> There is a simple solution that would put an end to all this BS, and this is to separate the last mile from the middle mile the same way that the old AT&T was broken up to split local from long distance service
It would be extremely challenging, legally. If we're talking about cable rather than copper, the last mile was built by private companies with private money. BT, in contrast, started out as a government-owned corporation, and when it was privatized, the terms of the separation were written into the prospectus.
> (This is how they do it in the UK and UK people are very happy with their internet service.)
Yet U.K. internet really isn't faster than U.S. internet in areas with comparable density. According to Ookla's Net Index, average broadband speeds in say Pennsylvania, a state with less than half the population density of the U.K. is about the same as in the U.K. (28.3 mbps versus 28.6 mbps). Akamai's data shows the U.S. ahead of the U.K. in average connection speeds.
Sure they can. It was done in the 1990's in the US. Regional Bell Operating Companies were forced to allow other telcos to provision service on their infrastructure. At one point, I had home phone, long distance, isdn and mobile on one bill from Sprint.
That infrastructure was all built while AT&T was a government-sanctioned monopoly with regulated rates and the whole deal. The vast majority of the cable infrastructure was built with private money, post-deregulation.
In Upstate NY, you can buy cable services from Time Warner, Earthlink or a couple of smaller carriers. In the past, this was a good deal, now the 3rd parties don't seem to have access to higher speed services.
> If we're talking about cable rather than copper, the last mile was built by private companies with private money.
A significant amount of this infrastructure was built with government subsidies and stimulus money by local monopolies with no competition.
> Yet U.K. internet really isn't faster than U.S. internet in areas with comparable density.
It's not so much about denser urban areas so much as the typical case. I still know people in the US who can barely get 3 megabits on their connections no matter what speed they pay for, and they live in proper cities and not tiny communities.
I tried to get a proper example, but Verizon's website[1] is somewhat inscrutable, and tells me that my friend in Seattle can't get DSL service. Still, their DSL plans they list go 'up to' 15 megabits down and 1 megabit up; in Vancouver, they go up to 50/10, but my plan is 25/5 for $65/mo on its own (no contract). I would be surprised to see that in the US.
> A significant amount of this infrastructure was built with government subsidies and stimulus money by local monopolies with no competition.
No it wasn't, if we're talking about cable and not copper. The cable companies industry is not the phone industry.[1] Almost all the existing cable infrastructure was built after deregulation of the industry in 1992, in which granting exclusive cable franchises was made illegal under federal law. Indeed, almost all municipalities use their cable franchises as a revenue source: imposing a franchise tax as well extracting lump-sum payments to support internet service for municipal buildings, public access television, etc.
[1] And even in the phone industry, the subsidies overwhelmingly go to supporting service in high-cost rural areas, where no profit-minded company would otherwise bother to build infrastructure.
> It would be extremely challenging, legally. If we're talking about cable rather than copper, the last mile was built by private companies with private money.
What about the government claiming the cable under eminent domain? You can pay the companies "market rate", and when you're done you can lease the lines to anyone, including the original company?
Comcast is buying slightly over 10% of all US broadband subscribers for $45B, so let's say the entire US broadband infrastructure is worth over $400B. That's some serious eminent domain.
True, but they're buying a business. A purchase that's strictly infrastructure would rule out the business relationships and contracts and would be significantly cheaper, especially given that the existing customers are free to remain customers (although who's to say what they'll do when they suddenly are exposed to the competition...)
There where multi-billion dollar subsidies to build the last mile. More importantly, there is no legal protection from a monopoly being broken up. And local ISP's clearly qualify as monopoly's.
When did the cable companies get multi-billion subsidies to build the last mile? And the local ISP's are not monopolies: almost everywhere the cable companies are in competition with wireless, DSL, and satellite. I know there's a meme on HN that "wireless isn't real competition" but the fact is that wireless is where the demand is right now. Tons of people have no wireline service but everyone has wireless.
The cable companies last mile generally runs over copper so you need to look into the initial subsidies when it was first laid down, the most common being a local monopoly.
> The cable companies last mile generally runs over copper
I use "copper" in this context to refer to POTS lines, not coaxial lines (sorry, it's jargon-y). The two were built under very different regimes, and it's not productive to conflate them.
> you need to look into the initial subsidies when it was first laid down, the most common being a local monopoly.
In general, a "subsidy" is something that yields a return to the company or industry above the market return. A local monopoly is not necessarily, and usually isn't, a subsidy. The monopoly "carrot" is combined with a yoke: universal service requirements and regulated rates. Local utility monopolies generally earn lower returns than unregulated companies. Indeed, it's the height of irony that you call local monopolies a "subsidy" then cite Kushnick further down, whose whole shtick is that deregulation (i.e. elimination of the local monopolies) was a huge "subsidy" to the telecom companies.
