done more to enhance the economic growth of the United States than probably any other public investment in our history. Without the federal government feeling envy about Hitler's autobahn, the Interstate highway system would NEVER EVER have been built by private investment and we would likely be much less wealthy as a nation than we are today.
Let's also take a look at the list of 'most wired' countries. What strikes me immediately is that nearly all of them are much more socialist-leaning than the United States. Denmark, Netherlands, Switzerland, Sweden, Finland, etc. South Korea's dramatic improvements lately have been attributed to that nation's deliberate subsidies and investements. They are also geographically quite small.
I'll be the first to complain about wasteful government programs (I LOATHE the California DMV more than nearly any agency on earth) but, having dealt with Adelphia, Time Warner, and AT&T in the past, I seriously doubt that the so-called 'competition' we have in the ISP industry is going to accomplish anything except higher prices and bandwidth caps. One might recall that the 700Mhz spectrum auction -- supposedly a panacea for lack of competition -- resulted in the incumbents buying everything up.
Let's face it. There is really no competition. I live in Los Angeles and my only option is Time Warner. This is some serious bullshit.
And they'd be right (Score:5, Interesting)
Of course they do. The Wall Street Journal is a temple of supply-side economics. According to them, the government can't do anything right, except cut capital gains taxes. I would have been very surprised if they'd had anything good to say about this bill.
So the WSJ is pro-market... that doesn't invalidate their argument. This bill still stinks. Stimulus spending doesn't work the way it's being advertised... it has little to no effect on short term job preservation or creation. While we all need things like roads and bridges, spending tax dollars on roads and bridges does not stimulate the economy in the short term... that money takes too long to percolate through the economy.
Stimlus spending didn't cure the Great Depression, nor did it shake Japan out of it's 90's doldrums. Admirers of the New Deal take great offense at the notion that the New Deal was a failure in reversing the Depression, but even left-leaning historians and economists agree that it was WWII production, not the New Deal, that finally brought us out of the depression. Shouldn't the metric of whether an anti-depression program worked be the elimination of the depression?
Re:I used to read the WSJ (Score:4, Interesting)
The terms "left", "right", "liberal", "conservative", and the derived term "centrist" mostly just serve to confuse any attempt at useful political discussion. These terms lump all of politics into two piles of mostly unrelated positions on mostly irrelevant topics.
In the United States, the absolute biggest political issue at the federal level should be the reduction of military expenditures. We've been spending a third of our tax revenue bombing civilians and maintaining major bases in many different foreign countries. We've never been able to afford this foolishness, and we certainly can't afford it now.
But "left" and "right" doesn't help on that at all. The mainstream "left" and "right" both consistently raise our military spending. The "far left" and "far right" completely agree: this military spending needs to be cut.
Isn't it suspect that in our mainstream political discussion there isn't even a single *term* for a group that wants to reduce our military back down to a reasonable size? It's the "extremist crazies" who want that, called by the same terms as "skinheads" and "hippie terrorist sympathizers".
Re:High speed Internet trains. (Score:5, Interesting)
Would you like to do the environmental impact study? We're talking years.
You don't build anything great in a week.
The other challenge is that the few places that actually have high-quality rails for Amtrak barely breaks even. Amtrak as a whole has never turned a profit. It is likely that even an improved passenger rail system would need a larger permanent subsidy to survive.
The Interstate highway system doesn't turn a profit either, what's your point?
I never said this should make money, this is a public works project to improve the country. Improving transportation and communication improves business and education.
(Also, I said keep the NRPC out of this, the rails don't have to be all-passenger all the time, you can move express when there's no passenger trains running)
Re:It won't help fix the core issues. (Score:2, Interesting)
1) There is a basic living expenses rebate in the Fair Tax system. Poor college kids (such as myself) would not be paying taxes to eat, and paychecks would not have taxes taken out.
2) How do you define the rich-but-frugal guy's fair share? What about his behavior is not fair?
Re:I used to read the WSJ (Score:4, Interesting)
Re:And they'd be right (Score:5, Interesting)
Stimlus spending didn't cure the Great Depression. Admirers of the New Deal take great offense at the notion that the New Deal was a failure in reversing the Depression, but even left-leaning historians and economists agree that it was WWII production, not the New Deal, that finally brought us out of the depression.
The main difference between the New Deal spending and the WWII spending is that the WWII spending was even more massive and with much greater government control. For example, wages and benefits for a large proportion of workers were set by government regulators. What could be produced was set by government bureaucrats. During WWII, the domestic economy was something approaching a Communist command economy.
So if WWII-style spending is what gets us out of a Depression, then expect more government control than you have in the current stimulus bill, not less.
Re:Right Wing Nuts (Score:3, Interesting)
You have options, don't let yourself be bullied or be labeled a victim.
Re:Right Wing Nuts (Score:4, Interesting)
Offered at a price they're unwilling to pay?
Verizon wanted $24,500 to run 1.1 miles of cable to my house. There is no way I can afford that, and my neighbors who are making $20,000 a year working on a farm are never going to afford it.
Oh, I'm sorry, you were referring to satellite or wireless, not actual broadband. Both have such high latency that they are useless for games or VOIP, and such slow download speeds that they are worthless for anything besides email. If it's rainy, cloudy, or overcast you can bet that you'll only be getting about twice dial up speeds. Even better, the local monopoly on wireless runs an unbelievably shitty service. Downtimes are frequent and can last 24 hours or more.
Give me this ten billion (or even a fraction of it), and I'd set up locally owned cooperatives (max size 2-3 DSLAMs) that split the cost of operating directly amongst their members. Government subsidies would be necessary only for initial purchase of the backbones, workers (and policies like packet prioritization) would be elected on a short-term basis, and I'd have a 24 hour help-desk set up that would provide support for every coop in the state. A non-profit business could provide good competition to the big telcos while avoiding the problems brought up here about a government run service.
Comment removed (Score:3, Interesting)
Re:Natural Monopolies (Score:3, Interesting)
The city of Ashland in southern Oregon also offers 10mbps fiber to everyone in the city, but they don't run their own ISP - instead, they allow competing ISPs [ashlandfiber.net] to offer service through their fiber network. Each ISP sets their own pricing, and they pay AFN for the connectivity.
Here was a price comparison [ashland.or.us] from 2005.
Re:Right Wing Nuts (Score:3, Interesting)
You (the government) paying $24,500 to run a pipe to my house would be better than paying that same money to the pocket of Verizon's CEO.
I suspect that there wasn't a whole lot of markup; Verizon wanted me to pay $50 a month after installation. But, here's the thing: I don't live in a rural area. There's at least a dozen people between the last mile and me who would have benefited from having that last mile put in. There are lots of problems with starting your own ISP/backbone:
So it's really not practical for me to take on the big guys at this point in time. If someone has a big chunk of cash to throw at me, I'll happily help coordinate (in a PHB fashion) such an effort on the weekends.
Re:Cognitive dissonance... (Score:3, Interesting)
I think in the US, the government should own the line, as a piece of infrastructure, and lease it out to the telcos. Considering what we paid in the 90's for the telecom industry, what we got was shit.
Re:stuff that matters (Score:3, Interesting)
The Fed is a cartel. Who are its contituent members?