NOTE: The following is cross-posted to Steve Stroh’s blog, BWIA.
Bruce Kushnick has written a new book, $200 Billion Broadband Scandal, that details a truly massive bait and switch campaign by the major US telephone companies. What the major US telephone companies promised in the buildup to the 1996 Telecommunications Reform Act was fiber to every home with symmetric 45 Mbps speeds, and a continuation of their historical open access model. They asked for, and got, rate increases to pay for the fiber upgrades. The work should have been completed by 2006… do you have your 45 Mbps symmetric fiber optic service with your choice of ISPs?
None of us do. Those few that do have fiber have 30 Mbps asymmetric for $200 or so per month, with no competitive choice of ISP services on that fiber. What broadband service most of us have from the phone company (those that haven’t defected to cable modem service) is at best 3 Mbps asymmetric, with a rapidly shrinking pool of choices of ISP services.
This "bait and switch" caused a ripple effect. While one can argue about the dimensions of that ripple effect, some effects are obvious – the cable companies only had to offer a modest increase speed increase above DSL to be competitive. It seems reasonable to think that cable modem speeds would be much higher in trying to compete with fiber… or the prices much lower. Companies installing fiber optic backhaul across the country went bankrupt because the promised demand, driven by Fiber To the Home, never materialized. Under the guise that "we need to have exclusive use of our fiber" the major US telephone companies fought a war of attrition that resulted in the overturning of competitive access to their copper infrastructure, and the likely death of most independent Broadband ISPs (that haven’t converted to wireless.) The US is now 16th in the world in Broadband Penetration, and will likely fall further down the list.
But what’s really galling is that we paid for the fiber – Kushnick names a figure of $2000 per household. Kushnick is damning in the detail; he has thoroughly done his research, digging into regulatory filings and testimony now almost a decade old.
Disclaimer – I have only skimmed a preview of the book, thus this is not a review. I am familiar with Kushnick’s premises for some years and I think he’s got the history down pat; I remember some of the "fiber promises" milestones from my readings at the time. To some extent I part company with Kushnick on what happens going forward. I don’t think that there’s any realistic possibility of getting the major US telephone companies to do anything like what they promised, and the money (collected from us) has been spent – on speculative investments overseas, on generous stockholder dividends, quietly ridding themselves of obsolete equipment resulting from poor technology choices, exorbitant executive salaries, etc.
I think that what needs to happen at this point is to build new,
independent Broadband infrastructure "around" the the largely obsolete
major US telephone companies’ infrastructure. I happen to think
Broadband Wireless Internet Access technology is the most
cost-effective and fastest way to do so.
That said, I applaud Kushnick for his dedication to laying open this sordid story. If there is to be reform, we first need to understand what happened, and Kushnick provides that for us.
$200 Billion Broadband Scandal
By Bruce Kushnick
406 pages, eBook, payment via PayPal
This article is Copyright © 2006 by Steve Stroh. Excerpts and links are expressly permitted (and encouraged.)