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I think the answer to all of these questions is yes, although I would be the first to say we have some gaps in broadband deployment – especially in rural areas – and performance I would like to see improve.

First, consider where we are today. You say we are “worse off today than we were four years ago” but consider what is happening. Four years ago (see http://www.pff.org/issues-pubs/other/GlobalPerspectivesontheDigitalEconomy.pdf – slide six in the presentation), American broadband providers were at a low point in their capital investment in networks. The Internet “bubble” had exploded and investment tanked.

In 2003, the FCC (see http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-03-36A1.pdf) adopted its broadband policy and exempted packet switching and broadband data networks from its “telephone” unbundling rules. Not long thereafter, Verizon (see http://eweb.verizon.com/npage/archive/stories_03jul/20031117.shtml) announced its plans to begin rolling out FTTP or fiber to the home. Other telcos began to build out fiber closer to neighborhoods and homes as well.

Since that time, Verizon has been building out its fiber network in 18 states. We now offer speeds up to 50 megs (see http://gigaom.com/2006/07/18/50-megs-for-80-from-verizon-fios/) in some areas and have a standard 30 meg offering over our fiber network that is priced where DSL running at a meg or so was just a few short years ago.

You point to price as a problem with broadband today in the U. S. Yet, the U. S. has experienced very fast uptake in broadband connections over the last couple of years and now has more homes connected to broadband than any other country (see http://www.oecd.org/document/9/0,2340,en_2649_34223_37529673_1_1_1_1,00.html). Our offerings must be affordable to have so many Americans connected to broadband. The OECD report is actually dated because more recent data shows that nearly 70 percent of Internet connected homes in the U. S. are now using broadband as opposed to dialup (see http://www.websiteoptimization.com/bw/0604/), which means that well over 40 million American homes are connected to broadband.

Yes, many of those homes have lower speeds than are commonly found in places like Korea but as I noted, U. S. speeds are increasing quite rapidly due to new technologies like fiber and competition from cable and other providers (Cablevision has announced a 30 meg speed in response to Verizon’s offerings – see http://gigaom.com/2006/06/21/cablevision-broadband-now-faster-than-lie/). Just over a year ago (see http://www.ftthcouncil.org/documents/352861.ppt slide seven in the presentation), only 100,000 or so homes had fiber connections in the U. S. while today, over 1 million do, substantial growth.

I also do not believe that the price comparisons I’ve seen are fair or accurate, and frankly I think what people are actually doing in the market – in other words whether they are moving to connect to broadband in large numbers – is a more important indicator. However, Verizon’s FiOS 15 meg offering is priced just about where entry level (one megabit per second or so) DSL was a couple of years ago ($45) and this puts our offering right in the middle of the pack (see http://www.itu.int/osg/spu/presentations/2006/shaw-emerging-policy-regulatory-challenges-ngns-6-july-2006.pdf slide 14 in this presentation) on a U. S. dollar per 100 kbit/s basis according to the ITU data – above flagship offerings in Canada, Finland and even much touted France. But again to me the key metric is affordability and based on the pace of broadband uptake in the U. S., I can’t see how that is an issue.

So, while things are not perfect with the U.S. broadband deployment, the trends are going in the right direction when it comes to speed, availability, competition and affordability. And if we can keep these trends going, I believe we will continue to advance and outpace most other countries when it comes to landline broadband competition and capabilities. In Europe (see http://lw.pennnet.com/articles/article_display.cfm?article_id=271114), they are not seeing the widespread landline broadband competition we have and this is a major reason why major incumbent providers are not investing in fiber technology. The trends I see are the kind the FCC was trying to stimulate with its policy changes and the policies are working. The more high capacity fiber that gets deployed – and the more responses there are in the market from cable and other telcos to upgrade their speeds – the more we will move ahead as a nation. The beneficiaries are the U. S. consumer and our economy.

The perfect example of telecommunications without competition is Australia. There are only two real operators in the Australian broadband market, Optus and Telstra. Telstra owns about 85% of the market as a result of being the old nationalised telecom provider which has subsequently been privatised.

