Ensuring universal service is something that governments try to do for things considered "essential": electricity, water, postal service, and broadband Internet.
The reason that Verizon signs contracts to serve all of a city like Wilmington, DE is that there are enough households who can afford it to make it worth their while. If Google comes and picks off the highest-value customers, the mix of remaining customers may not be worth serving from Verizon's perspective, and they may exit the market. (And even if Google is blocked by municipal governments, alternatives like WiMAX and its successors are much harder to block).
I don't think there's an easy solution to this problem. If you just let the market do its thing, then fewer people will have access to Internet overall. The tradeoff isn't easy.
There is an easy econ 101 answer response. If you're really trying to help the poor at the (presumably managable) expense of everyone else, then subsidize the subscriptions of the poor households by explicitly taxing. This dramatically reduces market distortions and makes clear exactly what's happening. Putting up rules that require the rich to indirectly subsidize the poor in the way being described (making the tax invisible) predictably leads to an awful situation.
People often reply "this isn't politically feasible", but that's giving up the game. If the opaque, inefficient, and difficult-to-measure strategy is politically feasible but the transparent one is not, that's a good sign it's a bad choice.
Yep. Though subsidising subscriptions is a pretty non transparent way of tendering for access. If you are in the business of creating lots of little monopolies to achieve universal access, wouldn't it be more transparent to just create one big monopoly?
We tried this in oz. A gov. built backbone to be sold off (the naturally competitive part), with a gov. built and maintained 'fibre to the home' access (the natural monopoly part).
Fox / News waged a months long campaign to have them booted out of office, in which they explicitly and repeatedly called the gov. nazi's, and outrageously lied about the associated costs for both the gov. and opposition broadband systems. Now we have a system which locks in contracts for the backbone, and rents copper infrastructure for the next 50 years for access. If you want fibre access, you have to pay for it to be hooked up at a prohibitively large cost.
We know we can deliver access to everyone in oz through gov. for close to the price of delivering access to a privileged few through market monopolies. At a certain point, you have to realise this isn't about bad political choice, but a deliberate and sustained attempt to lock in privilege for the wealthy at the expense of everyone else. This is the real market distortion.
> If you're really trying to help the poor at the (presumably managable) expense of everyone else, then subsidize the subscriptions of the poor households by explicitly taxing.
Isn't this exactly what local governments are doing? It's just that the tax falls on the (shareholders of) broadband companies, who are presumably not, for the most part, local residents. The reason this is more politically feasible is not that it isn't a tax, but that the tax is not being levied on voters. Or does the name matter that much?
The problem is that taxing entrants into the cable market creates a very high barrier to entry. The tax is not being levied directly on voters, but indirectly, by creating a monopoly that provides poor service, when they could instead have competition providing great service.
> The tax is not being levied directly on voters, but indirectly, by creating a monopoly that provides poor service, when they could instead have competition providing great service.
But isn't the point here precisely that without the tax or other barriers to entry, "they" would not have great service? Some might -- but it seems likely that far fewer would get it than with build-out requirements and so on in place. I think the government has an obligation to avoid leaving those people behind in this case.
An explicit tax on the company by the local government would still be better than a build-out requirement, since this would at least be transparent.
But even if you want to transfer money from someone to the poor, and (perhaps unethically) you want to take it from someone who's not a voter, it still makes no sense to pick on this particular company. Why not tax any of the other non-voting companies that service a locality? Say, the tax on coca-cola?
> An explicit tax on the company by the local government would still be better than a build-out requirement, since this would at least be transparent.
I guess I don't quite see how it's more transparent. What information would it provide, and to whom, that the current system obscures? And is the issue whether we call it a "tax" vs. "build-out requirement", or is the issue what is being taxed (land use vs. revenue from local customers vs. ...)? I can't picture what such a tax would look like, how it would really differ from the status quo, and why it would result in better service -- walk me through it.
> But even if you want to transfer money from someone to the poor, and (perhaps unethically) you want to take it from someone who's not a voter, it still makes no sense to pick on this particular company. Why not tax any of the other non-voting companies that service a locality? Say, the tax on coca-cola?
Well, I take it that there are some relevant differences here, as qq66 pointed out. Internet access is infrastructure, and increasingly, it is essential; access to Coca-Cola is not. I think the government has some obligation to avoid creating a disparity between haves and have-nots for infrastructure like this. It's not the only consideration, but that is one reason build-out requirements are appropriate for broadband companies, while not for soda vendors.
