Despite Good News About Broadband Adoption, Vint Cerf Calls for Nationalization (sort of, maybe, a little bit)
The handwringing about broadband adoption in the US continues unabated with yet another group calling for either some sort of government intervention or some form of nationalization (though Vint Cerf now claims he was joking – mostly). In trying to clarify his comments, Cerf actually added more confusion.
“Maybe we should treat the Internet more like the road system, look for ways of creating incentives to make the Internet more accessible to everyone, and less likely to be abused by the private sector,” Cerf said. … “It’s not likely you’re going to want to have multiple roads owned by the private sector to get to your house. Generally speaking, that’s true of the power system — you don’t have multiple wires going to your house to carry power.”
It’s good that Cerf cleared this up. He doesn’t want nationalized Internet. He just wants one wire going to your house, no “multiple roads” run by the private sector and something that resembles the road system (which is run by government, right?)
As just one example of why making the Internet like roads is a bad idea, look at the Big Dig in Boston. It was completed five years late for almost five times its original $2.6 billion budget. Just after it opened, a huge chunk fell on a passing cars causing injury and a fatality. It is a perfect example of government inefficiency on large scale building projects. Not exactly a great model when compared to cable’s $130 billion investment in its network and the more than $200 billion the telephone companies are expected to invest in their upgrade.
While I’m still confused about how making the Internet like roads isn’t actually a call for nationalization (to me, it looks like a duck, walks like a duck, and quacks like a duck…), fortunately, in the midst of the confusion comes a voice of reason.
The Pew Internet & American Life Project released its latest report on broadband adoption on Wednesday. Pew isn’t a group you can write off as Astroturf. They’ve done a lot of extraordinary research into how Americans are using the Internet. What did they find?
- The average price of broadband dropped 4% since the last survey (12/2005) to $34.50;
- Prices dropped despite the fact that 29% of respondents reported opting for a premium tier of broadband service – taking cable’s high-value offerings of faster speeds at a higher price;
- Across the board, broadband adoption grew 17% nationwide for the 12 months ending May 2008 – the strongest growth areas were among senior citizens, lower-middle income households and rural areas;
- The number of dial-up users who report disinterest in upgrading to broadband service remains roughly constant at 62% – even though the average price of dial-up actually increased 9% since the 12/05 survey;
- Of respondents who do not use the Internet, only 7% said that price was a deciding factor.
What this clearly demonstrates is what cable has been saying all along – while the goal of connecting every American is certainly a priority, and one we are working towards – the notion that there is a national crisis which requires immediate government intervention is simply overblown.
Contrary to assertions that the price of broadband in the US is prohibitively high, very few respondents in the Pew study agreed. This correlates nicely with the a Parks Associates Study last year that found very few people refused to get connected due to cost considerations. Adoption increased among Americans in households earning between $20-40k per year by 24% – the highest growth rate among any economic group. Only among household earning less than $20k a year did adoption rates actually fall. Given the state of the economy and the weakened dollar, this is not surprising.
It does, however, highlight the need to specifically target the barriers to adoption that low-income families face – ranging from lack of computer ownership in the home to lower education attainment. In stark contrast to the OCED figures touted by groups like Internet for Everyone – figures about which there is considerable debate regarding methods and measurements – Pew finds that when you actually ask America what they’re paying for broadband you get a very reasonable-sounding number.
Further, the 17% growth rate in broadband adoption is astounding given the level of economic uncertainty gripping other sectors of the economy. This speaks to the steady march toward near-universal nationwide adoption. With more than 55% now connected, broadband Internet has passed the 50% barrier faster than any technology in history – faster than cell phones, radio, television, and computers, Will all Americans be online next year? No, but we’re definitely getting there – and as we do, cable services are improving to keep pace with faster speeds and lower prices.
Last, but not least, note that 24% of dial-up users in rural America report that they would adopt broadband if it became available to them. The big takeaway here is that the US, working with ISPs on policies such as the changes to the broadband loan program that were included in the Farm Bill, is doing exactly what it should be doing – focusing on the small percentage of Americans who are either unserved or underserved. There is clearly demand in rural America for broadband, and we ought to use the power of the government wisely to provide the right incentives for companies to connect the unconnected.
