There’s two ways to look at the story that many of the country’s biggest ISPs have refused government stimulus money for broadband infrastructure investment. One, the ISPs patently don’t need the money, and are more than capable of delivering broadband to as many Americans as possible with their own capital. Two, the ISPs could use the money, but they’d prefer not to accept it lest they be beholden to all sorts of government-imposed restrictions, one of which relates to net neutrality.
Let’s take the first one, that the ISPs, including Comcast, AT&T, and Verizon, have a sufficient amount of capital to invest and build the country’s broadband infrastructure. (I write this using Cablevision’s Optimum Online Ultra, which is pretty much unnecessarily fast.) Since they have the capital, they don’t need to accept any government stimulus money, unlike, say, GM, which was about two minutes away from bursting into flames had it not received sweet, sweet government loans. That really is a Perfect World, Kumbaya scenario, I think. If the ISPs are so flush with cash, how come people complain on a daily basis about how rubbish Comcast is; how come they have to impose bandwidth restrictions on connections? If their networks are so robust—made robust, mind you, with all that money they supposedly have lying around—then they shouldn’t have to worry about Timmy High School Student streaming tons of video all day long.
Hence, the second way to look at this, that the ISPs damn well could use the money to invest in this country’s broadband infrastructure. No one expects rural Georgia to be zipping along the Internet at South Korean or Swedish-esque speeds, but surely the days of dealing with “slow Internet” should be behind us. This has to do with net neutrality. In taking the broadband stimulus money, the ISPs would have to agree not to “favor any lawful Internet applications and content over others.” So if AT&T, for example, strikes a deal with Video Site A instead of Video Site B, AT&T can’t turn around and give Video Site A preferred access to its network. That’s the crux of net neutrality, ISPs want to cut deals with their preferred partners at the expense of everyone else. It hampers innovation—Develop a cool Web site? Better cough up the bucks, otherwise people accessing it will be bitching about the slow speeds that’s entirely not your fault!—and rewards the smoke-filled-room shenanigans that have been a detriment to consumers for years.
Of course, no ISP will admit, on the record, to refusing stimulus money because they’re afraid of all the restrictions and unwanted attention.
Not that I’d worry about it: as we all know, the Market solves every single problem!
Cablevision’s Optimum is ‘unnecessarily fast’?? I’m not so sure about that one. You mean the same guys that just had an outtage in Oyster Bay? Yeah, I think you’re talking about those guys, the same ones that bungled the digital transition too.
http://finance.yahoo.com/q/bs?s=CMCSA
http://finance.yahoo.com/q/bs?s=T
1) The ISP’s are not flush with cash, just look at those balance sheets and tell me where all of it is at.
2) AT&T has ~170B in debt, Comcast has ~70B in debt. Where the money? A lot of it is tied up in things they can’t liquidate easily, like goodwill… 71B in AT&T and 15B at Comcast. It’s not like they’re sitting around on 50B cash… If you want to see a company flush with cash, look at AAPL.
“but surely the days of dealing with “slow Internet” should be behind us. ”
For a moment, let’s think about it from the company’s perspective… they have seen rapidly growing demand for data consumption. Is it not possible that they’ve actually been upgrading their networks, but people are now going through more and more data than they can provide? iPhone’s can load full webpages, download albums, download movies, stream videos from Youtube, play Pandora, check email every 15 minutes, etc. Surely, we can agree demand is increasing.
3) If there is such a BIG opportunity to take government money and create a business to serve consumers, why don’t you, Nicholas, go create this business? You want to start out with a few billion in debt that you don’t know how to pay off in 10 years when it’s due because you when to areas with just a handful of customers?
4) “as we all know, the Market solves every single problem!”
It’s not a perfect solution, but it’s a lot damn better than anything we’ve seen in past history. You decide – rule of man or rule of law?
I know that the recession has made times hard for everyone, but we can’t forget what even allowed us to see our standard of living increase. What made hundreds of medicines down to the cost of pennies per day at WalMart? If allergy medicine costed hundreds of dollars per month, I’d be broke.
Leaving things to the market isn’t a perfect solution, but it’s the best solution we’ve seen yet. Do you let a kid fall over learning to ride his bike, or do you leave the training wheels on forever? He’s going to fall over a few times, and maybe someone somehow breaks their foot or nose learning, but do we hold everyone back to prevent some thing like that happening?
Last point – If a person has a productive time in his life of 45 years, so age 20 till 65, and he earns 50k/year on average, that’s about $2.25M. Let’s say we put $4B into this to bring broadband to places not normally served, we can only repay $2B of it. That means $2B is wasted, equating to almost the lives of almost 900 people, or about 40,000 man years. In a sense, we took 40,000 years of labor, and had them build ditches, only to fill them back up.
Closing – I’m not convinced that we should complain about the ISP’s. If it’s such a big issue, the money is out there, and we think it can be solved, why force someone to take the money? Shouldn’t we be creating this business ourselves? Hell, it’s an opportunity others aren’t picking up on, should be a nice way to free yourself of a day job.
Yes optimum might be fast but george is right here…it’s gotta be CONSISTENT. Anyway Nick’s point in this article is well taken…for reasons passing understanding, cablevision and the rest of the cable mega-giants all saw upticks in their stock prices. I guess that’s what comes from charging the crap out of your customers for whatever tiny detail you can find.
Oh, come on Ankit.
Just because youre not going out there and founding 10 ISP’s, does not mean that we cant complain about shitty ISP’s.
I pay for the service, I want a service that does not stutter every 30 fucking seconds.
To point 2:
Demand is increasing, yes, but its their job to make things work.
Im not saying “Oops, not my fault. Live with it.” in my job.
I would be fired the next moment.
The ISP’s deserve the same treatment as everybody.
1) You can complain about bad service, no issue there, but articles like this that blame it on the ISP’s not wanting to accept net neutrality isn’t the way. If the issue is bad service, let’s address that.
2) What if they wanted to raise your rates to continue providing this service, and in the proper form? You know, if you really care, you can get a business connection that comes with an SLA.
3) Even if you personally do not want to start 10 ISP’s, with $4B in government loans out there, someone else will. $4B is quite the chunk of change, even a sliver of that would get an ISP off the ground very quickly.
This is an important issue and it’s good to see that the new Chairman has moved to put Net Neutrality on the front burner of communications policy. His vision of an open Internet that preserves the “freedom to innovate without permission” is one that our organization, the Center for Democracy & Technology, shares; it’s an idea believe all Internet users and innovators should vigorously support. The move to expand the basic Internet principles the agency laid out in 2005 by to include nondiscrimination and transparency addressed two areas where we thought the original principles fell short.
Ideally, the launch of FCC proceedings would prompt Congress to take up the matter too. CDT has long said that FCC activity on Internet neutrality would benefit from clear congressional guidance, authorization, and limits, so that the FCC’s task and regulatory authority are not open-ended. You can read more about our thoughts on this by looking at our more inclusive comments we submitted to the FCC on its overall Broadband Plan. http://www.cdt.org/speech/20090608_broadband_comments.pdf