Those Terrible Telcos: America’s Internet Shame

Posted on July 27, 2007
Filed Under Markets |

I’m a libertarian at heart, and a studied one at that, but no one is going to tell me that what passes for free-market doctrine today is anything other than unbridled - in fact protected - profiteering.

Witness, the telcos, thanks to whom (and their regulators) the US has fallen behind many other countries in Internet capability.

Paul Krugman in the New York Times wrote about this on Monday, it’s behind registration, but excerpted at cio.com as follows:

America’s Internet flourished in the dial-up era because federal regulators didn’t let that happen - they forced local phone companies to act as common carriers, allowing competing service providers to use their lines. Clinton administration officials tried to ensure that this open competition would continue - but the telecommunications giants sabotaged their efforts, while The Wall Street Journal’s editorial page ridiculed them as people with the minds of French bureaucrats.

And when the Bush administration put Michael Powell in charge of the FCC, the digital robber barons were basically set free to do whatever they liked. As a result, there’s little competition in U.S. broadband - if you’re lucky, you have a choice between the services offered by the local cable monopoly and the local phone monopoly. The price is high and the service is poor, but there’s nowhere else to go. - America’s Internet - Falling Behind

The CIO blog post by C.G. Lynch is a useful article in its own right, and cites some other sources worth reading for more detail, notably Vive la High-Speed Internet, by Business Week. You may want to know how it is that France now puts America to shame in online competitiveness and capability.

The ways are shown in which infrastructure investment, and especially a competitiveness mandated (rather than sheltered) by government produces a vibrant economic result, online and off.

Lynch also cites a Foreign Affairs analysis from two years ago that still resonates ominously:

Summary: Once a leader in Internet innovation, the United States has fallen far behind Japan and other Asian states in deploying broadband and the latest mobile-phone technology. This lag will cost it dearly. By outdoing the United States, Japan and its neighbors are positioning themselves to be the first states to reap the benefits of the broadband era: economic growth, increased productivity, and a better quality of life. - Down to the Wire

Bob Cringely was scheduled to write today about those terrible telcos, giving us all more background on the smoky back rooms. But he got sidetracked by a sub-plot in the story, which is endlessly engrossing as a pencil sketch of the muscle of the telcos, and the chains they use to hold us all in thrall.

This week I was supposed to explain why U.S. broadband prices are so much higher and U.S. broadband speeds are so much lower than in most other developed countries, but then Google made an unexpected reckless move in the wireless bandwidth market and here I am trying to explain it. […]

Look who Google is up against — all the largest Internet service providers in the U.S. Google will not win this even if they win the auction, because the telcos and cable companies are far more skilled and cunning when it comes to lobbying and controlling politicians than Google can ever hope to be. The telcos have spent more than a century at this game and Google hasn’t even been in it for a decade. And Google’s pockets are no deeper than those of the other potential bidders. - Is Google on Crack?: Eric Schmidt bets the ranch on wireless spectrum

We used to despise the phone company, and we took a fierce delight in talking bad about it during phone calls with friends, when better? But back then we had so much other life that existed once the phone was back on the hook.

Now, we live on the wire. Our jobs, our lives, our friendships, all operate through the always-on infrastructure. We live inside the lines now. And it matters greatly that they’re coating with arterial plaque, and never a hint of apology.

There will be more of this to come. Mercifully it’s the weekend.

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