Universal Broadband: The Pandering Begins

December 30, 2008 by A.B. Dada  
Filed under Broadband, Featured

A.B. DadaOver at Om Malik’s website, blogger Stacey Higginbotham posts an article titled “Universal Broadband: The Begging Begins.”  She goes into detail about the main parties that are vying for position in what will be yet another government handout, taxdollars taken from one group and given to another group on behalf of a third group.

Stacey has a few poignant things to say, and some not-so-poignant.  She opines:

There are debates over the new definition of broadband (anywhere from 1.5 Mbps from the rural DSL guys hoping to keep their existing infrastructure, all the way up to 10 Mbps from the equipment providers trying to sell more gear), and infighting over how to fund such efforts (bonds, tax incentives or handouts). There are the typical pleas for net neutrality tied to any government aid, and the also typical pleas from the industry that the government should just hand over the cash and let them move forward.

It’s frustrating to see a worthy goal like universal broadband get mired in a quest for cash by cable guys and carriers already making profits. Seriously, AT&T and Verizon are spending billions investing in upgrades, but still recorded third-quarter profits of $3.2 billion and $1.7 billion, respectively. The biggest cable companies — Comcast and Time Warner Cable — also reported profits for the period, with Comcast generating $771 million in net income and Time Warner pulling in $788 million. Both reported softening demand, yet touted that so far this year they have generated increased free cash flow as a result of their operations.

The problem, Stacey, is that you’re ignoring the reality of communications:  growth in the Internet arena is forced by open competition, not by State fiat.  Why are we focusing on Comcast and Time Warner Cable, two companies who are giving the most State monopoly priviledges of almost any communication provider?  I’m not talking about Federal provisions, but local ones.  Many communities offer Comcast and Time Warner and AT&T sole priviledge of running broadband to the citizens of the community.  This prevents decent competition from forcing the large companies from upping their service standards or lowering their prices.  In my own town of Rosemont, Illinois, I have almost NO choice, and it isn’t because providers don’t want to be here.  They’re not allowed to, due to the rigorous prevention of competition by my community.

I made the following comment to that article on that site:

Why should an urban dweller like me have to subsidize rural dwellers broadband? They made the decision to live far away from the city. They made their bed, they should sleep in it.

I deal with pollution, noise and crime. I do this so I can be close to tons of work opportunities, infrastructure, medical care and entertainment. If I choose to live in an ex-urban area, I should own up to the responsibility to lose access to certain things.

I believe this should be the case.  Should people who make the decision to live far away from the urban environment have a RIGHT to broadband, or a hospital, or a Wal-Mart or large grocer?  Of course not.  They made the decision based on what they feel is correct for their lifestyle and beliefs.  I, on the other hand, made the decision to put up with the urban problems so I have access to the things I need and want in my life.  There is NO RIGHT by the State, at any level, to tax me to provide for those who made independent decisions for their lives.

In an open market, nothing stops an individual or a group of individuals from acquiring a high speed connection and reselling bandwidth to their neighbors — nothing but local government intervention and rules.  It’s not the market that doesn’t want to provide faster service at cheaper prices, it is the cronies of the State that create these monopolistic corporate controls.

Even worse, government mandates for the definition of broadband create an artificial ceiling on said broadband.  When government says “you must provide 10mbps,” those with monopoly control provided by the government don’t have to go faster.  Those who want to provide slower service at a much better price, if the customers want it, are labeled out of the market competition.  It’s a ridiculous amount of pandering for a government label, and it harms consumers and competitors both.

Taking the subsidization-reduces-service a step further, bolstering one competitor’s financial bottomline with taxdollars means that other competitors may not even desire to compete.  This means that what the government pays for today may stay that way for a long time to come.  Why even bother trying to get faster speeds or lower prices if your competitor is receiving a handout that you don’t get?

It’s all ridiculous, when you think it through.  We don’t NEED broadband choices because they exist already.  What we need is less government intervention and a more open market for competitors to see what people want, what they’re willing to pay, and what is available to meet both of those items.

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