Chapel Hill Technology Advisory Committee

[Terri Buckner <tbuckner AT ibiblio.org>]

Free American broadband!
http://www.freepress.net/news/11902

It's time for Congress, the FCC and the White House to stop protecting 
the corporate dinosaurs and start exploring alternatives that will 
foster a genuine free market in high-speed Internet services.

From Salon, October 18, 2005
By S. Derek Turner

The following article is from Salon.com.

Next time you sit down to pay your cable-modem or DSL bill, consider 
this: Most Japanese consumers can get an Internet connection that’s 16 
times faster than the typical American DSL line for a mere $22 per month.

Across the globe, it’s the same story. In France, DSL service that is 10 
times faster than the typical United States connection; 100 TV channels 
and unlimited telephone service cost only $38 per month. In South Korea, 
super-fast connections are common for less than $30 per month. Places as 
diverse as Finland, Canada and Hong Kong all have much faster Internet 
connections at a lower cost than what is available here. In fact, since 
2001, the U.S. has slipped from fourth to 16th in the world in broadband 
use per capita. While other countries are taking advantage of the 
technological, business and education opportunities of the broadband 
era, America remains lost in transition.

How did this happen? Why has the U.S. fallen so far behind the rest of 
its economic peers? The answer is simple. These nations all have 
something the U.S. lacks: a national broadband policy, one that actively 
encourages competition among providers, leading to lower consumer prices 
and better service.

Instead, the U.S. has a handful of unelected and unaccountable corporate 
giants that control our vital telecommunications infrastructure. This 
has led not only to a digital divide between the U.S. and the rest of 
the advanced world but to one inside the U.S. itself. Currently, 
broadband services in America remain unavailable for many living in 
rural and poorer urban areas, and remain slow and expensive for those 
who do have access.

For instance, when farmers gathered at this year’s Iowa State Fair to 
discuss their policy concerns with U.S. Secretary of Agriculture Mike 
Johanns, the topic on the minds of many was broadband. And for good 
reason. Twenty-five percent of Iowa’s rural communities have no access 
to high-speed Internet service, and over half of the remaining rural 
communities are serviced by only one provider. Those lucky enough to 
live in areas served by Iowa Telecom can pay as much as $170 per month 
for a DSL line.

President Bush has called for “universal, affordable access to broadband 
technology by the year 2007,” and Federal Communications Commission 
chairman Kevin Martin recently declared broadband deployment to be his 
“highest priority.” Martin recently took to the pages of the Wall Street 
Journal to tout “the dramatic growth in broadband services.” In his 
editorial he boasts of “fierce competition” among broadband providers 
and tells us we’re “well on our way to accomplishing the President’s goal.”

The facts tell a different story. Today, major cable companies and DSL 
providers control almost 98 percent of the residential and 
small-business broadband market. This trend is the direct result of FCC 
policies that fail to encourage real competition among broadband 
providers, giving free rein over the market to the cable and DSL giants. 
The corporate giants are also vigorously fighting to stop cities and 
towns from building “Community Internet” systems — affordable, 
high-speed broadband services funded in part by community groups and 
municipalities — even in places where the cable and DSL companies 
themselves don’t offer service. Yet, like rural electrification projects 
in the early 20th century, today’s Community Internet projects offer the 
best hope of achieving universal broadband service.

Like so many other challenges faced by the Bush administration, the 
response to the growing digital divide has been to redefine success and 
prematurely declare victory.

In the 1996 Telecommunications Act, Congress directed the FCC to oversee 
the timely deployment of Internet services that “enable users to 
originate and receive high quality voice, data, graphics, and video 
telecommunications.” Currently, this requirement translates into an 
Internet connection with typical download and upload speeds between 10 
Mbps and 20 Mbps (megabits, or million bits, per second).

But the FCC defines a “high-speed” connection as one capable of 
transmitting data at a rate of 200 kbps (kilobits, or a thousand bits, 
per second) in one direction — about four times the speed of dial-up. At 
this slow speed, it is barely possible to receive low-quality streaming 
video, and is completely impractical to originate high-quality video.

The typical download speed of a DSL connection in the U.S. is 1.5 Mbps, 
while the average cable-modem connection downloads at 3 Mbps. These 
connections are adequate for streaming low- to standard-quality video, 
but are far too slow for applications like high-definition video. 
Furthermore, they pale in comparison to what is being offered in Japan, 
where consumers can download high-definition movies in less than five 
minutes.

