Is Obama's Broadband Plan Anything More Than A Free Gift To Incumbent Providers?

from the increasingly-looking-that-way dept

Mon, Jan 12th 2009 2:20pm — Mike Masnick

Just a few weeks ago, we warned that, while the thought of increasing broadband is a good idea, the details of any sort of "broadband stimulus" plan was important -- especially if it just looked like giving money to the same old incumbent players who have a long, and rather disgusting, history of accepting tons of public money and then not delivering. At other times, those incumbents have spent a lot of money trying to stop the actual spread of broadband. Broadband Reports is warning the incoming administration that the incumbent players are going to be spinning all sorts of stories about how they'll provide all sorts of new broadband improvements, while ignoring their history of fighting against broadband expansion. Unfortunately, Business Week points out that the broadband stimulus plan is almost certainly heading in that direction, meaning that it will almost certainly reward the incumbents, despite the fact that they're a part of the problem.

For years, plenty of people have been pointing out that the real problem with broadband in the US is the lack of competition in the market -- and a big part of the reason there's so little competition is because of these sorts of government handouts that favor a single player in a market. It's difficult to see how continuing that tradition changes anything -- other than making a few legacy providers even wealthier. If we want to see more and better broadband in this country, we need to see more competition, not the strengthening of existing legacy players.

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Filed Under: broadband, competition, incumbents, obama, stimulus

16 Comments

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Jerry in Detroit, 12 Jan 2009 @ 2:43pm

And what did you expect?
And what did you expect? Our soon-to-be president comes from one of the national capitols of crony capitalism.
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Mark (profile), 12 Jan 2009 @ 3:33pm

Why not put the cart after the horse
If they broadband companies want this money so bad, why doesn't the government earmark the money for the intended purpose then, and only then, when the companies delivered the promised broadband they get paid. It's how the rest of the world works, most of us even pay a month in advance on our telco stuff just to prove we deserve to keep it on. Of course the downfall of this would be government oversight and determining the standards and we know how well government does THAT.
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Anonymous Coward, 12 Jan 2009 @ 4:01pm

Re: Why not put the cart after the horse
If they broadband companies want this money so bad, why doesn't the government earmark the money for the intended purpose then, and only then, when the companies delivered the promised broadband they get paid. It's how the rest of the world works, most of us even pay a month in advance on our telco stuff just to prove we deserve to keep it on.
Huh? Do you even realize that you just contradicted yourself? If things were the way you say you want then you would pay the phone company after they delivered service for the month. But getting paid beforehand is what the telcos have come to expect as their right whether dealing with customers or the government.
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Anonymous Coward, 12 Jan 2009 @ 4:37pm

It's hard to not be cynical about this sort of thing.

The government sees the advantage of broadband and naively starts an initiative to expand and improve broadband access.

The big players get involved. They get their employed lobbyists, often related to congressmen, to write the bill.

Government forgets it's of the people and decides that no one knows more about the industry than the industry, and lets them have their voice.

The industry writes "more money for us" into law.

I don't have anything against corporate profits, but I want it to be a struggle towards efficiency and providing the best product. Something that serves me as a consumer.
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fat Tony, 12 Jan 2009 @ 4:49pm

My XP
In my dealings with broadband I have noticed that telephone companies required prepayment(US and Europe).
The two cable companies I have dealt with (COX and RoadRunner) have charged me after my first 30 days.

TimeWarner's music/media issues aside I have found cable to be the more consistent expansionist in terms of coverage. I would like to see Fiber come to ANY area I live in...until then, I will settle for the best VALUE in whatever area I find myself.

This is the problem as I see it with the incumbent support plan. Our value is in direct competition to their profit margin (as it is with all capitalists). So our money has to create enough profits for them to move beyond their current set and out into the places where the user base may or may not actually exist.

I have just recently finished setting up my godfather with all the equipment he needs to record his own podcast. He has the barest of knowledge on each piece. He is using dial-up as he has for nearly 9 years. This new requirement is pushing him into new and unfamiliar territory.

An internet with which he can see everything he normally would look at in an hour to mere minutes. I am pretty sure it scares him...

That is the only example I know of for a deeply permeating broadband requirement, young kids who "need it" for school and whatnot are a joke.
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DS, 12 Jan 2009 @ 4:58pm

"Just a few weeks ago, we warned that, while the thought of increasing broadband is a good idea, the details of any sort of "broadband stimulus" plan was important"

Silly rabbit, 'details' are secondary to most big gov't.
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Young Kid who "needs it", 12 Jan 2009 @ 5:18pm

Re: My XP
High speed broad band is not just for the internet. Take a look at Wii Speak and T-Moblie. Both companies offer a way to talk for free (per minute, broadband charges apply, plus a month fee for t-mobile($10)) to any where in the United States, and with Wii any where in the world. All of this only possible with broad band (at least 256k each way).

Why would anyone be afraid of how fast you can get somethign done? Why wait an hour to download 1 photo of your god child? Why not spend a minute? With broadband he could talk to you any time he wants with out long distance charges.

My xp with my 56yo inlaws proves you wrong. These are people who before the Wii and broadband wouldn't get anywhere near the internet. Now I find them surfing all the time for things. They enjoy it becuase they don't have to waste thier time waiting for things to happen.

It is people like unto your self that keeps affordable broadband out of the hand of the masses. You might as well be a White male in the early 1700's saying that since "Blacks" were inferior they did not need to know how to read becuase they would never understand.

