Broadband & Neutrality Regulation

Over on Forbes today, I have a very long post inspired by Monday’s oral arguments in Verizon’s challenge of the FCC’s Open Internet rules, passed in 2010

I say “inspired” because the post has nothing to say about the oral arguments which, in any case, I did not attend.  Mainstream journalists can’t resist the temptation to try to read into the questions asked or the mood of the judges some indication of how the decision will come out

But as anyone who has ever worked in a court or followed appellate practice  well knows, the tone of oral arguments signals nothing about a judge’s point-of-view.  Often, the harshest questioning is reserved for the side a judge is leaning towards supporting, perhaps because the briefs filed were inadequate.  Bad briefs create more work for the judge and her clerks.

I use the occasion of the hearing to take a fresh look at the net neutrality “debate,” which has been on-going since at least 2005, when I first started paying attention to it.  In particular, I try to disentangle the political term “net neutrality” (undefined and, indeed, not even used in the 2010 Open Internet order) from the engineering principles of packet routing. Continue reading →

Last week on The Diane Rehm Show, Susan Crawford, former special assistant to President Obama for science, technology, and innovation policy, claimed that China “makes us look like a backwater when it comes to [broadband] connectivity.” When she was asked how this could be, Ms. Crawford responded:

It happened because of [Chinese industrial] policy. You can call that overregulation. It’s the way we make innovation happen in America.

Ms. Crawford is wrong on the facts and the philosophy. Continue reading →

Answer: To check health information. Seniors who can investigate a symptom online will save a trip to the hospital. Not knowing whether a symptom is serious and not having the ability to investigate the condition online, many seniors without internet access go to emergency room to answer their health related questions.

This is the fourth post in a series about broadband. It investigates criticisms about America’s broadband market by Susan Crawford. Other posts are available here and here.

Crawford notes on a recent blog post, “One recent 2012 study showed that even after going through digital literacy training, 22% of participants still did not have a connection.”  The part that Crawford doesn’t mention is that 78% of the 33,000 people who participated in the digital literacy program (30 hours of classroom instruction on the basics of the computers and internet) went on to become sustainable broadband adopters (SBAs), meaning they secured their own broadband connection at home. Continue reading →

This is the third of a series of three blog posts about broadband in America in response to Susan Crawford’s book Captive Audience and her recent blog post responding to positive assessments of America’s broadband marketplace in the New York Times. Read the first and second blog.

If Crawford’s mind, this is a battle between the oppressor and the oppressed:  Big cable and big mobile vs. consumers. Consumers can’t switch from cable because there are no adequate substitutes. Worst of all, she claims, the poor are hardest hit because they have “only” the choice of mobile.

Before we go deeper into these arguments, we should take a look back.  It was not long ago that we didn’t have broadband or mobile phones.  In less than two decades, our society and economy have been transformed by the internet, and we have evolved so quickly that we can now discuss which kind of network we should have, how fast it is, which kind of device to use, and even how the traffic should be managed on that network. The fact that we have this discussion shows the enormous progress we’ve made in a short time. Plus we can discuss it on a blogging platform, yet another innovation enabled the internet. Continue reading →

This is the second of a series of three blog posts about broadband in America in response to Susan Crawford’s book Captive Audience and her recent blog post responding to positive assessments of America’s broadband marketplace in the New York Times. Read the first post here. This post addresses Crawford’s claim that every American needs fiber, regardless of the cost and that government should manage the rollout.

It is important to point out that fiber is extant in almost all broadband technologies and has been for years.  Not only are backbones built with fiber, but there is fiber to the mobile base station and fiber in cable and DSL networks.  In fact American carriers are already some of world’s biggest buyers of fiber.  They made the largest heretofore purchase in 2011, some 18 million miles of fiber optic cable.  In the last few years American firms bought more fiber optic cable than all of Europe combined.[1]

The debate is about a broadband technology called fiber to the home (FTTH).  The question is whether and how to pay for fiber from the existing infrastructure—from  the curb into the house itself as it were.  Typically the it’s the last part of the journey that can be expensive given the need to secure rights of way, eminent domain, labor cost, trenching, indoor wiring and repair costs.  Subscribers should have a say in whether the cost and disruption are warranted by the price and performance.  There is also a question of whether the technology is so essential and proven that the government should pay for it outright, or mandate that carriers provide it.