Setting the high-speed standard so low allows Martin and the FCC to 
portray the increase in mediocre connections as a sign of progress. 
Other countries define broadband in a more honest way. For example, 
Canada has declared the minimum standard for broadband to be 1.5 Mbps in 
both directions — more than seven times faster than what the FCC 
considers to be “advanced service.”

Defenders of the status quo like Martin argue that since the U.S. spans 
a huge geographical area, it is wrong for us to expect the level of 
high-speed broadband service that Western Europe or Asia enjoy. But this 
ignores the success of sparsely populated nations like Canada, and 
cannot explain why densely populated cities such as San Francisco do not 
have access to the same types of high-speed connections found in Seoul, 
South Korea, or Tokyo.

Martin’s failure to confront the broadband problem becomes painfully 
obvious when you consider how his commission measures broadband 
availability and adoption. Instead of counting the number of subscribers 
in a particular area, the FCC considers an entire ZIP code as “covered” 
if at least one person living in that area has a broadband connection. 
This allows the FCC to make misleading boasts about how broadband 
coverage reaches 99 percent of the country.

Consider the case of Loudoun County, Va., a high-tech community just 
outside of Washington that’s home to Internet giant America Online. The 
FCC claims there are more than six broadband providers, on average, 
within each Loudoun County ZIP code. But a recent survey revealed that 
one-third of the county’s households are unable to purchase any 
broadband service.

Nationwide, the reality is only one in three urban and suburban American 
adults have broadband at home, and only one in six adults living in 
rural areas do. Furthermore, the choice of broadband providers available 
to these consumers is paltry. The FCC’s own data show that nearly 20 
percent of all Americans report having no cable or DSL service providers 
in their neighborhood, and another 28 percent only had access to one 
provider. In President Bush’s home state of Texas, for example, 93 
counties have only one broadband provider and 16 counties offer no 
service at all.

Most of the countries surpassing the U.S. in broadband speed and 
availability have “open access” rules governing both their cable and DSL 
industries. Open access rules require the owner of a network to allow 
its competitors access to the network at wholesale prices. These rules 
usually apply to networks that are “natural monopolies” like telephone 
systems and railroads, and in order to ensure innovation among 
competitors, these provisions usually do not apply to newly built 
infrastructure. Ultimately, open access benefits consumers by creating 
competition that leads to lower prices and new innovative services. You 
can credit open access with the drop in long-distance rates seen in the 
1990s.

Nations like Canada long ago mandated that the local cable and telephone 
monopolies provide competing Internet Service Providers (ISPs) access to 
their networks at wholesale cost. However, here in the U.S., the FCC — 
backed by the Supreme Court in the Brand-X case — took the bizarre step 
of exempting cable Internet providers from all open access rules, while 
applying them in a limited fashion to the incumbent DSL companies.

The Brand-X ruling affirmed an FCC decision to classify cable modem 
service as an “information service” and not a “telecommunications 
service.” Under the 1996 Telecommunications Act, information service 
providers are not subject to the open access regulations that are 
applied to telecommunications providers, such as DSL companies. To 
assert that cable-modem services have no telecommunications component is 
simply bizarre. Indeed, Justice Antonin Scalia said in his dissent, 
“When all is said and done, after all the regulatory cant has been 
translated, and the smoke of regulatory expertise has blown away, it 
remains perfectly clear that someone who sells cable-modem service is 
‘offering’ telecommunications.”

The Supreme Court’s decision in effect ensures that consumers have no 
choice among cable-modem providers. This is because almost all 
municipalities grant a single cable provider the right-of-way to lay 
cable wire, in exchange for a portion of its local revenues — usually 5 
percent.

While almost no competition exists within local cable Internet markets, 
consumers in some larger cities have been able to choose among several 
DSL providers. (Although thanks to other FCC decisions, customers often 
must purchase a phone line in addition to their DSL service.)

But the FCC recently decided to cut off this last frontier of 
competition by ending most of the remaining open access provisions 
governing the DSL industry. Bush’s FCC believes that open access is 
restricting innovation in broadband services.

