7 ms·

Ensuring universal service is something that governments try to do for things considered "essential": electricity, water, postal service, and broadband Internet

by qq66 12y ago

Ensuring universal service is something that governments try to do for things considered "essential": electricity, water, postal service, and broadband Internet. The reason that Verizon signs contracts to serve all of a city like Wilmington, DE is that there are enough households who can afford it to make it worth their while. If Google comes and picks off the highest-value customers, the mix of remaining customers may not be worth serving from Verizon's perspective, and they may exit the market. (And even if Google is blocked by municipal governments, alternatives like WiMAX and its successors are much harder to block). I don't think there's an easy solution to this problem. If you just let the market do its thing, then fewer people will have access to Internet overall. The tradeoff isn't easy.

jessriedel 12y ago
There is an easy econ 101 answer response. If you're really trying to help the poor at the (presumably managable) expense of everyone else, then subsidize the subscriptions of the poor households by explicitly taxing. This dramatically reduces market distortions and makes clear exactly what's happening. Putting up rules that require the rich to indirectly subsidize the poor in the way being described (making the tax invisible) predictably leads to an awful situation. People often reply "this isn't politically feasible", but that's giving up the game. If the opaque, inefficient, and difficult-to-measure strategy is politically feasible but the transparent one is not, that's a good sign it's a bad choice.
- cam_l 12y ago
  Yep. Though subsidising subscriptions is a pretty non transparent way of tendering for access. If you are in the business of creating lots of little monopolies to achieve universal access, wouldn't it be more transparent to just create one big monopoly? We tried this in oz. A gov. built backbone to be sold off (the naturally competitive part), with a gov. built and maintained 'fibre to the home' access (the natural monopoly part). Fox / News waged a months long campaign to have them booted out of office, in which they explicitly and repeatedly called the gov. nazi's, and outrageously lied about the associated costs for both the gov. and opposition broadband systems. Now we have a system which locks in contracts for the backbone, and rents copper infrastructure for the next 50 years for access. If you want fibre access, you have to pay for it to be hooked up at a prohibitively large cost. We know we can deliver access to everyone in oz through gov. for close to the price of delivering access to a privileged few through market monopolies. At a certain point, you have to realise this isn't about bad political choice, but a deliberate and sustained attempt to lock in privilege for the wealthy at the expense of everyone else. This is the real market distortion.
  - brucefancher 12y ago
    Government can barely deliver the mail and you're going to offer broadband competitively?
- deleted 12y ago
  [deleted]
- rwl 12y ago
  > If you're really trying to help the poor at the (presumably managable) expense of everyone else, then subsidize the subscriptions of the poor households by explicitly taxing. Isn't this exactly what local governments are doing? It's just that the tax falls on the (shareholders of) broadband companies, who are presumably not, for the most part, local residents. The reason this is more politically feasible is not that it isn't a tax, but that the tax is not being levied on voters. Or does the name matter that much?
  - nardi 12y ago
    The problem is that taxing entrants into the cable market creates a very high barrier to entry. The tax is not being levied directly on voters, but indirectly, by creating a monopoly that provides poor service, when they could instead have competition providing great service.
    - rwl 12y ago
      > The tax is not being levied directly on voters, but indirectly, by creating a monopoly that provides poor service, when they could instead have competition providing great service. But isn't the point here precisely that without the tax or other barriers to entry, "they" would not have great service? Some might -- but it seems likely that far fewer would get it than with build-out requirements and so on in place. I think the government has an obligation to avoid leaving those people behind in this case.
  - jessriedel 12y ago
    Well, yes and no. An explicit tax on the company by the local government would still be better than a build-out requirement, since this would at least be transparent. But even if you want to transfer money from someone to the poor, and (perhaps unethically) you want to take it from someone who's not a voter, it still makes no sense to pick on this particular company. Why not tax any of the other non-voting companies that service a locality? Say, the tax on coca-cola?
    - rwl 12y ago
- sergiosgc 12y ago
  Explicitly taxing and subsidizing involves the kind of economy planning you don't want in a free market. Plus, it's a permanent fix. It's much easier for the government to build the fiber infrastructure, lease it to operators in the short term, possibly sell it or spin it off in the medium term. Just give the free market a bump to move it out of a local maximum.
magila 12y ago
Putting broadband internet on the same level as electricity and water seems absurd to me. By far the most common use cases for broadband are streaming video, gaming/DLC, and piracy. Is there really a point where it becomes reasonable to consider Netflix, Xbox live, and The Pirate Bay essential services?
- qq66 12y ago