Fiber in the corporate setting is a different discussion. Many companies use private, fiber networks.  The fact of that a company or large office building offers a concentration of many subscribers paying higher fees has helped fiber grow in as the enterprise broadband choice for many companies.  Households don’t have the same economics.

There is no doubt that FTTH is a cool technology, but the love of a particular technology should not blind one to look at the economics.  After some brief background, this blog post will investigate fiber from three perspectives (1) the bandwidth requirements of web applications (2) cost of deployment and (3) substitutes and alternatives. Finally it discusses the notion of fiber as future proof.

Broadband Subscriptions in the OCED

By way of background, the OECD Broadband Portal[2] report from December 2012 notes that the US has 90 million fixed  (wired) connections, more than a quarter of the total (327 million) for 34 nations in the study.  On the mobile side, Americans have three times as many mobile broadband subscriptions as fixed.  The 280 million mobile broadband subscriptions held by Americans account for 35% of the total 780 million mobile subscriptions in the OECD. These are smartphones and devices which Americans use to the connect to the internet.

Continue reading →

I am American earning an industrial PhD in internet economics in Denmark, one of the countries that law professor Susan Crawford praises in her book Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. The crise du jour in America today is broadband, and Susan Crawford is echoed by journalists David Carr, John Judis and Eduardo Porter and publications such as the New York Times, New Republic, Wired, Bloomberg News, and Huffington Post. One can also read David Cay Johnston’s The Fine Print:  How Big Companies Use ‘Plain English’ to Rob You Blind.

It has become fashionable to write that American broadband internet is slow and expensive and that cable and telecom companies are holding back the future—even though the data shows otherwise.  We can count on the ”America is falling behind” genre of business literature to keep us in a state of alert while it ensures a steady stream of book sales and traffic to news websites.

After six months of pro-Crawford coverage, the New York Times finally published two op-eds[1] which offered a counter view to the “America is falling behind in broadband” mantra. Crawford complained about this in Salon.com and posted a 23 page blog on the Roosevelt Institute website to present “the facts”, but she didn’t mention that the New York Times printed two of her op-eds and featured her in two interviews for promotion of her book.   I read Crawford’s book closely as well as her long blog post, including the the references she provides.  I address Crawford’s charges as questions in four blogs.

  1. Do Europeans and East Asians have better and cheaper broadband than Americans?
  2. Is fiber to the home the network of the future (FTTH), or are there competing technologies?
  3. Is there really a cable/mobile duopoly in broadband?
  4.  What is the #1 reason why older Americans use the internet?

For additional critique of the America is falling behind broadband myth, see my 10 Myths and Realities of Broadband.   See also the response of one of the op-ed authors whom Crawford criticizes.

 

How the broadband myth got started

Crawford’s book quotes a statistic from Akamai in 2009. That year was the nadir of the average measured connection speed for the US, placing it at #22 and falling. Certainly presenting the number at its worse point strengthens Crawford’s case for slow speeds. However, Akamai’s State of the Internet Report is released quarterly, so there should have been no problem for Crawford to include a more recent figure in time for her book’s publication in December 2012. Presently the US ranks #9 for the same measure. Clearly the US is not falling behind if its ranking on average measured speed steadily increased from 22nd to 9th.

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The Progressive Policy Institute has released a new and remarkable broadband report. In it, PPI explicitly distances itself from the Crawford/Wu wing of the left-of-center telecommunications conversation. A money quote from the introduction:

What should the progressive agenda be? Are our choices either to embrace this aggressive regulatory agenda or to accede to conservative laissez-faire? This essay argues that there is a third, and far more promising, option for such a progressive broadband policy agenda. It balances respect for the private investment that has built the nation’s broadband infrastructure with the need to realize the Internet’s full promise as a form of social infrastructure and a tool for individual empowerment. It turns away from problems we may reasonably fear but that simply do not exist—most importantly, the idea that the provision of broadband services is dominated by an anti-competitive “duopoly” that stifles the broad dissemination of content.