However, the FCC’s own data indicates that open access in the DSL sector 
has contributed to growth in DSL services and the weakening of the cable 
companies’ monopoly power over the broadband market. It appears that the 
FCC is acting under pressure from telecom companies, which are demanding 
a “level playing field” in the wake of Brand-X. This move will 
permanently entrench a cable-DSL duopoly over the broadband market, 
ensuring higher prices and lousy service for consumers.

Now, some may see the recent “price wars” between such popular providers 
as Comcast and SBC as a signal that the market is functioning properly. 
Closer examination of introductory offers reveals them to be nothing 
more than bait-and-switch gimmicks.

SBC’s $14.95 per month offer for its “DSL-express” service — rolled out 
with much fanfare earlier this year — is merely an introductory rate, 
which requires signing a long-term contract with an expensive 
termination penalty. Furthermore, subscribers must be new SBC DSL 
customers, and must purchase the DSL along with the additional cost of 
SBC telephone service. The connection itself is extremely slow by most 
standards of “broadband,” as it only offers a maximum upload speed of 
384 kbps. When spread out over three years, the true cost of the SBC 
offer is about $25 per month, not including the cost of the phone line, 
taxes and other fees. When these additional charges are included, the 
total cost averages out to well over $40 per month.

Rick Lindner, chief financial officer of SBC, told investors the offer 
was simply a way to lure customers away from cable companies and sell 
them other SBC products. Lindner explained that bundling low-cost DSL 
with phone service “suddenly takes you from … being a $15 product to 
being a $65 or a $70 customer.” He joked: “We’re out to pillage and 
plunder the industry, that’s our objective.”

The most promising alternative to the cable-DSL duopoly is Community 
Internet — universal, affordable high-speed broadband service provided 
by cities and towns or community groups. Hundreds of places — from 
Philadelphia and San Francisco to Chaska, Minn., and Granbury, Texas — 
are now viewing broadband as a public service, no different from water, 
gas or electricity. They are building Community Internet and municipal 
broadband projects to bring high-speed Internet to areas overcharged or 
underserved by the cable and DSL companies.

Community Internet projects come in many different forms, utilizing 
different technologies and various business models. Some projects are 
built and operated exclusively by a municipality, while many others 
operate under public-private partnership agreements. Although a few 
places receive broadband over power lines, or fiber laid directly to 
homes, the majority of Community Internet projects utilize “Wi-Fi” 
technology to create “hot-spot” zones of broadband coverage or, in many 
cases, build a “mesh network” to blanket an entire city. San Francisco 
Mayor Gavin Newsom is currently taking bids to build just such a network 
in his city, with Google offering to provide the service for free.

The story of tiny Scottsburg, Ind., illustrates how Community Internet 
can provide needed services that keep jobs and resources in the local 
economy. In 2002, Scottsburg Mayor Bill Graham was confronted with the 
possibility of two local businesses leaving town because his city had no 
broadband service. One of the companies nearly lost a key defense 
contract because its dial-up Internet connection repeatedly failed as it 
was trying to send in a bid.

The mayor contacted cable and DSL providers, who told him outright that 
providing broadband in his town just didn’t make business sense. As 
Graham told the PBS program “Now”: “We were in a crisis mode. We were 
gonna lose companies, gonna lose jobs. We just had to do something, you 
know. How many jobs can a small community lose? None.”

A committee formed by the city to find a viable solution to this problem 
quickly concluded that the answer was to construct a municipal wireless 
network. The city created the Citizens Communication Corporation, and 
within four months installed wireless transmitters on water and electric 
towers, producing a network that reaches over 90 percent of the county’s 
residents.

After the Scottsburg network was up and running, several DSL companies 
(the very same ones that had refused to service Scottsburg) went to the 
Indiana statehouse to lobby in support of a bill that would have 
prevented any other towns in the state from creating their own Community 
Internet systems. Fortunately, the powerful testimony of Mayor Graham 
convinced legislators to kill the SBC-backed bill.

However, across the nation, the cable and telecom companies, armed with 
powerful lobbyists and coin-operated “experts” are quietly working the 
halls of state legislatures and Congress in a concerted effort to kill 
off Community Internet. Over the past several years, 14 states enacted 
laws that ban or place limits on municipalities from building Community 
Internet projects.

