Friday, April 15, 2005

Is Cheap Broadband Un-American?

Also Available in the Current Edition of "In These Times"

ISPs See Red
We have Big Media to thank for saving Americans from themselves. Just as the notion of affordable broadband for all was beginning to take hold in towns and cities across the country, the patriots at Verizon, Qwest, Comcast, Bell South and SBC Communications have created legislation that will stop the creeping socialism of broadband community internet before it invades our homes.

And to think that Americans might want to receive high-speed access at costs below the monopoly rates set by these few Internet Service Providers (ISPs).

Today, monthly broadband packages offered by the national carriers can hover as high as $75, barring access to millions of Americans who can’t afford the sticker price. Cities and towns across the country have taken up the task of building a cheaper alternative -- often choosing easy-to-build wireless mesh networks -- to bridge the gap that has kept many on the darker side of the digital divide.

Telecommunications giants have mobilized a well-funded army of coin-operated think tanks, pliant legislators and lazy journalists to protect their Internet fiefdoms from these municipal internet initiatives, painting them as an affront to American innovation and free enterprise.

Their weapon of choice is industry-crafted legislation that restricts local governments from offering public service Internet access at reasonable rates. Laws are already on the books in a dozen states. This year alone, 10 states are considering similar bills to block public broadband or to strengthen existing restrictions.Spinning broadband as theirs alone to provide, ISPs have chalked up some early victories—including a draconian law now on the books in Pennsylvania, which strips local governments of the right to choose their own homegrown broadband solutions without the prior approval of a monopoly phone company. In late 2004, Verizon dictated the law word-for-word to local legislators, who then quietly slipped it into the middle of a 72-page bill that appeared to call for improved communications infrastructure for all Pennsylvanians.

It will have the opposite effect.

Forcing public broadband networks to ask permission from Verizon before offering service is akin to forcing public libraries to ask permission from Borders before checking out books.

Meanwhile, the United States has slipped from fourth to sixteenth place in national broadband penetration, falling behind South Korea, Japan and Canada, where effective private-public sector initiatives have paved over the digital divide, allowing more citizens to reap the economic benefits of the open information era at a fraction of the costs we take for granted.

Not so in the United States. A nation that once prided itself as the global pacesetter in technological innovation and affordable communications is now held in the thrall of corporations eager to keep a basic 21st Century right—the right to connectivity—from citizens who can’t afford their exorbitant access fees.

How has America fallen so far back?

The struggle for accessible, locally provided broadband has been building for several years. But it didn’t hit the corporations’ radar until the middle of 2004, when larger cities such as Philadelphia and San Francisco recognized broadband access as a basic public utility—no different from water, gas or electricity—that they could provide.

It’s easy to understand the local appeal. Broadband networks have proven a win-win for municipal governments: Community internet creates free-market competition for communications services, improves schools, enhances public safety and social services, and encourages entrepreneurs through public-private partnerships. These networks are relatively cheap to build and bring technology—and resulting economic opportunity—to low-income urban neighborhoods and rural communities that are routinely passed over by the large commercial providers.

For consumers and citizens, low-cost broadband is extremely popular. Across the country municipal referenda and city council measures in favor of building public broadband pass easily—in some cases offering not only community Internet, but also television and telephone service.

“Access to the Internet today is as much a necessity of life as the more traditional services and should be available to all,” says Jonathan Baltuch, an economic development consultant from St. Cloud, Florida, a city that voted to provide citizens with a wireless network covering 30 square miles.

According to Baltuch, St. Cloud’s municipal network has yielded a considerable return to residents. Prior to the city’s broadband network, a St. Cloud resident paid on average $450 a year for commercial Internet access. Today they pay on average $300 a year in property taxes—money that not only provides broadband access but also supports efforts to keep city streets clean, pick up residential garbage and provide for local police and fire protection. “By the city providing this one service to its residents the average household savings will be 50 percent more than the average tax bill for all city services,” Baltuch says. “Further the $3 to $4 million per year that is leaving the city to flow to corporate headquarters all over the country will stay in the local economy.”

Philadelphia decided to follow suit. Last year, Mayor John F. Street announced plans for “Wireless Philadelphia” a project that by next year will provide the city's population of 1.6 million, spread out over 135 square miles, with a full range of Internet services.