On “cage match” competition in the telecom sector:

So perhaps the greatest paradox inherent in “cage match” competition is that, while advocates champion more intrusive regulation, the signal providers are in the fight of their business lives. The benefits of their innovation and investment are being appropriated by the devices and services that use the signal; their stock values and capitalizations are listless compared to the companies that make devices and applications; they have made commitments in the tens of billions to build infrastructure that cannot be reversed. And they are trapped in a vicious circle: they innovate to improve signal quality and availability, these innovations make possible new devices, applications, and services that capture consumer allegiance, these other aspects of the broadband experience appropriate value and make signal more commodity-like in the eyes of consumers, which forces the providers to further improve their product, perpetuating the cycle. They are the economy’s front line for investing in and innovating for our broadband infrastructure, and perhaps they benefit from that investment and innovation the least.

From the section entitled “Neutrality,” “Unbundling,” and other progressive policy failures:

The weight of the evidence, therefore, suggests the activist agenda leads progressives to a dead end. It addresses a problem that doesn’t exist—the absence of competition in broadband—and compromises another and more important objective—investment in broadband leading to ubiquitous broadband access. In reality, access providers have made massive investments in high-fixed cost broadband wired and wireless capacity that they can only justify by competing for market share and that are continually improving. The case that they are suppressing or might suppress content—either editorially or competitively—is virtually nonexistent.

This analysis is spot on. While I don’t agree with every policy proposal in the report (though I do agree with some, such as liberating spectrum from the broadcasters and DoD), PPI deserves a lot of credit for its excellent study of the state of telecommunications competition.

Patrick Ruffini, political strategist, author, and President of Engage, a digital agency in Washington, DC, discusses his latest book with coauthors David Segal and David Moon: Hacking Politics: How Geeks, Progressives, the Tea Party, Gamers, Anarchists, and Suits Teamed Up to Defeat SOPA and Save the Internet. Ruffini covers the history behind SOPA, its implications for Internet freedom, the “Internet blackout” in January of 2012, and how the threat of SOPA united activists, technology companies, and the broader Internet community.

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Richard Brandt, technology journalist and author, discusses his new book, One Click: Jeff Bezos and the Rise of Amazon.Com. Brandt discusses Bezos’ entrepreneurial drive, his business philosophy, and how he’s grown Amazon to become the biggest retailer in the world. This episode also covers the biggest mistake Bezos ever made, how Amazon uses patent laws to its advantage, whether Amazon will soon become a publishing house, Bezos’ idea for privately-funded space exploration and his plan to revolutionize technology with quantum computing.

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A few days ago, the big news in the telecom world was that President Obama again ordered federal agencies to share and sell their spectrum to expand commercial mobile broadband use. This effort is premised on the fact that agencies use their gifted airwaves poorly while demand for mobile broadband is surging. While the presidential memorandum half-heartedly supports clearing out agencies from some bands and selling it off, the focus of the memo is shared access, whereby federal agencies agree to allow non-federal users to use the same spectrum bands with non-interfering technologies.

The good news is that there is no mention of PCAST’s 2012 recommendation to the president to create a 1000 MHz “superhighway” of unlicensed federal spectrum accessed by sensing devices. This radical proposal would replace the conventional clearing-and-auction process with a spectrum commons framework reliant on unproven sensing technologies. Instead of consumers relying on carriers’ spectrum for mobile broadband, this plan would crudely imitate (in theory) wifi on steroids, where devices would search out access over a huge portion of valuable spectrum, avoiding federal users. Its omission in the recent memo likely means the unlicensed superhighway won’t be pursued.

Still, this doubling-down on other forms of dynamic spectrum sharing is unfortunate for several reasons. Continue reading →