The cable industry continues to work with Connected Nation to identify areas that are not reached by cable so every effort can be made to focus government resources on those areas that need it most.
Let’s also not overlook voluntary efforts by the private sector. For more than a decade, cable systems through Cable in the Classroom have been offering complimentary broadband service to any school within the cable system’s broadband footprint. That’s an offer that’s been accepted by thousands of schools already, and it continues to stand today.
What we should not be doing, and the Pew study makes this clear, is pursuing heavy-handed regulation (or even worse, the radical nationalization ideas proposed by Vint Cerf and others).
Tags: Broadband, broadband adoption, net neutrality, Pew Internet, Vint Cerf
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July 6th, 2008 at 8:21 pm
No, he got the details wrong. But, it is somewhat like a Highway, we do not want a Ford hiway to my home, and a Chevy highway and a BMW hiway all to my home. In otherwords we want only ONE fiber to the home that EVERYONE has access to and can provide me a service. We want to stop the “Monopoly through Access” model.
What I have proposed to my senators and congressmen is to force all the cableco and telco to sell their WIRES or whatever access method they have to a new Utility company. THey would take over and provide ONLY Maintenance, Upgrade etc of ALL wire- fiber to the home.
We as consumers are tiring rapidly or forced content, contracts, Broadcast Flag, Turning off of ports on hardware, forcing Home theater manu’s to remove analog outputs etc.
This utility would NOT be allowed to provide any type of content or service. Maintenance only.
Every homeowner with access to these wires/fibers would pay a monthly fee for the basic access to their home. Then buy any service or TV or Net or whatever new thing comes up. But not to be limited by acces provider.
Then EVERY Telco and Cableco would have access to the home in every city and every state. They could offer content, movies, phone, TV and any new service NATION wide. Rather then buy up and merge solely on regional basis to get more access to homes.
Access would be sold at wholesale plus upgrade profit by the new Utility to all comers….big or small.
July 7th, 2008 at 1:38 pm
So, Bill, under your plan, the government is going to run the Internet. How long do you think it will be before the government demands controls on speech, piracy, porn, protocols, and everything else. The Internet would change from a vibrant, outrageous place to a vanilla, stifled medium controlled by government bureaucrats who would be under tremendous political pressure to block all sorts of content.
Wow, your utopian vision is an Orwellian nightmare. The logical end is that the government will have final say over everything delivered electronically to our home. Don’t believe it? Look at broadcasting. The government, because it’s giving spectrum away and requiring recipients to act in “the public interest”, has the final say on what you CAN’T watch on broadcast TV. Some are already trying to do the same to pay TV.
Oh, by the way, I suppose you’re going to hand over the satellite TV and wireless industries to the government as well?
And, Bill, don’t insult our intelligence by trying to tell us that what you’re proposing doesn’t amount to a government takeover of the Internet. You’re off in some dreamland.
July 7th, 2008 at 1:48 pm
Bill, one more comment. You were born in the wrong time and/or place. You would have made a great Soviet media planner or Chinese government censor. Your idea is a recipe for thought control. Talk about a monopoly. Anybody who sees no danger in handing over the “wires” to the government is . . . scary. Sounds like you’ve already been brainwashed by . . . somebody.
July 7th, 2008 at 1:56 pm
No, not right…the Corporation running the wires are to only ADD NEW WIRES as needed or FIX Broken wires. They would have NOTHING to do with content. Not a government entity running it.
I want ONE wire into my home. Then I want to be able to choose if I want Time Warner or Comcast or Cox etc for TV. OR I may pick phone from ATT or Cox or Verizon or Sprint.
Or CBS may offer services direct to me…
What we are looking for is for the access portion not be encumbered in any fashion.
If I get on the road in front of my home…I can drive ANY CAR, and go ANYWHERE. I dont have to drive my FORD on a FORD hiway. Otherwise when it comes time to get a new car…Im limited to another FORD.
