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Net Neutrality Controversy Overshadows U.S. Broadband Woes

After a year of nail-biting anticipation over the fate of net neutrality in the United States, the Federal Communications Commission (FCC) surprised and delighted the technorati by revealing plans to reclassify Internet service providers as common carriers (see “FCC Goes All-In on Net Neutrality,” 7 February 2015).

Well, put the cork back in your champagne, Sparky, because we haven’t won anything yet. These new regulations may be great, but they do nothing to bring broadband to those who need it and leave telecoms more than enough power to crush competitors and control your experience.

While guaranteed equal access to all online services is important, that guarantee is almost meaningless when many Americans don’t have connections sufficient to access those services in the first place, or are severely limited by data usage caps.

Life in the Slow Lane — I’m a relatively lucky guy in terms of Internet access. Despite living in a tiny, isolated town in rural Tennessee, I have a Comcast Business line with guaranteed speeds of 50 Mbps down and 10 Mbps up, and no data usage caps.

However, I don’t have to travel far to find friends who aren’t as lucky. Outside of the small Comcast service area around here, the only choice is our local phone company, North Central Telephone Cooperative (NCTC), whose DSL speeds can be abysmally slow.

A while back, I was at a friend’s house well out of town. We were discussing how to replace a broken iPhone screen, and I mentioned that the tool he needed could be found on Amazon. It took several minutes to bring up Amazon’s site — and even then it didn’t load fully — a shocking reminder of how awful American broadband can be. Being able to access all Web sites at equal speeds is meaningless if they’re all equally bad.

My friend told me that he was paying around $80 a month for that DSL connection and the required phone line, after taxes and fees. It was supposed to offer a 512 Kbps download speed, but he said it was generally about 23 Kbps — slower than my 1998 dial-up connection. Happily, he was recently given the opportunity to upgrade to a much better connection, which I’ll get to in a bit.

After that experience, I started wondering how many other Americans were stuck with slow connections. According to Akamai’s latest State of the Internet report from Q3 2014, the average American’s download speed is 11.5 Mbps. If you go by the FCC’s more optimistic numbers, it’s closer to 18 Mbps. However, averages can be misleading, since the range includes connections as slow as my friend’s and as fast as the 1 Gbps service available in some parts of the country. (If you’re wondering about the median, the FCC lists a median American download speed of 18.43 Mbps in 2013, but for some
reason, the FCC excludes connections of 4 Mbps or less from that calculation.)

I wouldn’t have to travel far to find gigabit download speeds. In 2010, the city of Chattanooga here in Tennessee began offering municipal broadband at 1 Gbps. It’s touted as the fastest in the Western hemisphere, and it costs only $69.99 per month (my Comcast Business line is about $100 per month). Soon, my friends in Nashville will be receiving similar service when Google Fiber rolls out there.

Chattanooga’s fiber network has made it something of a boom town for tech, attracting an Amazon distribution center, Volkswagen’s North American headquarters, Claris Networks, Co.Lab, EDOps, and Lamp Post Group. While many may think of Tennessee as a hillbilly flyover state (when they think of it at all), once you look past the pickup trucks, camouflage, cowboy boots, and shotguns, we have our own little Silicon Valley growing right here in the south.

Good governance has had a profound impact on Tennessee’s economy, but don’t be fooled — our legislature is rife with embarrassing stupidity. I could write a tome about my state’s missteps, but one particularly stands out: the State of Tennessee has placed tight restrictions on municipal broadband and has prevented Chattanooga from expanding its network to neighboring areas. Tennessee isn’t alone in this: it’s one of 20 states that has enacted such restrictions, usually lobbied for by major telecom companies, and usually voted for by “business-friendly” interests.

This isn’t entirely a partisan situation. The Center for Public Integrity documents how big telecom has sandbagged broadband in Tennessee and other states, and profiles Tennessee State Senator Janice Bowling, who has fought AT&T to expand municipal broadband. She said, “I believe in capitalism and the free market. But when they won’t come in, then Tennesseans have an obligation to do it themselves.”

To the FCC’s credit (with a push from the Obama administration), it’s working on proposals to nullify broadband restrictions in Tennessee and North Carolina. But these proposals will surely be met with resistance within the FCC, and from Congress, the states, and the telecom firms. And the question of whether a federal agency can override a state legislature is up for debate.

But government proposals and even money can’t always solve the broadband gap. Let’s circle back to my neck of the woods, where the local telco, NCTC, was awarded $50 million by the federal government under the Broadband Infrastructure Investment Program, part of the American Reinvestment & Recovery Act. The purpose of this money was to build a high-speed fiber-optic network throughout NCTC’s service area.