Over the summer, Rep. Pete Sessions (R-Texas) — a former SBC executive — 
introduced an anti-Community Internet bill with the Orwellian title 
“Preserving Innovation in Telecom Act of 2005.” The legislation would 
prevent any city in the country from providing Internet access if a 
private entity offers service nearby — even if the private company 
serves as little as 10 percent of the residents.

Community Internet opponents routinely accuse municipal broadband 
providers of being an unfairly advantaged competitor and offering an 
inferior service doomed to fail and bankrupt taxpayers. But the 
allegation that municipal broadband providers hold an unfair advantage 
because they are the beneficiaries of special tax and legal treatments 
doesn’t hold water.

For decades, the incumbent cable and Bell companies have enjoyed all the 
benefits of a protected monopoly status, granted to them by the FCC and 
by local municipalities. And over the past several years, these 
companies have received hundreds of millions of taxpayer dollars to 
subsidize their broadband deployment efforts. The truth is that 
Community Internet projects pay taxes just like any other competitor. In 
fact, a study by the Florida Municipal Energy Association showed that 
private incumbent providers pay fewer taxes than municipal systems and 
receive more state and federal subsidies.

In addition to providing broadband to underserved areas, Community 
Internet projects often entice other competitors into the market. The 
same Florida study found that municipal construction of communication 
networks expanded “the number of private firms serving the same market 
by more than 60 percent.”

Yet the big cable and telecom companies continue to spread 
misinformation. A “fact sheet” distributed to journalists earlier this 
year by Verizon, detailing supposed failures of Community Internet 
projects, was found to be full of errors and mistakes, relying primarily 
on a 7-year-old discredited study of municipal cable TV networks.

Notably, municipal networks are arising because of the failures of the 
incumbent providers. Without them, the U.S. will continue to fall behind 
the rest of the world in broadband technology. Nations such as Canada 
and South Korea long ago realized the importance of public broadband, 
and incorporated municipal systems into their overall broadband strategies.

There are signs, though, that the tide may be turning in the U.S. 
against the cable and Bell companies. This year, spurred in part by 
success stories in places like Scottsburg, anti-municipal broadband 
bills were defeated in seven states and delayed in two others. Sens. 
John McCain, R-Ariz., and Frank Lautenberg, D-N.J., have introduced a 
bill that would allow municipalities to provide Internet service and 
overturn existing state anti-municipal broadband laws. The bills are 
expected to receive further attention this fall.

But Congress needs to do more than just allow Community Internet 
projects. It needs to free up valuable “spectrum” for these wireless 
networks to operate on. Currently, most Wi-Fi devices operate on an 
unlicensed basis in the “2.4 GHz” region of the spectrum — a crowded 
area occupied by hundreds of different types of consumer devices such as 
microwave ovens and cordless phones. The physical properties of this end 
of the spectrum prevent wireless signals from penetrating obstacles and 
terrain. This means citywide networks using the 2.4 GHz band will 
require large amounts of antennae, raising the overall price of deployment.

If wireless networks were able to operate on lower-frequency spectrum — 
such as the region used by over-the-air television stations — the 
infrastructure costs would be much lower, potentially allowing Community 
Internet networks to offer extremely fast connections for as little as 
$10 per month.

In most areas, even in large markets like Los Angeles, large portions of 
the television spectrum go unused. (Just attach an antenna to your TV to 
see how many channels it picks up — odds are it will be less than a 
dozen, and most of those will barely be visible.) Congress should allow 
low-power wireless devices to operate on these valuable but unused channels.

Similarly, Congress could set aside a portion of the spectrum coming 
back to the government from the broadcasters, as part of the digital 
television transition. The current plan is to auction off this valuable 
resource to the cellphone companies to cover the cost of the war and tax 
cuts. But it’s hard to imagine a better use of the public airwaves than 
opening up the spectrum for everyone to use.

But the answer doesn’t lie solely in government either. What is needed 
is a truly competitive market, with many providers engaging in 
innovation that ultimately benefits all consumers. Government can play a 
role in making the market more competitive — both by deploying Community 
Internet projects and by requiring the cable and telephone companies to 
provide open access to their networks.

American innovation offers a solution to our broadband problem. It’s 
time for Congress, the FCC and the White House to stop protecting the 
corporate dinosaurs and start exploring alternatives that will foster a 
genuine free market in high-speed Internet services.

This article is from Salon. If you found it informative and valuable, we 
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