The reason we need broadband is becuase humans are pack animals, and I can not thing of a better way to communicate over long distances than through the broadband where I can see and hear you and the only thing seemingly sperating us is a piece of plastic.
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thelosopher, 12 Jan 2009 @ 5:33pm

Re: Re: Why not put the cart after the horse
no contradiction. he's saying that the telcos need to prove they deserve the money in advance. we pay in advance they deliver in advance...get it!!!
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fat Tony, 12 Jan 2009 @ 6:05pm

Re: Re: My XP
I have no problem with network expansion...I am not sure I implied that either.

I think that deep penetration of PURE information of all kinds is critical to the expansion of humanity to a better society.
Better in some ways than others, but the outlying filth of the internet is an absolute necessity for freedom.

I absolutely want everyone to see the best and worst of the world. From genocide in afrika, to the reporting of sports events, to blogging, to "Ihate" sites.

There is no reason to fear the internet, unless you are too easy to trust that which your eyes see and your ears hear.

Your example for usage is perfect. I have already suggested that exact idea to him to replace his archaic copper phone line. His 40 year old electric fence causes interference...

Doing things faster doesn't make you better at handling things that take time. You have to appreciate someone who is willing to wait and work for what they want. When I know something is a limited resource I am more likely to spend it on the most efficient path to meet my goal.

That is the human principle: best results, least cost/effort

If your goal is money you employ those who have the greatest capacity to earn. Sometimes you don't know the best way though...so you employ lawyers, lobbyists, print-newpapers, smear artists... Whatever you can think of to make the greatest gain-cost ratio.
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Matt, 12 Jan 2009 @ 6:39pm

Re: And what did you expect?
Hey, he's better than McCain. Just not by a lot.
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Anonymous Coward, 12 Jan 2009 @ 6:52pm

Of course, they are going to want a slice of that pie!
As more people move to VoIP, how do you prevent canibalization of your circuit-switched phone business? Control and prioritize what goes through the pipes, and keep people dependent on wireline. This is a practice that has been in place for years. Remember all the troubles with DSL? So many times the answer was to use 56k and, while your at it, get a second line for only $29.99 a month. It really inferiorated me when the problem was a Balun installed at the switch.

Hopefully this Broadband thing will have a big net-neutrality clause attached to it. It would be nice to have reliable VoIP over broadband.
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Robert J Berger, 13 Jan 2009 @ 12:26am

Time for Re-Divestiture, not time to give them more money
We shouldn't be giving the Cable/Telcos money, we should be demanding they give our Rights of Way and Subscriber paid for infrastructure back to the Citizens. Its time to break them up and keep them broken up. But this time do it right. Break up the Telcos and now the Cablecos horizontally.

A public owned and regulate company that just does physical transport. Rights of way, conduit, utility poles, copper and fiber and local/regional meet points/central offices. The physical transport infrastructure can then be rented by commercial and non-commercial entities to deliver services to homes and offices as an open marketplace with open access to the physical plant.

The physical plant is paid for over long terms suitable for long term bonds. Usage fees based on this long term amortization would be low and reasonable (like a few dollars per month). Services like Internet, Video, VoIP etc would be offered in a competitive marketplace. The competitive marketplace would cover the short term amortization high tech stuff. The physical plant is mainly digging up roads, maintaining and stringing fiber. All low tech and long term amortizable.
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Anonymous Coward, 13 Jan 2009 @ 7:00am

"The government sees the advantage of broadband and naively starts an initiative to expand and improve broadband access."

I think you are the naive one if you think the govt. is naive about what its rules and regulations actually do and who they benefit.
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Jim Cox, 14 Jan 2009 @ 6:48am

Re: Time for Re-Divestiture, not time to give them more money
In many ways I have to agree with Robert's comments of breaking up the monopolies, and creating a public company (actually utility) to create the infrastructure necessary to get high speed access to as many people as possible.

My one concern is that the lobbyists for the major companies will fight any movement towards such a national or regional internet utility to the point it will never happen.

High speed internet access is no longer luxury! It is a necessity, especially if this country is to stay competitive in the global economy. That is what everyone involved from politicians, major corporations, and the general public needs to understand.

One of the first things that president Obama must must also challenge his administration and congress to come up with a comprehensive plan to provide high speed access to greater than 95% of the US population within three to five years, and have the framework for said plan ready in three months. Obama must then challenge the telecommunications and cable companies to work within this plan otherwise a national communications utility will be created to put in the necessary infrastructure to meet the goals of the plan. And yes, net neutrality must be included in such a plan.

While many people may be jaded with the way things work in Washington, they need to actively start pushing their representatives to move forward with an national IT stimulus plan, and they must keep pushing. Consider how much time people spent posting comments in reply to this original post. Couldn't the same amount of time be used to compose an email to ones Senators and Representatives? How about getting involved with the groups that are pushing for an improved IT infrastructure? If you don't believe a grassroots effort can accomplish much, just remember how much it helped Obama win the presidency.

I don't know how practical or possible all this is, and we can spend the next five years debating this, but if nothing is done, then the pooch is screwed, and we're the pooch.
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Jermski, 15 Jan 2009 @ 6:40am

Wireless Broadband
All this talk of cable and wireline is really a waste of time. 4G/Wimax is a much better investment in the long run. Installation is faster; the last mile is no longer the bottleneck; we dont have to pay local telcos and cable providers (though I'll have a cable backup as long as necessary)
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dan murphy, 4 Jun 2009 @ 8:21am

US Broadband Plan
I agree the ILECs are not the way to go. Instead I would introduce a plan where municipalities apply for grants and receive a matching grant to implement with local ILECs or CLECs based on their requirements and budgets. Increase competition, increase innovation, drive costs down - balance the playing field. National plan - local implementation based on merit. Forget about the technology and focus on the business/economic drivers to which the technology is a subservient.
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