  No, but I would argue that regular internet is approaching an essential service. Nobody needs FiOS but lots of people need access to email/web browser/etc.
- imgabe 12y ago
  "Most common use cases" by volume of traffic maybe, but Internet is increasingly necessary to pay bills, correspond with customer service for practically any company, communicate with your child's teacher at school, renew your driver's license, and practically any other mundane task. It's not that there aren't offline alternatives for these, but they require maintaining an expensive infrastructure of buildings and people. It's going to be cheaper for everyone in the long run if we can move everybody to doing things over the Internet.
  - deleted 12y ago
    [deleted]
  - magila 12y ago
    None of those require broadband (2 Mb or greater according to the FCC, IIRC) though. We're talking about fiber connections in the hundred to thousand megabit range here. Nobody is talking about cutting poorer neighborhoods off from the internet completely.
    - mschuster91 12y ago
      It's either 56k or crappy DSL (2M) for these 'hoods, which equals a "cut off" these days in which everyone and their mother has a landing page with 2MB+ footprint.
rayiner 12y ago
I think wireless obviates the universal access angle for wired broadband. Its already how most poor people access the internet. They very often don't have personal computers.
- cam_l 12y ago
  Wireless, at present anyway, has a massive disparity against fibre with regard to bandwidth. Or to put you comment another way, 'the poor can't afford computers or good internet access, so therefore they don't need them'.
  - rayiner 12y ago
    Yes, but the bandwidth is sufficient to access job applications, educational materials, etc. Heck, right now, I don't have wired internet at home, just my cell phone. I don't think the poor need fiber for Netflix, torrents, etc.
    - cam_l 12y ago
      (LTE I am guessing) But absolutely the bandwidth is sufficient to live in the present.. or at least the recent past. It is sufficient to access the services that poor people need because they are poor. Let them eat bread I guess..
      - PaulHoule 12y ago
        Ok so rich people get $70 a month unlimited broadband (cheap) while the poor have to pay $150 for expensive lte with a useage cap. If they had framily plans and bling phones and could fool people into paying $10/gb for fiber than verizon would have put up fios everywhere 10 years ago. The trouble is that fiber is too cheap.
        rayiner 12y ago
        Here in Wilmington, MetroPCS offers unlimited talk, text, and data with 500 MB of LTE for $40. 2.5 GB of LTE for $50. These folks have a cell phone anyway, sometimes subsidized by the government. A cell is a lot more valuable to them than a wired connection. Any money spent on fiber would be an additional expense.
zo1 12y ago
"* If you just let the market do its thing, then fewer people will have access to Internet overall.*" Care to add some justification or reasoning behind this gigantic leap?
Shivetya 12y ago
I am still not convinced broad band internet is a life necessity. We assume everyone wants it as we are techies, but even I know tech oriented people without home internet service, they cut that cable too. They live totally by what they get through celluar.
- Omniusaspirer 12y ago
  While I know plenty of people like those you've mentioned, I still think the further into the future we go the more high speed internet becomes a life necessity. How much longer will we all have physical offices to work in as opposed to a virtual reality space that emulates the same thing? How many businesses like my own that don't actually have a physical address are there going to be? At what point do business completely stop accepting physical forms of payment? "Cutting the cord" completely is likely to get much more difficult in the future.
  - smsm42 12y ago
    >>> How much longer will we all have physical offices to work Probably for a very long time. Nothing is like actual human contact. >>> At what point do business completely stop accepting physical forms of payment? Depends on the business. Some already did - Amazon doesn't accept cash as far as I can see. Some - like your local grocery store - probably never will, because sizable part of its clientele will still have cash.
smsm42 12y ago
So let me understand this. The government wants to have everybody to have fast internet, regardless of the ability to pay for it. The government does not have the clout to force the taxpayers to pay for it collectively (e.g. by raising taxes) so it tries to make providers to pay for it by building out. The providers don't go for it, so nobody has fast internet at all. Yeah, sounds logical, I don't see any easy solution for it. Except, you know, for the government to stop being control freaks for a minute, let the people that can pay to pay, and as the cost of basic service eventually and inevitably drops have more and more people enjoy it. Of course, that means that somebody who doesn't have any money wouldn't be able to enjoy the fastest broadband service available on the market, so if it's absolutely imperative everybody would be equal - the solution is always the same, the lowest common denominator. There is an easy solution, you just should be willing to see it.
- zo1 12y ago
  It's the dirty little secret about democracy/government that no one wants to mention. Everyone has grand ideas, and noble causes. But no one has the political balls, or the support of the people to actually fix it with actual solutions. So it's this constant back/forth game of funding and blame... and it never fully solves the problem. All it does is siphon funds from the public into the pockets of the politically connected ruling class and make it seem like the problem requires "just a little more" funding to make it work.

