War for the Web
01 01.13

The Internet as a Utility?

This past summer, we had the good fortune of sitting down with Susan Crawford to discuss the issues affecting Internet use today in the United States. She’s always been a proponent of overhauling the Internet regulatory structure in the United States, and for good reason. She recently wrote a great article for Bloomberg, outlining the Internet as a utility, and advocating some pretty important regulatory changes. You can find that article here.

There’s one important note that I want to make about what she’s saying. Some folks have been commenting on the article, as Internet users are wont to do, and talking about how the Internet is regulated, and so I want to lay out some of the regulatory changes that took place in the early 2000’s that have led to the current market structure for Internet access that we see in the United States.

In most regions of the US, consumers have one reasonable choice for Internet service. Some people are lucky, and have more, but certainly in most of America, the only Internet service comes from your local cable provider. It didn’t used to be that way, and it doesn’t need to be that way. When the Internet used phone lines, Anyone could lease a telephone line from AT&T and provide Internet service to anyone else. Lots of small ISPs sprang up all over the country.

Now, Internet service in those days was pretty slow. Cable broadband offers much faster access in comparison, and so the evolution of Internet service from dial-up and DSL service to cable broadband was pretty natural.

But there is a major regulatory difference between DSL and cable broadband. Where any service provider could lease lines from AT&T and provide DSL service, only companies that already had cable infrastructure in place could provide broadband service, as they have no obligation to lease their infrastructure to other providers. It’s a key difference, and it accounts for the incredible difference in speed and cost of service that you see between Denmark, Sweden and the Netherlands, and the United States today. In all of these countries, broadband infrastructure owners are required to allow other service providers to use their infrastructure, so there is competition for consumer internet access, whereas in the United States, there is little competition in any given part of the country.

Now, some people argue that 3G/LTE service offers viable competition for broadband and fiber optic Internet service, but the two simply aren’t comparable. There is plenty of data driven evidence that this is the case, but just to offer some anecdotal evidence as well; both my office, and my girlfriend’s offices are down on Wall Street in Manhattan. When Hurricane Sandy hit, we both lost Internet service. My office had some high ground, so we were able to move back in the following week. My girlfriend’s law office wasn’t so lucky, they had to relocate to midtown for several weeks. In both cases, we were without Internet service, and in both cases, our IT departments tried to compensate by bringing in 4G/LTE hotspots for the office to use. My office had 15 hotspots set up for 30 or so users, and they simply didn’t work. It was impossible to do any meaningful work over a 4G hotspot. We could send and receive emails, without attachments, but we couldn’t do anything else.

Now, as I said, that’s anecdotal, but the reality is that we are using more data every year all over the world. That trend isn’t changing, and mobile devices struggle to keep up. Fiber Optic Internet can handle these data increases quite easily, without even changing out the wiring. It’s fairly obvious what the cheap option for Internet access should be, so the question really is, why isn’t it?

 

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