Also, the cable industry was deregulated in 1992. DOCSIS 1.0 wasn't released until 1997. I doubt much of the infrastructure that was built under exclusive franchises is still there, because the mid/late-1990's involved widespread network upgrades to accommodate cable internet. Whatever is still there is more like the "last 100 feet" not the "last mile."
The BTOP is one of the rare federal telecom programs that's actually a subsidy, and very little of that money has been handed yet. The vast majority of the "subsidies" for broadband are actually transfer payments from the Universal Service Fund. This amounts to billions per year, but it's funded by a tax on the telecom industry. It's as if you taxed Macbook Pro owners 15% and distributed that money to help poor people buy Macbook Airs. Nobody would call that a "subsidy" to Apple.
Your last article is Kushnick's usual Glenn Beck-esque "connect the dots" bullshit. He's stuck in 1970 and think it should be the government's job to set prices for telecom services, and tries to count any increase in price as a "subsidy." Does it matter what a cable company calls its price hike? Is Uber's $1 "safe ride fee" a "subsidy?" It's absolutely inane to call an increase in the price of a product a "subsidy." Subsidies necessarily involve some sort of external transfer, not transfers within the contractual privity of a buyer and seller.
The monopoly bit is a subsidy, sure there are strings attached but they could also be attached to using government land like roads. Afterall good luck building a network without crossing a road.
I don't agree with Kushnick, my point is if a company advertised bubblegum for 50c and charged 90c when you got to the store it's illegal false advertizing. The telecom industry is vary much in favor of being able to do the same kind of price manipulation.
PS: Subsidizing undeserved or low population areas is paying for the last mile, it's not like they don't get to charge the new customers.
> The monopoly bit is a subsidy, sure there are strings attached but they could also be attached to using government land like roads.
The rate regulation and universal service requirement more than outweigh the advantage from the monopoly. At the end of the day, regulated local monopolies make lower returns than unregulated companies.
> PS: Subsidizing undeserved or low population areas is paying for the last mile, it's not like they don't get to charge the new customers.
That money doesn't come out of the government's pocket. It comes from a tax on the company: http://en.wikipedia.org/wiki/Universal_Service_Fund#Backgrou... ("As of the first quarter of 2013, the USF fee, equals 16.1 percent of a telecom company's interstate end-user revenues. As of the second quarter of 2013, the USF fee is 15.5 percent.") Second, the telecom company is not allowed to charge the new customers the cost of actually providing the service.
For most people, wireless is a superior product. I don't know if you have noticed, but the 1990's futuristic ideal of a big fat desktop connected to a fat fiber pipe isn't what people actually ended up wanting. They want a thin light tablet connected to wireless internet they can take on the go. Demand for that "inferior technology" is increasing much faster than demand for wireline technology.
The average smartphone bill is like $160 a month, and charges $10 a GB once you go beyond somewhere around 250MB to 10GB.
Contrast to $70-$80 a month for fiber optic that, if capped, is somewhere around 300 GB.
Verizon and AT&T won't give us optical fiber not because it is "too expensive" but because it is too cheap.
If we had universal optic fiber we could have good wireless coverage where everybody lives and works for 1/10 the OPEX of expensive and high latency LTE. Legacy LTE technology is great if you want to play angry birds when you crash your car, but other than that it is a horrible way to provision internet bandwidth.
The fastest way I've seen people under 20 end up with a 300 credit score is when they think they are saving money with a "framily" plan. Then things go bad, then they have to pay cancellation fees, pay back handset subsidies and pretty soon it's worse than the average drug deal gone bad.
And even more people buy toilet paper. And yet toilet paper is also not real competition for cable broadband. Counting customers doesn't establish real competition. I have both cable broadband and wireless. Neither is a meaningful substitute for the other. I can't watch movies over the wireless and I can't take my cable modem out with me, so I'm not sure what you're getting at by pointing out that wireless is growing faster.
It would be extremely challenging, legally. If we're talking about cable rather than copper, the last mile was built by private companies with private money. BT, in contrast, started out as a government-owned corporation, and when it was privatized, the terms of the separation were written into the prospectus.
> (This is how they do it in the UK and UK people are very happy with their internet service.)
Yet U.K. internet really isn't faster than U.S. internet in areas with comparable density. According to Ookla's Net Index, average broadband speeds in say Pennsylvania, a state with less than half the population density of the U.K. is about the same as in the U.K. (28.3 mbps versus 28.6 mbps). Akamai's data shows the U.S. ahead of the U.K. in average connection speeds.