This is the service that my friend was just able to sign up for. But it may not be what you think. Here are NCTC’s fiber broadband Internet speeds and prices. If you’re drinking a beverage, I suggest that you swallow and carefully place the cup down on a coaster first:

  • 4 Mbps for $39.95 per month
  • 6 Mbps for $47.95 per month
  • 12 Mbps for $59.95 per month
  • 30 Mbps for $69.95 per month (vs. Chattanooga’s 1 Gbps)
  • 50 Mbps for $99.95 per month
  • 100 Mbps for $199.95 per month

Mind you, these prices apply only if you also subscribe to old-fashioned landline service. These speeds and prices are not what most people would think of when they think of fiber Internet — perhaps the fiber in question is hemp instead of glass. In fact, the FCC wouldn’t even consider half of these speeds to be broadband.

Don’t get me wrong, this service represents a huge improvement for the rural citizens of my community. My friend is thrilled with his 12 Mbps connection (for which he pays about $130 per month, after the required landline, taxes, and fees). It gives people like him access to services most of us take for granted, but it’s a far cry from what’s happening in Chattanooga, where subscribers get 1 Gbps for what 30 Mbps costs from NCTC.

Indeed, broadband penetration in the United States is paltry, according to Akamai. The good news is that 73 percent of Americans have a connection with a download speed of more than 4 Mbps. But the number of Americans with speeds over 10 Mbps drops significantly to 39 percent. Also notable is the percentage of Americans with download speeds of 15 Mbps or higher, the throughput considered sufficient for 4K video: that figure is only 19 percent. While 4K video seems luxurious in 2015, that level of bandwidth will undoubtedly be necessary for next-generation online services — imagine having a connection that couldn’t properly stream 1080p video today. Worldwide, the United States doesn’t even break into the top 20 countries in terms of broadband penetration.

Maybe the questionable Internet access of rural America doesn’t concern you. Perhaps you’re one of the lucky few to have access to Google Fiber or Verizon FiOS. Or maybe you’re like me and live in a town or city with sufficient broadband access for the services you need.

But this issue affects us all. As the gap between the rich and poor widens, so does the broadband gap. Imagine how your life would be different if you didn’t have fast access to Google, Wikipedia, Amazon, and Netflix, among many others. Or even worse, imagine how much of a disadvantage your children would be at without these resources.

If you live in a city, as more and more Americans do, you may not think of your fellow citizens in the country, but many of those people are the ones that grow your food, raise your meat, bottle your water, assemble your cars, and build much of what you use every day. As automation takes more and more American jobs, the Internet will be even more vital in providing opportunities to these people. Can we afford to leave them behind?

I’m a living example of this. Without fast, reliable Internet, I’d probably be flipping burgers or filing papers somewhere. Not that there’s anything wrong with these jobs, but how long before they’re automated out of existence as well? Broadband was my key to economic opportunity.

But even if broadband access isn’t a pressing issue for you, there’s another threat on the horizon that you won’t be able to ignore: data usage caps.

A Tip of the Cap — Even under the strict yoke of Title II, the FCC has offered a loophole to help Comcast and its ilk make online video services like Netflix unpalatable: data usage caps.

If your home broadband connection doesn’t already have a data cap, you may roll your eyes and think that I’m Chicken Little. But trust me, data caps are coming sooner than you think. And if the FCC’s net neutrality proposal passes, expect them even sooner.

Until recently, I used a residential Internet connection from Comcast that had a data cap. In this part of the country, Comcast has been testing data caps of 300 GB per month, charging an additional $10 for each additional 50 GB used.

On the surface, this seems entirely fair. After all, you pay for how much water, gas, and electricity you use. But I’m willing to bet that you have more Internet-connected devices in your house than water taps, and unless you have a leak, those taps don’t just start spraying water by themselves. Likewise, most electric devices have been refined to use as little power as possible, or can at least be turned off with a switch.

Until you have a data cap, you have no idea how much data you truly use. My family probably relies on the Internet for roughly the same things you do: Web browsing, email, iTunes, Netflix, app downloads, operating system updates, and the like. We do not run Internet-facing servers, nor do we use BitTorrent.

Thanks to the data usage cap, our monthly bills from Comcast crept up over time. In February 2014, we used over 350 GB and were charged $20 in data overages. By June, we’d exceeded 400 GB and our overages cost $30. By November, it was $40, meaning more than 450 GB of data. In December 2014, we were charged a whopping $120 in overage fees, thanks to data usage somewhere over 850 GB — and no, I have no idea how we consumed that much data. Our last bill was a total of $222.30 for Internet, a basic SD television package, and HBO.

That bill didn’t crush us financially, but it could have hurt many less-fortunate families. Even still, our budget depends on somewhat predictable living expenses. An unexpected $120 charge wasn’t a good thing.

Part of the problem is that it can be difficult to track how much data your household uses every month. Some routers track this for you, but my AirPort Express doesn’t. Comcast and some other ISPs offer data usage trackers, but who knows how many customers are aware of these or if they would identify a culprit in excessive data use. There are a number of Mac utilities that will track data usage, but they help only with a single machine, not the entire home.