Also, this infrastructure often has to be built on public land. It's the government's job to make sure that land is managed well for an indefinite period into the future, presumably well beyond the life of whatever cable is being laid down. This is why it's appropriate for the government to demand more oversight of these companies in general, whether that comes in the form of build-out requirements, a fund for cleanup fees, or whatever. A story I've seen again and again is public land rights being granted to a private company, which subsequently damages the land and then tries to stick the public with the bill. The government has an obligation to protect public interest in the land and avoid that kind of situation. Again, it has no such obligation with respect to many other businesses: Coca-Cola doesn't need land rights to sell bottles in private stores, so that kind of oversight is not appropriate.
> I guess I don't quite see how it's more transparent. What information would it provide, and to whom, that the current system obscures? And is the issue whether we call it a "tax" vs. "build-out requirement", or is the issue what is being taxed (land use vs. revenue from local customers vs. ...)?
The transparency issue is that a build-out requirement isn't denominated in dollars. (There are other economic efficiency arguments, such as if the poor people would rather have the money than the cable connection, but I'm addressing your question on transparency.)
A cable company has much more expertise than a local government for what the long-run costs and potential profits are for a build-out requirement, and moreover they have a much higher incentives to apply their expertise to the local situation than a politician. If you institute a build-out rule, it does so without knowing the size of the costs; they are simply imposed silently. Any future public debate about revising the rule is enfeebled.
> I can't picture what such a tax would look like, how it would really differ from the status quo, and why it would result in better service -- walk me through it.
The company is charged $X per year to use public rights of way. The government hands this money to the poor people who can choose to buy cable connections or not. (If they don't, this is a sign that they have something better to use the money on.) If the government doesn't trust the poor people to use the money responsibly, then the government directly subsidizes their cable connection fees instead.
> Well, I take it that there are some relevant differences here, as qq66 pointed out. Internet access is infrastructure, and increasingly, it is essential; access to Coca-Cola is not. I think the government has some obligation to avoid creating a disparity between haves and have-nots for infrastructure like this. It's not the only consideration, but that is one reason build-out requirements are appropriate for broadband companies, while not for soda vendors.
You missed the point. I wasn't saying that we should have build-out requirements for soda, I was saying that if we use a tax instead, then we can take the subsidizing resources from anyone rather than just a company in the field whose customers we wish to help. This would allows us much greater flexibility in getting those resources in a non-distortive way.
> whether that comes in the form of build-out requirements, a fund for cleanup fees, or whatever.
A fund for cleanup fees is completely different idea, and indeed is generally economically sensible. (Clean up fees are about correctly pricing externalities. Build out requirements are about getting one group of people to subsidize another.)
> A story I've seen again and again is public land rights being granted to a private company, which subsequently damages the land and then tries to stick the public with the bill.
This has nothing to do with the topic. I've seen people litter all the time in public spaces. Should I institute the loud-car ban because some people have littered in the past?
Whoops, I wrote this in haste but now it's too late to edit. The last sentence referred to an analogy that I decided didn't work. I would say: just because I've seen people litter all the time in public places doesn't have much to do with the badness (or non-badness) of economically inefficient/opaque methods for correcting other bad externalities.
> The transparency issue is that a build-out requirement isn't denominated in dollars...If you institute a build-out rule, it does so without knowing the size of the costs; they are simply imposed silently.
OK, I think I see.
> The company is charged $X per year to use public rights of way. The government hands this money to the poor people who can choose to buy cable connections or not. (If they don't, this is a sign that they have something better to use the money on.)
But I'm still having trouble seeing how this scenario improves on the original problem.
I thought that local governments were already charging $X for uses of rights of way, and build-out requirements are in addition to this. So if I understand right, the idea is to charge more (say $(X + Y)) but not impose those requirements, and instead let the broadband companies decide where and when to build out; then distribute the excess $Y (and, possibly, funds from elsewhere) to subsidize Internet service for the poor.
The problem I see here is that, if I'm one of those N poor folks the broadband company decides it doesn't want to build out to, I'm out of luck. I don't even have the option of buying broadband service, and offering up my $Y/N dollars does not give me much leverage to change that. If enough of my neighbors got together and pooled our funds, maybe that would be enough to convince the company to build out to our neighborhood, but maybe not, especially if (1) the company has already decided our neighborhood isn't worth it, or (2) building out would require the company to pay more in right-of-way fees (though maybe this is included in the initial $X+Y price?).
In short, it seems like our government trades the relatively strong leverage we have as a collected political force for the relatively weak leverage we each have as individuals, plus $Y/N dollars apiece.
In this particular case, that does not sound like a good trade, for the reasons I mentioned: Internet access is more or less essential infrastructure, and there is public interest in having nearly-universal access to that infrastructure, rather than a class of haves and a class of have-nots.
