When I first subscribed to Broadband in 1998, it was definitely NOT mainstream, and quite innovative 20 years ago. It was over 20 times faster than 56K dialup — about 1 Mbps — and didn’t tie up the phone line. Have there been improvements since then? Yes, now Specdumb (Spectrum, formerly Time Warner) is about TWENTY FIVE TIMES faster than this for basic service — I get about 25 Mbps. They offer far lower rates to NEW customers than existing custdumbers, which I dislike — new customers can get 100 Mbps for the first year for $45. And custdumber service, is abysmal. Why did they offer high speeds? Not for geeks to download over bit torrent, but for mainstream viewing of services such as Youtube, and downloading other video content such as Netflix. And to compete with the other providers in my area. Many cities have only ONE cable choice even today.
The thing is, some luxury markets later become mainstream. That certainly occurred with broadband. If not a luxury, it was certainly a niche market in the late 1990’s.
The lack of competition in this sector has much to do with government regulations at the local level. The 1984 cable bill (long before high speed internet by about a decade), gave cities authority to rent out the pole space and underground rite-of-way. Cities can choose to prohibit new companies in an area, charge them different rates than established companies, require free service to government buildings and schools, etc. The second factor aside from regulation, that has inhibited more competition, is the high cost of laying infrastructure, which initially, must be paid for with a relatively small number of subscribers.
Some areas in the US have very high speed, affordable internet; in Kansas, with Google Fiber, 1,000 Mbit is available for $70/month (though they too recently raised prices). Their TV service is not incredibly cheap; they have to pay just like the big cable companies for this content, and typically pay MORE which they then pass on to consumers. But due to high infrastructure costs, and potential future wireless competition, they put a pause on deployments to additional cities. It is funny reading about the lawsuits, though — they obtained rights to move other competitor’s cables a few inches on poles, and the other companies sued. Being able to shift cables greatly reduces installation time and costs.
But, truth is, most consumers won’t even notice a difference between 25 Mbps and 1,000 Mbps with the services they presently use.
Russky: I agree, and would add government mostly wants a ‘piece of the pie’, in the case of cable, that means revenue streams for pole rental and government broadcast channels. It’s a mostly ‘invisible’ source of revenue that residents won’t complain about as they do, say, property and income taxes.
In some ways it might make more sense for distribution and generation to be handled separately — they way natural gas can be purchased from 3rd party suppliers but you pay a common carrier transmission fee, but this is a very different model than what we have in the US for broadband. Typically such deregulation has lowered costs for electricity and natural gas.
As for innovation, the best way to encourage it is decreasing barriers to entry. That means, lower taxes, less permitting, and fewer regulations. Also known as ‘smaller government’. Other ways to encourage innovation are to allow MORE highly-educated immigrants into the US (think Indian and Chinese computer programmers, engineers, entrepreneurs, and anybody else that can support themselves rather than being a drag on social services).
FrankOne 2 years, 2 months ago.