by qq66 12y ago

jessriedel 12y ago

There is an easy econ 101 answer response. If you're really trying to help the poor at the (presumably managable) expense of everyone else, then subsidize the subscriptions of the poor households by explicitly taxing. This dramatically reduces market distortions and makes clear exactly what's happening. Putting up rules that require the rich to indirectly subsidize the poor in the way being described (making the tax invisible) predictably leads to an awful situation. People often reply "this isn't politically feasible", but that's giving up the game. If the opaque, inefficient, and difficult-to-measure strategy is politically feasible but the transparent one is not, that's a good sign it's a bad choice.

cam_l 12y ago
Yep. Though subsidising subscriptions is a pretty non transparent way of tendering for access. If you are in the business of creating lots of little monopolies to achieve universal access, wouldn't it be more transparent to just create one big monopoly? We tried this in oz. A gov. built backbone to be sold off (the naturally competitive part), with a gov. built and maintained 'fibre to the home' access (the natural monopoly part). Fox / News waged a months long campaign to have them booted out of office, in which they explicitly and repeatedly called the gov. nazi's, and outrageously lied about the associated costs for both the gov. and opposition broadband systems. Now we have a system which locks in contracts for the backbone, and rents copper infrastructure for the next 50 years for access. If you want fibre access, you have to pay for it to be hooked up at a prohibitively large cost. We know we can deliver access to everyone in oz through gov. for close to the price of delivering access to a privileged few through market monopolies. At a certain point, you have to realise this isn't about bad political choice, but a deliberate and sustained attempt to lock in privilege for the wealthy at the expense of everyone else. This is the real market distortion.
- brucefancher 12y ago
  Government can barely deliver the mail and you're going to offer broadband competitively?
deleted 12y ago
[deleted]
rwl 12y ago
> If you're really trying to help the poor at the (presumably managable) expense of everyone else, then subsidize the subscriptions of the poor households by explicitly taxing. Isn't this exactly what local governments are doing? It's just that the tax falls on the (shareholders of) broadband companies, who are presumably not, for the most part, local residents. The reason this is more politically feasible is not that it isn't a tax, but that the tax is not being levied on voters. Or does the name matter that much?
- nardi 12y ago
  The problem is that taxing entrants into the cable market creates a very high barrier to entry. The tax is not being levied directly on voters, but indirectly, by creating a monopoly that provides poor service, when they could instead have competition providing great service.
  - rwl 12y ago
    > The tax is not being levied directly on voters, but indirectly, by creating a monopoly that provides poor service, when they could instead have competition providing great service. But isn't the point here precisely that without the tax or other barriers to entry, "they" would not have great service? Some might -- but it seems likely that far fewer would get it than with build-out requirements and so on in place. I think the government has an obligation to avoid leaving those people behind in this case.
- jessriedel 12y ago
  Well, yes and no. An explicit tax on the company by the local government would still be better than a build-out requirement, since this would at least be transparent. But even if you want to transfer money from someone to the poor, and (perhaps unethically) you want to take it from someone who's not a voter, it still makes no sense to pick on this particular company. Why not tax any of the other non-voting companies that service a locality? Say, the tax on coca-cola?
  - rwl 12y ago
sergiosgc 12y ago
Explicitly taxing and subsidizing involves the kind of economy planning you don't want in a free market. Plus, it's a permanent fix. It's much easier for the government to build the fiber infrastructure, lease it to operators in the short term, possibly sell it or spin it off in the medium term. Just give the free market a bump to move it out of a local maximum.

magila 12y ago

Putting broadband internet on the same level as electricity and water seems absurd to me. By far the most common use cases for broadband are streaming video, gaming/DLC, and piracy. Is there really a point where it becomes reasonable to consider Netflix, Xbox live, and The Pirate Bay essential services?