But even if you can monitor your usage, that goes only so far. In my case, what could I have done? Turn off iCloud? Cancel Netflix and avoid YouTube? Stop backing up my Mac to the cloud? Those are some of the reasons I have broadband in the first place!

As a result of our huge bill, I switched to Comcast Business, which offers a predictable, flat monthly rate. On the downside, although Comcast Business uses the same lines as residential Comcast, it’s a separate business unit. So if you sign up with Comcast Business, you have to cancel your residential Comcast Internet, which nullifies any bundle discounts you may have for cable TV or Internet phone. That gives you an opportunity to investigate Dish Network and DirecTV for your TV needs, and also gives you leverage with Comcast for negotiating lower prices for the previously bundled services. I ended up sticking with Comcast for TV and ended up paying less than I was before with a bundle. If you have no need for live TV, you can save
even more (or investigate the new Sling TV service — see “FunBITS: Sling TV Is Made for Cord Cutters,” 20 February 2015).

But will Comcast Business always run without caps? Will every customer have such easy access to it? No one knows.

Even if you don’t tend to exceed your data cap, there’s always a bit of stress whenever you watch Netflix or download a new version of OS X. It’s hard to put a dollar amount on that, but it’s a palpable tension that I’m glad is gone.

While I concede that data caps make sense for wireless Internet, where pesky physics limits the amount of available spectrum (I’ve noticed mobile service improving since caps were implemented), data caps make little sense on wired connections. The amount of data you consume is determined by your download and upload throughputs. If telecoms are straining under the load, why do they keep offering faster packages? The whole thing stinks.

And even if data caps were a necessary evil, they should scale to your tier of service. For my 50 Mbps connection, a cap of between 500 GB and 1 TB would have been reasonable while still allowing me to actually use the connection speed I paid for. As it stands now, data caps are like airline baggage fees: most people will end up paying more for no improvement in service.

I worry that these data caps will become more widespread and more strict should the proposed net neutrality regulations stick. Without revenue streams from paid prioritization deals, bandwidth caps will become a safe way for ISPs to “innovate” (read “make more money”). And since most telecom companies also offer TV services, data usage caps may be the last way to squeeze out high-bandwidth competitors.

Being able to access everything on the Internet equally will be great, as long as data caps don’t restrict us to accessing far less than before.

What to Do — As I’ve hopefully shown, while the FCC’s net neutrality proposals might be good for the Internet, they are far from the end of its challenges.

Ultimately, net neutrality is trying to foster competition in the online service space, but equally important is competition in the online access industry. While regulation can be helpful, regulatory capture, where regulatory bodies are taken over by the interests they’re intended to regulate, is a real risk.

Regulatory capture may explain government regulations that have helped lead to this noncompetitive market. Many cities, by law, make it almost impossible for non-established players to break into the market.

Similar government regulations have often thwarted cities from providing their own broadband options, like the one in Chattanooga. 20 states have laws that prevent municipal Internet, and the Obama administration is fighting to get those laws overturned.

I believe there is only one surefire way to make things better: vigorous, brutal, all-out competition. Less than 40 percent of Americans even have a choice in broadband providers. To see what can happen when competition is fierce, read Kirk McElhearn’s “Free Disrupts Telecom Market in France,” (30 April 2012).

Municipal Internet is one of the keys to encouraging competition, especially in areas that aren’t economically attractive to big telecom firms. Despite all the bluster, Comcast still offers Internet service in Chattanooga, just as UPS and FedEx compete with the United States Postal Service. Heck, companies have even figured out how to compete with municipal water: by bottling it. Competition is a beautiful thing, even if it comes from the government. And frankly, if you can’t compete with government, you have no business being in business.

Finally, there is one aspect of the FCC’s Title II proposal that I’m particularly critical of: it doesn’t require ISPs to unbundle services, which would make things even more competitive. That would require incumbents like AT&T to let competitors use their infrastructure (for a fee, of course).

On the surface, this seems unfair. But bear in mind that many of these companies were able to build up their infrastructure with no fear of competition thanks to an unfair, government-backed advantage. I think unbundling helps to undo the damage caused by government interference.

But even more to the point: there’s a good chance that you own these lines.

What? Yes, it’s true. Back in the roaring 1990s, under a program called the National Infrastructure Initiative, $200 billion of taxpayer money was distributed to telecoms (mostly companies that eventually merged into Verizon and AT&T) to build a nationwide high-speed network, capable of 45 Mbps in both directions.

Needless to say, this did not happen. We were collectively ripped off, with nothing to show for it two decades later except slow DSL service. To the companies that received those taxpayer dollars, I say: give it back or prepare to be boarded.

There’s only one way we can gain real competition in the broadband market, and that’s to be a bigger voice than the lobbyists. Let your state representatives, your national legislators, and the FCC know that you want true competition in the telecom market. After all, you paid for it.

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