We want open access for anyone to get on the wire at any loction.
THis also allows all to compete nationwide. No more ATT having to buy SBC so they can expand to an area. If the wires were open they can provide their service nationwide to the entire country.
But that may be what you are afraid of…competition Im guessing. If they cant control ACCESS then they would have to compete.
Why do you think they lobbied and got rid of wholesale prices for access that used to be allowed.
July 7th, 2008 at 2:06 pm
Perhaps Im phrasing it wrong. I want the one wire to be open to all who buy time and bandwidth. If I want to set up a business as a local small ISP out of my bedroom , then I want to be able to buy service at wholesale rates that are equal to all.
Just allow anyone to get on the wire.
And NO I did not mean for the government to RUN anything. Just to break off the wires and sell them to a COMPANY to manage and upgrade. We would all pay a monthly access charge that is the same to everyone. Then we buy what every service or content we want.
Say we pay 15.00 per month to this new wire company solely to have the wire. Sort of a UTILITY type set up.
Then I pay Cox 29 for cable TV and 20 to Time warner for use of their backend for Internet…and movies from Viacom etc.
No government for anything….
Then w
July 7th, 2008 at 2:34 pm
I’m not sure how you have convinced yourself that what your proposing isn’t nationalization. Your first sentence – “He got the details wrong” seems to imply that you disagree with my characterization of Cerf’s suggestion. So you claim it’s not nationalization, but then suggest we “force all the cableco and telco to sell their WIRES…”.
How is that not nationalization?
But let’s assume that under your system the third party ISPs must sell their wires to is a private entity, not a public one. What would be the motivation for them to invest in new delivery technologies?
You assume that all innovation happens at the edge of the network. What about innovation at the core of the network? You say the utility would be responsible for upgrades. But where would the capital for this come from?
Maybe you think the fees people pay for access would cover the costs. With every person hooked up to one service (a true monopoly) they could raise rates at will and charge anything they want. Unless of course the government caps their rates, so now you’re introducing price controls into a capitalist economy, as well.
But let’s go ahead and cap the rates. The cost of providing upgrades is unlikely to stay constant so you now have to create another layer of bureaucracy that has the power to approve higher rates on a regular basis.
Wait… all of this sounds strangely familiar. Oh! That’s right. It describes the US postal service. They’re a quasi-governmental operation that has a commission established to oversee it and approve rates. It has been so successful as a model that it has spawned literally dozens of competing carriers who guarantee they will actually deliver your package.
July 7th, 2008 at 2:36 pm
Bill: The way I see it, whoever owns the highway makes the rules of the road. And in this instance, it’s the government (or an entity designated and governed by the government). If you don’t think this setup is ripe for micro-mismanagement, suppression of speech, abuse, and corruption, I don’t know what to say. The best outcome is that the system will end up being used for the benefit of really big players with really big money. That’s the best outcome. It gets worse from there.
July 7th, 2008 at 2:44 pm
So let me get this straight. Because of your attitude toward a perceived monopoly, you think a better solution would be a government seizure of private property to establish an actual monopoly.
How is that a better solution?
You should also keep in mind that cable built its network with private capital. This was not done on the back of taxpayer subsidies. Are you prepared to reimburse all of the industry’s sunk costs? Where do you propose to get the cash for that?
July 7th, 2008 at 4:25 pm
Michael et all, great discussion. I am staying away from the nationalisation bit. However I did want to comment on one of your previous comment Michael. In the post retorted that things were not done on the back of taxpayer subsidies. Earlier in the original post you mentioned the Farm Bill and the appropriate use of government to provide incentives to reach the unserved and under served.
I don’t see how the distinction between a subsidy and an incentive. Each can still provide benefit to the organization. However, that is not completely my point.
The numbers from Pew are interesting, and for once I don’t think we need to argue about how the numbers were obtained; versus our OCED debates. Touching back on the unserved and under served, do those labels include low-income families that seem to be loosing (slightly) connectivity? Are we only providing incentives for new ‘pipes’ or also new users?
Cheers!