It was at this point that the incumbent ISPs began to show their horns. The ISPs is loath to loosen their stranglehold on a market that, according to the Telecommunications Industry Association, could yield $212.5 billion in revenues by 2008.With so much at stake, it was time to mark out their territory and smother municipal broadband projects wherever they began to take root.

The goal was simple—legislate competition out of existence. But to do so the industry needed allies in its fight against local choice. It found them easily among state representatives willing to sell statehouse votes to fill their campaign coffers, and Washington-based think tanks—such as the Cato Institute and the New Millennium Research Council (NMRC)—willing to produce “research” that pleased their corporate funders.

To this mix of industry sock puppets add a gullible media. In a finely targeted media campaign, the “evils” of municipal broadband were pressed upon local journalists who were willing to echo corporate concerns without digging for an opposing view. Too often, local papers failed to follow the money that linked their sources at the Cato Institute and NMRC to the industry—taking at face value comments and data from these think tanks without revealing the conflicts of interest that would impugn their research.

A report discrediting community Internet issued by NMRC, for example, has been cited nearly a dozen times by journalists in the two months since its release. Not a single reporter bothered to let readers in on the fact that the NMRC receives money from the same corporations whose policy positions it just happens to profess.

On February 17, the battle over access finally graced the front-page of the New York Times, with a story pegged to Philadelphia’s ambitious plans to turn the city into “one gigantic wireless hot spot.” The first quote by Times writer James Dao went to Adam Thierer, identified as “director of telecommunications studies at the libertarian Cato Institute.” He told the Times: “The last thing I’d want to see is broadband turned into a lazy public utility.”

Dao failed to note that the Cato Institute is funded by Verizon, SBC Communications, Time Warner, Comcast and Freedom Communications. Dao then interviewed David L. Cohen, executive vice president of Comcast, who also disparaged community networks.

Again, Dao failed to alert readers to Cohen’s web of interests that might impugn his integrity. In a previous incarnation, Cohen served as chief of staff to then Philadelphia Mayor Edward Rendell. Rendell has since moved into the governor’s mansion, while Cohen jumped to the private sector. This relationship might explain why the governor ignored widespread public opposition and signed into law last December the bill that shafted Pennsylvania communities seeking to offer homegrown broadband services.

These corporations say that they’re shutting down homegrown broadband efforts to safeguard the best interests of American free enterprise. But, as Dianah Neff, Philadelphia’s chief technology officer, asked in a recent column for ZDNet: “When was the last time they were elected to determine what is best for our communities? If they’re really concerned about what is important to all members of the community, why haven’t they built this type of network that meets community needs or approached a city to use their assets to build a high-speed, low-cost, ubiquitous network?”


Anonymous said...

Don't you think AOL would've stopped Earthlink if it could? Why it couldn't?
: Free Enterprise.
What do you think Earthlink thought about
NetZero, PeoplePC and now Netscape's
internet service? :Upstarts! Find ways to stop them! Why they couldn't?
: Free Enterprise.
Cant these money-hungry idiots see that what the wireless people are doing is the very essencs of American innovation?
Coming up with a new, more efficent way
to fast internet connectivity, at a lower
cost. Isn't the competition it provides
the very heart and soul of Free Interprise?
I believe the 'Think Tanks' need a little
mental Rid-X to clarify the 'matter' and
hopefully seperate the shizit from the
Shine-Ola, The legislators in on this
need to be legislated to the nearest curb, and the 'journalists' should go back to the obituaries and covering the
nightlife scenes that they used to do.
That's my humble, Southern opinion!

Lamar Havard - Mobile, AL

0101010 said...

Good article. I've heard many arguments against community networks, in particular those funded by taxes in anyway. Most of them are effectively varients on the "its un-American" theme ie. "we don't need your stinking socialism polluting our beautiful free-market economy".

What such people fail to realize is that cities are contemplating the DIY solution because the market is or has failed to serve them, not because they are latent commies. People seem to forget that markets can and do fail and the freer they are the more likely it is. That is how we got the gilded age, the great depression, all those boom and bust cycles, bank crashes and all the other ills that come along with them. All the time Joe Surfer out in the burbs or in the urban ghetto is left with barely 56K data speed or super expensive 256/56 DSL at $40 or more a month that barely qualifies as "broadband" - if they can get it or afford it.