I wouldn't think it's that the government doesn't trust the poor (or really, anyone not yet built-out-to) to spend this money on responsibly. Rather, it's that divvying it up and letting individuals make their own decisions on how to spend it sacrifices political and economic coordination, which is required in this case to serve a desireable public end, near-universal access. Solving coordination problems like this is a big part of why governments exist, and we shouldn't be rushing to give up that coordination for individual decision making. We can easily end up in a situation where we're all worse off that way.
Explicitly taxing and subsidizing involves the kind of economy planning you don't want in a free market. Plus, it's a permanent fix. It's much easier for the government to build the fiber infrastructure, lease it to operators in the short term, possibly sell it or spin it off in the medium term. Just give the free market a bump to move it out of a local maximum.
I think wireless obviates the universal access angle for wired broadband. Its already how most poor people access the internet. They very often don't have personal computers.
Yes, but the bandwidth is sufficient to access job applications, educational materials, etc. Heck, right now, I don't have wired internet at home, just my cell phone. I don't think the poor need fiber for Netflix, torrents, etc.
But absolutely the bandwidth is sufficient to live in the present.. or at least the recent past. It is sufficient to access the services that poor people need because they are poor.
Ok so rich people get $70 a month unlimited broadband (cheap) while the poor have to pay $150 for expensive lte with a useage cap.
If they had framily plans and bling phones and could fool people into paying $10/gb for fiber than verizon would have put up fios everywhere 10 years ago. The trouble is that fiber is too cheap.
Republic Wireless has 4G unlimited everything plan for $40/month. I don't buy it because I'm fine with 3G for the phone - viewing HD movies on the phone is not my priority. I'm sure there are even cheaper ways to get basic wireless connectivity. Of course, if you want to watch netflix in HD 24x7 while running a torrent exchange and a game server, that would not be enough. But we're talking about basic needs, right?
Here in Wilmington, MetroPCS offers unlimited talk, text, and data with 500 MB of LTE for $40. 2.5 GB of LTE for $50. These folks have a cell phone anyway, sometimes subsidized by the government. A cell is a lot more valuable to them than a wired connection. Any money spent on fiber would be an additional expense.
Wow, 2.5 GB, that will get you through a whole lot of educational videos. If your lucky and really careful with how you ration your usage, it might last a whole week! Only $50. I'm sure even the poorest of the poor can afford 200/month!
As someone who comes from a country where bandwidth caps are the norm. I can tell you that you have no idea how easy it is to control/monitor your usage. You're spoiled by having huge bandwidth pipes and caps, so you have no notion about how to conserve and utilize it efficiently.
Wireless is the predominant form of internet access in the majority of Africa. The poor might not have a place to sleep, but I guarantee you, they have a cheap cellphone. The slightly better off have a smart phone or blackberry with data access.
It might not be perfect. They might not be able to watch Netflix or hours of educational videos on youtube, but it's a start and better than what the poor have traditionally had since ever. Please stop moving the goal posts, it's intellectually dishonest.
As someone who lives in a part of the US that only has Satellite Internet and relevant bandwidth caps, I can tell you that I am under no such spoilage.
I am open to any suggestions on bandwidth conservation.
In the future, you may want to get the facts before jumping to judgement, though :)
So let me understand this. The government wants to have everybody to have fast internet, regardless of the ability to pay for it. The government does not have the clout to force the taxpayers to pay for it collectively (e.g. by raising taxes) so it tries to make providers to pay for it by building out. The providers don't go for it, so nobody has fast internet at all. Yeah, sounds logical, I don't see any easy solution for it.
Except, you know, for the government to stop being control freaks for a minute, let the people that can pay to pay, and as the cost of basic service eventually and inevitably drops have more and more people enjoy it. Of course, that means that somebody who doesn't have any money wouldn't be able to enjoy the fastest broadband service available on the market, so if it's absolutely imperative everybody would be equal - the solution is always the same, the lowest common denominator.
There is an easy solution, you just should be willing to see it.
It's the dirty little secret about democracy/government that no one wants to mention. Everyone has grand ideas, and noble causes. But no one has the political balls, or the support of the people to actually fix it with actual solutions. So it's this constant back/forth game of funding and blame... and it never fully solves the problem. All it does is siphon funds from the public into the pockets of the politically connected ruling class and make it seem like the problem requires "just a little more" funding to make it work.
Putting broadband internet on the same level as electricity and water seems absurd to me. By far the most common use cases for broadband are streaming video, gaming/DLC, and piracy. Is there really a point where it becomes reasonable to consider Netflix, Xbox live, and The Pirate Bay essential services?
"Most common use cases" by volume of traffic maybe, but Internet is increasingly necessary to pay bills, correspond with customer service for practically any company, communicate with your child's teacher at school, renew your driver's license, and practically any other mundane task.