Telstra owns the entire telecom “backbone” with Optus only engaging in “last mile” connections onto that backbone. The result is that Telstra can raise rents on Optus connections and has effectively priced broadband out of the average persons grasp (This was in part to allow telstra to continue to take advantage of its extensive dial up resources). Accordingly broadband consumption in Australia is very, very low.

We suffer from what is essentially a (half government owned) monopoly on the majority of internet infrastructure and that is really starting to hurt small business operators and domestic internet traffic. It is worse in rural areas where there is close to zero penetration in the broadband market because of the high installation costs.

Competition is definitely the way to go. Since Optus stepped up operations the prices of Telstra broadband and cable has come down a little compared to the $1500 ($US 1000) connection fees in 2002/2003. But, competition has to be supplemented with rational policies promising all carriers access to the telecommunications infrastructure. Network Neutrality in application to back bone infrastructure would be suitable and probably a welcome move in Australia. However, we are an extreme example and do not have to advantage of joint ownership of telecommunications ownership that is enjoyed in America.

Of course, technology will continue to provide but telecommunications (with the thousands of miles of line installation and hundreds of thousands of hours of technical support) is a business that cannot be sustained with a “one size fits all approach”. The choice to offer a premium service should be engaged if only to improve high quality services. On the other hand there should be safety net so that disadvantaged persons (IE rural persons, small business and domestic connections) are not further left behind on the information superhighway.

In conclusion, I think what we are looking at here is a new form of social welfare in relation to internet connection and it would be negligent to leave our moral compasses at home when considering these issue.

yes it is Harold Feld which is why simplistic solutions such as “network neutrality” are so misguided.

Sweden (which one fellow keeps boasting about) enjoys a high level of competition because of government rules that require it.

well, there are actually three of us 😉

your statement is partly true. government rules require Telia (the former state-owned telephone monopoly, now Telia/Sonera) to open its copper wires to competing DSL providers.

but that’s not even half of the story.

the cable operators (who do not have to provide open access to other ISPs) compete with the DSL providers.

and the wireless operators (of which there are at least three licensed by the government) compete with both cable and copper for the same broadband “kronor.”

it is a gross oversimplification to say that the competitive situation in sweden is a result of “government rules that require it.” it is a more a result of different technologies, and different industry segments all going after the same consumer.

economists fret about things like friction, engineers apply lubrication to reduce it.

when it comes to broadband, the deleterious effects of friction are greatly reduced by providing the consumer with the lubrication of choice.

The old econ standard is that four equal sized firms is the bare minimum for a market to be “moderatley competitive.” That’s the benchmark employed by the Department of Justice Antitrust division and Federal Trade Commission, called the Herfindahl-Hirschman Index. http://www.usdoj.gov/atr/public/testimony/hhi.htm A market with fewer firms is “highly concentrated.”

Highly concentrated markets behave in dfferent ways from moderately concentrated and genuinely competitive markets. Sweden (which one fellow keeps boasting about) enjoys a high level of competition because of government rules that require it. France and the NEatherlands, now that they have imposed similar open access rules, are experiencing a ddramatic increase in speed and a significant drop in cost as measured by bits/sec.

A monopoly market is different from a duopoly, is different from a triopoly or oligarchy or highly concentrated market, is different from a moderately concentrated market, is different from a competitive market. Other factors, such as consumer lock-in via high switching costs or network effects, also play a role in whether a market behaves like a competitive market or not.

Most people learn physics in high school with a simplified model that drills on the basic Newtonian specifics. Most high school physics problems begin “assume no friction.” That works fine to teach the basic principles. What happens if you try to build a rocket using what you remember from high school physics? Yes, it is much cheaper to build rockets if you assume no friction, but they will not get very far.

Same here. Most folks vaguely remember some basic economics about competition where there is “monopoly” (bad), government ownership (bad), and competition (good). But reality is more complicated.

It seems there’s a real divide in thought between some that think ‘competition’ implies a completely different technology, network, and incompatible systems, and those that see that real competition happens when customers are completely free to move between different companies, without moving house, buying all sorts of associated products, or dramatically changing the way they use the product/service.

Two completely different and incompatible products can’t really compete meaningfully with each other!