So by all means let cities compete but if corporations are so all powerful let them compete back - why do you think we have FedEx and UPS when there is a government tax subsidized US Mail? And why do people still by expensive bottled water when it comes out of the fawcet? Yet for many the US Mail and water from the fawcet are a blessing.

Yes, I think Verizon and their ilk are crybaby corporations who have been caught with their pants down mooning the free market while their customers are crying for service! If they want to compete let them - but they don't need anti-competitive laws in their favour either. If you want to live by the free-market then you've got to be ready to die by it too and for many of the big telcos it wouldn't be a moment too soon.

counterframe said...

Excellent overview and links. Thanks for this. I'm circulating it among some UNC communications students.

I'm in North Carolina, and we're flanked by states that already have given in to the big corporations, Virginia and South Carolina. Last week, N.C. state legislators handed the telecom companies a big present by lifting the cap on how much they can charge for basic local phone service, and they warned that prices would start rising within months. I'm afraid that a move against community broadband can't be far behind.

Please stay on this issue and keep the rest of us updated. Thanks for what you're doing.

Anonymous said...

I have been following some of the snippets about the American broadband situation as they have surfaced in the media. This is a very nice addition.

What I would most like to see, however, is really how other countries are handling broadband. I have heard for instance that in Japan broadband speeds average 8mp and cost about 10 bucks a month [us dollars]. I have also heard that France's Telecom will have wired every single phone line in France by the end of 2005 with super fat copper lines that can support movies-and re-nationalized Telecom.

Americans traditionally never get international news, but it would really be interesting to have accurate, fact checked info on penetration, cost, and pipe size of all the other major first world countries and their political/economic policies
toward broadband access.

Just a thought.

Anonymous said...

Yep. Too much freedom. That's the problem. Whenever and wherever you have too much freedom, the next thing you get is monopolies that jack up the prices. And that's why we need government to jump in and restore the balance.

In my neighborhood we have a choice of exactly one trash disposal company. Of course, the trash company has a contract with the local government that precludes any other company from picking up my trash. It must be a public safety issue, because I'm sure its for my own good. But it's a contract much like the contracts that governments make with Telco and Cable providers. You know: the special legal priviledges that confer monopoly status.

Hmmm... Maybe the solution isn't more government?

0101010 said...

Anonymous - you're right, not "more government" but "more governance". More government just gives you more people looking for their next campaign fund dollar instead of actually governing and representing their constituents.

I'm sure there are millions more like you who complain about their trash pick up, our service sucks pretty badly too. Worse still is the pitiful selection of cable providers i.e. one.

The other commentor who mentioned France is probably right - I've heard they are rolling out ADSL2+ as I type that gives up to 24Mpbs down (1.1Mbps up) for about 30 Euros a month which is $40. Now thats what I call bang for your buck, or should I say bits for you buck? And with that kind of bandwidth YES people really will be able to stream HDTV to their home without a separate cable fiber - such usage is already being tested in the UK by NTL, and I believe in California by SBC.

Its quite clear the telcos would love to have a technology to squeeze out the cable guys AND have a monopoly on providing network access in every state, wouldn't that be nice for their bottom lines now that we're all ditching landlines for cellphones, long distance for VoIP and DSL for Cable with internet.

But what if it was all provided wirelessly, potentially at even higher bandwidths?

Even if municipalities get locked out of jumpstarting the market in areas where telcos have failed, I look forward to some stiff private sector competition for the same business. In many rural areas in less developed countries wireless is the only solution and solves a problem that would never be solved by regular telcos. How are most of those links set up? By government funded projects or local communities doing it for themselves.

Anonymous said...

"A report discrediting community Internet issued by NMRC, for example, has been cited nearly a dozen times by journalists in the two months since its release. Not a single reporter bothered to let readers in on the fact that the NMRC receives money from the same corporations whose policy positions it just happens to profess."

We, at did, and continue to do so. ;) The NMRC also distributes anti-Muni garbage from another shill-group dubbed the Heartland Institute.

Anonymous said...

Free municipal broadband, replacing the $50/month private broadband, will remove the digital divide?

