Thoughts on the Proposed Broadband Stimulus

It’s a definite Good Thing(TM) that we now have an administration willing to make telecommunications quality a big priority. America is embarrassingly behind the curve in both speeds and availability when compared to other industrialized countries. That said, I’ve got a lot of serious reservations as to how this is all going to play out.

Most of my trepidation is from how the last federal attempt at broadband worked out. Remember the Telecommunications Act of 1996, the $200B and growing grab-bag that incumbents have used to entrench their positions? We ended up with fewer ISP choices today than we had in 1997, a Universal Service Fund that is regularly ripped off and broadband redefined from 45Mbps to 200Kbps. Incumbents spent most of the money to build up wireless networks and long-distance carrier options. Rates also rose higher than inflation since the act passed and features that cost pennies to provide cost consumers several dollars per month. In short, we’ve been had.

States aren’t exactly guilt-free either. The enforcement provisions of the 1996 law were left up to them, yet they didn’t exactly do a bang-up job. Incumbents formed really powerful lobbies and astroturfing groups to keep PUCs regulating just enough to prohibit new entrants into the market and keep their bottoms lines healthy.

The end result of all of this mismanagement and bad regulation is multifaceted. We have terrible broadband speeds, highly inflated prices and terrible broadband availability. The price of building a new parallel network to compete with an incumbent is so high that most investors won’t fund such an endeavor. Incumbents, meanwhile, pull of a delicate balancing act of both arguing for their service area monopolies and preaching about the free market. The breakup of AT&T in 1984 and introduction of forced wholesale line leasing in 1996 haven’t done a lot to fix much of anything.

Broadband spending should be about more than speed. It should focus on expandability, competitive choice and availability. Anything less is encouraging the status quo.

Only an all-fiber network will do. Most of the cost of building a network is pole attachments and trenching. As long as you’ve got your hole in the ground, why not drop in a technology proven to have a lower total cost of ownership and a near-infinite level of expandability? That’s what I don’t get about incumbent telcos and cablecos. They refuse to use the latest technology even when it would cost the same to deploy and less to maintain. Sure, it’s easy to say that any 50Mbps connection is a good thing, but we should be keeping an eye to the future when we need 1Gbps, 10Gbps or even 100Gbps. Fiber does it and it does it right now. DSL? No way. DOCSIS 3.0? Hardly.

Only open networks will do. The lack of competitive choice is why we’re in this situation in the first place. Having a choice between just The Phone Company and The Cable Company means that the two only have to put on the appearance of competition. They’re so weak and flabby from putting forth almost no effort to get customers that even though they have the worst consumer satisfaction figures, most folks don’t switch because they have nothing to switch to. This also keeps prices high and service quality low. I mean, how hard is it really to out-do Comcast, Comsumerist’s runner-up for Worst Company in America?

Only 100% availability will do. It’s shameful that a mere 95% of Salt Lake City, a highly urban area, has access to DSL. It’s even more shameful that Woods Cross, a suburb, is largely unserved by either Qwest or Comcast. Residents are left to plead for service and get only vague “Real Soon Now(TM)” promises in return. That’s unacceptable. There cannot be a digital divide like that, especially as broadband access rapidly becomes a replacement for the telephone as an essential information service.

These conditions should be attached to every red cent the feds spend on broadband. If we accept any technology that delivers a certain speed, we’ll be back to this same discussion in 10 years. If we accept closed networks, we will just trade one monopoly for another. If we accept that some people will just go unserved, we will sign the death warrants on thousands of rural, suburban and urban communities. That may sound like hyperbole, but mark my words that it will come true.

The current $6B investment has been framed as a down payment. I certainly hope so because it will not be enough to right the ship. The package being considered right now is a mixed bag. Speed requirements are about on-par with where current network operators are going in urban areas and the first batch of money will focus on unserved and underserved areas. Open access a la Carterphone is a requirement which, when combined with the grant/loan structure instead of tax credits, will discourage incumbents from feeding at the trough. I don’t much like, however, that the RUS (you know, the guys who screwed over UTOPIA) will be the ones in charge of a $2.8B chunk of the spending. I also don’t like that networks won’t be open to multiple service providers, a much better way of ensuring network neutrality than using regulations without teeth.

I also don’t like that with the way this is structured, wireless will be the big winner. The thresholds for wireless service are set much lower for underserved areas (3Mbps vs. 45Mbps for wired) and wireless, as efficient as it is for getting a signal to sparesely-populated areas, is by no means a future-proof technology. Fiber (or even HFC, for that matter) can blow it out of the water any day of the week. If we’re serious about building a world-class infrastructure, let’s go all the way and revisit our goals from 1996. Remember that goal? Fiber optics to every home and business with speeds of at least 45Mbps both ways? Competing service providers offering a wide array of service choices? Those are goals worth keeping. Using wireless as a stop-gap stepping stone is just wasting money.

The only way the broadband spending will have a lasting impact is if we accept very few compromises and stick to the basics. Fiber works. Competing providers work. Complete coverage works. Any compromise on these points means wasting our money.