qq66 12y ago
No, but I would argue that regular internet is approaching an essential service. Nobody needs FiOS but lots of people need access to email/web browser/etc.
imgabe 12y ago
"Most common use cases" by volume of traffic maybe, but Internet is increasingly necessary to pay bills, correspond with customer service for practically any company, communicate with your child's teacher at school, renew your driver's license, and practically any other mundane task. It's not that there aren't offline alternatives for these, but they require maintaining an expensive infrastructure of buildings and people. It's going to be cheaper for everyone in the long run if we can move everybody to doing things over the Internet.
- deleted 12y ago
  [deleted]
- magila 12y ago
  None of those require broadband (2 Mb or greater according to the FCC, IIRC) though. We're talking about fiber connections in the hundred to thousand megabit range here. Nobody is talking about cutting poorer neighborhoods off from the internet completely.
  - mschuster91 12y ago
    It's either 56k or crappy DSL (2M) for these 'hoods, which equals a "cut off" these days in which everyone and their mother has a landing page with 2MB+ footprint.

rayiner 12y ago

I think wireless obviates the universal access angle for wired broadband. Its already how most poor people access the internet. They very often don't have personal computers.

cam_l 12y ago
Wireless, at present anyway, has a massive disparity against fibre with regard to bandwidth. Or to put you comment another way, 'the poor can't afford computers or good internet access, so therefore they don't need them'.
- rayiner 12y ago
  Yes, but the bandwidth is sufficient to access job applications, educational materials, etc. Heck, right now, I don't have wired internet at home, just my cell phone. I don't think the poor need fiber for Netflix, torrents, etc.
  - cam_l 12y ago
    (LTE I am guessing) But absolutely the bandwidth is sufficient to live in the present.. or at least the recent past. It is sufficient to access the services that poor people need because they are poor. Let them eat bread I guess..
    - PaulHoule 12y ago
      Ok so rich people get $70 a month unlimited broadband (cheap) while the poor have to pay $150 for expensive lte with a useage cap. If they had framily plans and bling phones and could fool people into paying $10/gb for fiber than verizon would have put up fios everywhere 10 years ago. The trouble is that fiber is too cheap.
      - rayiner 12y ago
        Here in Wilmington, MetroPCS offers unlimited talk, text, and data with 500 MB of LTE for $40. 2.5 GB of LTE for $50. These folks have a cell phone anyway, sometimes subsidized by the government. A cell is a lot more valuable to them than a wired connection. Any money spent on fiber would be an additional expense.

zo1 12y ago

"* If you just let the market do its thing, then fewer people will have access to Internet overall.*" Care to add some justification or reasoning behind this gigantic leap?

Shivetya 12y ago

I am still not convinced broad band internet is a life necessity. We assume everyone wants it as we are techies, but even I know tech oriented people without home internet service, they cut that cable too. They live totally by what they get through celluar.

Omniusaspirer 12y ago
While I know plenty of people like those you've mentioned, I still think the further into the future we go the more high speed internet becomes a life necessity. How much longer will we all have physical offices to work in as opposed to a virtual reality space that emulates the same thing? How many businesses like my own that don't actually have a physical address are there going to be? At what point do business completely stop accepting physical forms of payment? "Cutting the cord" completely is likely to get much more difficult in the future.
- smsm42 12y ago
  >>> How much longer will we all have physical offices to work Probably for a very long time. Nothing is like actual human contact. >>> At what point do business completely stop accepting physical forms of payment? Depends on the business. Some already did - Amazon doesn't accept cash as far as I can see. Some - like your local grocery store - probably never will, because sizable part of its clientele will still have cash.

smsm42 12y ago

So let me understand this. The government wants to have everybody to have fast internet, regardless of the ability to pay for it. The government does not have the clout to force the taxpayers to pay for it collectively (e.g. by raising taxes) so it tries to make providers to pay for it by building out. The providers don't go for it, so nobody has fast internet at all. Yeah, sounds logical, I don't see any easy solution for it. Except, you know, for the government to stop being control freaks for a minute, let the people that can pay to pay, and as the cost of basic service eventually and inevitably drops have more and more people enjoy it. Of course, that means that somebody who doesn't have any money wouldn't be able to enjoy the fastest broadband service available on the market, so if it's absolutely imperative everybody would be equal - the solution is always the same, the lowest common denominator. There is an easy solution, you just should be willing to see it.

zo1 12y ago
It's the dirty little secret about democracy/government that no one wants to mention. Everyone has grand ideas, and noble causes. But no one has the political balls, or the support of the people to actually fix it with actual solutions. So it's this constant back/forth game of funding and blame... and it never fully solves the problem. All it does is siphon funds from the public into the pockets of the politically connected ruling class and make it seem like the problem requires "just a little more" funding to make it work.