In some way that the $10/month dialup didn't?

Given the fact that computers still cost at least $500?

So, let's see here, we'll give free broadband access to the people who were able to afford the $500 computer and want better service than the $10/month dialups?

How is this closing the digital divide exactly?

Anonymous said...

Well, ok, and the best comment is....comparing internet broadband to neighborhood trash pickup!

Yup, I see the similarities already....

Serial Catowner

Anonymous said...

Hey Lamar!

Listen up Gomer! You, and your Southern bretheren, can kiss my ass! You know as much about free markets as my dog. There is nothing free about a monopoly. Didn't they teach you to read down South in school or were you too busy being indoctrinated in to the Christian American taliban. Maybe when you were growing up too much reading cut into your lynching time. The article clearly states that this arrangement is not an example of the free market. Why don't you and all your idiot cousin/uncle/brothers piss off!

Anonymous said...

Now I dare that last poster to rephrase his diatribe but make it about black people.

Anonymous said...

The BushCo. regime laughs at all of you. They don't care what you think because they can FIX THE ELECTIONS! Snap out of it America, BushCo. has STOLEN TWO elections and it WILL be Jebro Bush in '08. It is tragically amusing to read all the angst over this issue or that when all of it is just so much bleating. The elections can and are being stolen through computer hacking, intimidation and booth allocation.

Jozef Imrich with Dragoness Malchkeon said...

Indeed, there are lots of spin offs from your story ...

Wireless wonder at a fraction of the cost: by Adam Werbach Should Municipalities Get in the Wi-Fi Business?

Minneapolis is about to become an unwired city, creating a universal wireless Internet access network available to every citizen, visitor, business and municipal facility within city limits
In Minneapolis: Wireless Internet As Basic Public Infrastructure

Anonymous said...

If you want internet, then go internet. If you want some ass and butter, go to

Anonymous said...

How terrible to live in a country where the cult of anti-communism makes socialism a bad word. The logical destination of any untrammelled free market is oligopoly at best and monopoly at worst. Buying politicians to speed you on your way from profit making entrepenuer to monopoly rent extracting parasite is par for the course.

The use of government regulation to keep the market a market is essential if the market is to serve the people and not vice versa.

Here in Australia we labour under a semi-market system corrupted by having had a government monopoly, Telstra, that has been half privatised and that the conservative government now wants to sell fully. Thus they have a strong incentive to strengthen its close to monopoly position to up the selling price.

Result - some pretty strong atrophy in service delivery. We live in hope that the new wireless and maybe even Power Line technologies will break the cable and copper wire (ADSL) monopoly.

With some regulation prices have been coming down but once Telstra is free to be a private enterprise pressure on government, rather than beholden to it, the pressure for regulation to be eased in favour of "legitimate" profits will grow.

Anonymous said...

Everyone else in the world is privatising their telecom because the government controlled netowrks are incredibly inefficient and costly, and you know it is the taxpayers that end up footing the bill.....

So now American towns think they know better, and instead of waiting for the next generation of technology to be deployed by private sector companies, they are going to overspend on technology they do not understand which will be obsolete soon.

Do they not realize that they are guaranteeing that their towns will be the last place that new competitors will go? Where is the logic, the accountability, the fiduciary responsibility to taxpayers?

I guess they like it when all the device makers and equipment manufacturers and consultants show them that they can attract more attention by buying their gear.

Won't someone tell the emperor that there are no clothes?

Anonymous said...

Hey blog gently,
Since when is having a local government (who also happens to regulate right of way and assess taxes on telecommunications services) enter a market that already has serveral competitors considered "the free market"??

If you think France is so great, perhaps you should get a 30hr/week full-time job guaranteed for life at France Telecom, take August off, and enjoy the low rates they charge for broadband by paying 60% of your salary in income taxes and a 10% tax on everything you buy.

When the tax rate gives you a heart attack, you can stand in line to see a government-provided doctor who is much less expensive than a free-market doctor. After all, doctors - like broadband and trash pickup - are services that everyone needs and so the government should provide them.

Anonymous said...

Dianah Neff said, "If they’re really concerned about what is important to all members of the community, why haven’t they built this type of network that meets community needs or approached a city to use their assets to build a high-speed, low-cost, ubiquitous network?”

