Posts tagged with: broadband

Karl Bode at Broadband Reports accuses various free-market think tanks of inconsistency and even hypocrisy in their approaches to the question of broadband internet regulation: “Wouldn’t banning towns and cities from offering broadband be regulation? And wouldn’t it be ‘un-necessary regulation’ considering companies like AT&T have discovered they can simply compete in the muni-wireless sector? Strange how such rabid fans of a free-market aren’t interested in allowing market darwinism to play out,” he observes (HT: Slashdot).

It seems to me not to be the case that the advocates of the municipal broadband compact aren’t in favor of competition. They simply want to guard against the unfair advantage that municipal and city governments would enjoy if they entered the internet provider business.

“While incumbent providers have every right to declare an area unprofitable, they should not have the right to then ban these communities from wiring themselves. These broadband black holes were created by the providers. They should either fill them or get out of the way, taking their cadre of subjective experts with them,” says Bode.

Actually, these “broadband black holes” have always existed…they just haven’t been noticeable until broadband was invented and the market began servicing surrounding areas. It’s not as if cable internet providers have taken away access these places previously had. Presumably their economies have not yet developed to the point where they can utilize this kind of technological innovation in a sustainable way.

But Bode doesn’t really understand the economics of markets: “Fans of a free market should be eager to see the organic free-market at work. If these municipal broadband operations are such a flawed idea: let them fail.”

It’s hard to put it any simpler than this: government-run services are not part of “the organic free-market at work.”

Despite Bode’s claims, there’s no real inconsistency here. And the fact that a current area may not be a profitable market for broadband provision does not mean that it will not be so in the future…but cities and municipalities wiring themselves and providing internet service on their own removes the possibility that these communities will ever be serviced by the market.

Update: Thanks to Broadband Reports for the equal time, noting my contrarian blog post along with a few others (all of which agree substantially with the original piece).

I also owe them thanks for noticing that I misspelled “noticeable” (corrected above), although, in due course, they mis-identified the Acton Institute as the “Action” Institute, a la “Action” Jackson, not Lord Acton.

Further Update: I’d also like to clarify that I’m not necessarily in favor of a federal-level restriction on the actions of city governments in this area. This may not have been obvious from my original post. I do think it is unwise for cities and municipalities to provide wireless access, but from this it does not follow that such should be outlawed. I was simply trying to clarify some of the reasons to oppose government provision of internet access and am not interested in defending the “municipal broadband compact” in detail.

Blog author: jballor
Thursday, August 24, 2006
By

The editors of PC World magazine have done a little survey of how users around the world access the Internet, based on the responses of over 60 worldwide publications that “either carry the PC World name or are associated with us in some way.”

You can check out the piece here. Here’s a brief summary of some of the interesting findings:

Our colleagues report that many countries are substantially ahead of the United States in many respects.

For example, in the United Kingdom, you can buy DSL service with a download speed of up to 24 megabits per second. In Denmark, some people have fiber-optic connections as fast as 100 mbps. And in Italy and Spain, broadband service is cheap, and dial-up service is free (except for the cost of the local call).

Also in Denmark, “Broadband over Power Line (BPL) is available in some regions.” Check out the rest of the article for more information on specific countires. The article also links to this Wikipedia entry for more information on the rest of the world’s nations that aren’t dealt with in the article.

Blog author: jballor
Tuesday, May 30, 2006
By

According to published reports, market mechanisms, and specifically competition, are accomplishing what many decriers of the “digital divide” have long contended only big government could do. The AP, via LiveScience.com, reports, “Middle- and working-class Americans signed up for high-speed Internet access in record numbers in the past year, apparently lured by a price war among phone companies.”

The study, provided by the Pew Internet & American Life Project, found that broadband subscription “increased 40 percent in households making less than $30,000 a year. Among blacks, it increased 121 percent.” The “digital divide” is beginning to close, as market forces help divergences in broadband access to collide: “Among the $30,000-$50,000 households, 43 percent now have broadband, compared to 68 percent for those making more than $75,000.”

This has been accomplished despite the barriers to competition that have traditionally existed. In many areas, including my own, only one cable company offers its services in a particular area. This means that the competition is coming not only from within a single form of telecom service, but also from among various methods of delivery, such as DSL, cable internet, and satellite/wireless.

The innovation of new delivery methods has raised the prospect of even greater competition, as broadband delivery over power lines (BPL) and increased wireless access become available.

The Pew study also references the dominance of higher wage earners, particularly among whites, who are responsible for the majority of user uploaded content to the Web. This points to a fundamental truth about the creation of wealth and technological innovation: it allows for leisure and productive activity that otherwise would be spent simply laboring. Filming, editing, and uploading digital videos, for instance, is a time and labor-intensive activity, and one that can only be undertaken by someone with the time away from work and luxury to afford both the necessary time and equipment.

But these recent developments point to the potential for a digital collide, in which internet access and the leisure time necessary to take advantage of the Web become a reality for more and more Americans. And these trends point to a measure of this already becoming manifest, as people who don’t have time or energy to surf the Web, for example, are unlikely to voluntarily pay for broadband access. In this way, the digital collide is the result of increasing wealth and prosperity across the economic classes of American society.