Nieman Watchdog > Ask This > Where’s that broadband fiber-opt...
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Saved by 1 people (0 private), first by anonymouse user on 2007-05-11
- Acedeuce on 2007-05-11 - Tags cable , connectivity , fiber optic cable , msm , regulation , telecoms , verizon
Public Sticky notes
Through most of the 1990s, the United States led the world in high-speed connectivity. Yet according to the International Telecommunications Union (ITU), the United States, despite having the most broadband connections, has stumbled to 16th in broadband technology and continues to fall.
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By 2006, according to telecommunication companies’ own documents, 86 million customers in the United States should have received 45 Mbps service. In fact, South Korea and Japan do even better: they routinely offer 100 Mbps connections in both directions, uploading and downloading, for around $40 per month. But in the United States, the best connections top out at 1/3 this speed and cost 400% more—and very few places even have access to the new fiber-optic services being offered.
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The FCC defines anything above 200 Kbps as broadband (1000 Kbps = 1 Mbps), allowing them to claim that Americans have broadband access
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Through tax breaks and increased service fees, Verizon and the old Bells reaped an estimated $200 billion since the early 1990s to improve subscriber lines in the United States.
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One study—titled “Dataquest: Implementation of ‘true’ broadband could bolster U.S. GDP by $500 billion a year,”—claimed that with “true” high-speed broadband services, the United States could add $500 billion annually to its GDP because of new jobs, new technologies, new equipment, and new software designs. It might even lead to less dependence on oil because of a growth in telecommuting. Moreover, countries that lead the world in broadband technology, like Korea and Japan, turn out more scientists and engineers. It is clear that connectivity drives technology design and creation.
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The U.S. does face the challenge of wiring huge rural expanses, a problem not faced by, say, Japan. But this does not explain why close-packed metropolitan areas like New York and Chicago lag far behind Tokyo and Seoul.
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In the 90s, the Clinton-Gore Administration called for a "National Infrastructure Initiative" to upgrade American homes, offices, schools and libraries with a fiber-optic network that would replace the older copper wiring.
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increased rates for certain services and tax breaks. In addition, “rate-of-return” regulation—laws which monitored phone-company profits—were replaced with either price caps or alternative regulations. The former cap the prices of certain products; unlike before, however, no regulator would examine the profits to see if they were out of line. While this provides benefits to customers, the price-freezes were accompanied by cuts in staff and cuts in new construction, allowing the companies to increase profits. Some services were also deregulated, including Call Waiting, which costs less than a penny to offer and yet earns $4-5 a month per customer.
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Bell profits (return on equity) jumped to 30%,
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received massive tax write-offs on the promise they would build fiber-optic networks (over $25 billion).
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If the phone companies had kept up their original capital expenditure rates, an additional $92 billion would have gone into new construction
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Japan and Korea and other countries made sure the money went into ground wiring and other upgrades
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The Bell companies submitted cost analyses to the public service commissions, such as the New Jersey Board of Public Utilities, which were supposed to outline the actual costs of doing the upgrades. These “actual costs” models were intentionally kept low so the commission would approve. The original cost models showed costs of about a thousand dollars a customer; the actual cost in an installation in Dover, New Jersey, as reported by the New York Times, was $17,000 a line.
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Profits were essentially capped somewhere between 11-13% (as a percentage of revenues)
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In fact, however, such “capital expenditures” dropped from 24% of Bells’ total expenses in the early 1980s to just 14% of expenses in 2004.
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after the state deals went through and the mergers were completed, they simply closed everything, even though they had commitments under state laws
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In the case of New Jersey, I believe that what happened was illegal. Verizon NJ had a contract with the state to rewire, got paid for that rewiring and didn't do it.
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we argue that the laws were changed based on deceptive speech
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