July 7th, 2008 at 5:15 pm
Apparently we have different ideas of “nationalization” Mine is that its actually RAN BY THE GOV. But forcing the telcos to disgorge ownership of the wires to another COMPANY and have them run it is not.
This company would be solely a wire management co with no service allowed of any kind. Then turn all the telcos and cablecos loose to provide and invent any service they can come up with.
Lets use your Road analogy.
I dont want any CONTENT or SERVICE to own the road to my home. That is all im interested in. The same as I dont want FORD to own the road.
Currently, yes the gov owns the road, but that is being changed in many states and they are being sold as toll roads. But I can use ANY vehicle from any manufacturer. and the price is the same other than fees for larger vehicles
We can sell the roads to private people as is being done now in a lot of states. But would YOU let GM own the road and control what car gets to drive on it. Or perhaps charge you more to drive your Ford on it.
Not good. I want access to the wires as a utility.
But if the woderful Telco and Cableco want to open up their wires at wholesale rates to all comers ….then lets roll.
July 7th, 2008 at 10:28 pm
You can call it what you want, but it still amounts to the government seizing private property and handing it over to someone else. I’m not a constitutional scholar, but I don’t see any justification for an eminent domain claim here simply because you’d prefer the market worked differently.
The road analogy is actually pretty poor for the simple reason that roads require a huge amount of space, and as a result running multiple road systems managed by private owners is impractical. Given the wide array of possible ways to deliver broadband either in use or under development (wi-max, BPL, satellite, HFC, FTTH, etc) space isn’t the same kind of limitation. As a result, Ken’s question stands. Do you propose to seize satellite systems for delivering broadband? What about BPL? Are you going to halt all development of other technologies since those would be other “roads” to your house?
July 8th, 2008 at 10:28 am
No, I would just require open access at equal prices for anyone wanting to start a service over the wires or cables, or fibers. As it used to be until the telcos lobbied to let them charge others MORE for the whole sale side. That is why I no longer have available over 30 LOCAL ISP providers in my town. Only ONE at high speed. (satellite is nonsense due to latency and slow speed-so its a non factor) DSL in some places is available, but its far slower than the cable. And the new ATT fiber system is CHERRY PICKING as usual. With the new Franchise given to them STATE wide rather than by the city due to their lobbying. They NO LONGER ARE REQUIRED to provide service to EVERY HOME IN THE CITY. Only to the high end developments.
Well, where I used to live I actually had 5 options for electricity service. I had ONE wire to my home….and I could pick from one of FIVE companies to provide electricity. A generic maintenance company maintained the wires but the power could be bought from many companies.
Not the case where I am now, but the idea is the same. And the “size” of the product is of no matter. The ideas is the same. They have a captive audience SOLELY BASED ON ACCESS not on quality of product or service…
And here is your wonderful telecom companies now SUING small cities that are left out and now building their own broadband system. Dont want that competition that would be open.
http://www.law.com/jsp/legaltechnology/pubArticleLT.jsp?id=1202422769174&rss=ltn
I guess we will have to part on different takes on this. Im a Net Neutality, open source guy. Open wired with access to all the providers. Not the walled of garden stuff. For craps sake some of the new Sony TV will stream content….but ONLY from Sony. Not gonna happen at my house. thanks
Why do you think the Media companies want to force manufacturers to do the removal of the analog outputs on your TV. So you cant tape anything. They have wanted to get around the 1970’s Sony Betamax decision and have complete control of the hardware also.
Sony is especially dangerous…they are both a content maker and a hardware maker. Guess whose content you will have wonderful access to on your Sony TV. Any takers on this one.
July 8th, 2008 at 1:18 pm
What about localisation of the Internet guys? Calling attention to the cities and municipalities that are attempting to build their own, utility styled, fiber networks?
http://www.law.com/jsp/legaltechnology/pubArticleLT.jsp?id=1202422769174&rss=ltn
http://scrawford.net/blog/it-costs-more/1203/
July 9th, 2008 at 3:05 pm
[...] Google’s renewed interest in net neutrality (a concept it had begun to walk away from, until Cerf’s recent comments implying a preference for nationalization) may be an effort at drawing attention away from the Google-Yahoo deal. Nearing an agreement with [...]