It's not that there aren't offline alternatives for these, but they require maintaining an expensive infrastructure of buildings and people. It's going to be cheaper for everyone in the long run if we can move everybody to doing things over the Internet.
None of those require broadband (2 Mb or greater according to the FCC, IIRC) though. We're talking about fiber connections in the hundred to thousand megabit range here. Nobody is talking about cutting poorer neighborhoods off from the internet completely.
Seems pretty short sighted. There is so much being created that is connected to the internet. You say you don't need high bandwidth for these things and I would say that is because they are made with the fact that there are a lot of customers who don't have the higher bandwidth. Give everyone more bandwidth and just think of what we could create!
> None of those require broadband (2 Mb or greater according to the FCC, IIRC) though.
Really? Have you tried your bank's website over dialup? Or a typical bill pay site? (DSL typically meets the 2Mb or greater threshold, so it qualifies as broadband by your definition.)
I had 768/128Kbps DSL until last month (when my wife got fed up with poor streaming video quality and called the telco about upgrading). For using my bank, credit card company, and "social networking" sites it was fine. That's not dial up speed, I realize, but it's not 2Mbps, either. Since the upgrade to 7/1Mbps service I have observed that sites I thought were slow on the old service are still slow. My wife says YouTube and Hulu are better. I am pleased that my VPN to home seems better (which I attribute to the increased upload bandwidth).
It's either 56k or crappy DSL (2M) for these 'hoods, which equals a "cut off" these days in which everyone and their mother has a landing page with 2MB+ footprint.
It would be a good idea for the government at least to set the standard for their essential websites to not have 2MB+ footprint. As for the commercial ones, that would be for them to decide if they want larger audience or not.
You don't need Google fiber to send email or browse basic text site. Much better idea would be to force government sites that provide bill payments and other essential services (which 100% of them btw can be still paid by old fashioned phone call as far as I know) to have low bandwidth requirements and low compatibility reqs (i.e. no flash, no Java applets, no excessive graphics, etc.). This would also ensure better accessibility, but also would mean you never need 100M channel to just pay your bill.
> By far the most common use cases for broadband are streaming video, gaming/DLC, and piracy. Is there really a point where it becomes reasonable to consider Netflix, Xbox live, and The Pirate Bay essential services?
Ah yes, you can use it for trivial things, so let's totally ignore all the crucial information and services that are only available on the internet. That seems reasonable.
So what are the “crucial information and services” exactly that require gigabit internet access (Google Fiber's selling point, after all) today?
Although “broadband” has always been a moving target, I think it is reasonable to say that essential services won't require gigabit internet access in the next decade or so.
Telepresence teaching for the poor? Are you actually serious? Rather just fix the schools, please. Instead of throwing money at a "problem" that you invented a need for.
I know as tech people we're inclined to think that more tech can always fix the world's problems. But that's a venus project type of fly-trap, and we must be careful not to fall for it!
Are they totally trivial things? Most poor people are working poor at jobs they don't particularly like. Should they be miserable at all times of the day just because they are poor?
As broadband becomes more pervasive I think we'll see other uses (for example, I could see VR being incorporated into virtual high schools for things like simulating a chemistry lab.)
How long did it take for electricity to be considered a necessity? And I'm legitimately curious how much of a factor radio was in motivating people to make the switch...
No, but I would argue that regular internet is approaching an essential service. Nobody needs FiOS but lots of people need access to email/web browser/etc.
I am still not convinced broad band internet is a life necessity. We assume everyone wants it as we are techies, but even I know tech oriented people without home internet service, they cut that cable too. They live totally by what they get through celluar.
While I know plenty of people like those you've mentioned, I still think the further into the future we go the more high speed internet becomes a life necessity.
How much longer will we all have physical offices to work in as opposed to a virtual reality space that emulates the same thing? How many businesses like my own that don't actually have a physical address are there going to be? At what point do business completely stop accepting physical forms of payment? "Cutting the cord" completely is likely to get much more difficult in the future.
>>> How much longer will we all have physical offices to work
Probably for a very long time. Nothing is like actual human contact.
>>> At what point do business completely stop accepting physical forms of payment?
Depends on the business. Some already did - Amazon doesn't accept cash as far as I can see. Some - like your local grocery store - probably never will, because sizable part of its clientele will still have cash.
The reason that Verizon signs contracts to serve all of a city like Wilmington, DE is that there are enough households who can afford it to make it worth their while. If Google comes and picks off the highest-value customers, the mix of remaining customers may not be worth serving from Verizon's perspective, and they may exit the market. (And even if Google is blocked by municipal governments, alternatives like WiMAX and its successors are much harder to block).
I don't think there's an easy solution to this problem. If you just let the market do its thing, then fewer people will have access to Internet overall. The tradeoff isn't easy.