Why? Because the cost of building it will not enable them to break even...even at prices that start at $14.95 (SBC) and $19.95 (Verizon) the take rates of broadband are still relatively low. Where adequate supply exists, the problem is DEMAND, not SUPPLY.

Do you want these companies to keep pumping money into broadband when most people are not buying it, even when prices have gone from $79.99 to $14.99 over the past several years??

Government is working the wrong side of this equation...they should be teaching people how to use computers, and building free access kiosks in public places. This will help drive up demand by creating a larger pool of potential subscribers.

There are lines to use computers at the library, for Pete's sake. (Gates Foundation study). The library is run by whom? The same government that wants to build a broadband network!

Alternatively, the local government could entice the private sector to build by guaranteeing to buy a minimum number of subsctiptions - a shared risk model. Reduce the risk and you have a better chance of someone building.

Instead, they prefer to rant. And make sweeping generalizations about "monopolies". And play fast and loose with facts.

It gets them more publicity, I guess. And that seems to be what some of them are really after.

Anonymous said...

Good points.

I cannot recall ever reading an article on muni broadband that clearly articulated both sides.

Where is the balanced reporting?

Or is there no reporting on this subject, only editorializing...

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Unknown said...

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Unknown said...

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Anonymous said...

Is this post still alive??? the last comments seem to be from 2005...just wondering if there is still a public outcry for cheaper broadband - the latter of getting raped by big media prices...

anyway - if anyone is reading - just wanted to comment on why i am truly pissed off at the way 'Americanisms' seem to prevent the average citizen from gaining access to global knowledge. What i mean by 'Americanisms' is the fact that once something comes out that people want/need capitalism seems to squeeze it to the last drop instead of nurturing the industry by driving change & thus we have an industry price set for all.

I've been working in the UK for about 5 years now & have seen more developments here than in the U.S. in regards to broadband - mainly because i work in the industry.

When it comes to contacting family back home it's incredible to see that dial up is still the best option available...which doesn't make it very conveienent to chat with Mom on Skype ya know.
I mean where was broadband created again? What was the purpose behind the Internet again..oh yeah created by scientists in the hopes of free exchange of information to better the developments of society right! a cost of nearly $80 for an "up to" 1mb service...ha ha jokes on you America! you are being raped severely for several years now.

over in the UK broadband started off with 512K, 1Mb & 2Mb then public interest drove up the market creating several ISP retailers. BT still owns the monopoly as they own more than 80% of the copper lines. I believe they sold off a few to NTL, but anyway the ISP's started buying their own DSLAMs & VPs & the industry starts to grow. This growth was driven by customer demand (you could say a combination of business customer & residential). However, business needs far succeed residential demands usually because big money talks...

residential customers only mean problems because they do not fully understand the capabilities of broadband and attenuation, etc.

soo...when 2mb goes to 4mb & 8 & then 16 to 24mb the price wars start as the lull in the market takes place & other competitors have the ability to buy capacity in the local exchanges for their own equipment.

Currently in the UK you can pay about £18 per month for an 'up to' 24mb service. If you don't believe me check out

In Japan the telecoms industry was driven by government funding which is why they have the fastest cheapest connections around for residential customers to date...or so i hear. (approx. 100mb service via FTTH i think).

so in this respect the UK still has further to go...but what the hell is going on at home!?!?

It appears that pushing the industry of Broadband does not exist because the cry for change does not seem to exist in the business & residential sector together.

I've read several good comments in this blog & only a few stupid comments verbally bashing each other.

It's no wonder that most jobs are going abroad to India or the Tibetan 'relief fund'

If there is an organisation like OFCOM here that has sway with the ISP's (funded by the government - as a result of public outcries) then i would expect the industry to have grown in the next year or two in the right direction if not superceed other countries.

There is sooooo much potential for the states to take the apple from the tree, but equally too much greed to plant the seed.

i may not ever come back to see who has commented of this blog & criticised me or my thoughts, but hey if this has touched a nerve - i can only hope that i've planted a seed.

Anonymous said...

It apparently is...I was just living in Ireland for the past 2 years and enjoyed €15 [$20] a month wireless was grand. Here you have to pay a grand or 'enjoy' a Big Mac for it. Yeesh!

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