July 15th, 2008 at 10:57 pm
[...] short answer is absolutely nothing. But David is part of a group called Internet For Everyone whose founders have suggested nationalization of the Internet. The list of his coalition partners reads like a who’s who of the left. ACLU, ACORN, Care2, [...]
October 4th, 2008 at 12:00 am
[...] – bookmarked by 5 members originally found by pantycristo on 2008-09-18 Despite Good News About Broadband Adoption, Vint Cerf Calls for … [...]
February 2nd, 2009 at 1:24 pm
You free market advocates seem to always put ideology before empirical reality. What the numbers show is that citizens who live in countries which either nationalize their telecommunications or place them under heavy government regulation get the best internet service. The US has fallen from 4th to 15th in terms of percentage of the population which has broadband internet access because our internet services aren’t nationalized and/or under enough government regulation.
You guys seem to have an irrational fear of the government, without realizing that governments are composed of their citizenry and they reflect both the virtues and faults of their citizens. If the citizens are lazy and passive, governments mismanage and abuse their power, but in countries where the citizenry take an active role and demand results from their governments, they get better services at a cheaper cost. Would you rather live in Japan where the maximum bandwidth is 1000 MB/s or the US where the maximum is 50 MB/s? I would take government intervention any day, because if the government abuses its power, citizenry have recourse through our democratic system (as lacking as that may be). If a private company abuses its power, it is much harder to do anything about it and the private company has no interest in the general public welfare–only its bottom line.
I doubt any public telecommunications company would ever consider cutting the bandwidth for Peer-to-Peer activities like Comcast did. I doubt that net neutrality would even be an issue if we had a nationalized system. What I am sure is that people in underserved rural and urban poor communities would have much better access to the internet. If you guys really believe that the private sector has done such a stellar job of connecting people to the internet, how do you explain the fact that those private companies actively lobbied to stop public Wireless internet like Philadelphia has in communities across the country. A nationalized telecoms company wouldn’t dare do that kind of lobbying and if it did, the citizen outrage would quickly stop it. In contrast nobody seems to be nailing Comcast, AT&T, etc to the wall for their atrocious lobbying, because we expect private companies to act against the public interest.
Nationalization is no panacea, but when you have a functioning democracy which can curb any potential abuses, it works much better than loosely regulated privatized systems. Frankly, I don’t understand the paranoia about the government from free market ideologues, yet the the myopia and downright blindness toward private sector abuses.
February 2nd, 2009 at 1:50 pm
Amos –
NCTA is not an ideological entity when it comes to the discussion of free market solutions versus government solutions. In fact, just last week the association’s president posted a video explaining the industry’s position on government’s role in promoting broadband deployment and adoption.
There is most certainly a role for the federal government in promoting broadband.
However, let me address some of the points you made, and why they’re simply not accurate.
Actually, the reason we have slipped from 4th to 15th has just as much to do with the flawed metrics being used to make that comparison. I wrote extensively on this problem last year. If every country reached 100% adoption, the US would still be ranked 20th due to several factors which skew the results – including household size, inclusion/exclusion of T-1 lines and business connections, etc.
I also wrote about the myth of Japanese broadband. While it is true that they have services available at those speeds, the majority of the country can do no better than DSL. The cost also ends up being more than is typically claimed since you must purchase your connection and your access separately.
That’s a claim that many like to make, but one that just doesn’t fly. As an example, take your average college campus. Campuses are probably the closest thing to the model of nationalized broadband with connections to all students made available on an equal basis.
However, college campuses, just like private networks, have exactly the same problem with network congestion because some users consume more of the available bandwidth than others. Many ban P2P applications entirely, but all employ management techniques similar to those employed by corporations. Those campuses have no economic incentive to protect, so how do you explain their use of the same methods?
The fact is, the management of networks and the challenges with provision of broadband services are not a myth created by evil corporations. They are common problems facing all network operators and ones the cable industry is working hard to solve.